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A Soft Yet Solid Premiere Napa Sale

Photo by: Greg Gorman

Posted: Feb 23, 2009 2:52pm ET

It looked all too familiar: Premiere Napa Valley 2009, on a sunny Saturday last.

Knee-high mustard rising from the vineyards, brilliant splashes of yellow and green. A rainbow-colored hot-air balloon drifting lazily above the Veteran’s Home in Yountville. A sign here and there along Hwy 29: "Winery for sale; vineyard too." Piles of ripped out vineyards waiting for a dry burn day. Some vines still waiting for the pruning shears. Even the sneaky California Highway Patrol unit, tucked neatly off the highway, ticket book no doubt in tow, ready to write if one were exceeding the limit en route to St. Helena for the day’s tasting and auction.

Inside the Culinary Institute of America building, the barrel-tasting room—where perspective bidders, media types, bloggers, retailers and distributors can sample the auction lots—filled to capacity. It was by all accounts a tremendous turnout.

Most of the 200 wines being sold to raise money for the host Napa Valley Vintners were from the 2007 vintage, and there were many exciting wines. But looking over my notes and comparing them to the 2006 vintage poured a year ago, I can’t say I was more impressed with the 2007s than the 2006s. I tasted about 60 samples. These are one-of-a-kind offerings, often unique blends that are different from a winery’s normal lineup, and not wines consumers can buy.

The auction sale was solid, all things considered, with a total of $1.5 million, though well off last year’s record $2.2 million. Most of the lots were a mix of five cases to a full barrel, or about 25 cases.

The top bid went to Scarecrow Toto’s Opium Dream 2007 ($80,000, or $16,000 a case). Ovid Apotheca 2007 garnered $42,000 ($8,400 a case). Other notable sales included Shafer Vineyards Sunspot Vineyard 2007 ($24,000/$4,800 a case)  and Lewis Cellars 2007 ($20,000/$4,000). I liked all of these wines.

For comparative purposes, the 2006 Shafer Sunspot sold for $62,000 ($12,500 a case) a year ago.

Talk among vintners about the economy was upbeat. Everyone’s waiting for the bottom. Everyone’s tired of snowballing bad news. Everyone likes 2007.

No one I spoke with said they were lowering prices. But many acknowledged terribly slow sales. Wineries with lower-priced wines said that that niche helped them. Others said that wineries without any brand recognition or loyal customer base were headed into tough times.

Jason Zeledon
Berkeley, CA —  February 23, 2009 6:41pm ET
I find wineries' unwillingness to lower prices in this recession absurd. I went wine tasting in a nearly empty Anderson Valley yesterday and, while I had many good wines, I thought the general costs of $20-$25 for white wines and $25-$50 for red wines were very overpriced. At an even lower price point one can get truly spectacular wines from regions such as Australia, Germany, South America and Spain.

As I continued to taste different wines, I marveled at how just the previous night I enjoyed the 2007 St.-Urbans-Hof Riesling QbA Mosel-Saar-Ruwer . How much did I pay for this bottle, #56 on the 2008 Top 100 list? I spent $14.29 at the wine.com store in Berkeley. With innumerable other good values out there, why would anyone pay more for wine that is merely decent (as most of the wines I had yesterday were), but not in the same caliber as less expensive foreign competitors?

In any other industry the free market would have corrected itself, but many domestic wineries seem too obstinate to yield to common sense and reduce the price of their wines. While I¿ll continue to indulge my favorite hobby of wine tasting, I¿ll fill my cellar with better values. How long, I wonder, until many of these wineries go out of business?
Linda Schwartz
Fort Ross, CA —  February 24, 2009 2:17am ET
What is overpriced depends on the cost of producing a particular bottle of wine - and not the view of the Taster. Value is a very personal concept. For one person it is a endless stream of average wines. For another it is a single bottle of a wine that seduces. If the writer wants to continue wine tasting in California, he should consider supporting Californian wines. It is quite expensive to go to Mendoza on a Sunday afternoon...
Jason Zeledon
Berkeley, CA —  February 24, 2009 2:01pm ET
Linda: it seems you need a crash-course in basic economics. If people are not buying your product, then it is time to lower your prices. At five of the nine wineries I visited in Anderson Valley on Sunday, my buddy and I were the only ones in the tasting room. Also, I wine taste in Napa 2-3 weeks (usually on Saturdays) and I have been amazed at how many fewer fellow visitors there have been over the past few months. It being the tourist ¿off-season¿ doesn¿t account for the extent of this and one Napa winery that I am a member of has mentioned that visitor volume has definitely decreased. Any business needs customers to survive and, as wine is a luxury item, should not wineries lower prices in order to stimulate business?

