It's not just Napa, but changes often show up in Napa first. Maybe that's just because more people are looking there. Things there seem to be in flux with rising costs, changes in retailing, fires, and the pandemic.
The Price of Success
Not too long ago a couple of guys with money could buy into the wine lifestyle in Napa. Maybe one was a doctor and the other a corporate executive. They could start themselves a little winery, host some parties for their friends, maybe find a couple investors. Today to need a large fortune and it's become more of a write-off for the ultra-rich.
With it getting so expensive how do you get regular folks to come in and work? Whenever you hear about wine prices or land prices in Napa going up everything else is affected, from rents to food prices. It's not just winemakers, but cellar workers, field workers, tasting room staff, and the office people that keep the operation running. If they can't afford to live within a reasonable distance to their job they'll go elsewhere.
If you've visited in the last decade you know what's happening to the cost of lodging, restaurants, and tasting fees.
Wine Retailing
After a 25-year growth spurt premium wine sales in the U.S. leveled off and started declining a couple of years ago. Throwing out the pandemic effect it still appears the growth is over; at least for a while.
Twenty-five years ago there were 2,600 wineries in the country with 3,000 distributors who vied for the opportunity to get the wine into retail stores. Today we have 11,000 wineries and 1,100 distributors. So Joe Shmoe Winery wants to sell their 1,000 cases of Sauvignon Blanc in stores? That's nice. Get in line.
This leads to wineries needing more visitors to sell their wine directly. Napa County, like in most other popular wine destinations, controls visitor counts for each winery to manage traffic and overall congestion. Many are asking to increase their allowed number of visitors. This would require better roads, more lodging, and more restaurants. Eventually, the idyllic Napa beauty would look more like one big, sprawling city on the weekends, and you've just destroyed the reason many want to come to Napa Valley.
Wildfires and the Pandemic
On the other side, visitation has been hurt somewhat by fires over the past few years and, of course, really hurt by lockdowns and people worried about traveling during the pandemic. This brought a surge in online wine purchases. Wineries love direct-to-consumer (DTC) buying whether it's online or in the tasting room as there's no sharing profits with a wholesaler.
The fires? Who knows what the future will bring. Post-pandemic? Every business is as hungry to see you as you probably are to get out and do things. Right now wineries are pleading for employees while they are pleading for more visitors.
Interesting times.
No comments:
Post a Comment