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TUESDAY TRIBUTES
09/04/2012
Tuesday Tributes
Good Wine News: A Welcome Change

By Charles Olken

This year is different. Mother Nature is cooperating. The economy is cooperating. And wine country is full of smiling faces and optimism. What a change from the past couple of years in which nothing seemed to be going the way it was supposed to go.

Let’s talk about the harvest for a moment. It is not a new phenomenon—this sense of giddy anticipation that fills wine country at this time of year, but after a cool year in 2010 followed by a rainy, cool year in 2011, the winemakers can be excused for looking at this year’s crop as something of a gift from Bacchus. The old saw that every year is a vintage year under California’s sunny skies was never true, but it came close, as it did for the last decade in most wine areas in the world. But, then things changed.

Everyone had an explanation: El Niño, global warming gone bad (the interior heats up so the coast cools down), overplanting (that one never made much sense in these quarters), normal cyclical patterns returning after a long absence. Whatever your favorite among that panoply of potential truths and half-truths, the inhospitable weather of the past couple of years was piggybacked on top of an economy that had stubbornly refused to cooperate.

So, let’s assume that Mother Nature has returned to her senses. That might have still left the industry in shambles if wine sales had not also begun to pick up. Reports of sales increases of 5-8% across the country have lifted spirits and led to predictions that the wine glut of the past few years will soon become the wine desert as excess supply dries up in the face of burgeoning demand.

We have seen boom and bust cycles in wine before. It is the nature of almost any agricultural crop that some years produce excess and some years produce scarcity. The wine business is doubly cursed in that regard because it cannot respond quickly to changes in the supply/demand equation. Early optimism last Spring led to a shortage in rootstock as wineries began to sense that the world was changing. Yet even with plenty of rootstock next Spring, we all know that new plantings take years to come into full production.

The boom and bust cycle is moving towards boom, but supplies of wine will grow less rapidly than demand. And if there is a hint of a dark cloud in this scenario, it is the specter of rising wine prices as demand pulls them higher. That is a topic to be explored more fully in the coming weeks and months, yet we can tell you that we already see an upward drift in some places after years of relatively little change.

Perhaps the most interesting bit of good news in the wine biz is the rate at which winery investment has picked up. Reports on the actual rate of change will wait until next year when the economists have done their thing, but anecdotal evidence is everywhere. The wine news last week spoke of new investment at the original Buena Vista winery site, the emergence of a new and attractive facility (Reata) in the Jamison Canyon area of southeast Napa County, both large and small new wineries in Santa Barbara County (including the next year’s debut of the lavish Presqu’ Isle facility in the Solomon Hills area. In economist terms, new winery formation is what is called a lagging indicator. It tends to rise after demand has risen. Yet there it is, already on the march.

In the long run, all of this happiness at the industry level will result in good news for consumers. It is not that they or we will welcome rising prices. But from new plantings come new initiatives and new directions. From new wineries comes greater choice. And from a return of typical harvest weather comes a new supply of wine made in styles that are not antithetical as the wines of 2010 and 2011 have tended to be, to the joyful, tasty, characterful pattern that has made California wine into its own special and much admired product.


 

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