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When It Comes to Values, California Is Lagging

Photo by: Greg Gorman

Posted: Sep 20, 2007 12:19pm ET

September is California Wine Appreciation month, which is the Golden State’s annual self-promotion, courtesy of the wine industry. And since most of the wine consumed in this country comes from California, it’s worth noting a couple of things.

One is that, for all the great wines being made in California, the state doesn’t dominate the values segment of the market the way it could and the way it should.

In the Oct. 31 issue of Wine Spectator, our cover story is on values, and we offer 250 wines that we think are pretty good and sell for $20 or less.

The list of wines from California has some excellent choices. But as a whole, California’s wines aren’t even close to dominating. And I think they should.

You can say critics of California wine are too tough on the wines, which may or may not be true. But I think it has more to do with pricing--that is, too many of California’s wines are overpriced. You can extend that criticism across the entire spectrum of wines and you won’t get much argument from most consumers.

What’s also worth noting is that due to the current exchange rate with the euro, California’s wines enjoy a market advantage because the wines from Europe are much more expensive. This month the euro is at about $1.40, which I’m sure California vintners must appreciate to some extent. Sure, the exchange rate isn’t the only barometer of economic health, but once (or if) the currencies reposition themselves, imported wines will offer greater options and opportunities.

But the real value of value wines is that they bring more people to the party, and if California made better wines at lower prices, it would make a lot of people a lot happier and put the Golden State in the position it should be in: a world leader in values. At least here in the U.S. of A.

John B Vlahos
Cupertino Ca. —  September 20, 2007 1:35pm ET
James, do you say that critics are tougher on California wines because of high prices?
Steve Kirchner
Huntington —  September 20, 2007 2:30pm ET
Amen. Especially when a south american producer can make more than a million cases of an 85-point cabernet and sell it for less than US$ 10/bottle. And bad as California is in the under $20 category, I think we do even worse in the $20 to $50 range. Alot of people are living off a reputation that was made in the 1970s, and I don't think that will last forever.
James Laube
Napa, CA —  September 20, 2007 3:05pm ET
John, prices are not a factor in our/my ratings. But it's hard to tell how others handle pricing. If a publication tastes inexpensive wines, say $10 or less, do the critics judging the wines know they're tasting inexpensive wines? And go in with a preconceived notion?
Adam Lee
Santa Rosa, CA —  September 20, 2007 4:36pm ET
Jim,Why do you think this is the case? Why aren't we making better value wines here in California (or is it the entire US?). -- Also, the fall of the dollar may be good news for us on the store shelves but we are still paying for some barrels and it hurts when I have to wire the money! -- Adam Lee, Siduri Wines & Novy Family Winery
Andrew J Walter
Sacramento,CA —  September 20, 2007 4:50pm ET
its all about location, location, location. Anyone coming in to buy good vineyard property in California pays such a premium that there is almost no way to make good, value priced wine. You can certainly get land in Barossa or Mendoza for quite a bit cheaper. I think you should blog about the amazing success of California vintners that they make any good value wines at all (and they make some great ones -- just had a 2004 Napa Zin from Rocking Horse for 9.99 at TJs...very nice indeed)
Jason Carey
willow, ny usa —  September 20, 2007 5:28pm ET
With the dollar at all time lows, it itks me that I can still get a truly excellent hand-crafted Cotes du Rhone or Languedoc or Portugese wine at about 10 dollars and nothing like that at all from here.. there are some good values.. but heck. there is no importing to be done, no exchange rate.. ect,, why oh why?
Daniel Grotto
September 20, 2007 5:36pm ET
It really puzzles me why there aren't more value options in California wine. Part of the answer has to be that there isn't sufficient demand from wine consumers, right? Because California vintners surely have the skill to produce great wine at affordable prices. Just look at Columbia Crest in Washington -- it has an incredible track record of producing some really fantastic wines in huge quantities at value prices, including the occasional $10 bottle that broaches the 90 pt mark. I give all due credit to the team at Columbia Crest, but surely there are vineyards and vintners in California capable of matching Columbia Crest's phenomenal price/performance ratio.
Daniel Grotto
September 20, 2007 5:40pm ET
It really puzzles me why there aren't more value options in California wine. Part of the answer has to be that there isn't sufficient demand from wine consumers, right? Because California vintners surely have the skill to produce great wine at affordable prices. Just look at Columbia Crest in Washington -- it has an incredible track record of producing some really fantastic wines in huge quantities at value prices, including the occasional $10 bottle that broaches the 90 pt mark. I give all due credit to the team at Columbia Crest, but surely there are vineyards and vintners in California capable of matching Columbia Crest's phenomenal price/performance ratio.
Steve Fowler
Chatham, Illinois —  September 20, 2007 6:06pm ET
Fred Franzia is gettin ready to rock the boat.
Ashley Potter
LA, —  September 20, 2007 6:51pm ET
James, I coudn't agree with you more! Unless CA wineries start producing some inexpensive "value" wines I will continue to pursue great values in wine from regions such as Australia - McLaren Vale & Barossa, Rhone Valley in France, Toro & Yecla & Montsant in Spain, and Portugal makes some great reds as well - they're just a bit difficult to find.The only real "values" I've found in CA have been from the Paso Robles area, where many producers are proving that Rhone varietals can thrive in CA.-Brian Grafstrom
Jason Thompson
Foster City, CA —  September 20, 2007 8:28pm ET
I think everyone missed the most important part of the equation that was mentioned briefly by other bloggers...a cost that is much higher in California vs everywhere else in the world


