Posted by Adam Lee
You can’t visit a wine-related website these days without finding an article about how the current economic climate is affecting fine wine. Both James Laube and James Suckling have written insightful blogs relating their thoughts and experiences with wine in this troubled economy. The problem, of course, is that none of us really know what is going to happen. How long and how deep will this recession be? Is it “V-shaped” or “L-shaped?” Wine has never been as ingrained in American culture as it is now, but is that enough to help it survive these economic challenges?
As a winery owner and winemaker, these questions hit especially close to home. Every conversation I have with friends in the wine business inevitably turns to concerns over sales. Some wineries are selling bulk wine, believing that they need to make less to survive. Some are planning on spending more time in the market selling wine, while others believe that wine sales are going to be poor no matter what, so they would be better served to visit fewer markets and save money. Some wineries are overtly lowering prices, others are doing so quietly, and wineries that have tried to keep prices reasonable over the years are concerned that they haven’t built up much of a nest egg and are going to be cash-strapped now. More than anything, wineries are nervous. Uncertainty is the devil.
Of course, for retail customers of wine, this economic distress presents a huge opportunity. If an individual has any disposable income, he or she will find that wine prices are going down, supplies are going up, positions are opening up on mailing lists, and previously unavailable cult wines are easier to find at substantially lower prices. Overall, it is hard to see a downside for consumers … at least in the short term.
In the long term, however, I am very concerned that an economic depression could have ramifications for wine quality. I could point to a number of reasons why that might be the case; for example, the lack of capital reduces the opportunity to buy new equipment, or hard times lead to the demise of smaller wineries, which are often the ones that take the most risks. But great wine has been made with older equipment (and less technology in winemaking might not be a bad thing), and there is constantly a back-and-forth flow between the expansion of smaller brands and consolidation in the industry, with the balance tipping one way and then the other.
No, the real potential problem exists in the possibility of a change in mind-set among smaller producers. The economic collapse places such a high priority on wine sales that there is a real danger that smaller producers will increasingly view wine primarily as a commodity that has to be sold.
“What’s new about that?” you might ask. Given the insanely huge price increases taken by many cult producers, weren’t they already viewing wine solely as a commodity? Probably. But there is a difference, I think. The problem with cult wines at $200, $300, $400 a bottle is that the producer has forgotten that wine is, at its most simple, a beverage. And as a beverage, it is meant to be consumed, enjoyed and shared, not shown off, traded and flipped.
The potential problem now is that small producers, even those who have worked to keep prices reasonable, will forget that wine is—at its very best—something magical. Wine is the marriage between place and person. It is the greatness of a place focused by the greatness of a person. Wine has the ability to take each of us back to a time in our lives or to a person that once was a part of our existence, and to place something physical on a memory. Wine has the ability to make each meeting more special, to brighten up the worst day, to help you fall in love. We are all enamored of this thing called wine because we recognize just how special it can be even if we can’t quantify it.
But when times get tough, it is sometimes far easier for a winery to look at the wine that is stacking up as a burden. And to look at the grapes that will, once again, be hanging on the vines in a few months as only adding to this burden. Avoiding this mindset, while still being cognizant of good business decisions and practices, is a tightrope that all of us producers need to walk.
There may be many things we can’t afford over the next few years, but most especially, we can’t forget that there’s the potential for magic in every grape, barrel and bottle.
Troy Peterson — Burbank, CA — December 1, 2008 7:08pm ET
Tom Miller — Vestavia Hills, AL — December 2, 2008 1:03pm ET
Apj Powers — Dallas, TX — December 2, 2008 1:18pm ET
Andrew J Walter — Sacramento,CA — December 2, 2008 1:20pm ET
Joshua Masur — Redwood City, CA — December 2, 2008 5:02pm ET
Loren Lingenfelter — Danville, CA — December 3, 2008 1:50pm ET
Carl Schulze — Princeton, NJ — December 4, 2008 8:44am ET
Timothy Perr — December 5, 2008 2:16pm ET
Mathew Mcelroy — December 6, 2008 10:58pm ET
Adam Lee — Santa Rosa, CA — December 7, 2008 9:13am ET
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