Retailers have been hesitant to price increases, but some Napa County producers are both raising prices and ending grape purchase contracts, because of the bumper 2018 crop, Moramarco said.įor producers of more than 30,000 cases annually, the realities of selling the volume of what’s made likely includes working with wholesalers, which handle about two-thirds of Duckhorn Wine Co.’s production, according to Carole Reber, chief marketing officer. The average retail price ($31.34 a bottle) is half of what would be expected based on the rule of thumb for Napa County grape prices, down from 59% in 2008, when the average bottle price was $23.38. He compared Nielsen volume sales data for the top 30 Napa cab labels in food stores, accounting for 95% of volume for such wines in that price category, over the past decade. “There is still a lot of wine out there sold well below what would be a reasonable expectation, given the cost of grapes.” “Napa has done a wonderful job of building the luxury image for Napa and building a lot of luxury brands, but this is one risk that they have,” Moramarco said. But one challenge has been that though Napa cab prices in grocery stores as been rapidly climbing, they’re not keeping pace with the cost of grapes, he said. For Napa County cabernet sauvignon wines, a hot luxury-tier seller, around 15% are sold in food stores, Moramarco said. Though many luxury-tier wines (over $20 a bottle) are sold via restaurants, hotels, clubs and tasting rooms, a growing fraction are entering grocery aisles. If core Napa consumers buy at least a bottle a month, that works out to a market of less than 5% of legal adults. of legal drinking age, over 36 million would be considered “core” wine consumers - drinking at least several glasses a month.Īnd core wine consumers of Napa County wines are estimated to be those who buy the 9.3 million cases produced over the most recent five-year average, or 2.3% of the 405.6 million cases shipped in the U.S., according to BW 166. Out of a projected 242.5 million in the U.S. The record 184,573 tons of Napa County wine grapes crushed last year could translate into about 11 million cases of wine produced from that vintage at a retail value north of $7 billion, he estimated. “People who think that they’re just going to make a bottle of wine and put it up for sale, and somebody will come and buy it, probably you’re going to be disappointed,” Moramarco said. Successful brand producers will be those who accurately identify the target audience for a given product then actively pursue the greatest share of that market, he said. “It’s going to be a more competitive environment, so get ready for it and go out and figure out how you’re going to win,” Moramarco said. At any given time, he estimates that about 200,000 wine labels are in the marketplace. Tax & Trade Bureau approved roughly 125,000 new wine labels, many of them for selections not previously on the market, he noted. The crowded marketplace for beverage alcohol is set to become even more of a fight for market share between wine, beer and spirits brands generally, according to Jon Moramarco, managing partner of BW 166, a North Bay-based analytics firm. Areas of concern include where the wine business is in the business cycle, how trade policies outside California are impacting local vintners, and what rising costs of labor and grapes are doing to the bottom line. “There are some caution lights out there now that we want to talk about,” said Richard Mendelson, a longtime wine industry attorney with Dickenson Peatman & Fogarty in Napa and moderator of the State of the Local Wine Industry panel at the Impact Napa conference Aug. With the costs related to making Napa County wine rising and the marketplace for selling wine getting more competitive, local producers are reaching deeper into their marketing toolboxes.
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