Our economy is consumer-based and needs people to spend their money to keep growing. If the wallets are closing up, of course us wineries will feel the pinch. The challenge is to see your way through by playing to your strengths as well as cutting costs and providing better discounts where appropriate.

The wineries that are too debt laden, did not pay attention to their costs, and have poor sales and marketing hygiene are the ones shaking in their boots.

To be sure, if it is happening to your winery, it looks massive, as it does to anyone whose job or business has been affected, but the wine business is amazingly stable relative to a lot of small business sectors. Try being a small, up-scale, one-off restaurant in this market.

Economic Darwinism is one of the inevitable consequences of capitalism. When things are going well, wineries can sell all they make, sometimes at amazing prices that make rich men even richer and ordinary folks into rich men. That also is a consequence of capitalism.

There will be upsets in the wine business. There always have been. Mostly they affect wineries that either make wine that is not good enough to sell for the prices being asked or that simply have no idea how to sell the wine they make. Unfortunate choices like doubling the production of your $60 Chardonnay at exactly the same time as the wine markets turn soft will turn out to be unfortunate for you.

But, neither Steve E. nor any other Steve will be tossed out into the streets unless their products are simply the wrong stuff at the wrong time. With the supply of CA wineries now passing 3,000, I doubt that consumers will be short-changed by the passing of a few wineries that could not compete for all kinds of reasons. More likely, by the way, that K-J or Diageo or Constellation or one of the smaller winery groups will buy up those brands–that is if the Kingdom of Freddy Franzia does not get there first.

It’s just another form of Darwinism. While the public will get a massive amount of great wines at ultra-low prices courtesy of such retailers as Trader Joes, BevMo, Total Wine, Costco (plus the killer deals that can be found in tasting rooms!)…, some wineries will not be able to withstand the fact that they are loosing a massive amount of money. Many wine drinkers are not that brand loyal and once they pay $14.99 for it at TJ’s, they probably will not be willing to pay $40 for it later when things turn around. Some wineries are betting the public has short-term memory and will not remember the discounted price–and some of those wineries might be right–but our winery landscape will look significantly different when this is past. The brand names might remain, but the ownership of that brand might very well be differnet.

Economic change is like climate change, there are winners and there are losers. The winners are those that are prepared to take advantage of big intense high alcohol reds aged in the best oak that will be available in bulk at prices that are a fraction of what it cost for the grapes and winemaking. Great blending material if you have some inexpensive light bodied wine. Among the losers will be some of the four dozen wantabe “cult” labels that are for sale right now when they find the only thing they have that anyone wants is their bulk wine at a steep discount. (Oh, Franzia will need some brand names that people associate with the Napa Valley.)

I am reminded of 1982 when a family named Benziger had a bottling operation in Glen Ellen and a brand by that name. They would buy for $3 a gallon wine that cost us $10 to make, pay us to store it for them, and then when they needed it, ship it to the bottling facility where it was blended with wine from all over and bottled into a wine that sold for $24 a case wholesale. “Private Reserve” I think it was called. It was good value.

To me what is different is there are not only many more brands, but too many making over-the-top wine that, aside from the 100 point critics, few find enjoyable to drink. When the wine no longer offers to enhance your self image; all that is left is the way it tastes.