Thursday, April 28, 2011

Wine Prices Rebound!

Just in time for a follow-up to my last post about wine prices, here's a story that ran in the Santa Rosa Press Democrat about rebounding wine prices:

http://www.pressdemocrat.com/article/20110427/business/110429507


I'm extremely happy about this, and here's my rant and rave about why:

Wineries were pressured from all sides during the recession. Not only were wine drinkers demanding better prices for higher-end wines, but distributors and brokers were also demanding discounts deeper than have been given in as long as we can remember. Considering the fact that wineries have to sell their wares to distributors at 50% off as standard pricing (brokers range, depending upon the state and broker), that's taking a HUGE hit. Even many local restaurants (which wineries often just sell to direct from the winery), were asking for discounts, then marking up the wines more than they ever had (so the consumer paid the same as pre-recession prices).

What does this mean? For the past few years, it wasn't uncommon for distributors, restaurants and brokers to make more money on the wine than the winery was. Their reasoning? They have overhead. The winery's reasoning for being mad about it? They have overhead too! And the cost to make the bottle in the first place!

When wine is discounted as deeply as it has been the past few years, someone pays for it. During the past two years, it's been the winery for the most part. So, you can understand why I'm happy that pricing is starting to return to normal. A lot of wineries have been just trying to hold on for dear life, so it will be a great help to the industry to get back to normal, or whatever the new normal will be.

Friday, April 15, 2011

Low-Priced Wines - Now the Norm?

This morning I found myself nodding in agreement as I read Patrick Comiskey's LA Times article: "Fine wines at great prices." (Click here for the story.) In this piece, he discusses what seems to be an downward adjustment in wine prices and the many deals and steals now found in the marketplace:

"...In 2009, we wrote in these pages that, in terms of a sales sweet spot, $25 was the new $40. If anything, that median is trending further downward in 2011. For many, $15 to $20 might be the new $25." ...


The article goes on to quote wine retailers and the trends they've seen, including the increasing floor space they're giving to "bargain" wines. The quality, sub-$20 bottle of wine has been a hot commodity for retailers and wineries alike during the past few years, as have unique varietals and white wines (typically more affordable than reds).

I agree with a lot of what Patrick and the retailers report. This discussion about wine prices and what will be "the new normal" has been ongoing within the wine industry (and the industry publications) ever since the 2008 crash. Wineries who were forced to cut prices or make more affordable wines because of the times have been holding their breaths, waiting to see if prices come back up. And they have, to a certain degree, but those "affordable" bottles do seem to fly off the shelf faster than they used to.

Even up here in Anderson Valley, we've seen wineries cut prices on certain wines and work on producing more affordable bottles. If they're not already making more of these wines, then they're certainly talking about it for the future. While, as Patrick states, good Pinot Noir can be difficult to find at low price price points, producers are certainly trying. The higher-priced bottles are still moving due to prestige, points, scores, or reputation, but for the average consumer walking in the door, if they can get a deal, they'll take it.

Here at Foursight we're not an exception to what's happening in the industry. This past month we released some Pinots that retail at $20 and $28 a bottle, and they're flying out the door by the case (click here to see our wines list). We're also lowing our mid-priced Pinot Noir bottling for the future by a few dollars a bottle to reflect the changing point of resistance, so to speak, for our consumers.

We've sensed that the top price people are willing to pay for a great bottle of Pinot has lowered slightly. I say slightly because for tiny producers like us who sell direct to our customers and produce small lots of high-end wines, there's still a demand for the premium bottlings, and we believe there will be into the future. However, we've felt that perceived value has become more important to wine consumers during the past few years.

As one customer described it, in the past buying a "bargain wine" could be a source of embarrassment among a group of friends who all collect cult wines and like to show off their wine cellars. Now, getting a good wine at a great price is something to call everyone up and brag about.

I think this possible price adjustment also speaks to the changing demographics of wine drinkers. As studies have shown, millenials don't purchase as much wine for reasons of prestige and are more willing to experiment with different producers, varietals and regions.

So is the new, hot price point really $15-$20 per bottle? I think we need a few more years to really call it, but I can guarantee every wine producer out there is watching this closely.

Monday, April 11, 2011

Traveling

My husband, Joe, and I are about to fly across the country to visit some friends. It's been two years since we've flown anywhere, unbelievably, and, per usual, there are always changes. Like body scans. Am I the only one who would almost rather have a female security officer feel me up than walk through one of those? Ugh... Makes me shudder.

Anyway, we're now busy printing itineraries, jotting down confirmation numbers, arranging car pick-ups, and the like. It's amazing how much work goes into travel. I mean, this is a part-work, part enjoyment trip but it takes HOURS to prep for what's only a week-long trip in the continental U.S.

Either way, we're excited to see our friends who have moved WAY too far away, and take some time away from the property. We love what we do, but absence makes the heart grow fonder, right? :)

Sunday, April 3, 2011

First Frost Morning of 2011!

This morning I woke up to the sound of sprinklers running in the vineyard. Our frost protection was on for the first time in 2011!

Temperatures didn't dip to freezing until the wee hours this morning, and finally my father had to turn on the sprinklers to keep the new buds (and next year's developing buds inside the vines) at freezing and not lower. Also, the process of making ice creates a small amount of heat in and of itself, which can further protect the buds.

It's unusual for us to survive the entire month of March without frost. By this time last year we had already turned on the frost protection seven times. I'd like to say we've had an easy spring so far, but before budbreak even started we had frost, hail, floods and snow. We lost electricity for two days, and Highway 128 was closed twice! So, even though those events happened while the vines were dormant (and therefore mostly immune to weather events), there was still plenty of worrying over the property, culverts, road conditions, and the like.



A lot of people ask me about frost protection and water use. Here's the scoop: here in Anderson Valley, very few vineyards have the right to pump from the river. Most of us have off-stream ponds, meaning that all we do is collect winter runoff and rain water, then we use it throughout the year. When it runs out, it runs out.

When we turn on frost protection in the spring, the vines barely have even an inch or two of growth (less now). They're using very little water, especially since it's still raining and the ground's completely saturated. So, the vast majority of water put out in the vineyard ends up right back in the water table.

Many vineyards also now have drains in low-lying areas. These can collect water when running frost protection and funnel it right back into the pond, where it can be reused.

The reality is, in cold areas of the valley, if you don't frost protect, you likely don't have a crop. Vineyards aren't immune to this, but either are apples, oranges, and most other fruits.

A few more frost nights are imminent, but then on to another storm. Hopefully it will be a light frost year. Most likely, given history, it will just frost later in the season to make up for our wet March. :)