Will 2009’s record crop further harm Napa Valley Cabernet Sauvignon?
First, I apologize to readers. This site was down most of yesterday, due to issues at my web hosting company.
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It’s already been widely reported that California’s 2009 grape harvest was the second largest ever — 4.9 million tons, more than any other harvest except 2005, which “crushed” all previous records. (To put this number into context, that is 44% more grapes than were crushed in 1988.) Conventional analysis suggests that high-end wineries will take a hit, since “[I]n the coastal areas, there really is too much [product] at this point,” according to the well-known grape broker, Bill Turrentine, who added, “high end wineries in Sonoma and Napa counties suffer [from] a glut of fine wines almost no one thinks they can afford to buy.”
This is not particularly good news for “cult” wines or those just below cult status that aspire to super-ultrapremium prices. For the last 1-1/2 years (which is to say, since the economy collapsed), I’ve been astounded by the quantity of $50 and above wines that continue to pour in to me for review. “Who are all these people, and how are they staying in business?” I asked myself. Now, there’s additional pressure on them: the grape and wine glut from 2009.
What wine and region comes to mind when someone is predicting difficulties for “high end wineries?” Napa Valley Cabernet Sauvignon is the correct answer (those of you who guessed right win a free lifetime subscription to this blog). So let’s drill down and see just how much trouble N.V.C.S. is in.
Statewide, the ‘09 Cabernet crush (441,563 tons) was up 35% over 2008, which was not a small crop by historical measures. Of that, 55,000 tons, or about 12.5%, was grown in District 4, which is Napa County — more than any California region except for District 11 (the northern San Joaquin Valley, but we don’t care about Central Valley Cab, do we?). That means Napa Valley is going to be churning out an ocean of 2009 Cabernet Sauvignon, starting in about a year and continuing (for late releasers) through 2013.
In the just-issued, official “Grape Crush Report” (preliminary) for the 2009 California crop is a section that’s always worth reading: “Base Price Paid to Growers.” It essentially summarizes individual dollar deals from growers to producers who buy grapes. While there were some pretty cheap transactions ($350 a ton for District 4 Cabernet? I wonder where those grapes came from?), most of the grapes went for between $6,000-$11,000 a ton. The official “weighted average” for Napa Cabernet was only $4,743 per ton, but that average is skewed low by the cheap grapes, which will end up in inexpensive bottlings that have little impact on high-end Cab. By contrast, the weighted average for District 3 Pinot Noir (which includes Russian River Valley and Sonoma Coast) was just $3,039 — and we know how expensive those bottles are.
Now, my good friend, Pierce Carson, wrote in last week’s St. Helena Star that, due to “grape prices holding their own,” even this large harvest won’t significantly lower bottle prices. Pierce interviewed Vic Motto, a grape and wine finance guy whom reporters like me have turned to for many years as a source of information. Vic’s prediction was nonchalant. “(A recession) is never permanent. The wine we’re making today will be sold tomorrow — we’ll see what tomorrow brings.” He was, if anything, optimistic about Cabernet’s future.
I’m not so sure. I have a feeling deep down in my gut, as Turrentine seems also to, that these high prices cannot hold. And if cult Napa Cabernet begins to tumble (which, in fact, it already has), how long will it take before the downward pressure hits Sonoma County, Paso Robles, even Santa Barbara County? “[T]he economics of the wine business are still much better than most industries,” Pierce quotes Motto as saying. That may be true, in the sense that owners (many of them wealthy to begin with) are able to tread water, so they’re not in the dire straits of, say, the auto industry. But what about consumers? They are in dire straits. Even a multi-millionaire owner can’t afford to absorb big losses year after year.
My feeling is that, by this summer, we’ll have a greater understanding of how much damage was, or wasn’t, caused to Napa Cabernet by the Recession and, now, 2009’s big crop. I wouldn’t be at all surprised to learn of more bankruptcies, more sales, more dumping at Costco or wherever. Also, consider the fickleness of the consumer, who’s always looking for the latest critical darling. As I look over my highest-scoring Napa Valley Cabs since last Fall, I see brands such as Hestan, Redmon, Napa Angel, Knights Bridge, Piña and Sabina. These are not exactly household names. In other words, there’s a whole new crop of new (or relatively new) producers chasing, or should we say threatening, the more traditional boutique brands. Is there room for everybody? Not in my opinion, and not in reality. As MSNBC online reported just yesterday, “Napa Valley is facing the worst wine downturn since the early 1980s. Premium wines priced between $50 and $125 were ‘a dead zone’ in 2009, according to Silicon Valley Bank’s annual wine market report…”. I can’t see that changing in 2010. Something’s gotta give.
And this just in:
Where will Hardy land? That’s been the question over the ultimate job destination of Mr. Wallace, who won Murphy-Goode’s Really Goode Job. We now know: “I am passing along a press release to your email that announces Michel-Schlumberger’s unique partnership with the winner of the Really Goode Job, Hardy Wallace. He is moving into our winery where he will be writing about his experience living at a winery in addition to his other pursuits…”. That’s the word from Jim Morris, who works for Schlumberger. Same job, different location. Is the pay still ten grand a month? Enquiring minds want to know!
And this too
I’ll be doing a really nice, different kind of wine tasting at Old Crow Tattoo, in my neighborhood, on Sat. Feb. 20, starting at 8 p.m. The address is 362 Grand Ave. Stop by. I’d love to see you!