The Homa Files

Excerpted from San Francisco Chronicle, “Suddenly, Those Rare Wines Aren’t So Rare”, by Jon Bonne, January 30, 2009

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Industry experts estimate most of us are shrinking what we’ll spend on a bottle of wine by 20 to 50 percent for anything more than $10, with the occasional splurge. The thirst for $25 has dwindled to $15; $8 is the new $12.

That perilous midrange above $30 and below, say, $100? That’s where the real fear lies if you make wine.

Wine auctions struggled through the latter half of 2008, slashing their projected hammer figures, and lot prices have dropped between 10 and 30 percent since last summer, in part a correction of a runaway bull (wine) market in the past three years.

San Francisco’s Vinfolio, which specializes in locating high-end wines, has a different worry. Its average bottle price remains around $170, but with fewer sales.

In other words, it’s a buyer’s market. If you have the money, now is the best time in perhaps a decade to start a collection or taste the unattainable.

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Wines once nowhere to be found on store shelves have for months been making quiet appearances there, often because restaurants’ allocations have been left adrift. Retailers are suddenly scoring bottles of a litany of impressive California names.

All of this should give pause to wineries still playing in that realm over $30. (Beyond $100, you’re either betting on a track record or blindly ambitious.) Brand loyalty? In a recession it has the life span of a housefly. Uniqueness sells wine, but there are oceans of not-so-unique wine around. Plus foreign currencies have weakened just enough to let us all drink astoundingly well from overseas. 

Part of survival is pricing to the market.  It’s going to get interesting when the inevitable price correction for all those overblown $50 Syrahs and $80 Cabernets bump up against California’s fixed labor and grape costs.

There is opportunity here. For a while, more California winemakers have needed to fill the gap between cheap table wines (we have plenty of those) and fancy bottles (plenty of those too) with honest under-$20 wine that looks and tastes sophisticated while speaking honestly of its origins.

Edit by DAF

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Full article:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/01/30/FD5L15EMGG.DTL&type=printable

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This entry was posted on February 17, 2009 at 6:50 am and is filed under Mktg - Pricing, Wine. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.