Oversupply in the Grape and Bulk Wine Market - And What This May Mean . . .

[Michael_Martin]

Which will then crash and burn, even harder than grapes, as the supply far outgrows demand - unless enough gets siphoned off to the black market. Watch for increases in arrests on this front in the coming decade.

Adam’s 100 tons of unpicked Lodi Petit more or less backs up Nate’s comments.

Living in Colorado I see some folks making money beyond belief from THC and CBD products. Way more more than from grape juice.

If they’re operating legally, they’re not making money from THC products, due to the federal tax rules. It’s why the US companies have great gross margins, are lucky to have EBITDA, and tough net losses.

You are clueless.
I personally know folks who paid cash for million dollar plus homes, Lamborghini’s, custom cycles, race cars and in one case a new set of teeth all from pot money.

[Marc_Hauser]

Living in Colorado I see some folks making money beyond belief from THC and CBD products. Way more more than from grape juice.

If they’re operating legally, they’re not making money from THC products, due to the federal tax rules. It’s why the US companies have great gross margins, are lucky to have EBITDA, and tough net losses.

You are clueless.
I personally know folks who paid cash for million dollar plus homes, Lamborghini’s, custom cycles, race cars and in one case a new set of teeth all from pot money.

Those are individuals. Not companies. Execs and founders may be comped well (some of them work for my clients), but their businesses (again, legal, permitted ones) don’t make profit. This is well known throughout the legal industry. And it is my job to know this.

[Michael_Martin]

If they’re operating legally, they’re not making money from THC products, due to the federal tax rules. It’s why the US companies have great gross margins, are lucky to have EBITDA, and tough net losses.

You are clueless.
I personally know folks who paid cash for million dollar plus homes, Lamborghini’s, custom cycles, race cars and in one case a new set of teeth all from pot money.

Those are individuals. Not companies. Execs and founders may be comped well (some of them work for my clients), but their businesses (again, legal, permitted ones) don’t make profit. This is well known throughout the legal industry. And it is my job to know this.

Never said companies. I said folks. Slice or dice it however you want, people are making serious coin. I touch the industry as well. I see it first hand.

[Marc_Hauser]

You are clueless.
I personally know folks who paid cash for million dollar plus homes, Lamborghini’s, custom cycles, race cars and in one case a new set of teeth all from pot money.

Those are individuals. Not companies. Execs and founders may be comped well (some of them work for my clients), but their businesses (again, legal, permitted ones) don’t make profit. This is well known throughout the legal industry. And it is my job to know this.

Never said companies. I said folks. Slice or dice it however you want, people are making serious coin. I touch the industry as well. I see it first hand.

So it appears we are both right?

[Nathan_Smyth]

I see many anecdotes of millennials who do not drink, who do not date, who are vegan, who do intermittent fasting etc.

Wine is getting a bad reputation amongst folks on the Paleo diet.

And all the carbs in these high-sugar California wines are not helping matters.

Serious question: Does anyone still make a truly dry wine anywhere in California?

[And, quite frankly, from what I’ve tasted this year, you could expand that question to all of Europe, as well.]

[Paul_Gordon]

I see many anecdotes of millennials who do not drink, who do not date, who are vegan, who do intermittent fasting etc.

Wine is getting a bad reputation amongst folks on the Paleo diet.

And all the carbs in these high-sugar California wines are not helping matters.

Serious question: Does anyone still make a truly dry wine anywhere in California?

[And, quite frankly, from what I’ve tasted this year, you could expand that question to all of Europe, as well.]

Nathan

The vast majority of smaller CA producers release wines that are bone dry. Certainly true in our case.

Paul

[Jason_T]

I see many anecdotes of millennials who do not drink, who do not date, who are vegan, who do intermittent fasting etc.

Wine is getting a bad reputation amongst folks on the Paleo diet.

And all the carbs in these high-sugar California wines are not helping matters.

Serious question: Does anyone still make a truly dry wine anywhere in California?

[And, quite frankly, from what I’ve tasted this year, you could expand that question to all of Europe, as well.]

Nathan

The vast majority of smaller CA producers release wines that are bone dry. Certainly true in our case.

Paul

That’s not going to deter him.

[Nathan_Smyth]

The vast majority of smaller CA producers release wines that are bone dry. Certainly true in our case.

I would dearly love to get back to CA and spend an entire summer [or winter, or any time of the year whatsoever, to include harvest-time] doing nothing but visiting the smallest producers, and getting a strong sense of what’s happening with the Avant Garde who are duking it out in the trenches.

