Napa Valley Cabernet: an endangered species?
For many years I’ve watched as the price of Napa Valley wine has gone up—and up—and up—until it reached the stratosphere. And then it continued to go up.
Even twenty years ago, I wondered who was buying all that expensive Cabernet Sauvignon. I can’t remember when prices first hit triple digits—I think it was in the 1980s. But once they did, no respectable Napa winery wanted to be the last to retail for at least $100.
At the height of my working career as a critic, when I was paid to keep track of such things, I’d note every new, expensive brand that came on the market. I soon concluded that most were vanity projects: their owners were very rich, and they wanted “in” on the Napa Valley lifestyle that was so highly touted by aspirational magazines. You, too, could have the big mansion, set in a picturesque vineyard, surrounded by blooming gardens, with an azure-blue swimming pool, a grand deck complete with gigantic outdoor grilling station, and Napa’s beautiful mountains soaring in the distance. And all you needed was maybe $10 million to get started.
At one point (I think it was in the early 2000s) I did a count of all the $100-plus wines in Napa Valley, and the total was well into the hundreds. I began to wonder, “Who’s buying all that Cab?” It was easy to understand that the critically-acclaimed cult Cabs (Screaming Eagle, Harlan, Bryant, Colgin, Dalla Valle, and so on) were desired by many wealthy collectors, but what about the hundreds of lesser-known brands? Every week seemed to bring a new family winery with a fill-in-the-blank back story:
Pete, together with his lovely wife Maggie, made a fortune in (computers, engineering, construction, oil, stocks) but there was something missing in their comfortable life. In (date), they bought a small property in (Rutherford, Pritchard Hill, Oakville, Spring Mountain, Atlas Peak) and planted some Cabernet. Now, they produce some of Napa Valley’s most coveted wines, assisted by their consulting winemaker (Michel Rolland, Heidi Barrett, Andy Erickson, Mark Aubert, Phillippe Melka)…
The stories all ran together; so did the wines. They were functionally interchangeable, 95-pointers that all tasted the same. It was impossible to answer the question, “Who’s buying all that wine?” just as it was impossible to answer the question, “Is the winery actually making money?” I suspected, even by 2000, that many, if not most, of these vanity wineries were not profitable, but were kept alive by their owners’ personal fortunes.
The other day, a friend emailed asking my opinion about reports that sales of California wines are weak, with a troubling future. Was it tariffs? Younger consumers wanting something “natural” and eccentric? The greater popularity of craft beer and spirits? I replied, “All the above—plus the fact that California wine, driven by Napa prices, is just too damned expensive!”
And now comes this report, via Wine-Searcher, that “California’s top producers might be pricing themselves out of the market,” with the top culprit being Napa Valley wine.
The article was based on a new report whose startling conclusion was this: “The demand for Napa Valley wines is flat and heading toward a decline. Last year, this report speculated that price increases at Napa wineries may have finally priced out enough buyers to curtail growth. It now seems this is likely the case.”
Will 2020 be the year that Napa Valley Cabernet Sauvignon experiences a price crash? It’s in the self-interest of the producers to prevent this, so I expect they’ll do everything in their power to hold on. But if this represents a permanent trend, how long can they keep on? Will their heirs be content to underwrite a losing proposition, just so they can sit around the pool watching the sun set over the Mayacamas?
One interesting development was the purchase earlier this week of Flora Springs by the Bordeaux winery, Chateau Smith Haut Lafitte. Flora Springs was, back in the day, a highly respected winery. (One of the first articles I ever wrote for Wine Spectator was a profile of them.) They had exquisite vineyards on the Rutherford Bench, and produced various Cabernets and Bordeaux blends that were very good. But Flora Springs, like so many other wineries, gradually saw competition arising all around them: no longer a darling boutique winery, but one of hundreds to choose from. The ownership was quite wealthy (of course), but Flora Springs was precisely the kind of winery I wondered about. “How are they doing? How long can they hold on?”
