Synchronicity: Coincidence of events that seem to be meaningfully related.

My mom used to tell me there are no coincidences, just things whose reasons we don’t understand. But sometimes, the reasons are all too clear.

First there’s this headline from yesterday:

Wine & Spirits Wholesalers spend $280K on lobbying

from Yahoo News. Taken into context, that number is “up from the $240,000 the group spent in the year-ago period and the $260,000 it spent in the third quarter of 2009.” So WSWA is upping the amount they spend on lobbying, even in this most difficult period.

Then there’s one, also from yesterday, courtesy of Beverage World:

US Wine Exports Fell 15 Percent in 2009

That’s not good for wineries struggling to get by, and who depended on overseas to stanch the bleeding domestically.

Also yesterday the L.A. Times reported on the collapse of three wineries I’ve known well:

After the fall: The stories of three niche wine makers

This is extraordinarily shocking stuff. Garretson Wines was a pioneer in Paso Robles, Sauvignon Republic was co-founded by former Fetzer star (and Wine Institute head) Paul Dolan, and what can you say about Havens Winery that hasn’t been said? I consistently gave their wines high scores over the years.

Okay, so we know three things (at least):

1. Wholesalers have had the bejeesus scared out of them. When an industry jacks up its lobbying in hard times, it’s because it wants to avoid even harder times.

2. Such wineries as there still are, are finding it harder to sell, not only in America, but overseas, which had been a great hope for many.

3. Wineries are starting to fall like dominoes.

My friend Scott Carpenter, who runs the website The Everyday Wine Guy and contributes to CNN Radio and CBS stations, reports that, according to his sources, “The general guess is 200 [California] wineries will go down this year, mostly smaller guys…The wineries-for-sale list is allegedly way up for Napa and Sonoma.  Now it’s 60 and 51, respectively.” I myself recently wrote that, if things really do head south, we’ll find out this summer, certainly by the end of the third quarter.

What can wineries do to survive this avalanche or tsunami of bad economic times? Part of the answer is marketing. But you’d be amazed at how uninformed some wineries are when it comes to the simplest aspects of how to sell wine. A professional marketing consultant commented on this blog yesterday that “…it is troubling to me that so many [wineries] have no communications plan or comprehensive marketing strategy, yet they want to jump on Twitter or Facebook because it’s the latest thing…It is really shocking to me the number of wineries that make no effort to collect email addresses from tasting room visitors and, further, even those that do seldom use them! I was recently visiting a high end ($50-100/bottle) Sonoma County winery; purchased a couple of bottles, but no one even asked for an email address! Wouldn’t they like to sell me more wine?”

That’s the tip of the iceberg. If I was running a tasting room and somebody walked in and bought a couple bottles of $50-plus wine, I’d certainly ask them, at the very least, to give me their email! Then I’d send them periodic email newsletters, or find out if they want to sign up for my blog, or whatever. But to let them just walk out the door? Insane.

Think it’s just here in California? Nope. From yesterday’s Oregon Business online:

Wine glut possible

“Oregon’s wine industry is raising concerns about oversupply, as the state continues to expand grape production while wine sales drop,” the article says.

Australia, anyone?

I’ll have more to say about World of Pinot Noir this week, but now it’s off on this cool, partly cloudy morning to the south, and a few days in Santa Barbara County.

(I will also have more to say soon about the movie I’m in, Blood Into Wine, and the way they portrayed — or didn’t portray — my blind tasting. Stay tuned.)

I was reading the L.A. Times this morning over breakfast (oatmeal for health, bacon in hommage to Homer Simpson, and also because there’s been a lot of talk about bacon at this Pinot Noir event) when I came across yet another article on that big fight in New York State over whether to permit grocery stores to sell wine.

Like you, I’ve been kinda sorta keeping up with that story. I understood the issues. I just wasn’t sure which side I agreed with. One the one hand are small, mom and pop liquor stores, who fear that if grocery stores are allowed to sell wine, it will hurt them and maybe drive them out of business. On the other hand are groceries, who argue, Why shouldn’t we be allowed to sell wine? It would be a great benefit to our customers, particularly those in rural areas, who won’t have to drive 5, 10 or more miles just to buy a bottle of wine.

