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Saturday, February 20, 2010

The Annals of Luxury: Consumers Are Forsaking Pricey California Wines. Bad For Vinters, Good For You

California's winemakers could use a stiff drink.

In July we reported that the prices of premium California wines had dropped, as consumers abandoned expensive cabs and proprietary blends in favor of budget bottles from lesser producers.

Wineries had hoped that the trend would reverse itself during the holiday season. No such luck. Wine sales continued to spiral downward, leaving wineries and distributors with even larger inventories than anticipated.

The wine industry views 2009 as the worst year in memory, according to a report by the California Farm Bureau Federation.

It's a double whammy for producers of fine wines, those in the $50 - $150 range. Consumers are buying fewer premium bottles and expect to pay less for them. Half the bottles at the half the price. That's the predicament roiling the Golden State wine industry today.

As if this isn't bad enough, the state's wineries are facing increased competition from foreign producers, also suffering from the global economic downturn and changing consumer behavior.

Overseas vintners have seen a sharp fall in exports to the U.S., the world's second largest wine market. American imports of French wines and spirits tumbled 22.7% last year. Exports of French champagne plummeted an eye-popping 28%, according to the Associated Press.

It's not going to get better anytime soon. Experts predict that it will be a year or more before conditions start to improve. Others are fearful that consumer preferences may have shifted unalterably. Is a $150 cab really worth it when there are plenty of outstanding choices at one-third to one-half the price?

In the meantime, winemakers are preparing for the worst.  They are walking away from contracts they signed last year with grape growers, laying off staff, revising marketing and distribution plans, and pruning costs wherever they can.

Out of chaos comes opportunity for those with cash.

The best bargains are to be found on the Internet. Two websites offer daily specials of terrific wines at deep discounts.

Check winestilsoldout.com and cinderellawine.com frequently to see what's on offer.

(Example: WTSO recently listed the 2005 Roca di Castagnoli Chianti Classico Poggio Ai Frat, rated 91 by Robert Parker, for $24.99 a bottle. It's normally $45.)

Good deals are also to be found at wine.com and ambrosiawine.com. Sign up for their e-mails to be notified of sales.

For more on the plight of California vintners, see Corie Brown's article in the March issue of Entrepreneur and also this recent article in the Los Angeles Times.


  1. Hi There,

    Very interesting article. We have been in the wine industry for years and certainly see a shift in a variety of trends. These shifts are great for consumers - but, if wineries can embrace innovation, it can be great for them.

    We started CellarThief.com to offer consumer the opportunity to buy great wines at stellar prices. But, we have also found that wineries are seeking new ways to directly connect to wine lovers and sites like ours, WTSO and Cinderella are a great way to do so.


    Co-Founder, CellarThief

  2. Ryan,

    Thanks for your comments. I checked out your website. It's sharp!

    Come back again to see what we're up to.



  3. Now is certainly not a good time to be in the wine market. Like you said, why pay $150, when you can get something almost as good for 1/3 of the price. Makes no sense really, especially in the recession when money is tight. Perhaps when the recession starts to lift, they may see an increase in business again. I hope they do for their sake.