Calif. Bulk Wine Market, and Why You Might Care

Bulk wine is unsold wine from a previous vintage. It's sitting in large tanks or barrels and can be shipped to a purchaser in large containers. It often winds up at a winery or with someone else who will bottle and label it for retail sale. A winery can easily do this as they are already set up for it. Sometimes a winery might sell it as a one-time special bottling, sometimes under a different label because it'll be at a significantly lower price than their other wines.

Bulk wine is available every year, but the volume goes up and down, and it's way up now. Why does it matter to the wine consumer? You may find some good deals on wine from premium growing areas. You might see a Cabernet from Paso Robles from a winery that's not even in the Paso area, and it's going for $25. Likewise, you could see Cabernet from Napa selling for $40 under a Costco, Trader Joe's, or some unknown label.

Chart from wine brokers Ciatti.com
Click on image to enlarge

As you can see from the graph, Cabernet has the most unsold wine by far. Currently, it sits at over 10 million gallons available. The same time last year it was about 8.6m gallons, a year prior 5.3m. So it has nearly doubled in two years. This has many growers and winemakers worried about the demand for this year's wines. 

What this does is put a lot of pressure on prices, but any real price reductions has to start with the vineyard. Grapes are generally sold to wineries on contracts, it can be a one-year deal or multi-year. These contracts will help keep prices steady, for now. Currently the pressure is on winery profit margins.

The exception to the grape contracts are the small number of wineries that are all or mostly estate vineyards, meaning they grow their own grapes.

So it's winery owners that will suffer financially. If the wine glut continues as grape contracts expire, then the growers will start to feel the pain. Frankly, a lot of grape prices shot up because of supply-and-demand, not because of higher costs, Russian River Pinot Noir, for instance.

What this should mean for the wine buyer is some good deals for a while. This doesn't mean your favorite small-production Napa Cab will suddenly get cheaper. It means there will be similar Cabs at much better prices. Whether or not any of the premium bulk wine will trickle down to $12 blends, I don't know.

Data is from ciatti.com, brokers for wine and grapes. Brokers serve as an intermediary between sellers and potential buyers.