Wine Industry Struggles

************************************************Isn't the wine industry supposed to have a plan B in case the regular business activities go sour? Why is it that nobody has a backup plan? Everything in this post makes sense except for one thing that should have been in there:  The wine market works like fashion industry.  Next year's wines are not same as this year as far as popularity.  The levee may break but tastes have gone away from California wine for quite some time already.  Italy may teach a lesson.  Brunello is aged for minimum 5 years before released.  This has always been a big problem.  The money is tied up for half a decade before can be sold and some cash flow comes in.  What are they to do in the mean time?  One solution is some of that stock is sold as Rosso after one year.  This wine is good but not what Brunello is meant to be.  The release saves another year until the barrels are ready.  California wine-makers can do something similar.  They can release some of the wine or some of the lesser vineyards or blocks as a no-label or a second label that is offered only in some seasons.  If this category of wine is marketed industry-wide as a good quality wine released just to ease excess supply pressure (in reality to bring some cash in) without hurting the label's reputation and price, the public will buy them.  The media will do a milk Help-California-Wine and the public will buy this bargain wine.  In reality, if a special class of second label does exist, the winery can buy grapes from somewhere else and bottle to sell on the strength of its first label as California wine.  This brings cash and helps oversupply.  People will even like California wine industry then!!!


Wednesday, July 29, 2009, by Paolo

2009_07_napasign.jpgFrom top to bottom, the California wine industry is in a state of financial panic, but with harvest looming, most distressing is the uncertainty of the future: "People are drinking out of their cellars, the big distributors are throwing their weight around, and you add these things up, and from the winery perspective, the cash flow is brutal… Everybody figures this is kind of a temporary thing, that when restaurants burn through their inventory they're going to have to start buying again, and distributors, too. But everybody is wondering when the levee is going to break, and you have harvest coming up." [NYT]


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