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As wine consumers trade down in cost, some wineries stand to lose, while others gain

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Trading down from Gucci to J. Crew may not seem like the toughest sacrifice in the world, but even the top 2 percent of upper-income Americans is “thinking twice” about spending their money on über-expensive goods, says Bloomberg News.

“These ‘2-percenters,’ unnerved by the most recent recession, are trading down to less-expensive” apparel and other items, the article says. It quotes the president of a luxury research firm: “The rich have lost their exuberance.”

Of course, “a small cadre of ultra-high net-worth individuals…is insulated and not cutting back,” but unless you’re in the yacht business, you’re not really concerned about these 1 percent of the 1 percent.

The article names names: On “the way down” in clothing and accessories are Prada, Armani, Gucci, Hermes and Gianni Versace. On “the way up” are Ralph Lauren, Michael Kors, Banana Republic and Urban Outfitters. In other words, brands that offer cachet and style, without the high price.

So the HENRYs (“high earner not rich yet”) are scaling back. What does it mean for luxury wine brands, particularly California Cabernet Sauvignons that have hit triple digits?

Unless you’re the owner or the winery’s banker, you can’t really know what the bottom line is. Is Screaming Eagle hurting? Harlan? How about Bryant, Colgin, Dalla Valle, Schrader, Abreu, Sloan? If these are the Armanis and Guccis of wine, then we have to expect that things are not quite as solid as they were pre-2008. The HENRYs are “thinking twice” about spending their hard-earned cash on them, and there’s no indication they’re going to return to their free-spending ways anytime soon.

Nor are there enough “ultra-high net-worth individuals” to absorb all of these expensive wines. I have to believe, based on what I’ve seen and heard, that the cults are hurting–although some of their owners are so rich that they can afford to ride out what they hope is a relatively brief soft period following the Great Recession.

What are the alternatives to the cults–the winery equivalents of the Banana Republics and J. Crews of California that the 2 percenters are turning to? Here’s my list of Cabernet Sauvignon producers whose wines are pretty much near as good as anything from the cults, but whose prices are more aligned with reality: Stonestreet, Von Strasser, Vine Cliff, Goldschmidt, Krutz, Hall, Sequoia Grove, Duckhorn, Conn Creek, Kendall-Jackson Highlands Estates, Long Meadow Ranch, Piña, Macauley, Stephen & Walker, Kuleto, Yates Family, Renteria, Creo, Snowden, Laird, Moone-Tsai, Hunnicutt, St. Supery, La Jota, Frank Family, Prime, Rubicon Cask Cabernet, Signorello, Trinchero, Stag’s Leap Artemis, Monticello, Charnu, KaDieM, Venge, Terra Valentine and Hidden Ridge. I’ve given scores of 95 points or higher in Wine Enthusiast to bottlings from each of them over the past few years, and none costs more than $90 retail.

  1. Congrats on the WBA nod, my friend!

  2. Thanks young Jedi Dude, you too!

  3. Last but definitely not least! Hidden Ridge, and way under $90.

  4. Tom Rickman says:

    I have for many years questioned the price quality ratio of so called “cult” cabs. Tasted several-do not get the hype!
    Add Elyse to your list.

  5. Tom Rickman says:

    Of course I meant Elyse is a great Cab value!

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