When I moved to Sonoma County in 1995, it seemed every bare patch of ground — and acres formerly planted with apples, hops and other crops — was being planted with new vineyards; until 2008, that is. The wine business recovered from the recession, but is now facing another downturn.
In its annual report on the wine business, Silicon Valley Bank stated that the industry is “in the midst of a consumer reset.”
Gloria Ferrer Caves and Vineyards has cancelled most of its contracts with Sonoma County growers. The sparkling-wine producer’s marketing strategy now is to focus on grapes from its own three-hundred-plus acres of vineyards. Small growers who had contracted with Gloria Ferrer for decades found no buyers for their 2019 harvest. Some vineyards went unpicked. Two consecutive years of bumper yields combined with overall declining wine sales have resulted in an oversupply of premium wine grapes.
Bad news for growers is good news for drinkers of inexpensive wines. As happened during the economic recession of 2008, when sales of expensive wines plummeted, much quality wine will find its way not inside bottles with prestige labels, but rather to the bulk market, to be purchased by volume producers and blended into low-priced brands.
The Baby-Boomer generation, largely responsible for the growth of wine consumption over the past forty years, is now in its dotage and drinking less. And the Boomer population is also <> shrinking. The next-generation Millennials are spending their money on distilled liquor and craft beer; wine not so much. SVB concludes, “There are solutions, but hoping millennials will adopt boomer values as they age — and, as a result, move away from spirits and gravitate to wine — just isn’t a sensible business strategy.”
The bright sector for winemakers is the high-end. Unlike 2008, and as in our general economy, the wealthy are doing quite well. Purchasers of expensive vintages are not letting up. (As Lyle Lovett sang, “You make all that money / Make damn sure it shows.”) SVB predicts producers of high-priced wines will be able to maintain and even increase their prices.
Unlike the trend in Napa and Sonoma, where visits to winery tasting rooms have declined, Oregon wineries are doing well. “Oregon continues as the darling of the wine industry, still selling everything it produces,” the report says.
