Harvest is underway in the Napa Valley and there are many growers still looking for buyers of their grapes. The irony is that this is shaping up to be a great crop. So what happened? Well growers that often operate by the traditional handshake are finding that wineries just aren’t willing to take a risk this year. With fine wine sales off 20% + many vintners are getting nervous about growing inventory.
I have heard that some big wineries cancelled their long-term contracts which has left the growers with fruit ready to harvest but no place to deliver it. Now what? Well, either the grower is going to opt to get into the wine business and take his grapes to a custom crush facility, sell grapes at a very low price , or leave it on the vine and prepare for a huge cash loss.
The “experts” say that the economic crisis will eventually force businesses to rethink their risk model. It appears that both vintners and growers need to come together and evaluate their business model. The idea that the current year vintage price is often based upon the prior year’s market results seems outdated.
Here’s the dilemma: The grower seeks to maximize cash value via increased yield which is often in conflict with the vintner seeking higher quality through lower yield.
If both the grower and vintner are dependent on each other’s willingness to produce the best , then maybe it is time to revise the model so that both share the profit and risk associated with growing a high quality Napa Valley wine.
Until next time…may your footprints provide a pathway that others will want to follow.