California shakedown: The wine glut taxing California’s wine scene

Wine is a rarity – a splendid, value-added substance built upon an agricultural commodity. There is also, for the time being, far too much of it.

The 2024 growing season in California, my 17th vintage making wine, was gorgeous. Plentiful winter rain set the vines up for success. The summer then brought warm, dry days with cool nights – perfect for even ripening.

Relatively few heat spells and low disease pressure meant that there was no rush to pick. As the associate winemaker at Sonoma’s Brick and Mortar, I was working with pristine fruit brought in at its peak.

However, while cycling around Sonoma County months later, I saw row upon row of unharvested grapes. Fruit was left to rot on the vine in some of the state’s most prestigious appellations. For the 2024 harvest, there was no hiding in plain sight.

Desperate times

The custom crush facility that I worked for received calls from growers on an almost daily basis, asking us to vinify their fruit for them and offering all manner of deals. ‘Take half the fruit for yourselves,’ was often the plea.

Promises to pay may have been well intentioned, but there are no guarantees. Major wineries have gone bankrupt.

That unspoken-for wine in the tank loses value as the days go by. It will eventually be picked up for a song and blended into one generic bulk wine or another, its identity and integrity lost, any invocations to terroir a hollow joke.

‘Does this not mean amazing prices and plentiful wine for all?’ one could be forgiven for wondering. Sort of, in the short-term, is the answer.

However, over time, it also means a hit to quality, vineyards and the environment.

The California wine industry must figure out what it wants to be, and we, fellow wine lovers, should understand the role that we play in crafting the future of wine.

As I write this, there are 360 California bulk wine sale listings on one online marketplace alone, many dating back over multiple vintages. In one, 18,000 US gallons (about 68,000L) of 2024 Mendocino Chardonnay is optimistically priced at $12 per gallon ($3.17/L – about £2.50).

Competition is stiff. Tens of thousands of gallons are on offer for less. Consider the 2020 Alexander Valley Zinfandel, listed at $3 per gallon.

This is a stark indication of how punishing the passing of time is to the perceived value of unsold wine. So how did we get here?

The notion of infinite growth

The last two-plus decades saw enormous over-planting of new vineyards, spurred on by excessively exuberant projections based on past growth.

In the 1990s and 2000s, Americans were rapidly becoming wine drinkers; the mistake lay in thinking that this trend would continue until wine sat on every table.

Add to this the swirl of complex factors surrounding drinks culture – the sober-curious movement, adaptogenic beverages (involving active ingredients), cocktails, Millennials not wanting to be like their parents, and consumer confidence – and plop! We’ve landed in this wine-dark sea.

For five years or more, Californian marketing cooperatives such as Allied Grape Growers have issued warnings about the over-planting of new vineyards and have been urging farmers to rip vines out. It takes years before new acres make themselves felt.

Fruit comes online (ready for commercial wine production) in year three, or really year four. If one isn’t paying attention to who is planting what, one can quickly become part of the excess.

The low-yielding drought years of 2014-2016 gave producers a false sense of scarcity, which fuelled the growers’ refusal to heed the warnings of oversupply. Then Mother Nature layered on extra complexity.

Masking the problem

Wildfires in 2017, 2019 and even more so in 2020 slashed production across the state, most notably in Napa, Sonoma and Mendocino counties. Smoke rendered thousands of tonnes of fruit unsalvageable.

Unscrupulous producers already sitting on more wine than they could sell used the fires as an excuse not to accept perfectly good contracted fruit. Here was their out. The ensuing scarcity masked the problem yet again.

Then came Covid, bringing with it a temporary uptick in wine drinking that gave wineries a misguided sense of exuberance – wine is back! Wine club memberships are up! We’re saved! Not so. What happens to all of the extra fruit?

Cue the rise of ‘private label’ wine companies that contract to make a ‘Cuvée CostCut’ or a ‘Bob’s 80th’ birthday wine. Cue the mass-marketed boxed wines.

Understand that these are, by and large, put out by opportunistic entrepreneurs/marketers – not actual winemakers – picking up wine that someone else is frequently selling at a loss.

Think market forces, think global markets.

Buying in bulk

Picture enormous plastic tanks full of wine, sloshing as they ride on merchant marine ships across the globe, from Australia to the UK, Chile to Canada, San Francisco through the Panama Canal and on to…?

This isn’t a dystopia to be guarded against – it already accounts for a vast percentage by volume of wine consumed around the world. Sure, the carbon footprint is lower when wine is shipped in bulk and bottled where it’s to be sold, and that’s something.

But is the primary goal to have plentiful cheap plonk from all over the world? Or should we hold wine to a higher standard and place quality over quantity?

Now imagine that top wineries that long held to principles of terroir are facing pressures that may fundamentally change the way they’re making wine.