But, at least statistically speaking, NONE of yall’s wines make it back here to the East Coast.

Statistically speaking, we are drowning in an ocean of high-carb California industrial [or semi-industrial] wine which tranforms Cougar Moms into goodyear-blimps and Sportsball Dads into [exceptionally large] potato-heads.

[Nathan_Smyth]

BTW, just in case any of you geniuses haven’t thought of it yet, there’s a helluva marketing campaign sitting there, just waiting to be discovered.

Something along the lines of “Family-Farmer Grown & Vinified Bone-Dry LOW-CARB Alcoholic Beverage”.

[GregT]

I didn’t really like the article. He’s trying to create some controversy but things are not all that critical, or different this time than any other time.

There was an oversupply of office buildings in the 1990s and guys like Trammell Crow ended up losing money. There’s an oversupply of shopping malls today because nobody envisioned Amazon sucking the life out of the shopping experience.

People start investing when they think a market is hot and eventually you have too many people investing and prices go down and the market shrinks. That is what allowed Two Buck Chuck to appear - when he started he had pretty good grapes to use. Maybe now the quality of that wine will improve again.

The article is misleading even if it does mention the central issue. Grapes that were grown under contract usually are not left hanging on vines because the buyer changes his mind. If there are too many grapes now, those are almost certainly grapes that were grown in hopes of finding a buyer.

Statistics are still in favor of wine. The most recent figures I found show that the total consumption of wine in the United States was up again year to year. Obviously that does not mean any grape from anywhere is a good idea, but there’s not a grape oversupply because people are drinking less wine. People are drinking more wine.

Growers just overestimated their market and planted too much. I might have thought I could sell an extra few tons of Zin. So did you, your brother, your mother, your friend down the street and your entire social network. Now we have too much. Duh. I don’t see the crisis in the wine world here.

I was just talking to someone about this two days ago. She mentioned that the wine world is unlike just about anything else because in no other field would you start a business without any idea of what your market will be and how you’re going to reach it. If you do that, you’re most likely going to fail. And yet in the wine business, every day new people jump into producing grapes or wine without any idea of how they’re going to sell their product. They just hope for the best.

Marijuana is not a direct competitor to wine. You don’t sit down with a bottle of wine and some friends to get stupified. The two things serve different markets.

Wine is indeed facing increasing competition but the competition is craft liquor and beer. Even so, wine consumption is still up year to year.

Petite Sirah left on the vine has nothing to do with high-priced Cab.

And Nathan, I have no idea where you are on the east coast but you are utterly wrong, at least if you’re in NYC or one of the larger cities. And especially if you can receive out of state shipments.

Wine is getting a bad reputation amongst folks on the Paleo diet.

And all the carbs in these high-sugar California wines are not helping matters.

Serious question: Does anyone still make a truly dry wine anywhere in California?

[And, quite frankly, from what I’ve tasted this year, you could expand that question to all of Europe, as well.]

1. People on the paleo diet aren’t likely to make a measurable difference in wine consumption.

2. If you don’t like high-sugar CA wines, buy low-sugar CA wines.

3. For a truly dry wine from California, all you need to do is look around.

4. Same for Europe.

BTW, I’ve seen low-carb ads for wine. They just have slightly less alcohol. Skinny Girl built an entire brand around the idea.

Gluten free too.

[R_Frankel]

My understanding is that overall US wine consumption has been steadily rising. With all this grape oversupply why aren’t we seeing more lower priced cabs/blends coming to market? Or maybe they are there and I’m not seeing it?

[GregT]

There are more lower priced Cabs and blends coming to market. They’re not coming from Napa and you’re not buying them.

Remember, “oversupply” doesn’t mean there’s an oversupply of really excellent grapes that will make stellar wine.

There’s a lot of plonk showing up.

[Arv_R]

Maybe they can turn some of the surplus into brandy. E&J and Christian Bros. could then come up with some new craft brandy cocktail recipes and send out reps to bars to drum up interest in that.

If wine is a little bit cheaper, I don’t think that hurts enthusiasts.

