Preferred Wine Cellars
Sign Up for the Recipe Publishing Newsletter
How the Recession Affects California Wines
Everyone is aware of the recent recession but where does that leave the California wine industry? This industry is immense and includes everyone from farmers and grape brokers to distributors, big corporations, and retail outlets. Unfortunately the recession is still affecting the industry and that is because wine is a cash-flow business and a lot less is flowing right now.
California wines which cost more than $15 a bottle are harder to sell and businesses like restaurants are reticent about buying more wine, preferring to sell what they already have in stock. People are drinking what they have in their cellars and not investing in expensive bottles. Of course the effects of the recent recession will end one day but when will that be? A lot of Americans claim that it still feels like recession-time and they are still careful what they spend their hard-earned money on.
The Harvest Must Go On
Another reason why the wine industry is especially affected during the recession is because of the annual harvest. When sales of an item are slow, manufacturers make less of it but with wine the grapes have to be harvested every year during fall whether there is a high demand for the wine or a low one.
You cannot switch the production off or not use the vineyards for a while because it can take up to ten years between planting a vineyard and being able to grow grapes there which are good enough for winemaking. You have to keep growing the grapes and making the wine.
Budget Wines are in Demand
The good news is that people still buy wine, recession, or no recession. Actually sales are up at the moment, even though people are buying a pair of $7.50 bottles instead of one $18 bottle. Growers in areas where expensive wine is produced are having a tougher time than growers in areas where budget wine is made.
Pinot Noir grapes in the Russian River area sold for around $3000 a ton in 2008 and they are now going for about $2000 a ton which is a huge drop. Cabernet Sauvignon grapes cost around $4000 a ton in 2008 and are now around $2500 a ton.
Some top wineries though claim that direct sales via the internet or at the winery are still good, although sales to restaurants and wine stores have slumped. Ten or fifteen years ago California was producing too much wine so if the recession had hit earlier it would have been a lot worse. There would have been a huge wastage of wine.
What This Means for You
There might not be a lot you can do about the tail-end of the recession but you can take advantage of discounted wines. If you have a wine cellar, now is the time to stock up on premium wine. Everyone is trying to move their wine inventories so why not take advantage of this and invest in some quality California wines?
Premium producers have to sell the old stock to make room for the new vintage and selling at a loss is better than not selling it at all so if you are clever you might just find some real bargains!
