Sales of Napa Valley red wines come to a ‘screeching halt’

  • Wednesday 15 April 2009

The economic downturn has brought sales of ultra premium Napa Valley reds ‘to a screeching halt,’ according to Dan Isenhart, wine buyer at Amazing Grapes Wine Store in Los Angeles.

But whilst the high end reds have seen a dramatic fall in sales, the mid-range wines are experiencing a boost as a result of the recession.

‘Every retailer I’ve spoken with says sales in 2009 so far are down 25%.

Sales of those $50 to $100 bottles of wine, especially the Napa Valley blue chips, have slowed tremendously,’ says Ben Pearson, wine buyer for the Bottle Barn, a major retailer in Santa Rosa, California.

‘Our foot traffic is still strong, but folks are unquestionably trading down. The $5 to $10 price category is really hot right now.’ He also said he is seeing lots of closeouts and reduced prices.

Sales started dropping last November and have continued downward in 2009, resulting in the first yearly drop in total retail value of wine shipments from California in 15 years, according to the Wine Institute, the trade organization for California wine.

While sales revenue is down, the total gallons of California wine shipped in 2008 actually increased by 15 million gallons.

Sales of Argentinian wines, especially, are showing remarkable strength in the teeth of the recession - up 29% in value and 13% in volume in 2008 - while France, Italy, and Spain lost market share, the investment firm of DPEC Partners reports.

That result is undoubtedly due to the excellent quality to price ratio the Argentinian wine have shown, as well as the fact that the euro’s strength against the dollar last year drove prices for European wines higher. But that is now turning around as the dollar strengthens against the euro.

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