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Bad Weather Leads to Declines in Production & What Else?

rain, a good or bad thing for a vineyard

It’s something that’s come up a few times of late.  Weather has been crappy in France, leading to likely lower production quantities of French wine during the upcoming vintage.

In Paso Robles, 2015 was down a ton from the top range of production values, according to some Cabernet Sauvignon production was down by 60%.

So generally speaking when the media reports that a vintage is smaller than normal, they’ll also say that prices are going up.  Sure, that’s true but I also wanted to talk about the specifics of what’s happening during smaller vintages.

So if you’re a winery working on either a long term vineyard contract, or with an estate vineyard, things don’t change much.  After all, it’s usually not worth it to have to worry about adjusting the price of your flagship offering, based on a few less tons of fruit.

But, the secondary market can be severely affected and that’s where the average price point tends to go up significantly.  In terms of the secondary market, I’m talking about some well known Negociants like Cameron Hughes, but also even bigger fish like Costco’s line of wines, or Trader Joe’s.

A smaller vintage means there is less juice that ends up on the secondary market.  Wineries can sell everything they make and smaller vintages also typically mean that quality is higher than normal, so again, sales are easier.  In a land of easier sales, there aren’t extra barrels (or at least not as many extra barrels) for those secondary guys to access.  If you’re Trader Joe’s you might eschew most California and French wines during that vintage and instead stock more stuff from other regions that aren’t having the same issues. As an example, while California had a tiny 2015 vintage, Spain had the largest vintage in their history.

So that’s one thing that’ll happen on the lower end of the price spectrum, choices from the regions with lower production quantities, will be lessened. Market share is going to be grabbed by those producing enough, cheap enough juice.  Before you think that’s a great thing though, when’s the last time you thought about Chile or Argentina for your next $30 bottle? Even when our wine clubs included international selections, we didn’t source anything beyond $20 a bottle for them. Wine drinkers do typecast entire regions or countries and it’s hard to come back from everything being $5.

There’s also one other issue at play, how do markets recover after something like a very, very small vintage happens.  It’s actually more difficult than you probably think.  Take Paso as an example, any shelf space that they couldn’t fill because of the lower amount of wine available, was filled by others.  Say new producers in Walla Walla as an example for a region that makes similar wine.  What happens if that wine sells well?  Obviously that shelf space isn’t going to go back any time soon.

For higher end growing regions, that’s a really, really significant issue that often gets left out of the conversation.

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