The cost of an acre of land anywhere in California is now over $100K. In an area that produces decent wine, it is closer to $200K. And in Rutherford or Oakville or Russian River Valley, you are looking at $300K+. The reason that South America, Austrailia, Africa can make quality wine for next to nothing is that they pay next to nothing for the land. Similar in France as most of the vineyards have been in big families for generations...the only thing that they are paying for is the taxes on the land as the cost of the land has been long absorbed.

I think the only way to compete on the value/low end is to mix AVA's. Mix some cab from Napa with some Merlot/etc from the Sierra Foothills or Lake County. Mix syrah from Santa Barbara with some granache from Fresno...I think that pretty much summarizes it. Or hold on to the land until the value of land around the rest of the world catches up...

Not likely...
Joe Downs
Vason Island, WA —  September 20, 2007 11:13pm ET
I am a California native, grew up on a vineyard, took classes at Fresno State, and have worked in the wine business. I concluded years ago that there are no value priced wines from California. At least not of any consequence.I have lived in the Northwest for years now, and while I drink gems from Washington, Oregon, Italy, Spain, and France, my cellar has less than 10% of wines from California. I understand the point about land values, but most of the high end wineries bought that wine before the run up in values. Besides, why should I pay for someone else's poor business sense? It's greed and ego James, clear and simple. Let the market decide what's right; I'll kick back with a bottle from Southern France.
Robert Duncan
September 20, 2007 11:33pm ET
Agree, California is to diverse in talent and varietals too not have more value offerings. Most wineries simply don't have a value wine strategy. Many live & die based upon the success of their "Flagship" wine and their value/regular offerings consist of "the grapes that did not make it in our Premiere/Reserve bottling" Land is expensive in CA but many wineries purchased property long ago & are not burdened by today's real estate costs. In fact they do pretty well selling their grapes to less well known wineries that do a decent job of producing reasonable quality/price offerings.
Mary Constant
Calistoga —  September 21, 2007 9:15am ET
As a few have pointed out, land is very expensive in California. Whether it was purhased recently at horrific prices or bought many years ago or inherited that is only a part of the cost of growing grapes and making wine. Labor is more expensive in California than any where else. As is everything else needed to keep a business going. There a lot of new wineries which are really just "labels" who skip the hard part and buy fruit and/juice and have a celebrity winemaker and a nifty label who can price their wine any way that they want...they have none of the cost of farming, property taxes, equipement, etc. Most wine drinkers don't realize this .
Richard Hirth
Michigan —  September 21, 2007 9:49am ET
There's a chicken and egg problem here: California (at least big name appellations) can't produce relatively inexpensive wine because of the high land prices . . . but the main reason the land prices are so high is because they can sell a sufficient quantity of wine at high prices. The only way this changes is if they can't sell the $20-$50 stuff anymore, which will have to cut land prices. What older wineries (in Cal or elsewhere) paid for their land long ago is irrelevant to its opportunity cost today. Just because the land is paid for doesn't mean their real alternative isn't either selling the land or selling the grapes at today's market price.
Gib Masters
Portland, —  September 21, 2007 10:02am ET
