This should be a good year for U.S. wine fans, whether they’re buying $100 California cabernet sauvignons or $6 grocery store jugs and boxes.
That’s my take on the Annual State of the Wine Industry Report for 2015 by Silicon Valley Bank, a high-tech commercial bank with offices in San Francisco and around the world.
Some of the best news is for consumers and producers of “fine wine,” defined as bottles that sell for $20 or more. Sales of such wines could increase by as much as 18 percent, with only modest price increases.
“We’re predicting a breakout year,” the report says.
Most wine in this higher-price category is purchased by the top 25 percent of wage earners, making $75,000 or more a year, it says. That group, made up largely of Baby Boomers and the following Generation X, has mostly recovered from the 2008 recession. Its consumer confidence is soaring as gas prices remain low and the economy continues to improve. It’s the 20th straight year of increased wine sales in this country.
Buoyed by those factors, consumers are “trading up” to more expensive wines, it says.
But the report also has good news for consumers of cheaper wines. Prices of U.S. wines in the $9-a-bottle-and-under category are falling, and likely to continue falling, driven down by booming imports of low-price wines. It’s partly because a strengthening U.S. dollar makes imports cheaper, partly because consumers in France, Italy and Spain are turning away from wine toward beer and soft drinks, leaving more wine to export.
This is not entirely good news for U.S. growers, of course. Some vineyards in California’s Central Valley are pulling out acres of grapes that were aimed at wines priced under $7, citing oversupply, the report said.
Prices and sales of domestic wines in the $10- to $20-a-bottle range are expected to hold their own, according to the report.
Who buys those $20-and-up fine wines? The most active buyers will be the 35- to 55-year-olds, a trend that has held for years.
That age group spans the younger end of baby boomers, now ages 49-66, and Generation X, now ages 37-48. It means that Generation X is gaining on the baby boomers, and likely to take over the fine-wine-buying mantle within a decade.
Later, of course, the millennials, ages 21-36, will assume the fine-wine mantle. At that point, boomers will start dropping out because they will have entered the “mature” generation, ages 67 and up, which tends buy less fine, expensive wine.
Are expensive wines better than cheaper ones?
Not always. But they can be — for good reasons.
First are vineyard land prices. Prices in Sonoma and Napa are higher than in California’s Central Valley. Sonoma and Napa have the climate — hot days and cool nights — to make great wines. The weather is less favorable in the hot Central Valley, so land prices are lower.
Second is yield per vine. Makers of top wines sometimes prune away up to half of the grapes on a vine, letting it put its energy into the remaining grapes.
Vineyard managers go to great lengths to prune their best vines, even hand-picking individual leaves to get the perfect sun exposure to their grapes.
Winemakers sometimes ferment and age their wines in French oak barrels that cost $1,000 and up. Lesser wines get lesser barrels.
And there are more intangible reasons. A winemaker I know once told me that any price over $15 a bottle is simply the winemaker’s ego. An exaggeration, probably, but not without some truth.
In most of my columns I try to stress wines that are affordable to everyday newspaper and blog readers who have mortgages, car payments and college funds. This week, for a change, I’m featuring some of those “fine wines” that cost $20 or more.
2012 Rodney Strong Cabernet Sauvignon, Alexander Valley (100 percent cabernet sauvignon): hint of oak, aromas and flavors of black plums and bitter chocolate, intensely fruity and smooth; $40.
2012 Merry Edwards Pinot Noir, “Meredith Estate,” Russian River Valley: lush, intense aromas and flavors of black cherries, spice and earth, ripe, smooth tannins, long finish; $57.
2011 Castello di Amorosa Sangiovese, Napa Valley (96 percent sangiovese, 4 percent merlot): toasty oak, intense aromas and flavors of red raspberries and Asian spices, smooth, ripe tannins, long finish; $30.
Nonvintage J Brut Rosé Sparkling Wine, Russian River Valley (66 percent pinot noir, 33 percent chardonnay, 1 percent pinot meunier): lively bubbles, aromas and flavors of toast and red raspberries, crisp; $38.
2012 Grieve Sauvignon Blanc, Napa Valley (100 percent sauvignon blanc): floral aromas, flavors of white grapefruit, very crisp; $42.
2012 Niner Wine Estates Syrah/Grenache, “Jespersen Vineyard”: hint of oak, aromas and flavors of black cherries and strawberries, lush and fruity; $45.
2012 Tooth & Nail Malbec/Syrah, “Tolliver Ranch,” Paso Robles (80 percent malbec, 20 percent syrah): intense aromas and flavors of black cherries and dark chocolate, lively acids, long finish; $27.
2011 Grgich Hills Estate Zinfandel, Napa Valley (98 percent zinfandel, 2 percent petite sirah): hint of oak, powerful aromas and flavors of black raspberries and black pepper, long finish; $35.
2012 Kendall-Jackson Grand Reserve Merlot, Sonoma County: hint of oak, aromas and flavors of black cherries and milk chocolate, long, smooth finish; $26.