March 24, 2015 – Listening to the presentations at the 21st annual Central Coast Insights wine symposium held in Paso Robles this month, I came away with these observations
1. The “Central Coast” is a HUGE wine region, encompassing everything from Livermore, the Santa Cruz Mountains, Monterey, Paso Robles and Santa Barbara. Encompassing six counties and over 100K acres, at least half of which is planted to Chardonnay, it’s nigh impossible to find a lot of similarity among these regions except to say they are all south of Napa.
2. The Central Coast’s position in the wine world is perceived as one of value and quality for the dollar. The majority of wines coming from the region are in the “sweet spot” of $9 to $15 per bottle.
3. Revenues for Central Coast wineries were up 10% over 2013 in 2014, while profits were up for 55% of wineries, down for 18% and flat for 27%. Over half, 55%, plan to increase production in 2015.
4. Dominant varietals remain Chardonnay, Cabernet and Pinot Noir. Syrah, Zinfandel and Merlot are on the decline. Uptrends in 2015 sales for Chardonnay are projected at 4%, with Sauvignon Blanc at 19% and Pinot Grigio at 25%.
5. The biggest players in the wine industry have no incentive to plant or make anything but what has been in demand: they are doubling down on what the market is already buying, planting more Chardonnay and more Pinot Noir, because that’s what they are selling. However, they are at the mercy of the next popular movie, which could trash Chardonnay or Blends, for all we know, just as Merlot was crucified on the altar of Pinot Noir in Sideways.
6. Data from supermarket and superstore scans shows that people are moving up from the $9 price point, which prevailed in the wake of the 2008 recession, and are now trading up to the $12 to $15 range. While wine consumers are buying up, they are buying less. Wines under $7 are not doing as well as those above $9.
7. The big upward trends are in red blends and Malbec, which are showing the fastest growth. Varietal consumption patterns also show wine drinkers shifting from Merlot to red blends, with 40% of new UPC’s (stock items in retail outlets) being red blends. In fact, over 5,000 new red blends were created in the last 5 years. Millennials, in particular, are attracted to blends, as are older Boomers. They deliver a lot of bang for the buck.
8. The majority of wine in the US is sold through supermarkets, drug stores and supercenters. With the bulk of the stuff being under $20, with an average price of less than $10/bottle, much of it is homogenous, bearing little, if any, stamp of terroir.
9. Overall pressure from the megabrands to keep prices low on the grapes needed to make the large volume beverages has led to the decrease in diversity in the overall grape population. For example, Riesling and Gewurztraminer are being pulled out of established Central Coast vineyards in favor of Pinot Noir.
10. The number of grape varieties planted worldwide is decreasing. In 2000, 21 varieties made up 51% of plantings: in 2013, the number had been reduced to 15. Further, in France alone, in 2000, there were 285 varieties: today, there are fewer than 96. An alarming trend!