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Wine

Silicon Valley Bank’s Wine Division Findings Point to “Value Being in Vogue”

Throughout the Silicon Valley Bank report, written by Rob McMillan, founder of the wine division, are references back to the Jerry Maguire film, all leading to “Show me the money!”

Well, that’s what we’re all needing right now… A beacon in the economic storm that we’re all currently navigating in our fragile sailboats; one sheet down and two to go…Perhaps even more down for some.

Fine wine has taken a huge tumble. That’s now just old news.

It’s the $35 and below bottles of wine that are still selling, while the $50 to $125 bottles have hit a dead zone. Beyond that, guess who’s buying (Wall Street execs) the more expensive bottles  of wine (Wall Street…) that  are still selling (Wall….) in the hundreds of dollar range? Interesting, huh?

But, what about everyone else, because wine is being sold? No one’s going to give up vino just because there’s a recession. (Perhaps some want it even more.) According to this report, per capita consumption continues to rise in the U.S., and those who were in the position “to trade up” are now “trading down.” As consumers trade down to value-priced wines, those brands are having positive year-over-year growth results.

Here’s an interesting concept, as you think about this… While that wine consumer is trading down, it is without a doubt that this person is going to learn what great values exist that s/he might have otherwise missed, had this recession not hit us so hard. As these people experiments with new brands, they’ll begin to find new loyalties in the process, which means that what they once knew and did is now changed forever more.

Value is Vogue…

This report points to the fact that since there are continuing increases in per capita consumption, planting should also take place as non-bearing acreage in order to keep up. Right now, however, vine replacement levels of new vines is down. This will result in an under supply in the future, if something isn’t done about this now… not later. This is tough to do, because even though the prices of vineyards are falling, they’re still high priced.

That begs the question, What’s the incentive to grow a vineyard at this time? This also creates a lot of confusion about what the real price is of a vineyard and its new plantings in this deflationary economy. Then there’s the ever tightening of credit lending to further complicate things for wine grape farmers.

So, what’s currently in it for today’s confused consumers?

As well as the lower tier priced wines from California, Oregon wines are proving to be great values. Imports are doing well, too, because of the cost to produce their wine. With the cost of land and labor being much lower in other countries and the help of government subsides, imports are  super values. If land owners in the US don’t keep up with new plantings to meet the increase in demands, importers will take their places pretty quickly.

Oak Knoll Winery
Image of Oak Knoll Winery via Snooth

Imagine a Willamette Valley vineyard designated Pinot Noir that sells for $20.00? The 2005 Oak Knoll Winery Pinot Noir, Red Hill Vineyard is that wine. They also have a 2006 Oak Knoll Pinot Gris Willamette Valley at $10.00! These are extreme values that fit perfectly into today’s buying patterns.

I’m a huge fan of Fish Eye boxed wines. They’re great everyday juice, the box sits conveniently in your fridge or on your counter, and dispenses wine ever-so-easily. Track back The Wall Street Journal story by Dorothy Gaiter and John Brecher about their Fish Eye wine experiment. The wine claims a six week seal of freshness. That all proved itself as being true and correct, according to Dorothy and John, because air isn’t allowed into the package to destroy the wine over time. $16.00 for a three liter box.

Oak Grove Winery is another brand that has super affordable wines, many of which have received Best Buys from Wine Enthusiast Magazine, and all of the varieties sell for about $8.00 a bottle. This is a hard to beat price for their full range of everyday wines.

A bit higher priced wines are the wines under the Artisan Family of Wines group: A Rose, a Meritage, a Cab… and, yes, a Petite Sirah under the Seven Artisans label at $17.99. For PS today, this is a real value.

Running through most of the Petite Sirah members, actually, their PSes fit in the $35 and under category. The Website has a full list with all of the members.

A glass a day keeps the doctor away….

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