It is fair to say 2023 was not an easy year for California’s wine industry, battling not only the same macroeconomic headwinds – inflationary costs and rising interest rates – faced by all, but also having to come to terms with the return of flat or shrinking wine sales volumes after the brief respite provided by the pandemicinduced demand spike. Tough decisions that might have got made in 2020 and 2021 in response to long-term demographic/behavioural changes and the proliferation of alternative alcohol beverage products – and which were postponed by the pandemic demand – are now back on the agenda. Ultimately, the direction in California, as around the world, is probably towards a more streamlined wine industry.
By the year’s end it was clear that growers and wineries had begun to concertedly adjust to the reality. Grapes and bulk wine suppliers are becoming better attuned to buyer needs and more open-minded to re-engineering their businesses in order to make work for them the prices that buyers can actually pay. Many such adjustments are painful – not least the mothballing or removal altogether of uncontracted vineyards, for example, or the rationalizing of headcounts – but they are helping lay the groundwork for a rightsized industry enjoying greater resilience in 2024 and beyond.
Our final report of 2023 made plain the bulk wine pricing trend and its “2019 vibes”: “Pricing has weakened as the year has progressed and – outside Napa and a few areas of Sonoma – the price hierarchy has condensed somewhat towards Californiaappellation pricing.” While some programs will switch their sourcing from Coastal to premium California wines in order to shore-up margin at this time of elevated costs, others programs might take the opportunity to trade up on grapes in order to boost quality, assisted by the 2023 vintage being – as is widely perceived – a very good one. Lower pricing on excellent-quality wines frees-up wineries, negociants and retailers to create new lines and products that might help attract fresh consumers and younger demographics, so that overall sales volume has a chance of returning to growth at some stage. We remain positive about our industry and see 2024 as a year of opportunity.
- Bulk wine suppliers should send their samples in to us as it remains the best way for their wines to find a buyer. They can contact either Mark at +1 415 630 2548 / mark@ciatti.com or Michael at +1 415 630 2541 / michael@ciatti.com to get their wines listed.
- Growers should keep us up to date with the 2024 grapes they will have for sale by contacting Molly at +1 415 630 2416 or molly@ciatti.com.
- International buyers seeking to harness some highly attractive price-quality opportunities on Californian wines, including from premium Coastal areas, should contact Greg at +1 415 458-5150 or greg@ciatti.com. California is also able to offer lower-alcohol wines for international buyers seeking to meet the growing global demand, particularly among younger consumers, for such products.
Read on for our review of 2023 and look ahead to 2024 and – for the most up-to-the-minute information – get in touch with Ciatti directly. The broker team with its many decades of experience stands ready to help guide buyers and sellers through the year ahead – and would like to wish all its friends, clients and business associates a very Happy New Year