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Happy New Year! Reflections on 2013

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As we wrap up another year, I find myself, like so many others, looking back over the old one, and wondering what it all meant.

I’m not going to do any sort of list, but instead want to let my mind wander free-range over the past 365 days. It’s been a year of gradual and welcome emergence from the despairs of the Great Recession. Here in California, as you may know, our economy is booming, particularly in the coastal areas, and most especially in Northern California. Fueled by the growth of Silicon Valley, NoCal is experiencing low unemployement, high salaries, and most notably a housing boom. Prices (and rents) are soaring, bringing to mind the housing bubble of the early and mid-2000s–but this time, the experts are telling us there’s no chance of a burst. I don’t know that I believe them, though.

Wineries seem to be doing all right. Like I always say, nobody can really know a winery’s bottom line unless you’re the banker or owner, so any conjectures about the industry’s health are only that: conjectures. But business seems to be back on track. I’m sure there are individual wineries that are struggling, but sales, bankruptcies and the like don’t seem to be any higher than they’ve been in the 25 years I’ve been watching the California industry.

The Holy Grail for wineries is, of course, direct-to-consumer sales. I can’t even remember when I first heard that phrase. I do recall the first time it was brought to my attention that a direct sale brings the proprietor 100 cents on the dollar, rather than the split he has to eat when dealing with the three-tiered distribution system. That was years ago, when I was touring the wineries of the Sierra Foothills, particularly those along Highway 49, in Gold Country, and also located conveniently between the population centers of the coast and the ski resorts around Tahoe. All the owners told me how much wine they were selling through their tasting rooms, up to 90% of their production. That was a good thing, for them–but a bad thing, as far as I was concerned, because too many of the wines were (in my opinion) flawed, and yet the owners had no motivation at all to clean up their acts.

Anyhow, tasting room sales obviously are a subset of direct-to-consumer. So, today, are wine clubs that are active through the Internet. I don’t have a crystal ball, but I’d love to be around in, say, 20 years, to see if wineries are still at the mercy of a (fairly heartless) distribution system, or if they’ve managed to figure out how to sell direct. At this point, I don’t have a clue.

Two other aspects of the past year intrigue me: the excellence of the 2012 and 2013 vintages. After a difficult 2011 and challenging 2010, California enjoyed two of the nicest years, weather-wise, in memory. The main wines have yet to appear from either, but theoretically, both 2012 and 2013 look to have the qualities of stellar vintages. One cloud that’s hanging over the coming 2014 vintage is California’s severe drought. As I write these words, 2013 is shaping up to be the driest year in California’s history–which goes back in record-keeping to the 1850s. It’s appalling how dry conditions are. On Jan. 1, 2014 (i.e., tomorrow), if the national (which is to say, East Coast) media don’t make a big deal about this, they discredit themselves, and show their right coast bias. How the drought will impact the grapes is complicated, a story that will play itself out next summer. Of course, the weather could change on a dime: January-March could be real drenchers. We’ll just have to wait and see.

A final observation: In all my years of wine reporting I’ve never appreciated so much as I have this year the importance of a younger generation coming up. I guess this is a natural result of the fading away of the original boutique winery proprietors, who came of age in the 1960s and 1970s. There are ambitious, talented young winemakers all over the place. I’ve written about this extensively in my articles about Paso Robles and Monterey, but it’s not just along the Central Coast, it’s statewide. What energy these winemakers are bringing, what innovation, what risk-taking. California is a very conservative state, wine-wise (the opposite of our political liberalism), and it’s a bold move for a young, unproven winemaker to try her hand at something new, rather than “just” another Pinot Noir or Cabernet Sauvignon (not that there’s anything wrong with either!). But I do see a cadre of vintners in their 20s and 30s tinkering with less familiar varieties–and often they’re crafting them at lower alcohols and with higher acidity than has been the case. I’m looking forward to experiencing more of these wines in 2014.

I’d like to thank my readers for sticking with steveheimoff.com for another year; I’m now going into my sixth on this blog. Thank you, too, for all of you who take the time to comment. Your feedback always is welcome and sometimes educational. I wish you all a happy, healthy New Year.

  1. The direct to consumer trend is becoming a big plus for wineries wine clubs and their bottom line. As those sales increase, the smaller production lots will be less sold thru the 3 Tier system for domestic producers. you,ll see an increase of these higher production bottlings found in stores and restaurants. Thus, buying fine wines via the internet will be an increasing trend. So, yes that and our collective worries about the drought will make us Californians more conscious of water conservation. Finally, after the higher production 2012 and 2013 years, I have grave concerns that winegrowers will push their luck and crop high again, especially with varieties in high demand like Cabernet and Pinot Noir.

  2. Thank you, Steve, for another year of highly stimulating jabber on your blog.

  3. Happy New Year Steve. Thanks for the shoutout to young winemakers trying new things (and might I suggest it goes beyond the state lines). Most of all, thanks for churning out smart, well-written, and thought provoking blogs. You are truly one of the great wine writers of our era

  4. Bob Henry says:

    Steve,

    I am less sanguine than you are about the prospects for California wineries.

    The words of Charles Banks still ring in my ears:

    “West Coast Wineries Are Up for Sale — Quietly”

    Summary: A wave of recent deals show investors see opportunities in wine, while owners see an exit strategy.

    Link: http://www.winespectator.com/webfeature/show/id/49221#.UoI_yAMMzG8

    SELECTIVE EXCERPTS:

    “… While small wineries can succeed by selling most of their inventory direct to consumers and large producers have muscle with wholesalers, those in the middle — annual production of 5,000 to 15,000 cases, for example — can’t get much attention from distributors unless the brand is hot.”

    AND:

    “… I’ve never seen more wineries for sale in California than there are today,’ [said Charles Banks, who through investment groups such as Terroir Selections purchased Santa Barbara Syrah specialist Qupé in October and Napa veteran Mayacamas Vineyards in April.] … Banks … estimates that between 30 to 50 percent of California wineries are either in financial difficulty or aren’t as profitable as they could be.”

    As you and James Laube have reported on, too many 2011s suffer from mold.

    Those wine will languish in warehouses and on merchants’ shelves.

    ~~ Bob

  5. Happy New Year Steve. Great content and consistency all year, your blog is a great service for all of us. All the best in 2014!

  6. Dear JamesG, thanks for the kind words.

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