Well, now they’ve sold. The question isn’t whether the ownership was or wasn’t making money, it’s “Why does Smith Haut Lafitte think Flora Springs is a good investment?” (Their purchase doesn’t include the brand or “Napa Valley vineyard sources,” according to the article.) One thinks of the Bordelais as very astute businessmen—after all, they’ve managed to stay at the top of the heap for multiple centuries. So there must be something Smith Haut Lafitte sees in Napa Valley.
At the same time, I remember when the Woltner family, heirs of Chateau La Mission Haut-Brion, started a winery back in the late 1980s. Chateau Woltner was in the Vacas, on the east side of the Silverado Trail, on lower Howell Mountain. They put out a Chardonnay that was then the most expensive ever in California. It was pretty impressive: Bordeaux Second Growth invests in Napa Valley! What could go wrong?
Well, everything. The brand didn’t last for very long. It was sold for $20 million in 2000.
I don’t know what eventually happened to the Chardonnay vineyards, nor do I care. The point is, just because a French Bordeaux family buys a Napa Valley winery doesn’t guarantee its success. The eventual outcome of Flora Springs will depend on the continuing popularity of Napa Valley Cabernet and Bordeaux blends; and if this category is pricing itself out of existence, there’s little anyone can do to save it. Of course, as we know from Eddie Penning-Rowsell’s classic The Wines of Bordeaux, prices of Bordeaux have been a roller-coaster ride for centuries: sometimes way up, sometimes way down. But Bordeaux persists. Maybe Napa’s future will be as tumultuous.
California (napa and vicinity) and Bordeaux are two regions i’m done with. I’ve been saying for years (apparently no one cares about what i say) those two regions are hugely overrated and over expensive, regardless of the quality they may produce. Pf course some wines are rather good…but i like to find my bargains elsewhere.
Spain, italy, portugal, greece (so underrated and unknown greece), france… they all have fantastic wines for fraction of the napas and bordeauxs.
Good riddance to ‘cult wines’, ‘sacred soil’, ‘ego project wines’.
ANSWER TO “I can’t remember when prices first hit triple digits . . .”
Excerpt from this San Francisco Chronicle obituary:
“Remembering Boots Brounstein, who revolutionized the idea of Napa Valley terroir at Diamond Creek Vineyards”
URL: https://www.sfchronicle.com/wine/article/Remembering-Boots-Brounstein-who-revolutionized-14284472.php
“. . . Diamond Creek would become the first Napa Valley winery to charge $100 for a bottle of wine.”
ON THE SUBJECT OF NAPA VALLEY CABERNET SAUVIGNON PRICING — “THEN” (2010) . . .
Excerpt from the Los Angeles Times (February 4, 2010) article titled “Dark Days for Cult Cabs.”
Link: http://articles.latimes.com/print/2010/feb/04/food/la-fo-cultcab4-2010feb04
“Even wine critic and Cult Cab kingmaker Robert M. Parker has issued warnings: ‘Wines priced over $300 have encountered considerable resistance, with their mailing list customers dropping off, or taking much smaller allocations,’ he wrote in the December [2009] issue of his widely read newsletter, the Wine Advocate.
“‘Sadly, far too many proprietors of high-end Napa wines are in denial, and have failed to recognize the dramatically changing parameters in the wine world of the consumer.’
“Not all of Napa’s Cult Cabs are dead, of course. Wines still in the good graces of critics like Robert Parker and James Laube of the Wine Spectator are weathering the storm well, including Shrader, Screaming Eagle and Harlan, as well as the more recently anointed, such as Scarecrow, Maybach and Kapcsandy. But many more may be out of luck. ‘FOR A WINERY WITH NO TRACK RECORD, THIS IS A NIGHTMARE,’ [former Screaming Eagle winemaker Heidi] Barrett says. ‘If they came into the market thinking they could start in at a $200 price point, they have no chance.’ ”
VERSUS “NOW” (2019):
Excerpt from the Wine Spectator (November 15, 2019) cover story titled “California Cabernet Sauvignon: Napa’s Stunning 2016 Vintage.”
