The National Wine
UnClub
Newsletter
New Year's Wishes and Worries
First, let us wish you all a wonderful and happy New Year! The Holidays of 2002 have thankfully been rather quiet on the world scene and we are looking forward to the application of reason and wisdom in the world's seemingly precarious situation. The world we wish for is like a fine wine: integrated and balanced, refined and sensual. May we all do our part to let it be so.
The world of wine is in an interesting state of change as the global economy falters. Fancy labels that rose meteorically to fame and unattainable price tags have lost some of their intoxicating luster for the general wine enthusiast. Value wines are understandably making a strong comeback in the United States at the expense of these precious rarities in some cases. Collectors still are seeking their favorite brands but are waiting more patiently for the inevitable retailer discount.
To see premium California brands (middle price range labels usually) offered at bargain-basement prices is somewhat alarming as it indicates some desperation on the part of producers, wholesalers, and retailers to move their inventories. Of course it's obvious that simply shutting off wine production isn't as easy as it is in the manufacturing industry. You can't just cancel the harvest and start again at some more convenient time a month or so down the road. Those grapes, if left unharvested, are history and you must wait another full year to obtain the raw material necessary to restart your production of wine.
Most wineries wisely choose to go ahead with the harvest. You pick the fruit, crush and de-stem, ferment and clarify, then begin barrel and bottle aging, trusting that the market will be ready for your product a year or so down the road. If it isn't, well you age it a bit longer or sell it at a reduced price to clear your tanks for the next year's harvest. The back-up of unpurchased wine becomes the glut of supply that outstrips demand, thus requiring prices to drop.
In the short run, this is a boon to the consumer. Prices on favorite brands are temporarily lower and stocking up is advised. In the long run, a wine glut will undoubtedly drive certain producers (usually the boutique wineries) out of the business, thereby reducing supply. We all should hope that worthy small operators aren't eliminated in this process, leaving the fruit for only the corporate giants of the wine world. Creative diversity in wine styles would certainly suffer in this scenario.
Despite the setback of the current world economy, wine had never been more popular in the United States. The Silent Majority here is more and more likely to be sipping a fine Chardonnay or Merlot over imbibing spirits like Scotch and soda, or Bourbon and Coke. It's just that Californian wines aren't ever going to be great values due to the high cost of winery start-up and maintenance. Imports are likely to be much more affordable and will fill the need for value-wine alternatives.
Foreign producers are clamoring to bring their wines to America as they see us as the last great untapped market for their produce. This means that we will see a continued influx of new (to us) European, Australian, South African, New Zealand, Chilean, and Argentinian wine labels on our store shelves. While our economy is weakened, their economic situation is much worse by comparison and prices should consequently stay low.
As American wholesalers hunker down and become more and more reliant on standard brands to maintain market share, many savvy retailers are acting as their own agent to satisfy the demand for more interesting (and affordable) wines from around the globe. They are making arrangements with small importers to obtain new, relatively unknown labels that represent both high quality and value for their customers.
If the Californian wine industry is smart, they will realize that one-time, steep price reductions aren't the long range answer to their oversupply problems. They must become more competitive on an everyday basis to survive the worldwide competition for American wine consumers. Even in the famous French wine region of Bordeaux, prices fluctuate with each vintage for varying reasons. Californian producers can't expect prices for their product to expand upwards indefinitely.
So we begin a new year, one in which many things are uncertain. When hasn't this been the case really? What about the dark days of the Great Depression, World War II, Viet Nam, or the Cuban Missile Crisis? We have the same opportunity to live through some bleak times as did our forebears. We should stand up and face this challenge with the same courage as they did. And perhaps find a moment or two during the year to enjoy a fine meal and some well-made wines with our family and friends, appreciating the abundance we are blessed with in this wonderful country.
Cheers!
Donald W. White