What is in this article?:
- California winemakers are predicting that business will revive within three years from a slump that began in 2007.
- Concerns: coming years will bring tax increases; water shortages for wineries; domestic grape shortages; and lower prices on imported grapes.
- Wine executives are looking forward to a groundswell in consumption from the Millennial Generation.
Survey of wine professionals
Smiley's survey of wine professionals, now in its 19th year, included responses from 109 wine producers, as well as wine grape growers, distributors, retailers and lenders from throughout California. It is the largest survey of its kind in the wine industry.
Fifty-six percent of the wine producers and more than 66 percent of the wine distributors responding to the survey predicted that the wine business will get “back to normal” within three years. The majority of survey participants reported that they believe consumers are continuing to look for bargains in wine purchases, are dining out less and purchasing lower priced wines, trends also noted in last year’s survey.
They also reported that they had altered their business practices since the economic recession began in 2007 by creating more flexibility in their business plans, reducing operational costs, increasing wine-by-the-glass sales rather than relying primarily on bottle sales, and adjusting to lower profits. They also noted that the prices paid for supplies and wine grapes had dropped, direct sales to consumers had increased and staffing had been reduced.
Additionally, they noted a dramatic increase in their business use of social media, including Facebook, Twitter and company blogs.
“Social media has been widely used, in part because it is quite inexpensive,” Smiley said. “The challenge is to make use of it strategically, without wasting time.”
The responding professionals predicted that among red wine varietals, demand for and sales of Cabernet Sauvignon and Pinot Noir will be particularly strong during the next three years. And among white wine varietals during the same period, Chardonnay, Sauvignon Blanc and Pinot Grigio will be moderately strong performers, they said.
Wine Executive Program
The Graduate School of Management will continue its work with California wine executives when it collaborates with the UC Davis Department of Viticulture and Enology in offering the Wine Executive Program March 21-25 at UC Davis. The four-day program is designed to teach the fundamentals of winemaking and management skills that are necessary to be profitable in the wine industry and related businesses. More information about this spring program is available online at http://www.wineexecutiveprogram.com.