It's good to be a Portlander, sandwiched between the Willamette Valley and Walla Walla.
Hugh L Sutherland Jr-m
miramar beach, fl —  September 21, 2007 10:05am ET
There is a cry to get the Americans to drink more wine, but the wineries continue to increase their prices. Wine prices have more than outpaced inflation over the past 10 years. The price of the land would not be so high if there weren't buyers out there with more money than they know what to do with. I enjoy a bottle of wine with my wife every night. I cannot afford $50 wines so I vote with my pocketbook and buy cheaper, whether from USA or not. If more of us would vote with our pocketbook, we would get more high quality wines from California.
Jay J Cooke
Ripon CA —  September 21, 2007 11:41am ET
My wine collection consists of weekday wines (value)& weekend wines (expensive) It is very difficult to find good CA weekday wines anymore. James, in one of your past articles you felt that with the quality & high production of the 2005 vintage there should be value 05 cabernets available. Do you still believe this?
James Laube
Napa, CA —  September 21, 2007 11:44am ET
Jay, yes I do, since there were significant surpluses of wine in both 2005 and 2006.
Greg Gregory
Atlanta, GA —  September 21, 2007 12:47pm ET
Jim, there are so many factors that go into this. All of the responders are correct because we all have our own perspective based on our desire or ability to pay current market prices for CA wines. One thing that hasn't been mentioned that I think is important would be the value of a wine when sold at auction versus the release price. I know of many wines, not just CA, that are released and sold for a good bit more than what they fetch at any of the online or live auction houses. I believe this is when a producer has to take a step back and determine if their pricing needs to be adjusted down, or in some cases up. I know of one particular winery that charges over $150 p/btl on the mailing list and can then be found at a 33% reduction within a year at auction. To me, this is when you can determine wines are over valued based on hard numbers and not just our own perceptions or means.
Hoyt Hill Jr
Nashville, TN —  September 21, 2007 1:33pm ET
The cost of land is not an excuse for high prices in California. This is only an excuse for new wineries which have had to purchase vineyards since land values skyrocketed. There are dozens of Napa and Sonoma wineries which have owned their vineyards for decades but do not make anything enjoyable under $50. And, value is not only about price. It is fine to charge $50 for a Napa wine if it is as fine a wine as a $50 wine from other parts of the world.Does anyone really think the average $50 Napa red is as good a wine as its counterpart from Spain, Portugal, the Languedoc or South America?There are far too many California wineries living off of reputations made with wines they made 20-25 years ago but do not make now
Richard Horvath
September 21, 2007 2:51pm ET
Since there is currently a disconnect between scores and price, has Wine Spectator considered whether a wine's final score should be adjusted due to price? For example, loosing a point for every $100 (rounded down) of the release price? Thus, a $500 bottle would loose 5 points. Would such a system encourage some producers (namely, those without a "fine wine" reputation) to balance costs and quality, especially since many wines are sold at stores based on a high rating?
Jason Thompson
Foster City, CA —  September 21, 2007 3:43pm ET
I like Greg's comments. I will even go to point out one such winery (that I no longer drink at any price point). I don't mean to call them out, but they need to be aware of their overpriced hype based on scores they received 10 years ago.

