California vineyards face foreclosure
- Wednesday 17 March 2010
The wine division of the Silicon Valley Bank said some foreclosures could be expected in 2010, continuing a trend which began last year.
‘We expect to see more “bargain transitions” or distressed sales [from 2009 into 2010]’, Rob McMillan, founder of the bank’s wine division told decanter.com. He added foreclosures were 'rare' in the wine industry.
Following 12 years of consecutive growth in the retail value of wine sold in the United States, the market declined in 2009, according to wine industry consultants Gomberg, Fredrikson & Associates
‘There is no sugar coating it. Many wineries had a tough time selling wine in 2009. Many said it was the worst year they ever had,’ it said in a recent report.
McMillan said according to a survey of 460 West Coast fine wineries, 2% had suggested that they needed the market to recover for them ‘to be viable’, while 7% described themselves as ‘very weak’ financially.
‘A percentage of those will most likely change hands,’ he said.
McMillan also said the fine wine segment was hit harder that the volume production segment, with the hardest hit wineries falling into a ‘dead zone’ in wine pricing between $50 and $100.
‘We don’t have a final number, but expect end-of-year sales for the fine wine segment will be off in the single digits, probably between 6%-8%’.
The bleak situation for some wineries contrasts with 2008, when no foreclosures were reported, according to Silicon Valley Bank spokeswoman Carrie Merritt.
‘It’s a difficult market. Small family-owned wineries and farmers are suffering right along with other family-owned business across the US,’ she added.
On a positive note, the bank predicts ‘positive growth for the wine industry overall in 2010’.