End of the Glut

Sep 17, 2012 1 Comment by

Back in 2010 the Wall Street Journal reported, “There is a glut of wine all over the world—an oversupply so significant that it’s compelled Australian winemakers to plow up their vineyards, forced French producers to turn wines into ethanol and brought wealthy Napa vintners if not to their knees then to their bankers in search of refinance. The reasons are various—new vineyard plantings by ambitious producers, increased productivity at a time of plummeting demand, winemakers who have over-leveraged their brands.”

As a result, prices of grapes went down and the cost of bulk wine plummeted.  Note that during this time some bulk wine was selling for as low as $1 per gallon!  And there were more than a few opportunists who stepped in to snap it up, put a flashy label on it and sell it for $15 per bottle.  One of these “Johnny-on-the-spots” who came out of nowhere claimed to be moving well over 100,000 cases under labels with lot numbers on them.  Not anymore.  At least not from California, as the glut has ended and, I am told, the supply of good wine available on the bulk market has virtually dried up.  I have recently discovered that the previously mentioned producer is now sourcing some wine from Bulgaria to meet his needs.  Oh, the humanity!

The reason for the end of the glut is many fold:

  • new vineyard plantings in California have really slowed down the last 5 years;
  • because of the global recession many producers lowered production and depleted their back-stock of inventory;
  • 2010 and 2011 were much smaller vintages in many growing areas due to various weather related causes.

And then combine all that with a strong growth in consumption in markets such as the US and around the world especially, China, and I am sure you get my point.  In fact, the shortage has gotten so bad that in late August thieves in the night harvested a vineyard and made off with a half-ton of old vine Zinfandel in Contra Costa County—now that is going to extremes!

We are lucky at Vintner Select to have many estate producers in our portfolio and even though they have less wine to sell right now with the lower yields these last few vintages, they are at least secure with their own vineyards and have enough supply to maintain quality and sustain themselves long-term.  And those producers we deal with that do not own any vineyards like Sean Minor, Charles Smith, Susie Selby, Jared Burns (Revelry), and the owners of Foxglove and Vinum, each of them  are very confident that the long term contracts and relationships built over time will give them enough grapes to work with, so that they can continue to produce a consistently high-quality bottle of wine under their respective labels at similar pricing.  Over the last few years when we have selected these negociant producers, we have been careful to align ourselves with wineries that are always prepared, looking to the future and not just resting on their laurels.  And in this case it has paid off.

So the glut may be over, but we will continue to be able to offer you great wine at reasonable prices.

- Michael Brown

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About the author

Michael Brown has been a Portfolio Manager for Vintner Select since 2010, a fine wine importer and tri-state distributor, Michael has extensive knowledge about wine that started while working at a local winery when he was finishing his degree in philosophy from Xavier University in Cincinnati.  He went on to work for a wine bar in Chicago before training as a chef, first at the noteworthy Culinary Institute of America in Hyde Park, NY, and later in Paris, France, at a few restaurants under top-rated chefs.  He has worked in the wine business full time since 1991 and has traveled extensively through the wine areas of France, Italy, California, Oregon and Washington State. Certified as a Specialist in Wine (CSW) by the Society of Wine Educators, he has also passed the first stage of the Master Sommelier exams.

One Response to “End of the Glut”

  1. Michael Brown says:

    New data is pouring in about the latest harvest and the effect it will have on supply of wines from California in the next few years…

    “Grape Supply Loosens in Short Term: California’s 2012 crop is larger than expected, but long-term, shortages loom”

    See full story at:
    http://www.winesandvines.com/template.cfm?section=news&content=105682&htitle=Grape%20Supply%20Loosens%20in%20Short%20Term&

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