URL: [not available]
“Sticker shock remains a problem for Napa Cabernet lovers, however. Of the wines in this [nearly 600 submissions Cabernets Sauvignons and blends] report, more than 50% cost more than $100 per bottle. That trend is here to stay . . .”
TOO MANY NAPA VALLEY WINERIES WITH NO TRACK RECORD “THINK” THEIR CABERNET SAUVIGNON CAN COMMAND $100 IN THE MARKETPLACE.
THE WINE INDUSTRY IS REPLETE WITH ANECDOTES OF WEALTHY VINTNERS DISCREETLY “SITTING ON” THEIR HIGH-PRICED AND UNSOLD WINES IN THEIR WAREHOUSES . . . AS CONSUMERS HAVE NOT ADOPTED THE BRANDS.
THAT HAS LEAD TO THIS QUIET PHENOMENON:
Excerpt from Shanken News Daily (November 13, 2013) news report titled “West Coast Wineries Are Up for Sale — Quietly”
URL: https://www.shankennewsdaily.com/index.php/2013/11/13/7221/wine-spectator-west-coast-wineries-are-up-for-sale-quietly/
“. . . 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.
“. . . ‘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 and Napa veteran Mayacamas Vineyards]. . . . 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.”
Plenty of 40-75 $ wines in Napa probably better than the 100’s
Jh:
Some of those $100 bottles languishing in wineries’ warehouses are now discreetly selling through “liquidators” for $40 to $75.
See article below.
Bob
Excerpt from the Los Angeles Times “Food” Section
(July 8, 2009, Page E1ff):
“Deals Go Fast on Wine Sites”
URL: http://www.latimes.com/features/food/la-fo-cheapwine8-2009jul08,0,6005303.story
By Patrick Comiskey
Special to The Times
“New Jersey wine retailer Joe Arking was in the Napa Valley last month, drumming up business. Arking is hardly a typical retailer in the bricks-and-mortar sense or, for that matter, in the normal Web-commerce sense. His website, winestilsoldout.com, sells just one wine at a time and at an incredibly steep discount until it’s gone without a trace — usually within eight hours. While Arking doesn’t like to use the word ‘liquidation,’ the wine’s swift and mostly silent evacuation is the website’s greatest virtue.
“In ordinary times a Napa winery wouldn’t bother even meeting with a guy like Arking. But with wine sales at a virtual standstill, wineries, importers and the wholesalers who make wine available to retailers and restaurants have had to resort to some unusual, some would say drastic, measures to get wine out the door.
“Born of opportunity, winestilsoldout.com and similar sites such as winewoot.com and thewineliquidator.com have become one of the industry’s most effective underground sensations. While each of these websites takes a slightly different approach, they all work to the same end: acting as a vehicle for moving wine that might otherwise be gathering dust in a warehouse — often without undercutting the wine’s hard-earned reputation.
“The method is mildly sneaky but surprisingly efficient, and wineries, importers and wholesalers alike are warming up to the possibilities offered by this back-channel pipeline. In fact, of the 27 sales meetings Arking took in the Napa Valley, half signed on. Once they’ve had a few more slow weeks to think about it, says Arking, he believes that number will be closer to 90%.
“As a concept, winestilsoldout.com is as straightforward as its name. The website sends an e-mail blast to subscribers (now numbering in the tens of thousands) for one wine at a time, at a carefully calibrated discount as much as 70% below its original retail price (and 30% lower than other discount offers).
“The wine is sold on the website until it’s gone, whereupon another wine replaces it. Usually two and sometimes three wines are offered daily. Depending on the bottle price, when you buy multiple bottles, shipping is free — a substantial additional savings.
. . .
“For wineries, perhaps the site’s most attractive feature is the brevity of the sale. Most are completed in a matter of hours — and for a winery whose claims of luxury are backed up by a high price tag, avoiding any erosion of their perceived value is a key selling point. ‘We offer the opportunity to sell wine directly to a wine-loving consumer, without ruining any of the other possibilities on the retail or restaurant side,’ says Arking.”
This has long been the case. The official “retail” price often has little relationship to what the consumer actually pays.