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Tuesday Tributes
Everyone Is Buying—The Economy Is Saved

By Charles Olken

There is a lot of money sitting in the vaults of big business and the fat cats just waiting for the economy to turn around. Now we have proof positive that those cash reserves are being put to work in the wine industry.

Everyone is buying. There is nothing better for the economy than when money starts moving around. Oh sure, if you bought Facebook the other day, you might not be so happy, but take a look please at some of the headlines in our own industry. Cash is no longer sitting on the sidelines.

Got a winery you don’t want? Ask the Gallos or Bill Foley or Accolade, the Aussie wine group that just bought Geyser Peak, Atlas Peak and XYZin.

Got a good charity you want folks to support? Have a look at the just concluded Napa Valley Wine Auction that just raised $8 million.

There is no question. Money is on the move, and the economy will not be far behind.


The question of the economy goes deeper than a bunch of fat cats and big money winery owners, of course. Wine consumption is rising at rates that suggest a healthier middle class. Maybe it is all illusory, but when people feel better, they spend, and people feel better.

The suggestion that a grape shortage is about to visit the land may seem hyperbolic at first glance, but consider the evidence. Not only is everyone buying, but rootstock sales in 2012 have picked up. That should come as no surprise, of course, because there have been virtually no significant plantings in California for almost a decade. Even in 2011, which at least showed an increase of something approaching 1%, it was Pinot Noir accounting for half of that, and half of the Pinot Noir went into Sonoma County.

Pinot Noir may be one of the varieties to go into short supply first because demand keeps rising fueled in part by prices that are more or less half of those one would pay for Cabernet Sauvignons of equivalent quality. People may have more money to spend, but they still prefer not to throw it away.

I also worry about coastally grown Zinfandel. There has been no increase in that acreage in a couple of decades. That Zin prices have not taken off is as much a function of Zinfandel getting a bit ahead of itself in its pursuit for depth and intensity as anything else. As Zin makers cut back on ripeness in the search for a lighter sense of balance to their wines, Zin could see its fortunes rebound. And it would not take much to see Zin prices move up if that happens.

The fact is that we all want a robust economy. The other fact is that wine grapes are an agricultural commodity, and plantings respond to supply and demand. But unlike corn or tomatoes, one cannot get a crop in the same year as the plantings. I will accept that I have been too facile in pointing to the big money moves in wine as proof of change, but may not too too much because big money only moves when big money thinks that the small money that makes up the retail market is also going to move. And if the retail market keeps moving, then it could take some years for the grapes to catch up.


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