[rsmithjr]

More wine for Negociants to sell…

[Jurgen_Steinke]

There is too much wine produced in the world. But I have the feeling that the elite wine producers have less problems to sell their stuff than the mass producers. I see often “sold out” at the well known and praised houses but heavy discounts at the supermarkets. The average price for a bottle of wine here in Germany is about 2,50 Euros. And even at those prices the stuff is difficult to sell. A family member of mine is a wine producer here in Baden/Germany (Ortenau) with good land for Pinot Noir/Spätburgunder. He is retiring at the moment and is trying to sell his acres. But there is almost zero demand and the price for vineyards is absurdly low. Something never seen in recent history. And new creations of fancy labels, marketing strategies etc. does not help much if at all. Its very difficult or even impossible to make a living if you are an almost unknown wine producer with average quality and a limited production. On the other hand: the well known and praised producers build fancy wineries and luxuries tasting rooms. But those are the minority. The majority is facing growing economical problems.

The trendy drinks today here in Germany amongst the young and fancy people are cocktails. The hottest thing at the moment is Gin Tonic. And the government is trying hard to bring alc. consumption down. No good news for the wine industry.

[Wes_Barton]

I was just talking to someone about this two days ago. She mentioned that the wine world is unlike just about anything else because in no other field would you start a business without any idea of what your market will be and how you’re going to reach it. If you do that, you’re most likely going to fail. And yet in the wine business, every day new people jump into producing grapes or wine without any idea of how they’re going to sell their product. They just hope for the best.

Nah, the same thing happens over and over in everything else, and has so throughout history. It’s all in the mindless lemming/buy high, sell low/pop culture hype buy in. Sort of a myopic assessment of an opportunity. People see a shortage and far too many react to that shortage. People see a boom market and buy in, thinking it’ll never “correct”.

In some cases, hype is created by the buyers. With grapes, mega wineries don’t have a downside with oversupply. They get rock bottom prices, and someone else takes the loss for grapes and bulk juice that’s left unsold.

[Adam_Frisch]

From what I’ve heard premium wine is increasing in market shares. At least until the market tanks and the recession hits.

[Merrill_Lindquist]

I notice it with many of the growers - they’re desperate to get rid of their fruit. If I had the capacity and sales channels to shift it, I could pick up tons of great fruit at very low prices. Last year one of them in Lodi had to leave 100 tons of Petit Sirah hanging. And that was just one grower. How many more have had to do the same?

In any case - and this is one of my soapboxes - but California needs to shift focus from super premium pricing. On a global stage, CA wine is just not competitive. Almost any other New World nation will deliver better wine at lower prices. I’m not saying CA wine isn’t as good, it certainly is, it’s just priced too damn high. I go to South Africa for business quite often and the wines there are fantastic quality costing half of ours. What I always then hear is: “well, they don’t have the same labour laws we have and can basically use very cheap indentured labour”. Yeah that’s true, but how come AUS/NZ can produce much cheaper wines than CA can when they have virtually the same labor costs? Doesn’t pass the sniff test. We could be exporting our wines just like these nations do and - voila! - surplus gone.

I want everyone to make as much money as they can, I believe in capitalism, but dare I say it, has the ex-Wall St-buy-a-winery-to-show-off-for-my-friends-on-the-golf-course culture finally caught up with CA wine? I’m personally sick of $60-300/bottle prices. It’s an affront. And it’s killing CA wine and making it even more elitist than it already is. Which young millennial is gonna get excited by an industry that only caters to rich middle aged people and treats the consumer like suckers you can highway rob?

Geesh, someone got out on the wrong side of the bed today!

[GregP]

Serious question: Does anyone still make a truly dry wine anywhere in California?

And here I was asking myself just who the hell drinks all that White Zin. Seems time for you to step up.

Seriously, though, you should really learn about CA wine. And they don’t have to be expensive, a sea of dry wine out there. Even Rombaur cut back on RS in their Chard lately. RS wines are really in the under $6 a bottle category these days, and even then not that often. And TBH, if your palate cannot tell dry wine from one that is off-dry or with RS after years of consumption (that you claim), then maybe wine is not for you.

I know of no one who presses off until completely dry. If you know who does, then list them here. Or stop posting nonsense. Only because you think/believe something does not make it true. But, yes, list names, should be an interesting and very extensive list judging by your beliefs. Don’t be shy.

I also suspect that you do not understand the difference between picking at higher Brix and fermenting to dryness. Which happens all over the world, BTW, and not just in CA, pretty much in any wine region you’d care to name. Also, learn what RO is and which country invented the process, and is still heavily dependent on it. Sold at stupendous prices these days.

[James_Billy]

TBH, if your palate cannot tell dry wine from one that is off-dry or with RS after years of consumption (that you claim), then maybe wine is not for you.

Seriously, if you can’t detect a certain component you should stop drinking wine?

I think if you can’t say something sensible and polite then maybe online forums are not for you.

And you’re a serial offender.