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Tuesday, July 14, 2009

The Noble Writ: A Trying Time for Wine

Posted By on Tue, Jul 14, 2009 at 3:00 PM

Like many sectors of the economy, the wine industry isn't doing well. You might suppose that alcohol sales would be more resilient than most things, and to some extent that's true -- sales of inexpensive wines remain relatively robust. However, high-end wines are being hit hard.

My first clue that something was amiss? The numerous e-mails and mailings that I began receiving from wineries from which I hadn't purchased wine directly in many years, if ever.

Many small domestic producers have mailing lists through which they sell their wine. If you're not on the list, you can't buy the producer's product (unless you stumble upon the wine at a restaurant or at auction). From the late 1990s to the early part of this decade, plenty of wineries had waiting lists just to get on the mailing lists, and a select few had closed their waiting lists as there was no hope that anyone would ever get moved to the mailing list.

Then, all of a sudden, wineries that had dropped me from their lists were offering to sell me wine -- and lots of it.

click to enlarge A wine backlog? - ILANA SHKOLNIK, WIKIMEDIA COMMONS
  • Ilana Shkolnik, Wikimedia Commons
  • A wine backlog?
Next, these highly-allocated, limited-release wines started showing up on store shelves. And not just at exclusive shops in New York, Los Angeles and San Francisco, but here in St. Louis, too. In the past, if any of these wines showed up, the handful of bottles were often set aside in the back for a shop's best customers, but here they were on the shelves for any schlub with the cash (or available credit limit) to purchase, sometimes in surprisingly large quantities.

The prices have been essentially the same as if you'd bought them from the winery, but due to the nature of retail wine sales in the United States, that meant that the producers were taking a big hit. In Missouri, there are three tiers to the system: producers sell to wholesalers, wholesalers sell to retailers, and retailers sell to the public. Not surprisingly, each tier adds its own mark-up to the price. So, while a winery selling direct to the public through a mailing list gets 100% of the sale price, the same winery selling through the three-tier system might see only 50% of the shelf price. That's quite a hit to revenues.

Now word has come out that grape sales are slow. And these aren't just undistinguished Central Valley grapes, but primo stuff from well-regarded vineyards. Casey Hartlip, the viticulturist of the prestigious Eaglepoint Ranch in Mendocino County posted in an Internet discussion forum that even he had grapes available, despite high-end producers like Copain, Edmunds-St. John and Sean Thackrey making terrific wines from his grapes.

The short-term impact of this may only be an increase in wine available in bulk. That's good for value-oriented operations like Cameron Hughes who are in the market for high quality bargains and can buy in quantity. However, if this trend goes on for more than one season, and highly-leveraged producers start to fail and are unable to pay growers for the past harvest, things may get ugly quickly.

In the meantime, keep your eyes peeled at your favorite local haunts for rarities. This is a good opportunity to sample a bottle of something you wouldn't ordinarily see without dealing with mailing lists and the hassle and expense of shipping.

While there aren't too many bargains at the high end yet, prices seem destined to fall as distributors look to unload stock to make room for the next vintage. Cavaet emptor, though, as a new crop of Web sites have popped up offering deep discounts -- sometimes you do get what you pay for.

An additional point about purchasing from Web sites: Heat is not good for wine. If you find an online bargain, it is worth either having the shop or Heb site hold the wine and ship it once the weather cools, or stumping up for overnight or two-day shipping -- though this will significantly reduce your savings...and still may not prevent heat damage.

Dave Nelson is the author of the blog Beer, Wine and Whisky. He writes about wine for Gut Check every Tuesday.

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