Silver Oak.

Their founder has passed away and the corporate entity that owns them sells their Napa label for $100/bottle and their Sonoma label for $60/bottle.

These wines are easily available from wholesalers/retailers for at least 20% less than their MSRP. Anyone paying full price is really not looking around. In average/poor vintages, you can get them for over 1/3 off. In 2004 I was able to pick up a half case of the 2000 vintage of the NAPA LABEL!!! for $40/bottle. That is a 60% discount. I don't drink the wine, I just give it away as a gift as many novice wine drinkers think it is the holy grail of wine...

Time for Silver Oak and similar wineries to take a gut check.
Charles Faust
San Ramon, CA —  September 21, 2007 4:58pm ET
It seems that there is no winery that has focused on value wines. In actuality, the value wine market is being addressed in the US by Australian, South American and South African wineries. Simply look at the seemingly endless number of wines receiving ratings (from RP for example) that exceed 90 pts. and yet remain in the range of $15 - $30.Richard - I think that bringing price into ratings is a very dangerous idea - in both directions. That is, considering that higher priced wines should receive a bias upward or penalizing a wine because of its wines. Actually, what I would like to see is a guarantee of completely blind tasting that gives no indication of price one way or the other. Then, the customer needs to decide whether they want to pay for the name or simply look for quality.
Andrew J Walter
Sacramento,CA —  September 21, 2007 5:32pm ET
Another problem with teh criticism of California value wines compared to Washington, Europe, Australia and South America is the source of the score. If Mr Laube reviewed wines from these regions as well, then the score / price difference would be meaningful (and I know WS tries to standardize inter-scorer variablility but, in the end, there is still a comparison between Laubes and Sucklings and Molesworths et al palates). WOuld Laube score Columbia Crest Grand Estates as well and Steinman does? Or that absolutley vile French and Italian stuff that Suckling raves about as having a great QPR? Maybe WS should do a multi-rater blind tasting of worldwide value wines so we can at least have a fair comparison.
Don Rauba
Schaumburg, IL —  September 21, 2007 7:24pm ET
I have to agree that a "bargain" wine from California is harder to find all the time. Washington State - I love you! Columbia Crest, L'Ecole 41, Owen Roe and others make fantastic wines that really satisfy and can really last! I have to mention that in January of this year I opened my last bottle of CCrest GE 2001 Merlot (90, HS) and found it to be WAAAAAY past my expectations in terms of fruit, texture, and aroma. Home run on all counts, and I'm not that big a Merlot fan (but I gave that bottle a 95!)

