Adding to the coverage about the woes besetting the US wine industry is a piece in BusinessWeek magazine that “falling land prices and changing tastes in California’s wine country, home to American’s priciest pours, are popping its bubble”.
As many as 10 premium wineries and vineyards in Napa will change hands in distressed sales or foreclosures this year and next, the respected business magazine reported adding that those suffering most were the “newer arrivals” who made their fortunes outside the wine industry and bought expensive Napa land with the hope of creating the next high-end wine label.
“Napa land values, which average $150,000 to $200,000 an acre for a vineyard planted with red varietals, have fallen 15% from the 2007 peak. Falling land prices, of course, make it harder to refinance mortgages.
“Adding to their woes is the sudden frugality of the American wine drinker. Between 1991 and 2008 the dollar value of U.S. retail wine sales rose every year, almost tripling in that time,”BusinessWeek quoted consultant Gomberg, Fredrikson & Associates. “Last year sales dropped by 3.3%, to $29 billion, as prices were driven down by wine from Chile, Argentina, Australia, and elsewhere.
“’No more is it about stocking wine cellars with 5,000 bottles of Screaming Eagle,” says Peter Kaufman, managing partner of Bacchus Capital Management, a private equity firm in Pleasanton, Calif., referring to a Napa cult cabernet that can sell for $750 or more a bottle. ‘High-rollers are discovering that there are lots of drinkable $20 to $40 bottles of wine.’”