California's vineyards may be in deep trouble as the recession lowers consumer spending on wine and wineries decrease their orders for grapes.
The Santa Rosa Press-Democrat reported today that about 70 percent of the Sonoma County grapes that are typically sold on the open market in the months leading up to harvest are unclaimed, in comparison to 40 percent at the same time last year. Unless wineries begin to increase their orders, the slowdown could create a significant dent in the area's $400 million grape sales.
Although Americans continue to drink more wine overall, bottles priced $25 and higher are experiencing a sharp drop in sales, reported the Wall Street Journal. Many high-end wineries are slashing prices or finding new distribution channels, and some are being forced to put themselves up for sale.
But while grape growers and high-end wineries suffer, lower-end wine makers are reaping an unlikely windfall as consumers demand less expensive bottles of wine. Fred Franzia, the CEO of a cheap wine empire that includes brands like Charles Shaw, summed up his feelings about the discrepancy in an article in The New Yorker earlier this year.
"We make wine for the people," said Franzia. "Napa and all their funny money-- they're all getting knocked off their thrones. I'm not falling. I'm built on rock."