As to your contention that ¿value is a personal concept,¿ you are just plain wrong. A bottle that Wine Spectator scores 90 points and costs $14 (such as that Top 100 2007 Riesling I mentioned in my previous post) is an unquestionably better value than the $21 2006 Pinot Grigio from Toulouse that scored 86 points. I had the 2007 vintage at the winery on Sunday and it the cost was actually raised to $24. In a recession, how is this a smart business move? The truth is that most mediocre California wine is in the $10-$25 price point and spending the same amount gets one a superior bottle from another region. You say I should ¿support¿ domestic wineries by buying their products, but what sense does it make to willingly purchase and drink lesser quality wines? For the record, though, I am a wine club member at six very good Napa wineries; I¿m willing to pay for wine that is truly good.

Jason Zeledon
Berkeley, CA —  February 24, 2009 2:02pm ET
What astounds me is the unwillingness of wineries to adjust to the market situation. I¿m a small business owner in Berkeley that sells retro Nintendo systems and games (www.icarusgames.net) and when certain games haven¿t been selling, I lower the price. And then, presto, people come and buy them! There¿s nothing magical about it- it is common sense. How much does it cost most wineries to produce a bottle of wine? A few dollars? Do you really think that they cannot afford to lower prices?

The great demand for California wine that began in the 1980s and continued until recently fueled the higher prices- and rightly so. That is what consumers were willing to pay. But now, when the fine wine market has shrunk, wineries have not adjusted. Judging from my recent visits to Anderson Valley, Napa and Sonoma, people are not visiting and buying nearly as much as they used to. I would think that most wineries will eventually adapt and reduce their prices; after all, how can one stay in business without a positive cash flow?
Linda Schwartz
Fort Ross, CA —  February 24, 2009 5:20pm ET
There are less visitors in Tasting Rooms now than before as many people have lost their jobs, are struggling to pay their mortgage and feed their families. Some restaurants have lines of customers waiting outside their door and, when the customers are called inside, they generally will drink wine - very often our wine - that has always been viewed as modestly priced for its quality.

If the restaurant charged less than it cost to serve their customers, they would indeed need a crash course in basic economics. If a winery did the same, they should enroll in the same business program.

If Jason can find well priced wine that pleases him from around the world, he has many fine options. He can also find well priced baby formula in some of these global markets. Price is very often related to sanitary conditions and workers' wages.

I have had the privilege of drinking local wine in France, Italy, Spain, Germany, Chile, Argentina, South Africa, Austalia, New Zealand and India and each time I am struck that most of these wines do not reach the same level as those "grown" in CA. The concept of a Vintage Year here simply marks the date - unlike that of so many other countries - where they struggle each year to ripen their fruit in the cold, hail, rain, humidity and a soup of pathogens.

In CA we have a Wine Industry that well deserves to be a source of pride and economic opportunity. Please do not talk with relish that soon many wineries will be going bankrupt - and that they will deserve this fate.
Jason Zeledon
Berkeley, CA —  February 24, 2009 7:13pm ET
Linda: are you suggesting that wineries in Germany and Spain (like the U.S., very economically advanced countries) have suspect ¿sanitary conditions¿ and paltry ¿workers' wages?¿ If so, perhaps you should enlighten the rest of us in the wine drinking world and write an expos¿ Somehow the producers of that aforementioned German Riesling were able to turn a profit from selling mass volumes of their Top 100 wine to a distributor which then sold it to a wine shop which then sold it to me for $14. What did the winery originally sell it to the distributor for, $4? Yet they made money. If California wineries are having a difficult time making a profit, then perhaps they should contact their European brethren. They seem to have it figured out. I also noticed that you neglected to answer my question about the cost of producing a bottle of wine. Are you seriously suggesting that most wineries would go out of business if they did not charge $25 for a mediocre bottle and $50+ for reserve wines? If so, I suggest that their owners enroll in business school to study economic efficiency.

How interesting it is that you acknowledge the recession¿s unfortunate impact on many wine drinkers- ¿people have lost their jobs, are struggling to pay their mortgage and feed their families¿- and yet you fail to see the wineries¿ best response: enticing people to continue drinking their wine by lowering prices. Any other industry would respond in this way; why should wineries act as if they are exempt from the laws of supply and demand?

Jason Zeledon
Berkeley, CA —  February 24, 2009 7:14pm ET
Also, wine tasting and buying wine are two very different activities. I regularly wine taste in various regions to expose myself to new wines and broaden my knowledge base. I buy wines to enjoy an extended drinking experience with family and friends. I would love to purchase more California wines, but as a consumer I would like to see a more competitive local marketplace. The United States has long been at the forefront of innovation and setting the market, but have not domestic wineries fallen behind international competition in this situation?

Alas, Linda, you are reading me erroneously. I take enormous pride in the unprecedented success of California¿s wine industry. The Old World had thousands of years to produce great wine; Robert Mondavi and friends did so in twenty-five. It is not my wish at all to see wineries go out of business; it is just stupefying to see them ignore what is so blatantly obvious.

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