The U.S. wine industry has been on an historic 50-year run. Demand from Baby Boomers drove the effort. Now the wine industry is fearful the run is done and tough choices loom.
In the 1970s there were about 1,000 wineries in the United States. Today, there are more than 11,500.
Napa has gone from 25 wineries in 1975 to more than 400 today. Wineries and grape growers planted more and more acres to meet demand. Now demand has leveled off.
Winemakers still make money. Premiumization allows makers to sell the same number of bottles—or fewer—while maintaining income because increases in price make up for sales stagnation or decline. Also, the increase in direct-to-consumer purchases mean the winery gets to keep more of the sale.
The growth model of the past half century, however, is not sustainable. Jeff Bitter, president of Allied Grape Growers, said several years ago for the grape business to be healthy, 30,000 acres of vines needed to be pulled. This year he told the Western Farm Press: “We didn’t pull out the acreage that I believed we needed to in order to be in balance. But three short crops in a row have masked the reality that those acres are still there. When you’re producing at 10% below average crop, it’s like some of that acreage has been removed. And although the acreage base has been reduced somewhat from where we were three years ago, we shouldn’t be fooled by those short crops because the acres are still in the ground.”
Bitters is a fourth-generation California grower who oversees a nearly 600-member statewide grape growers cooperative that sends $100 million worth of grapes annually to wineries, shippers, packers, and dehydrators. He maintains there are several things to be concerned about, but waning consumer demand is the major reason for anxiety.
The problem is younger consumers are a smaller cohort, have more choices in alcohol beverages, and may rebel against their parents’ preferences. In addition, Boomer numbers shrink every day. Some die, some reduce wine consumption, some turn to other beverages.
Production follows demand. With demand down or flat, the astonishing growth of vineyards and wineries cannot be sustained.
Bottom line: There will be plenty of good wine for you, but you may want to re-think your dream of spending retirement money on starting a wine operation.
Last round: Excessive use of commas is considered a serious crime, made worse with semicolons. They almost always result in a long sentence. Wine time.