Great Grape Shakeout Continues

November 19, 2024 – It’s no secret that the wine industry is going through a tough period. Vineyards still sit unsold that would have been snapped up just three years ago, had they gone on the market then. There’s a lot of optimism among hot new brands seeing their first sales this year, and cautious faith among those who are relatively established in the game. But there is also a sense of dread among those who’ve passed the 20-year mark, as they see a dramatic shift from the old model of people buying cases every visit, to buying next to nothing. 

A big shakeout is already underway, and as winemaker Ian Brand says, “There’s some short-sighted stuff going on, and pieces of the business that once looked invincible are now clearly not. The wine business is limited in its imagination and backward looking at a business model that was focused towards Boomers. The things that sold to Boomers in volume and the things that attract the new generation of consumers are very different.”

So, what, exactly, is the problem?  “California wines writ large—high octane, aspirational, trophy—are not what the new drinkers want. Well-crafted wine with a story is pretty much the only thing that is actually functional. Everything else is down 20 to 50%,” says Brand.

Developments at Siletto

Brand insists that what happened with the Siletto Vineyards portfolio suddenly being parceled out is not unusual. It’s the first of many, he predicts. We keep reading about countries in Europe pulling out vines, and it is happening in California as well. “Even if they pull out 50,000 acres across the state, there is worldwide glut,” says Brand. “No silver bullet exists other than reduction in capacity. We have to wait for the carnage, and we will lose players.”

For his part, he wants to keep the old vine Cabernet Sauvignon alive at Wheeler Vineyard, which is currently in the process of changing hands. He’s hoping to be involved in farming it and describes the party making the purchase as someone with whom he has an existing relationship. “Likely the old Chard will come out as it’s not worth farming at this point,” says Brand. “We’re doing everything we can to save the Cab Sauv. It’s likely I would have to do the farming. This fruit simply cannot be duplicated.” 

Winemaker Nat Wong, who makes Blade & Talon wines and lives at Calleri Vineyard, part of the Siletto portfolio which he has been caretaking, says he hopes that vineyard will be leased. Other parts of the Siletto portfolio, especially the oddball varieties that have been popular with boutique winemakers, may be at risk. 

Brand, for one, has no interest in them. 

He says that the top quartile of small wineries is in decent shape, but the rest have real problems. “Any vineyard that sells to small wineries is risking a combination of low margin and slow to pay.” 

That said, Brand says he is doing the best he can to keep the parts intact that deserve to be intact. “There were lots of contracts I did not renegotiate that I could have, because it could have forced people out of business.” Playing the long game may cause short-term pain, but he feels it’s worth it for the long-term gain, both with respect to fruit and relationships. 

David Baird To Leave Folktale 

After a career of ten years, winemaker David Baird is leaving Carmel Valley’s Folktale to concentrate on his own brand, Common Thread. Although it’s a cordial parting, he admits it’s bittersweet.

“I’ve really enjoyed my time at Folktale and the chance to make wines there, but my family needs me more now, as my sons are getting older. I’ve decided to join my father in his real estate business in Monterey. It was really time for a career change for me after ten years.” Don’t worry, fans of Common Thread, he is still committed to making those bright and energetic styles of wine. 

Never Bored: Kurt Gollnick 

When he retired from a 33+ year career at Scheid Vineyards as COO, Kurt Gollnick, a Cal Poly grad who has farmed on the Central Coast for over 40 years, was happy to get back to his Chalone vineyard, where he and his wife live. Rodnick.Farm Vineyard has been a grape source for brands like Big Basin Vineyards, but now he’s returning to the finance side.

He recently became vice chairman of the boards of West Coast Community Bancorp and Santa Cruz County Bank. He was a founding director and Chairman of the 1st Capital Bank Board of Directors, and is also the founder and President of the Salinas Regional Sports Authority, an active member of the Hartnell College Foundation Board, and past Chairman of the Monterey County Agriculture Advisory Committee. Now more than ever, wineries and vineyards need banking resources on their side. 

In fact, Gloria Chirichillo, co-owner of Domenico Winery in San Carlos with her husband Dominick, recently celebrated the 20th anniversary of the founding of the winery. They started out with the Bacchus Winemaking club, a way for groups of friends to make a barrel or two of wine together from vineyards Dominick sourced. One of them happened to be in Amador County, in Ione, which the Chirichillo’s acquired, and at which they’ve just developed a gorgeous new event center and tasting room. After years of urging, Gloria finally got her way when they built a striking new kitchen to the winery facility on Industrial Road in San Carlos. Osteria Domenico, open Wed. through Sunday for dinner, and for brunch on weekends, enabled them to cater larger events and wine club dinners and special tastings, something they could not have accomplished without financing. “Thank goodness for our banking partners!” said Gloria. “We could not have done this without them. They’ve been by us every step of the way.”

As we tread with trepidation into a future now even more muddied by the clouds of uncertainty and upheaval, exacerbated by an increasingly cranky and unpredictable Mother Nature, we all need to be particularly circumspect.

What’s Brand’s advice? “Put your head down and be good at what you do and be sure you can avoid the shrapnel. There’s going to be some extreme flux.”