I knew we had reached a crisis when a colleague of mine who owns a boutique winery said that her 2025 crush plan was to drop all fruit contracts and buy finished wine on the bulk market.

Why deal with grower contracts, vineyard tracking, worrying about the weather and when to pick, hiring and training a harvest cellar crew, and fermenting grapes into wine when one has an ample and diverse supply of bulk wine easily at hand?

Any ‘winemaker’ buying wine in bulk comes to it after many critical decisions and actual winemaking have come and gone.

To be clear, wine has been traded in bulk for as long as wine has been made. Transactions mainly involved wineries looking to make relatively minor tweaks to their production.

For example, maybe I could use an extra 750L of Merlot to round out a particular lot and you made a bit too much to sell for yourself this year.

Shadow markets

As someone who has participated in small-scale, less cynical bulk wine buying, I can say looking for that diamond in the rough can be creative and fun; however, the ‘shadow market’ in bulk wine has expanded dramatically in recent years as wineries renew fewer grape contracts.

Today, entire companies are built around the assumption that growers will continue to overproduce and that bulk wine will continue to be sold at or near a loss.

Brands made with bulk wine pop up overnight, wooing the consumer with flashy packaging rather than the wine itself. The business model isn’t to enter into meaningful long-term contracts with growers, but to buy cheap and invent new labels as needed.

There is a sameness to these wines. They are invariably tweaked to conform to a particular formula. But these wines don’t offer a repeatable experience because where in the morass of bulk wine did that bottle come from?

Cheap wine also has an environmental cost. When grape prices are down, farmers often cut back on human labour. This can necessitate increasing the use of fungicides or herbicides, which takes a toll on the workforce, the environment and wine quality.

Far from being just a romantic notion, organic, biodynamic and regeneratively farmed vineyards are proven carbon sinks and havens for wildlife.

The extremes are stark, each producing radically different outcomes for the environment.

The way forward?

In a global context, California is still in its infancy as a wine region, still sorting out which varieties do best where.

Once vines have been planted, regardless of quality and need, farmers are loath to pull them out. They are business people, but it’s emotional. The vines are their babies. Many refuse to believe that their fruit is worth less or, indeed, worthless.

The sustainable option is to pull out enough vines to bring production in line with consumption, understanding that Mother Nature will always have the last word.

Between 2023 and 2024, California saw an estimated 15,000ha ripped out, mainly from the Central Valley. However, about 7,000 additional hectares came online, representing a net reduction of only 8,000ha. Allied Grape Growers calls for pulling out at least 20,000ha more.

This is a tricky proposition. Everyone agrees that vines should go, but nobody wants it to be theirs. How best should growers proceed? I sought the advice of a highly regarded Californian viticulturist who has more than 25 years of experience in this cyclical business.

They were happy to speak, but requested anonymity. ‘First, I look at, okay, is the vineyard economical in a good market?’ they told me. ‘And if it’s not, it’s time to remove it. If it’s virus-affected or compromised, it’s a challenge to sell that fruit.

‘I’ve had multiple calls over the last six months,’ my interviewee continued, ‘from people saying, “Will you lease my vineyard for no payment?” They want to maintain the property. They think it has tremendous value, and I look at the age and yields. “Do you have a contract? No?” Those folks are in denial. They don’t understand the business.’

What if you have a new, healthy, well laid-out vineyard in a prime appellation but sales are soft and you’re having trouble covering costs?

‘Of course, you’re not going to pull that vineyard. You haven’t even begun to pay for your investment,’ they explained. ‘My advice to those is: let’s do the minimal work to keep the vineyard healthy this year, to be in line for healthy production next year.’

Looking for balance

My source is confident that Napa and Sonoma are close to finding a balance between supply and demand. There isn’t much room in either county for new plantings, and growers and wineries are, they said, increasingly ‘diligent and efficient about what we are doing’.

The market will no longer tolerate poorly farmed fruit, and nor should it.

Citing the Sonoma County Winegrowers’ sustainability programme, they continued: ‘Sonoma County as a whole has made this claim that we are going to be sustainable. Well, we have to act on that, and we have to improve what we are doing every year.’

Their message: ‘Plant to your site, and farm to your site.’ In other words, don’t try to force quality where the terroir won’t support it and don’t plant in high-yielding terrain unless you have a solid sales plan for all those grapes.

Wineries must also do better. Those that don’t seek rapid expansion, focusing instead on only making what they can sell, are more reliable buyers of fruit and tend to treat that fruit with greater care.

Where even these wineries can fall short is in their marketing. Food and wine, enjoyed together at the table with loved ones, is an ancient story in need of a rebrand. This is wine as culture, and this is at risk.

Most importantly, wine buyers shouldn’t discount the role they can play in rectifying the situation.

‘The number one driver for wineries is the consumer,’ noted the viticulturist. ‘Consumer pressure for sure has gotten wineries that 10 years ago were not on board (with sustainability) on board.’ Mindful consumption, I would add, is the real answer.

