Wines & Vines Home
   
 
Welcome Guest
LOGIN |  CREATE ACCOUNT
 
 

Viewpoint

 

Will Napa Cabernet Become a Commodity?

November 2010
 
by Leo McCloskey, Ph.D.
 
 
As the clock ticks, Napa Valley’s Cabernet Sauvignon wines will become increasingly susceptible to commoditization. A commodity is a product for which there is demand, but it is bought and sold without qualitative differentiation.

Napa Cabernet Sauvignon is to California wine what Yosemite is to our national parks. The Oakville district alone produces more cases of 90-plus point wines than any other Cabernet Sauvignon region in the New World. It is something of a state treasure that begs to be preserved.

Napa’s Chardonnay and Cabernet Sauvignon wines were immortalized in the historic Judgment of Paris wine tasting in 1976. After that well-publicized event, many people thought that Napa Valley was “Burgundy in America.” They were mistaken. Though Napa was evolving to a luxury Chardonnay producer, it was an undifferentiated one that became a New World commodity.

Diffusion of intellectual property such as rootstocks, scion wood and techniques from Napa led to plantings across California, Australia, New Zealand and Chile. Globalization and overplanting creates an oversupply, resulting in a trend of lower prices that cannot be avoided without classification or regulation of the type found in Europe.

Commodity Chardonnay
Price data supports the view that California Chardonnay became a commodity after the 2002 recession as a result of New World overplanting. California, Australia and New Zealand’s combined planted acres through 2008 were more than 200,000 acres.

The tipping point to commodity Chardonnay appears to be only 90,000 bearing acres in California. In 2000 Michael Quintus, then vice president of Kobrand, the seller of luxury white Burgundies, warned California winemakers at the Burgundy in America symposium sponsored by Enologix that 2000 figures of 93,000 bearing acres with 103,000 planted would shift the price down. In essence, Quintus predicted that California’s most famous luxury white wine would become the commodity we know today. Winemakers at the symposium were incredulous.

Chardonnay became less profitable to grow over time. The problem first emerged in 1999, when bearing acres exceeded 90,000 in California. Grape prices began to drop by the fall of 2001. By 2008 California Chardonnay growers’ prices (adjusted for inflation) were 45% lower than 1999. The Napa Valley price slide was 20% between 2001 and 2009. By 2008 the Australian Bureau of Statistics reported 74,000 acres of Chardonnay, compounding the problem.

Over one decade the number of 90-plus-point California wines dropped 50% in Wine Spectator. On March 4, 2009, The New York Times wine writer Eric Asimov wrote, “It’s hard to feel neutral about California Chardonnay. The wine’s almost effortless popularity as a mass-market white also brought it the mark of infamy.”

New luxury Napa Chardonnay wines seemed to disappear. By August 2010, only 12- 2008 Napa Chardonnays had scored 90 or more points from Wine Spectator, based on a search of winespectator.com reviews. The price of the 90-point 2008 Merryvale Chardonnay Napa Valley Starmont was $16 at Wine Access. The price of the Wine Spectator 88-point 2006 Robert Mondavi Napa Valley Chardonnay was $15 at K&L Wine Merchants. One Chardonnay, the 91-point 2007 Rombauer, appeared to be selling for a luxury price.

Cabernet can be saved
An economic underworld of oversupply may be shifting the price of Cabernet Sauvignon down in the future. Figures show Cabernet Sauvignon exhibiting early signs of commoditization. But it is not too late to save Napa Valley Cabernet Sauvignon.

USDA’s Grape Harvest Report shows that California Cabernet Sauvignon prices began falling after 1999. By 2007 they (adjusted for inflation) were 28% lower than 1999. In contrast, Napa prices increased 29% between 1999 and 2002. But even before the “Great Recession,” Napa prices, adjusted for inflation, were stagnant.

Today there are 75,000 acres of California Cabernet Sauvignon. Australia has 75,000 acres, and Chile an estimated 100,000 acres. As with Chardonnay, there is a path to commoditization for Napa Valley Cabernet Sauvignon. Diffusion of intellectual property creates a planting path that may pass through the same 90,000 bearing acres that commoditized Chardonnay.

Enologix warns winemakers to differentiate Napa from California by classifying the wines of Napa Valley. In lieu of a classification, Enologix advises that companies create a three-year trailing average 100-point score of 92-plus points to support prices above $50.

