Silicon Valley Bank surveys wineries throughout the country. They send requests out to many, some respond, some don't. You might recall SVB crashed and burned a few months ago and is now part of First Citizens Bank.
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| Hey, shouldn't you be drinking chardonnay? Please. image from NYPost.com |
Survey Respondents
Napa was home to 25% of the people responding to the survey, Sonoma 15%, and Oregon 16%. That leaves 44% from other places in California or in other states.
Old Days
Through the 1960s wineries were strictly production facilities with maybe a sampling bar set up in the cellar or in an office. Tastings were free. Maybe you bought some wine, maybe you didn't, but it helped get the word out for the winery. At the time, there were a dozen or two wineries with tasting in Napa and another dozen in Sonoma.
Changes happened in the '70s with new blood coming in and building new wineries, usually with a purpose-built tasting room. Tasting was still free; many now had dedicated sales folks.
Beginning with the '80s expansion and fancier wineries, especially in Napa, tasting fees of about ten bucks came along. I saw this as a self-defense strategy because there were enough wineries in Napa Valley that one could come through the area and get a really good buzz, all for free! They brought their friends and had a big party, all for free!
By the '90s the wineries realized this paid tasting thing had several advantages: 1) Keep out the riffraff. 2) Get people to buy wine instead of paying the fee. 3) Help cover the growing tasting room costs.
The majority of wineries were open for walk-in tastings. Just a few of the smaller, more exclusive places required appointments
New Millennium
Tasting fees continued to slowly spread with rising prices almost everywhere, though most areas outside of Napa still had plenty of free tastings available. The purpose of many tastings went from selling a couple bottles to selling an experience, so you'd buy some bottles to remember them by -- kind of a souvenir.
In 2019, before the Pandemic and all of its economic fallout, wine tasting in Napa average a bit over $30. I know, hard to imagine because it wasn't that long ago. Also in 2019, 56% of the wineries surveys said they were strictly walk-in visitation, no reservations.
Current State
The big news in the wine biz is that now the average price of a bottle from Napa is $108; Sonoma is $57. The survey said the average price for tasting in Napa Valley is $81. That seems high to me, but I expect the number is an averaging of basic tastings and elevated experiences, as many wineries offer two or three different levels. Sonoma's average is $38, Oregon $32. The Sonoma number also seems high, so that supports my theory that they are averaging all levels of wine tastings offered by each responding winery.
These numbers are huge jumps from pre-Pandemic levels and even from 2022. Costs have gone up, and it's not just a generic "because of inflation" answer. Specifically, the cost of grapes, the cost of labor, and, according to respondents, even costs because of climate change and insurance in fire prone areas. If you look at the rise in the cost of wine production in Napa over the past several years, you'll see that the price of a bottle is increasing at the same rate.
About 30% of those surveyed are open only for appointments, and another 43% do a combination of appointments and walk-ins. This usually means if you come in without a reservation and if there's room, they'll gladly take your money.
Tasting room traffic was down in 2022 and down again this year, and it's quite noticeable. Is this some sort of post-Pandemic "adjustment period?" Many think and hope it's temporary.
Wine's Problems
Wine sales are down for the past two years. The under 30 consumers tend to drink something other than wine. Consumers under 60 are drinking less now than the same group did 15 years ago. Wine has an age problem. A lot of this is that there are fewer people to buy wine. That's why the older folks are called Boomers, because there are many more of them.
What's Next, Maybe
With the significant drop in visitors, I expect some softening of fees in many places. It probably won't happen in the popular places that have remained busy; it may not happen in Napa. Some may offer an abbreviated free or much less expensive tasting. Others will just drop tasting fees to a more reasonable level. Maybe with the cheapest tastings they won't waive the fee if you purchase.
Reservations might have surge pricing. That is, weekends and holidays in Napa might still be $80 to taste, whereas other days might be $50, or even $25 in the winter. This is like what airlines do where flying midweek is less expensive than other days, and they jack up the price even more around holidays.
Sources:
Decanter.com
SVB.com
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