Are We Hiring into a Industry-Wide Downturn?
This month’s issue of Wine Business Monthly has a lot of useful information in it. A lot of talk of headwinds up ahead for the wine industry, along with some justifiable “yes, but stay calm”-type of advice. For regular readers of this blog, you know that I've been worried for a long time that 2019 would signal a cyclical downturn for grape growers and that, more recently, I've come to believe we're headed into a recession and an industry-wide slump. Which is why I was also
The Three Horsemen of the Grapepocalypse, Part 4: A Survival Guide
Well, I’ve thrown a lot out at you in this series of blog posts. The grape market cycle might be grinding to a halt! A recession is coming
The Three Horsemen of the Grapepocalypse, Part 1: Revenge of the Grape Market Cycle
Lately, there has been a lot of talk about how we’re due to see a downturn in the wine market. As those of you who have gotten a glass of wine with me anytime since 2012 probably know, I’ve been predicting a peak in wine grape prices in 2018. Over the past 6 years, I’ve refined and softened that prediction. We have not seen over-planting on the same scale as we have in past grape market cycles. In 2017, I changed my tune a bit to state that (a) the peak will occur in 2018/
Some Big Picture Thoughts on Where Our Industry is Heading in the Next Few Years
Today, I'm waiting on a couple pieces of projects, giving me some "down time" to work on some of the continual analysis I do of the wine grape market. I just got inspired to share some insights and methods with my readers. This based off my question to myself "Where is the wine industry is going over the next few years?" Now, before I begin, a couple of caveats: I focus largely on coastal regions, especially the North Coast - keep that in mind when you interpret this blog
Maybe Napa Cabernet Sauvignon Prices Aren't That High!
My two favorite people from Uppsala are both named David. The first is David the Gnome and the second is David Morrison at The Wine Gourd blog. I’ll refrain from extolling the virtues of David the Gnome for now and focus on David Morrison. Frankly, he does some of the best quantitative analysis of any wine blogger out there. If you would like to understand the economics of the wine industry, his blog is a must-read. His latest post, “Napa cabernet grapes are greatly over-
Where Are We in the Wine Grape Market Pricing Cycle?
Historically, our industry has been cyclical. Prices rise, we start planting. Then the new vines start producing. Prices fall, we stop planting. Consumer demand continues to grow, while vineyards age and yields fall and then prices rise. Rinse. Repeat. This cycle continues to describe our industry rather well, with four caveats/exceptions. First, the prices of very top-end of the market, grapes like Napa Cabernet Sauvignon and the top five percent or so of Sonoma County fr
Grape Prices Are Not Too High, (Yet)
Are grape prices too high? I have heard many producers claiming that they are. Vineyard guys tend to think they aren't. In the end, the answer is, of course, "depends." Depends on where you are and what you're growing. But we can take a broad-market look at this issue, too, and that is something I do every year or two. The chart below shows some relevant stats. First, take a look at Grape Cost as a % of Retail Price. This is only an estimate, using USDA and Wine Instit
Are Grape Prices Rising Too Fast? By the Numbers
The other day I posted to this blog claiming that, though grape prices have been rising faster than bottle prices in recent years, they are just making up for lost ground. Ergo, I concluded the rise in grape prices over the past 4 years has been sustainable. This is contrary to the concerns voiced by people in this industry who are much more experienced and successful than I, including David Freed, Rob McMillan and anyone whose name or employer is Ciatti. I wanted to resear
Sonoma Chardonnay Update: Price Recovery Accelerates - Still Looks Cyclical
Though I’m waiting for the final crush report numbers to assess my projections’ accuracy, I wanted to go back to one projection, in particular. District 3 (Sonomarin) Chardonnay was a bit of a question for me, though not as enigmatic as Anderson Valley Pinot and Lake County Cab. In the case of Sonomarin Chard I got it right, predicting a price of $1998.32. The preliminary numbers show an average price of $1987.15, for difference of $11.17, meaning I was about half a percen
The Verdict is In: Napa Cab Prices Are No Longer Cyclical, So What Now?
In the last post, we looked at the changing dynamics of modelling county-wide averages for Napa cab prices by year. My suggested method for dealing with the uncertain and changing nature of predicting cab prices was to use a combination of scenario and sensitivity analysis. I went ahead and did this myself and the exercise has yielded new insight into Napa cab price modeling that I would like to share here. Before we delve into that, though, I would like my readers to unde
