The WinEconomy, new brands

Despite the not so good vintage of 2010 and the upcoming low yielding vintage of 2011 we still have yet to see any pricing power for wineries. There remains enough wine on the market from previous years that wineries raise prices at their peril. Having said that we are not seeing anywhere near the level of markdowns and close outs we saw in the last couple of years.

Similarly we are not seeing wineries closing their doors the way we did in 2009 and 2010, instead we are seeing a number of winery mergers and acquisitions. Keeping prices from rising too is the number of wineries that have expanded production and are beginning to distribute their wines into our area that did not previously do so, and a smaller number of new wineries that are starting production.

The wineries just starting distribution or just opening represents the most daunting challenges to the wine industry at this time. All important is to approach the market with good varietal selection and quality but an even more important priority is getting the pricing right. Gone are the days where new wines to a market can be priced in the ultra super premium category of $50, $75 and up regardless of the appellation of their fruit sources, winemaking talent or any other contributing factor.

To approach the market with prices at that level there is simply too much competition from some of the most iconic and high quality brands that boast unrivaled lineage and history in the American wine industry. Couple this with great wines coming in from Europe and new world regions like South America and Australia and the challenge becomes even greater. Many of the biggest names in the wine industry here in the states are defending their market share by maintaining and in some cases reducing prices from earlier levels and at the same time releasing wines from the epic 2007, and nearly as good 2008 vintages, that are flat out delicious.

So for new wineries just being introduced to a market these competitive pressures represent the strongest headwind we have seen in some time. In fact the most successful new launches and introductions are coming from grower wineries. These are wineries that are opened by long-term farming families that when faced with an over supply of grapes have ramped up production on their own.

These wineries have the clear pricing advantage of low raw materials cost from the excess grape capacity, and in many cases easy access to winemaking facilities. When these new comers are entering a market most are doing so at the under $30 per bottle price level and in many cases are bringing their wine in at $20 or under, further eroding the power for new, non-grower brands to price in the higher ranges.

For consumers this continues to be mostly good news. With many wines still being released from the stellar 2007 and 2008 vintages for Washington, Idaho and California and equally good 2008 and 2009 wines from Oregon most of which is very high quality, with stable to slightly declining prices you have the opportunity to load up on wine prior to the release of those from the more challenging vintages of 2010 and 2011. Additionally, as some very good wines enter our market here in North Idaho and Eastern Washington for the first time there will be many new wines to try that are very good and those that do enter the market at unrealistic price levels will ultimately come down in price to a point where consumers sense they are valued properly. There is no reason to reach to higher price levels at this time when many old favorites and some new ones too offer such compelling quality and value.

As always trust the guidance of your favorite wine professional who can help you find and purchase great wines at these compelling values from some of the best vintages in the relatively nascent history of the North American wine industry.

If there is a topic you would like to read about or questions on wine you can email George@thedinnerpartyshop.com or make suggestions by contacting the Healthy Community section at the Coeur d'Alene Press.

George Balling is co-owner with his wife Mary Lancaster of the dinner party - a wine and table top decor shop in Coeur d'Alene by Costco. George is also the managing judge of The North Idaho Wine Rodeo and writes frequently for the online version of Coeur d'Alene Magazine at www.cdamagazine.com. His articles can also be found on the blog at www.thedinnerpartyshop.com.