The Dead Zone: What’s Your Perspective?

There’s not a day that passes where you can’t find an article, blog, or story about the current recession and the negative impact it has had on a variety of industries. So its not surprising that many wineries selling high end wines (those selling for $50 or more) find themselves in the dead zone, so says a recent article on PressDemocrat.com. Likely more disconcerting is the notion that this dead zone may remain for some time to come as there may not be a return to the wine spending habits that were normal or customary just a short time ago.

This article as well as many others on the subject got me thinking: What are the consequences of not returning to our recent past and how will this effect the wine industry in the long run?

Well… I guess it depends on your perspective!

• If you happen to be a high end, well established winery that sells their wine for $100 and up (hey … maybe $500+), there may be little ill effect at all. Most of these wineries sell their wine only through their wine club or list, and often have a very long line ready to go. These are top end brands offering wines in very high demand with very small supply (some that come to mind: Screaming Eagle, Chateau Petrus, Grange, Vega Sicilia, Gaja, etc.). There will always be a market at the high end as there will always be those that can afford what they want at any cost.

• If you happen to be at the other end of the spectrum as an established bulk wine producer offering your wines at less than $10, you are in good shape! Based on the “trading down” that is taking place, you are likely seeing an increase in business. These are brands such as Bronco (2 buck chuck), Gallo, and Yellow Tail. These are the wines that are low cost, but wines that will inspire (you won’t have an epiphany from drinking them).

Neither of the above provide what I call good QPR (Quality Price Ratio): The first group may provide high quality, but at a highly inflated price while the second group provides a low price but seldom high enough character or complexity to warrant enjoyment beyond that of a simply quaff (drinkable but often very forgettable as well).

However, if you happen to be one of the thousands of wineries somewhere in between, this could be a major concern, especially if capital is short and cash flow is a big concern, as it is to the majority.

This is a capitalistic society and the main business of business is to make money or should I say profits  -  as much as possible.

• So from a third perspective I cannot fault those that  simply raised prices to what they thought the market would bear, even when their “product” often did not provide quality commensurate with that price. Sorry ..time to pay the piper – you won but now you loose.

• My main concern (fourth perspective)  are those passionate wineries that work to produce the best they can at a reasonable profit. These are the small and medium wineries that invest not only their money, but essentially their souls in producing what they love and then sharing that bounty with the rest of us.  I will sorely miss any of these wineries that don’t survive.

This is where social media and networking may help as a low cost means to promote these quality producers to help them survive through these difficult times. This was part of an article I read today in the NY Times regarding Gary Vaynerchuk of WinelibraryTV . There was a reference to the positive effect it has had on Sojoun Cellars (keep in mind a negative review could cause the opposite effect).

• While Mr. Vaynerchuk does not yet come close to Mr. Parker or the Spectator in his ability to move the wine market as a whole, his words do sell bottles. In an episode of Wine Library TV in February, Mr. Vaynerchuk raved about a Sonoma Coast pinot noir from Sojourn Cellars, a small producer.
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• “We took 500 e-mails and phone calls in 24 hours,” said Craig Haserot, an owner of Sojourn. “Nothing has put more people on our database and sold more wine than Wine Library TV, and it’s not even close.”

Note: here is a link to the Sojourn Cellars tasting episode on WinelibraryTV.

Now I’m not suggesting social media/networking will cure all the ills facing the wine industry (hardly), nor will it work wonders for everyone. However, it is another weapon in the marketing arsenal to get the word out so that more prospective customers will seek out these products, and if they are truly quality wines at reasonable prices, will return over and over as return customers.

So from the perspective of this wine enthusiast, amateur wine maker, and certainly passionate wine consumer,  I am hoping that the damage will not be too great for this last group as they are the future of the industry. (Oh… and my congratulations to Sojourn Cellars!)