Both sides have a point, as is often the case with tricky social, cultural and legal issues, which is why they’re hard to decide. For example, Napa’s winery ordinance is tricky because it pits wineries, who want an extra income stream, against some of their neighbors, who don’t want more traffic, etc. But in a democracy, somebody has to win. In the New York case, I’m siding with the grocers. They should be allowed to sell wine, for several reasons.

For one thing, it’s difficult for a state — in this case, New York — to present a coherent reason for intruding into private, commercial enterprise. Granted, alcohol is a regulated product, but it’s not clear that a State, or county or city, has the right to decide who should and shouldn’t be allowed to sell wine. Yes, States have the power to grant liquor licenses, but all things being equal, they shouldn’t be in the position of picking winners and losers. (The one exception I’ll make is that cities should be allowed to limit the number of liquor stores in ghetto neighborhoods.)

For another thing, this notion of letting only liquor stores sell wine is so antiquated, it’s pathetic. A holdover not only of Prohibition but of 19th century attitudes toward Demon Rum, it fails to recognize that wine is now a mainstream, respectable food. Most people who drink wine do so with meals, and in the company of friends and family. Wine is not some narcotic drug whose dissemination must be limited only to certain restricted areas, like prescription medicines sold in a pharmacy. (And even supermarkets, which are just giant grocery stores, contain pharmacies.)

Finally, we have only to look at our state of California to see that letting grocery stores sell wine seems to be doing little harm, if any, to wine stores. At small grocery stores, like 7-Eleven, all they stock are the big distributor brands that most mom and pop wine stores wouldn’t think of selling anyway. At larger supermarkets like Safeway, the selection is bigger, and there may be some overlap between what they sell and what a little wine shop sells, but if there is, it isn’t much. No, what small wine stores sell tends to be either rarer, more expensive wines or inexpensive imports that most grocery stores would never feature. I think of a wine shop like Paul Marcus, in my neighborhood, where you can get wonderful Portuguese, Spanish, French and Italian wines for under $20. You’d never see them in a grocery store.

So I don’t think the New York liquor stores, who are organized under a group called “Last Store on Main Street” (an apocalyptic name meant to frighten) really have a case. I suspect New York State will eventually agree to let grocery stores sell wine, if for no other reason than that it will generate a quarter-billion bucks in new license revenues. If there are some liquor stores who feel threatened by open competition, let them upgrade to quality stuff. Consumers will shop wherever they think they can (a) get the best wine (b) at the best price (c) with the best customer service (d) and with the most convenience. They really don’t care if it’s a grocery store or a liquor store, and neither should New York’s (dysfunctional) government.

Old farts? Or rock stars?

At World of Pinot Noir, I introduced a friend of mine, a good-looking ultramarathoner without an ounce of bodyfat on his lean frame, to Richard Sanford, who is the Dean of Southern California winemakers. Hell, Richard is one of the Deans of all California winemakers. When Richard and I get together the conversation occasionally turns to Olden Times, and so it did there under the tent by the sea, where Richard was pouring Alma Rosa for the WOPN crowd. He was telling my friend about the old Sanford label and the Sanford & Benedict Vineyard when my friend — whom I like a great deal and admire for his creativity, not to mention the fact that he can run for 100 miles — said something about “you old farts.”

He meant it, I’m entirely sure, affectionately and without malice. We all say things that pop into our heads without thinking. I do every day, and I know it was that way with my friend. Still, it hurt, a little. Maybe it tapped into so much of the crap about dinosaur print writers who don’t get it versus cool young Twitterers who are the wave of the future, yadda yadda. At some point in one’s life and career, you have to start wondering if you’re still relevant — and maybe you find yourself trying a bit harder to prove you are.

