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Napa suffers at high end, while lower tiers and cults sit tight

The higher-end Napa wines are suffering most in the recession, with some big names discounted by nearly a third.

[CORRECTION: In an earlier version of this story we referred to the Viader Howell Mountain proprietory blend as being discounted from around US$80 to US$40. Viader would like to make clear that the price of this wine has not dropped, and that the winery intends to raise the price from the current suggested retail price of US$90 to US$100.]

Total wine sales are actually up a few percentage points, but almost all of that increase comes from wines costing US$8 to US$12.

‘The high-priced bottles are sitting there, but the low-end wine is selling really well,’ said Ben Pearson of Bottle Barn, a Sonoma County wine retailer.

Vic Motto of Global Wine Partners, an investment banking service, said, ‘For some, business is down 30%.

‘As a rule, wineries that rely on distributors are having a hard time. Buyers for the retail stores aren’t buying the top-priced wines. Restaurants aren’t stocking them.’

Wine is backing up in the system, and that means prices are falling. ‘Prices have gone down,’ said a salesman at Park Avenue Liquor Shop in Manhattan. For just one example, Caymus ‘Special Selection’ Cabernet Sauvignon 2006 was US$160 a bottle. Now it’s available online for US$99.

At Joseph Phelps Vineyards, marketing chief Michael McEvoy said discounts at retailers and online are deeper than in recent years for their flagship wine Insignia, which is selling at US$149.95.

‘It’s not anything we’ve done. The suggested retail for the 2006 Insignia is still US$200.’

The signs of the downturn are all over Napa and Sonoma counties. Grape prices have tumbled. Chardonnay that was US$2,500 a ton two years ago is now US$500.

Estimates are that 30% of this year’s grape crop won’t be sold, according to the Santa Rosa Press Democrat.

The Super Seconds—that tier of wines under cult status but still expensive—have seen sales slow.

‘Our wine used to sell out in a few months—now it’s taken a year,’ said Doug Shafer of Shafer Vineyards.

Napa Valley cult wines, however, like Screaming Eagle and Grace Family, are holding steady. ‘They’re tightly allocated to a small mailing list and people don’t want to give up their place in line,’ Motto says.

Jayson Woodbridge of Hundred Acre Winery in Napa, whose Cabernets sell for US$250 per bottle, says he has noticed little change – indeed, orders are up on last year.

‘People who buy the top wines may narrow their list of favourites down from 20 to eight wines. But they will buy more of those eight,’ he said.

‘The dead zone is the US$50-100 price bracket.’

  • New Napa Valley winery Ovid is offering its first release, a 2005 of Bordeaux blend, for US$175 per bottle, and the 2006 at the same price, Jeff Cox writes.

    The 6ha (15 acre) Ovid is a high-end venture in every sense of the expression. Neighbors include the cult winery Colgin, and now Continuum, Tim Mondavi and his sister Marcia’s new venture, among other super premium wineries.

    Andy Erickson is winemaker, Michel Rolland consultant. The vineyard was designed and planted by David Abreu, the most well-respected vineyard manager in the region. The managing partner is Janet Pagano, formerly of Codorniu and Stonestreet, and president of Mt. Veeder Winery.

    The proprietors are husband and wife team Mark Nelson and Dana Johnson. Nelson founded, and since sold, Ovid Technologies, the world’s leading biomedical search and full text software firm.

    Written by Jeff Cox, and Adam Lechmere

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