Lately, I'm hunting down all the Owen Roe I can find... oh, boy! But the secret's out now... better high-tail it to the store tomorrow morning! ;-)
Andrew Kiken
calistoga, ca  —  September 22, 2007 12:20am ET
So, the Wine Spectator recommends lower prices on wines!! Correct, me if I am wrong although, I know I am pretty damn close to being accurate about the cost of participating in the Wine Spectator Grand Tasting being $8000 for a 3 day period? So, you have 300 wineries paying $8000 to the Wine Spectator. Wineries pay to go to these events, it is not just a donation of their time. I dont think an under $20 bottle of wine producer is going to be able to participate in your Grand tasting. I am pretty certain that even a high end producer charging $100 or more for a bottle of wine does not make money at these events. All you get at these events is a few more consumers on your mailing list. Why do wineries participate in Wine Spectator events, because of ego, fear of not going and being blacklisted by WS, cost of doing business, and unable to analyze if these events are profitable. An ad in the Wine Spectator of less than than a quarter of a page is $8000. How much is a full page ad? Every business and every consumer wants lower prices it's human nature to wish for that, except when you are selling. Without their being a mark up on wine, wineries could not participate in your events or advertise in your magazine.
Andrew Kiken
calistoga, ca  —  September 22, 2007 12:50am ET
One more thing okay a few more there is a web site for consumers called qpr wines now wine blue book which ranks the wineries average score from all of the leading reviewers and their price. There are plenty of great california deals on wines, you just have to be selective in choosing your wineries and the methods to aquire those wines. Okay, 4 ways a winery can sell their wine: to the consumer because of wine tours, in distribution to retail or restaurant, because of wine reviews, or good publicity from untraditional methods. Being in a movie or tv show. If Oprah ever had a wine of the month club it would sell out in a day. I can tell you as a fact unless you get 95 points by one person rp you will not sell out of your wine because of a wine review. A consumer may be curious about a wineries wine when other wine magazines give them good reviews, but not enough to purchase the wine. The Wine Spectator may have minor influence for wineries who do get above 95 points, but your wine will not sell out because of it with few exceptions. Kosta Browne is an exception since they have several highly rated wines, good prices, and the demand for pinot noir is the highest it has ever been in the states due to sideways. One more exception is being in the Wine Spectator Top 100 I think that will help a winery sell out. A wineries mailing list, may be more likely to purchase the wine because of a good review. Auction pricing is only for collectors. There are wineries wines who are hard to get, but the collectors do not know that, because they only care about the wines that are 95 plus. So, the consumer does not know how hard a wine may be to get unless they knew a wineries sales methods. If you go to winebid.com you can get great deals on wines that are less expensive than what is sold at the winery. Most people reading this column would rather get their hands on the trophies than the ones just under the radar that is also a human nature instinct to want the "best".
Donald C Young
des moines,ia —  September 22, 2007 4:11pm ET
450 a bottle for the 2005 Harlan, up from 350/bottle for the 2004, are we really supposed to believe their costs went up by 100/bottle in 1 year? Greed, bad business practice, gouging the consumer. I own a vineyard in Paso, I know costs do not justify these prices.
Terrence Meyerhoff
September 22, 2007 6:16pm ET
Forget value wines from California. Those wines and days are long gone. Now it is getting increasingly difficult to just find good California wines at reasonable prices (less than $50), when just a few years ago many good California wines could be had for $20 to $30. The wineries are just getting greedier.
Michael Myette
Sacramento, CA USA —  September 22, 2007 7:17pm ET
Cold hard Truth to all of us: As long as people pay these prices, they will continue to charge them, period. This is economics 101, what is the maximum price the market will bear? $450 a bottle, and guess what?? Bill Harlan is still selling out of wine! Why wouldn't he raise his prices? When there are markdowns and bottles of Screaming Eagle and Bryant left on the shelves of Boutique wine shops (assuming they ever actually get to the wine shops) then the price will go down. Not before.
James Peterson
San Antonio, Texas —  September 22, 2007 7:51pm ET
The only good California wine I know of right now is the Conn Valley Prologue, and it's only a value to me because I can get it at cost (family member in the business). It seems that every time we find a good value Cali Cab (at or under $20 or so), it lasts for about a year, maybe two, before the prices nearly double. Think Chateau St. Jean Cinq Cepages--a great value at $35 or so, not so much at $80. That is all too common, and really why I almost never drink California wines in the value range.
James Peterson
San Antonio, Texas —  September 22, 2007 10:01pm ET
Let me just clarify that I meant the only good California VALUE wine. Obviously, there are more good California wines. I missed that omission...
Andrew J Walter
Sacramento,CA —  September 22, 2007 10:53pm ET
From Harvey's blog regarding the new Mollydooker winery (great values BTW)..."The reaction has been so positive that, from being virtually broke only two years ago, the Marquises have earned enough to buy a 116-acre vineyard in McLaren Vale. It comes complete with a winery with a capacity of 100,000 cases, 50 percent more than they need. They closed the deal on Sept. 5.When I visited them earlier this year, they were working out of the office of their consulting business, GRAPES, in an industrial park on the outskirts of Adelaide. Now they're ready to move into what sounds like a grand estate."We have been negotiating since October of last year," Sparky wrote, when he e-mailed with the news that they purchased the Classic McLaren winery and vineyard in the town of McLaren Vale. The purchase price was $11 million for the winery, vineyard and (an important detail in drought-plagued Australia) water rights for 10 years". Try getting 116 acres of prime vineyards with a winery and 3 house in Napa for 11 million dollars (and I bet thats AUS dollars). That is why you don't find many CA values...and the wine is good enough to enough people to justify buying it. Nuff said... :)
Paul Rakovich
Las Vegas —  September 23, 2007 1:57am ET
I agree with Michael, this is simply supply and demand. Hey, I wish Ferraris were cheaper, a $60K+ premium above sticker for the latest greatest is not "fair" but if you choose to drive a Ferrari or choose to drink Harlan...etc that's the way it goes.