So here I am now, in a coffee shop in “downtown” Santa Ynez, nursing a non-fat latte, when I pick up a copy of last Nov. 26’s Rolling Stone. Therein is an article on “the historic concerts for the 25th anniversary of the Rock and Roll Hall of Fame.” The musicians included such old farts as Mick Jagger, Bruce Springstein, Aretha Franklin, Bono, Patti Smith, Crosby, Stills & Nash, Paul Simon, Art Garfunkle, Stevie Wonder, Bonnie Raitt, Lou Reed, Ray Davies, Jackson Browne, Jerry Lee Lewis, Sting — and on and on.

You know, I’ve read and heard younger rockers, like Fergie, Lady Gaga, Jay-Z, Rihanna, Trey Anastasio, Will.I.Am, Shakira, Pink, Sheryl Crow, Foo Fighters, Taylor Swift, even Adam Lambert credit their musical forebears with blazing paths, breaking down barriers, opening entirely new genres and whole new universes of possibilities that enable pop music to forever stay vital, and to be one of America’s enduring contributions to world culture. And if you ask Mick Jagger, Stevie Wonder and their generation, they always and happily pay their propers to the likes of Muddy Waters, B.B. King, Chuck Berry, Roy Orbison, Hank Williams, Elvis, Cole Porter, Louis Armstrong, Billie Holiday, Bing Crosby, Sinatra, Fats Domino — that list also goes on and on.

For the life of me I don’t know wine writers seem more hung up with generational divisions than rock stars. Professor Saintsbury inspired Harry Waugh and Michael Broadbent, who inspired Hugh Johnson, who inspired Oz Clark and Jancis Robinson, who has inspired God knows how many women to believe they can be great wine writers. The writers of the 60s and 70s even inspired Robert Parker, even if it was in the negative sense that he decided to be unlike them, as Elvis decided to be unlike Pat Boone and the Sex Pistols decided to be unlike Journey. Parker, Johnson, Waugh, Bob Thompson, Charlie Olken and, yes, Jim Laube inspired me. I have some reason to think, or at least to hope, that I have inspired younger writers, and I know that Richard Sanford has inspired a generation of younger winemakers. Even now, there are brilliant young vintners working up and down California who keep one eye on the venerable past, with all its lessons and wisdom, as they stride into futures filled with hope and promise.

Old farts, or rock stars? Richard Sanford still has a few tricks up his sleeve. So do I.

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!

Of America’s 50 states, 18 are control or monopoly (as of 2005), meaning that their citizens can buy alcoholic beverages, including wine, only in state-owned stores. This is a result of the Repeal of Prohibition, when Congress decided on a states-rights approach, as opposed to a national policy, for governing the sale of alcohol.

The system of state monopoly stores has never worked well, depriving consumers of choice and, in many instances, resulting in drab, poorly run venues. It’s odd, too, that so many monopoly states are solid Republican, given that party’s traditional defense of free markets and suspicion of Big Government. For many complicated reasons (not the least of which is that the public hasn’t clamored for an end to monopoly control), changing the system was never high on anyone’s agenda.

That has now changed, for a simple reason: The economy. Nearly every state in the union is bankrupt or close to it. Governors and state legislatures are desperately seeking new sources of revenue. Loathe to raise income taxes, they’re looking at “creative financing,” such as fee and license hikes. Some officials in control states also are thinking what once was the unthinkable: privatizing alcohol sales.

In Washington State, lawmakers have introduced a bill “that would have Washington get completely out of the liquor business, allowing an unlimited number of people to buy licenses to sell liquor, as is done in California.” The idea is that, by selling the state’s warehousing facilities, and by allowing the market to determine prices, Washington could nearly double the $320 million alcoholic beverages brings in annually.

Down in Mississippi, which is suffering from its worst budget crisis since the Great Depression, Republican Gov. Haley Barbour has called for legislation “to privatize the wine-sale functions” of the state’s Alcohol Control Division. In Vermont, a state Senator has introduced a bill “to disband the department of liquor control.” In Virginia, “Bob McDonnell, Virginia’s new Republican governor, made privatization of his state’s liquor stores a key plank of his campaign last year,” according to the Wall Street Journal, which also reports that McDonnell’s idea “is opposed by the Virginia Assembly of Independent Baptists.” And in neighboring North Carolina, the state’s Republican candidate for Governor, Pat McCrory, similarly “said it’s time for North Carolina to get out of the liquor business.”