 

Leo McCloskey is president of Enologix, Sonoma, Calif., a company that offers quality metrics to wine producers. This article is © Copyright 2010 by Leo McCloskey and Enologix. All rights reserved. May not be used without the express written permission of Enologix, 461 Seventh Street West, Sonoma, CA 95476. To comment on this Viewpoint, e-mail edit@winesandvines.com.

 

 
SHARE »
Close
 
Currently no comments posted for this article.
 
 
SEE OTHER EDITIONS OF THIS COLUMN ï¿½ CURRENT COLUMN ARTICLES »


 
Wines & Vines Home
 
866.453.9701 | 415.453.9700 | Fax: 415.453.2517
65 Mitchell Blvd., Ste. A San Rafael, CA 94903
info@winesandvines.com
Wine Industry Metrics
 
Off-Premise Sales » Month   12 Months  
July 2014 $557 million
5%
$7,577 million
6%
July 2013 $533 million $7,128 million
     
Direct-to-Consumer Shipments » Month   12 Months  
July 2014 $61 million
9%
$1,674 million
10%
July 2013 $56 million $1,517 million
     
Winery Job Index » Month   12 Months  
July 2014 312
10%
222
19%
July 2013 283 187
     
 
MORE » Released on 08.15.2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Wines & Vines
Packaging Conference
 
Learn More »
 
 

Practical Winery & Vineyard Library
 
Search the PWV archive »
 
 

Direct To Consumer
Wine Shipping Report
2014
 
Download full report »
 
 

CALENDAR
  • August 19-23
     
    World of Wine
     
  • August 20
     
    Wines & Vines Packaging Conference
     
  • August 23
     
    Harvest STOMP
     
  • August 29-31
     
    Sonoma Wine Country Weekend
     
  • MORE »
 

READER COMMENTS
 
Article: Useful Spanish for Wine Harvest »
 
you misspelled "zona" under Loading Area
Reader: Guest
 
Article: Early 2014 Grape Harvest Begins »
 
Thanks for mentioning Temecula and the South Coast appellation in your article. It is great...
Reader: Guest
 
Article: Wineries May Lose Internet Domain Dispute »
 
All these arguments could be levied by any industry associated with any gTLD, new or...
Reader: Doug Barnett
 
Article: Wineries May Lose Internet Domain Dispute »
 
Do brands get hijacked now? Even though .wine does not yet exist, are there false...
Reader: Larry Chandler
 
Article: Resistant Weeds Threaten Vineyards »
 
Roundup is not benign. It does not always break down in a day or two...
Reader: Robert Rex
 
 


Directory/Buyer's Guide — Your Wine Industry Marketplace
 
 
WINERY SEARCH
 
 
Advanced Search »
SUPPLIER SEARCH
   by Product
 by Company Name or Brand
 
Browse by Category »
2014 Directory/Buyer's Guide
The Wines & Vines Directory and Buyer's Guide
 
 
EXPANDED ONLINE SEARCH INCLUDED WITH PURCHASE
 
ORDER NOW »
 
LEARN MORE »
 
 
Wines & Vines Magazine
 
 
LEARN MORE »
 
SUBSCRIBE »
 
Digital Edition Now Available!
Wines & Vines Digital Edition Now Available
 
LEARN MORE »
 
ORDER NOW »
 
 
The Wines & Vines Online Marketing System
 
The Industry Standard winery marketing application
 
FREE LIVE DEMO »
 
VIEW VIDEO »
 
 
 
 
Latest Job Listings
 Marketing And Public R...
 Yamhill County, OR
Sales and Marketing
 Guest Experience - Tas...
 Wapato, WA
DTC, Tasting Room and Retai
 Territory Sales Repres...
 Visalia, CA
Sales and Marketing
 Administrative Support
 Oakland, CA
General Administration and
 General Manager, Bottl...
 Sonoma, CA
Winemaking and Production
 Production/Procurement...
 Novato, CA
Winemaking and Production
 Harvest Truck Driver -...
 Eugene, OR
Winemaking and Production
 Tasting Room Associate
 Napa Valley, CA
DTC, Tasting Room and Retai
 Accounting Controller
 Yountville, CA
Finance
 Inventory Control Spec...
 Parlier, CA
General Administration and
 
More Job Listings >>
Follow Us On:
 
 





Home  |  About Us  |  Editors  |  Subscribe  |  Print Edition  |  Digital Edition

Advertise  |  Site Map  |  Contact Us  |  Privacy Policy
 
 
Copyright © 2001-2014 by Wine Communications Group, Inc. All Rights Reserved.
No material may be reproduced without written permission of the Publisher.
Wines&Vines does not assume any responsibility for any unsolicited manuscripts or materials.