Wine Industry Struggling to Keep Its Cup Full

Winemakers are worried about their future

From top to bottom, the California wine industry is in a state of financial panic, but with harvest looming, most distressing is the uncertainty of the future.

The reason the industry is struggling, according to experts, is because wine is a "cash-flow business" and from production to sales, money is not coming into the industry.

Grapes are not demanding the same amount of cash they did last year and growers are behind on sales.

"People are drinking out of their cellars, the big distributors are throwing their weight around, and you add these things up, and from the winery perspective, the cash flow is brutal," Steve Matthiason, a vineyard consultant and winemaker, told The New York Times. "Everybody figures this is kind of a temporary thing, that when restaurants burn through their inventory they're going to have to start buying again, and distributors, too. But everybody is wondering when the levee is going to break, and you have harvest coming up."

The wine industry is complicated and different from other industries struggling from the economy.The New York Times explains:

When production of chips outpaces sales, executives adjust production. But nature is relentless in its annual rhythm. The grapes must be harvested each fall, whatever the need. If grapes are scarce, it may take 10 years from the time a new vineyard is planted to when wines from its grapes can be enjoyed. In a glut, the spigot can’t be switched off immediately.

But some of the larger wineries are weathering the storm through strong Internet sales and stable distribution to retail shops and restaurants.But there is good news. Ten years ago the industry was producing too much wine and had to reform itself to control prices. One expert said if the current problem had hit a few years ago the effect industry " would have been catastrophic."

SF Eater contributed to this story

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