Sounds like a road to Damascus moment for Repubs. One of the reasons opponents are against this entirely rational, self-interested plan to privatize alcohol sales is that minors would supposedly have easier access to liquor. If you think about it, that’s a bogus argument. It presupposes that a state store employee is less likely to sell liquor to a minor, and that a private store employee is more likely to. It seems to me the chances are about equal in both cases, and incapable of resolving further.

It’s time for America to do away with state-run liquor stores. I mean, where are we, the U.S. or Syria? It would harm no one, and will help financially embattled states raise a little extra cash. I am calling on all politicians in control states to put their money where their mouths are. Are you in favor of market-based capitalism, or of the heavy, controlling hand of government?

As a reporter, I’m constantly barraged by press releases and other forms of information. Sometimes it’s contradictory. And then you always have to wonder who the source is and if it’s trustworthy. The big question of the past year in the wine industry has been, of course, who’s financially up, who’s down and where it’s going. As I’ve long said, none of us knows with certainty what’s going on at any individual winery unless we’re the CFO and can see the books! Which we obviously can’t. Thus, what we know is largely anecdotal. Here’s the conventional wisdom:

- Anything over a certain price ($12-$15, in most scenarios) is dead. This has just been confirmed by Jon Fredrikson, at Gomberg Fredrikson, who reports that “California wine shipments dropped in 2009 for the first time in 16 years,” especially for “wines above $15 a bottle.” I have used Gomberg Fredrikson as a trusted source for many years.

- Nothing appears to be bulletproof, including (or maybe especially) the cults. Everybody’s reducing prices, but you can only go so low.

- People haven’t stopped drinking. Far from it. They’re just drinking cheaper.

Everywhere I turn, I hear “We’re scaling back…the bottom’s falling out,” even at wineries owned by very rich people. At Wine Enthusiast’s Wine Star Awards dinner last Monday, I talked to lots of senior execs (in some cases very senior) at wine companies and distributor companies, and everybody said the same thing: dead or near dead in the super-ultrapremium category. Which leads to the biggest question of all: If this is true, how come we’re not seeing a wave of bankruptcies or sales? Which we haven’t. Winery failures over the last 12-15 months in California don’t seem any more frequent than usual. I asked people this question, and the typical answer was, “They’re riding it out.”

Yes. That’s what companies usually do during downturns. They lay off staff, cut costs, and hope that down turns up after a while. But what we have in America is unprecedented. While there’s lots of hoping and praying things turn up, there’s no guarantee they will. What if things don’t? After a while, even the most stalwart owner will have to give up. Maybe some of the billionaires out there can afford to ride the tiger for years. But most families who own wineries are not super-wealthy. What do they do if, in another six months or a year, things don’t turn around?

I would think that by this summer we’ll have much more clarity about the ground situation in California. Since there doesn’t seem to be any improvement in the country’s economic situation, with experts predicting continued 10% unemployment (much higher if you count under-employment) and a federal deficit that the Congress seems unable to fix, it’s hard for me to imagine the average wine consumer thinking, “Okay, I’m feeling better, I’ll start spending $40 again for a nice bottle.”

The wine industry understands it’s coming through the worst market in its life. They’re hoping that 2010 will be better. But they know that events ultimately are far beyond their control.

Speaking of profits, I’m moderating a panel at the Wine Writer’s Symposium called “Wine Writers, Ethics & Income Streams.” They told me the subtext is “How to make money through social media.” As someone who’s earned (at last count) $1,495,989.59 through this blog (O.K., I’m exaggerating, the actual figure is $0), I thought that’s pretty ironic. I do have some thoughts on monetizing this stuff, but I’m not going to steal my thunder. It’s nice to have developed a secondary reputation as an “expert” in blogging. Just shows how bizarre life is.