We babble on, misty-eyed, about terroir and then get excited by a screaming deal. Here’s where the rubber meets the road. Get to know your winemaker. Trace the wine back to the vineyard it came from and learn how it was farmed.

Understand the power of your wallet. This will create better wine, serve our planet and enhance our wine adventures.

Striking a balance: six recommended California wineries

Ignoring the ‘bigger is better’ ethos, these six California producers are all focused on only making as much wine as they can sell, while also treating their suppliers and the fruit that they supply with respect.

Dunn Vineyards

Howell Mountain is one of the greatest AVAs for Cabernet Sauvignon, and Dunn Vineyards has been creating dense, delicious Cabs here for 46 years.

Focusing on one variety may seem limited, but multiple sites yield complexity, which is complemented by 32 months in carefully chosen French oak barrels. Don’t be afraid of that oak – this fruit integrates it beautifully.

The 2019 Howell Mountain Cabernet Sauvignon (US$175-$250 Widely available, Alcohol 13.9%, 98pts) is stunning, still fresh, with plenty of life ahead. There’s a relatively more affordable Napa bottling, which is also excellent, and a reserve wine in the top years.

The family’s large donations to the Napa Land Trust demonstrate its commitment to ecology. dunnvineyards.com.

Flanagan

‘To make great wine, you must start with great fruit from great sites.’ So says Isabelle Mort, director of winemaking at Flanagan. Clichéd, perhaps, but few live up to this like Flanagan.

In addition to its own vineyards, Flanagan has long-standing contracts for renowned sites such as Bacigalupi and Ritchie. Where other wineries stomp on this famous fruit, Flanagan is all about expressing the vintage and the terroir.

Expect balance across the board.

The 2023 Viognier (US$65-$70 Flanagan, Vintner’s Collective, Alc 14%, 95pts) – with great acidity, complexity and a smooth mouthfeel – manages to be sumptuous without being cloying, which isn’t easy for this variety in California. flanaganwines.com.

Lichen Estate

There’s a touch of the mad inventor about Doug Stewart, founder and winemaker of Lichen Estate in the Anderson Valley, Mendocino.

From yoghurt to high-temperature superconductors, the companies he has founded have a through-line: sustainability and caring for the environment.

Doug farms Lichen organically, also focusing on regenerative practices such as not tilling and encouraging native grasses. Aiming to set the bar for California sparkling, his vines are planted at high density, which also conserves scarce water reserves.

The Lichen 2018 Sparkling Pinot Gris is pure and delightful.

The 2019 Grand Cuvée Rosé (US$95 Lichen Estate, Alc 12.5%, 93pts) is peachy, flinty and lively – and made from 100% estate fruit. lichenestate.com.

Porter Creek Vineyards

Alex Davis, owner and winemaker at Porter Creek Vineyards, is uncompromising in terms of his thoughtful, organic viticulture and hands-off approach to winemaking.

He doesn’t chase trends or markets. While about 80% of his production comes from his estate fruit, with a focus on Pinot Noir and Chardonnay, Davis also purchases small quantities of other grapes from organic growers – in order to offer something at a lower price point.

The 2019 Hillside Pinot Noir (Alc 12.8%, 95pts) perfectly represents what to expect from here: chiselled, elegant, restrained and delicious. portercreekvineyards.com.

Silver Oak

Silver Oak’s size (currently more than 160ha of vines in Napa Valley and Alexander Valley) makes it the outlier here. But when you’re big, your actions make a difference.

It’s an exemplar when it comes to taking a holistic approach to maximising wine quality.

This means drastically reducing herbicide use, conducting farming trials focused on soil health, building the first ever LEED Platinum-certified commercial wineries – in Oakville and Alexander Valley (the latter is also Living Building-certified for its net zero energy and water usage, among other things) – and fostering mutual respect with their contracted growers.

All this care is evident in the glass.

The 2017 Alexander Valley Cabernet Sauvignon (£108 Millésima, US$70-$120 Widely available, Alc 14.2%, 93pts) has a superb structure, lovely floral notes and a lingering finish. silveroak.com.

St Supéry

Few Napa wineries work exclusively with their own fruit – it leaves one vulnerable to the slings and arrows of nature.

At St Supéry, whose mandate is to make the best possible wine, estate fruit is considered non-negotiable.

Choosing one’s best vines to propagate new vineyards, nurturing low-yielding old vines that produce delicious fruit, and being a Silver member of International Wineries for Climate Action – these are among the quality moves Michael Scholz and his team at St Supéry have been empowered to make; it shows in their wines.

The 2023 Dollarhide Estate Vineyard Sauvignon Blanc (Alc 13.5%, 94pts) is delightful, creamy, complex and lively. stsupery.com.

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