Buoyed by the perception of an economy on the upswing, consumers are forking over more money for fine wine.
The only kink in the equation at the moment is that Napa Valley wine is in relatively short supply.
“If we had it, we could sell it,” declared Larry Maguire, president/CEO of Far Niente Winery, as a gathering for the trade was about to get under way Monday at the Robert Mondavi Winery.
Maguire was but one of the 41 winery representatives hosting Taste of Oakville, a combination of master class and tasting for retailers, restaurateurs and sommeliers held once a year in the Oakville appellation as an update all on the wines from that particular appellation.
“The situation is good for high-end Napa Valley wines,” Maguire maintained. “The only problem — there’s not enough inventory.”
“Things are improving,” agreed winemaker Andy Erickson, who makes the wines at Dalla Valle as well as for his own brand, Favia. “People are starting to spend money again on wine and it feels good. There’s a lot of enthusiasm out there. I was just in Las Vegas — one of the first places that got hit really hard (by the recession) — and it was great to see people are coming back ... and they’re spending money on food and wine.”
Eduardo Dingler, wine director at Morimoto Napa, said both wine and sake sales were hurt by the economic downturn. He said diners were focused on value, “willing to spend $25 or $30 for a white wine, but barely touching the reds. All of sudden this year, they’re willing to order higher end wines ... willing to spend $25 for a glass of cabernet.”
Four years ago, the steak-and-chop crowd at Cole’s Chop House in downtown Napa thought nothing of spending $120 to $140 for a bottle of cabernet sauvignon, wine director Jim Gallagher said.
“When the bottom dropped out (of the market), I saw a big change. I brought in a lot of less-expensive cabs and sold them in the range of $75 to $90. If we sold a $100 bottle, that was a really good night.”
Gallagher looks at this recent period as good for the restaurant. “Now I have lot of older vintages in the cellar ... the cabs have some bottle age and I can put them back on the list.
“Since the first of the year, we’ve sold a lot of wine. Last weekend was phenomenal — we had more than 200 people in for dinner.”
Dingler said business at Morimoto Napa has also been good of late, with more than 400 people enjoying dinner at the Riverfront restaurant last Saturday night.
On the retail side, wine drinkers have loosened the purse strings a bit, added Dan Dawson, proprietor of Back Room Wines in downtown Napa.
“I have more people coming in who are willing to spend $65, $75 and $100 for a bottle of wine without blinking an eye,” Dawson noted. “A couple of years ago, they were looking for wines costing $40 to $60. Today, I think I have a lot of people who are more comfortable going up to the $75 price point.
“Now I have to keep the $100 wines in the inventory ... (because) I have those people coming in who want those wines. That wasn’t the case three years ago.”
Over the past couple of years, “Wineries have been offering vintages at lower prices, especially at the restaurant level,” Far Niente’s Maguire said in a pre-conference interview. “Wine sales were steadily building last year, but now we have to deal with historically low inventories following three short-crop vintages in a row.”
Restaurant wine lists were pared down starting in late 2008, Maguire continued. “Last year, we saw restaurants starting to build up their lists once again.”
The assessments by producers and retailers here in the valley were echoed last week with the release of a State of the Wine Industry report issued by Silicon Valley Bank.
The survey of 500 wineries by the commercial lender prompted report authors to predict that a steady uptick in fine wine sales is expected. In fact, the growth in wine sales in this country alone this year is predicted to be 7 to 11 percent.
In addition to forecasting price increases for grapes and bulk juice, the bank report also points to a shortage in wine inventories “that will last for some time domestically.”
“Supply will be structurally short for an extended period in all production winery sizes, demand will continue to grow at a little slower pace post-recovery, imports will take a larger share of total domestic sales and make larger inroads into the lower-priced wine categories,” noted Rob McMillan, founder of Silicon Valley Bank’s Wine Division and author of the report.
“The biggest obstacles to growth and profitability for wine businesses over the next several years will be finding supply at the right price and quality for a given program.”
As for a prediction, Maguire quipped: “I’m not making any predictions ... other than I feel good about 2012.”