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Home > Blogs > Uncorked > Archives > 2009 > February > 02 > Entry
Mega-wineries flourish as recession forces wine lovers to ‘trade down’
Check out this Santa Rosa Press Democrat piece on the Unified Wine & Grape Symposium in Sacramento, at which many sales figures for the previous year are released, and there’s plenty of analysis of wine trends for 2009 and beyond.
Those who attended the Boonshoft Museum’s “Science of Wine” event last weekend, at which wines from the E&J Gallo Winery family of wines were served, should take particular note of what the industry analysts had to say about Gallo’s 2008 performance. Hats off to the empire that Ernest and Julio built!
Here’s how Wine & Spirits Daily summarized the event:
High volume wine companies like Bronco, E&J Gallo and Constellation had one of their strongest years in 2008 as consumers shifted towards cheaper wines sold in grocery stores, said analyst Jon Fredrikson at the Unified Wine & Grape Symposium. Gallo performed especially well with 10 of its brands making the 25 best selling list of wines in the nation last year. The trading down trend is also supported by a consumer shift to grocery stores instead of restaurants in an effort to save money and stay at home.
Meanwhile, the trend toward cheaper wine is hurting high-end wineries, particularly those that built their business at restaurants. Restaurants and distributors “dramatically cut” wine orders last year because they anticipated poor holiday sales. Jon said shipments were particularly weak in October and November, with many area winery warehouses reporting 30% declines. He encouraged high end wineries to find new markets for their wine, such as direct-to-consumer shipping or deep discounts at retail. Jon also said not to expect a quick recovery in the restaurant sector.
Luckily, California grape growers are experiencing a shortage instead of a bumper crop, which would further drive down prices.
Luckily?
Guess it’s all in your perspective.
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Comments
By wine-o
February 4, 2009 10:12 AM | Link to this
I believe the word “instead” was missed here. WSD is not a consumer advocacy, so it makes sense that they would prefer something that helps the industry and prices such as a crop shortage instead of a situation which would further strain an already suffering fine wine market.
By Ed
February 3, 2009 9:12 PM | Link to this
I guess when times get tough, that $10 bottle of Chilean cab gets better and better all the time.
By Lee
February 3, 2009 12:36 PM | Link to this
I have to agree with Tag, a shortage of grapes will do nothing to drive down prices. Long in inventory, as mentioned, will. Our vineyard also experienced lighter crops in 06 and 07 due to smaller berry size. Good for wine making, but bad for yields. Those wines are just now being released but the market won’t bear the higher price we really need to charge. The squeeze is on some other costs like marketing, events, etc.
By Tag
February 3, 2009 7:04 AM | Link to this
I’ve found so many erroneous conclusions and logically flawed assumptions in WSD that I don’t even bother reading it anymore. To say a shortage drives down prices shows a fundamental misunderstanding of our business.