You can always turbo charge a Honda Civic for kicks.

I just don't understand the anger that value wines from CA aren't abundantly available. If it's possible to make a great value wine then go out buy a winery, invest the money and do it, otherwise you're just Monday morning quarterbacking.

Michael Myette
Sacramento, CA USA —  September 23, 2007 12:13pm ET
Well said Paul.
Chris Haag
vancouver, bc —  September 24, 2007 2:17am ET
I do agree with Jason Thompson's comments on Silver Oak. I visited the winery last weekend and the wine was awful relative to the price point. Yet the tasting room was packed and people were buying the wine by the case, so go figure.....
John Miller
Windsor, CA —  September 24, 2007 1:36pm ET
This is a very confusing blog. What is the point? How did Silver Oak and Colgin become relevant to JL's point? It seems that the question is whether CA can compete with other Regions in making sub $20 bottles. But look, CA wineries don't have a monoply on greed. They sell what they can at the prices buyers will pay or go out of business. I think many foreign regions have an advantage over CA wineries for several reasons (land, labor, etc.). I know that many have jumped on the WA and OR bandwagons, but I don't find those wines more enticing on the whole than CA. But what it comes down to is this. People buy what they want to buy. I think some of the best selling CA value wines are pure garbage. But people buy them. But due to reason's stated above, it almost impossible for a small winery to make good wine in CA for under $20. This means that all of the value wines are being made by big wineries with substantial marketing research departments. These wineries are not out to make the best wine, but the best selling wine. What more do want out of them? And by the way, WS carries much more weight than a previous blogger suggested, especially in the value category. A "best buy" designation from WS (even with a sub 90 score) can make a Sales Director's job much easier.
Hugh L Sutherland Jr-m
miramar beach, fl —  September 24, 2007 2:19pm ET
I enjoy silver oak. This is the only quality winery that I know of who charges the same for their wine that they charged over 5 years ago. Give them some credit.
Kevin R Barris
Houston, TX USA —  September 24, 2007 3:34pm ET
James, there's a secondary effect to the issue you are addressing here -- because so few California wines offer true value, the "quality" of wines offered "by the glass" at US restaurants is generally horrendous. Even in good restaurants that have decent wine lists, their "by the glass" offerings are generally lacking. Why? undoubtedly because restaurant owners are greedy and love having patrons pay more for a glass of wine than the bottle costs. The only way to do this at $8 - $15/glass is to use inexpensive wines -- and we know none of these from California is any good.So, what happens? The very people California should be interested in weaning off beer and turning into wine drinkers simply don't buy bottles (for all kinds of reasons that would make for an interesting, different blog), but may give a try for one glass. Sadly, they all too typically get poured overpriced crap, and don't come back. That same potential drinker isn't going to shell out $150+ for Silver Oak or Caymus on a wine list just to give it a try.It's all short-sighted greed. With what Australia and Chile are doing, California better wake up.

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