Tough Love for Napa Growers
Grapegrowers' seminar a call to action
In his overview of the current market for Napa Valley grapes, Proctor pointed out that both production and pricing for Cabernet Sauvignon are increasing, while Merlot remains stable. Buyers are scouting for grapes earlier in the season than usual, and more of them are seeking long-term grape contracts. Pricing is tightening up at both the low and high ends of the spectrum, Proctor said, and inexpensive grapes are becoming more difficult to come by. Per-ton grape prices for 2008 range from $1,900 to $2,800 for Chardonnay, $2,300 to $4,500 for Cabernet Sauvignon and $1,400 to $2,500 for Merlot.
However, Napa Valley growers do face a number of challenges, Proctor said. Imported wines continue to gain market share despite the weak U.S. dollar; winery consolidation is reducing the number of grape buyers; and wineries are no longer as committed to specific regions. Factors like recession, a large crop and winery failures could also have negative effects on the market.
Though California is moving toward balance, with Napa and Sonoma leading the way to recovery, Proctor advised conference attendees not to become complacent. "Focus on competing in a global marketplace," he said.
Brand equity and marketing are key elements of success in tomorrow's wine market--not only for wineries, but for growers, Vaynerchuk said. "Be very careful who you're selling your grapes to," he warned, and make sure you like the wines they're making. Growers can also promote their vineyard "brands" by co-hosting events with their winery clients.
Scores from traditional wine publications and critics are still driving the market, Vaynerchuk said, but that is rapidly changing. Millennial-generation adults who are already having a significant impact on the wine industry "don't give a crap about Wine Spectator and Parker," he said. "And I think that's a little dangerous in this town." The new generation of wine drinkers relies on electronic communities and social networking sites, like Facebook, for information and recommendations.
"The cost of entry to build your brand today is zero," Vaynerchuk said, referring to the marketing value of blogs and websites. "Become part of the conversation, and don't hide from consumers."
It's also important to taste wines from other countries on a regular basis, in order to maintain perspective. "You're too hometownish… People don't care about Napa cult wines outside of America," Vaynerchuk said. "(This is) a global market."
In a presentation called "The Future of Napa Valley Wines," Ted Hall, president of Napa Valley's Long Meadow Ranch Winery, also expressed concerns and rallied attendees to take action.