There is trouble ahead for Napa Valley wineries in 2009 and maybe beyond. You might think that all California wineries will suffer equally, but Napa wineries may be more vulnerable. A trip to the Napa Valley costs more than going to Paso Robles, Mendocino, or the Russian River wine region. Lodging and restaurants are more expensive, tasting room fees are higher, and on average, the cost of a bottle of wine is more expensive in the Napa Valley.
Since January we have been to the Napa Valley on three separate occasions. Granted we always visit during the week but almost every tasting room we have been into has been empty, void of visitors. Where are the tourists? In each tasting room we have heard the same lament about winter months being slow, but never this slow. The outlook for visitors the rest of the year does not look good. The San Francisco Convention & Visitor’s Bureau is predicting a drop in European and Asian travelers and in corporate travel by U.S. companies. No company wants to look bad for taking unnecessary travel junkets. More tourists are traveling on a beer budget.
There have been article upon article about how wine buyers are scaling down. This past Thursday the Wall Street Journal in its Personal Journal section ran an article entitled “Buying Wine on a Dime.” The article points out that wine sales in the $11 to $20 range are very healthy. I would venture to guess that 90% of the wines from the Napa Valley are above this range. The article indicates that restaurant wine sales have dropped dramatically. Napa Valley wines are always a prominent part of any restaurant wine list.
We travel with a group of wine-loving friends and we all consider ourselves to be wine club junkies. Since October of 2008 all of us have dropped memberships in at least half of our wine clubs. In 2009 wine clubs will be a tough sell for wineries.
What can a winery do to attract tourists and sell wine?
We don’t pretend to be wine business experts by any means, but we do think of ourselves as seasoned travelers to wine country. These ideas are from our perspective and we would love to see the wineries consider the following. Lowering tasting rooms fees and/or apply the fees to a purchase of wine. Start thinking about making great everyday wines in the $11 to $20 range. Work with local lodging and restaurants to put package deals together. We all want to travel to the wine country; we just need to scale it down a bit. If a wine is not selling and inventory is building, have a blowout sale. It won’t ruin your image, everybody knows times are tough. Partner with other wineries for special sale weekends where people must come to the winery to take advantage of the wine sale. If you have a great wine blowout sale tell the wine bloggers, or post it on Good Cheap Vino. If you are a restaurant, how about waving the corkage fee if the wine is from Napa Valley?
Napa Valley has not been in this position before. The image of being a chic, fashionable and a world-renowned wine region has kept the tourists flowing. But this year things are much different. Take the offensive and do things differently than the past. I’m reading a book entitled “What Would Google Do?” by Jeff Jarvis. The premise of the book is that businesses should take a look at what they do through the eyes of Google. Google looks at itself differently than any other company. It is open and embraces the ideas of the outside community and that is why it is the fastest growing company in the history of the world. Wineries might ask the question, what would Google do if it were a Napa Valley winery?
Wine Shop Clerk says
There is no question the California economy is suffering and the effects go far beyond just the Napa Valley wineries. Most every tasting room in the state has seen some sort of downturn in business. Fewer miles are being driven, hotels book fewer rooms, even the mighty Google, while still very profitable, has been affected.
There are lots of things an individual winery can do boost their own business depending on location, offerings, etc. but a better economy would certainly help a lot.
Ash Mehta says
We are a wine bar and tasting room in Solvang. Our experience this year had been that guests are not buying as many over $30 wines but they ARE enjoying them by-the-glass. Our business is off in the single digits from last year, mostly helped by increased on-premise sales.
We offer flights from $18 to $25 and these are still our most popular on-premise sales. We pour 6 one and one half ounce pours and explain to guests that for the cost of a flight you are really getting almost two glasses of wine. Our policy of not counting a taste our guests don’t like also helps sell flights.
Our by-the-glass prices start at $7 but I RARELY see any one taking advantage of that.
I post quarterly data on http://www.tastesofthevalleys.com/whatsold.html.
Yesterday was a REALLY slow day and all our bottle sales were from $28 to $45.
I must say that the article does not indicate that many wine distributors are aggressively selling wine from South America. My wife and I go to many wine tastings in our area of the country and 90% of them are South American wines.
Livermore Wine says
The Livermore Valley offers a great alternative to Napa. The quality of its wines keeps getting better every year, some wineries competing with Napa’s best; it’s much closer to far more of the Bay Area than Napa; the people there are wonderful…more often than not the owner and/or winemaker is pouring wine; downtown Livermore has become a haven…terrific food and shops. Oh yeah, the vast majority of the wines are less expensive than Napa’s, and many of the wineries give tasting fees back on purchases of wine.
What’s not to like?
Give Livermore a try!
I think people are still buying wine, but they are looking for bargains more than ever before. People are looking for wines that taste good but are not expensive. When going wine tasting, more people are searching for wine tasting coupons to reduce their costs. However, this is just happening with wine. People are looking to cut their expenses in all areas due to the struggling economy.
Very well put. There have been, on average, 4 million visitors per year to Napa Valley. Who knows how they arrive at that number. Living in the Bay Area, my wife and I visit Napa frequently but many of our friends have reduced their trips significantly. I’m told participants in wine clubs have dwindled as well.
Oh well, that just means more great wine for you and I!