A friend of mine outside of California reached out to me early in this crisis and asked about California pricing and promotion in wake of the Coronavirus. From her market places perspective there was a lot of pivoting to meet the markets unknowns and demands. There was a lot of shipping promotion and discounts; some smaller communities offered free delivery from winemaker or other principal in a small geographic area. I looked at all California regions and didn’t see many changes except in the very small producers. I did see many more virtual events from all regions in California and throughout the US and around the world.
I have noted that people are reaching out to me for wine recommendations and the bottle price points they were targeting are in the $25/bottle and below range. I then read this week from Nielsen that the strongest demand for DTC orders and off premise wine sales is in $20-25 range. This made me think about Napa Valley pricing and how was the valley responding to this Coronavirus era. I had originally started looking at 25 wineries but to get to a better understanding of pricing I expanded to 75 producers. I decided to look at the king of Napa Valley wines–Cabernet Sauvignon to get an understanding and data points on pricing as this variety is often produced by most Napa Valley labels.
Here is the criteria I utilised for collecting data:
I did see a good number producers offering reduced shipping costs, only one in 75 had offered a virtual wine tasting experience/event, and there are 3 total wines (out of 201) that had a sale price point of at least 20%. I had figured the average bottle price point of these 75 producer was going to be in $75-80 range. I was off by 48% hence it is very important acquire data for current metrics to be validated/invalidated and to get price point confirmations.
And before publishing this article I did search to see if there are no recent articles on Napa Valley Cabernet or other wine variety pricing.
I had heard in conversation points way before this crisis of three things about Napa Valley pricing: 1) Cabernet Sauvignon 2) Sauvignon Blanc and 3) Tasting Fees as all being very expensive.
In these Coronavirus times can the $111.10 price per bottle be sustained given the most demanded price point is 4 times lower? Here is a previous article (Prior to crisis) and below is a survey I instituted at the start of the year (January 2020). Now this was just asking Napa Valley wine pricing in general. I wanted to ask about Cabernet Sauvignon but there are character limits in Twitter Surveys.
Now my study did not include virtual wineries with a Napa Valley label which can be a lower price but in some examples can be the same as the average. I think there will be a good number of people who have a wine club membership or even a fondness that will still engage at current prices.
I haven’t thought of a good data methodology for completing an analysis on virtual wineries–I am sure someone is tracking these price points and has an average–or it is even possible no one is tracking all virtual Napa Valley labels and perhaps no one knows the average bottle price point. I do suspect the aggregate will be a lower than $111.10 per bottle price point if I ever approach such a study in the future.
The reality of our world is that ‘we don’t know, what we don’t know” the question is how long will this recession be–will an economic recovery be in lock-step with lock downs i.e. will there be a normalising of the economy shortly? And how about in the mid-term or long-term? I do suspect that there will be a lessening demand for super premium and luxury bottle price points but I don’t think that market will disappear. What I am concerned and I have written about is that many small business owners of all types may not have the ability to survive in this short term world of not bottle shock but business shock. But I also suspect that many operating wine businesses have a number of liabilities that need to be serviced on a periodic basis.
There is no evidence yet but I do think that wine drinkers will remain wine drinkers i.e. wine drinkers are not going to abandon the wine category or only if in dire circumstances. When our Sheltering in Place is over I am guessing there will be pent up demand for both visiting Napa Valley and other wine countries and even buying wine.
I will keep reviewing price points especially during our SIP period of time and if time permits may look at other regions as well. If I were to guess I do expect many more sale price points of super premium and luxury wines at least in the near and mid-terms.
Let’s hope that this crisis ends soon.
James the Wine Guy
Demystifying Wine…One Bottle at a Time from all wine regions around the world.
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