North Bay wine growers are having a tough year, as cheap bulk imports increase
April 2024 marks Sonoma County Wine Month, a celebration of Sonoma County's rich wine heritage, yet local winegrowers are seeing declining wine sales and grape sales. Hank Wetzel, one of the founders of Alexander Valley Vineyards, says “The overall economic picture for fine California wine is difficult at present. A huge 2023 crop and declining consumption both play a role in my current decline in case sales. More recently I have heard of grape contracts being canceled.”
Many growers are also concerned over bulk wine imports by large conglomerates. These imports, sometimes blended with local wines, could pose a threat to the region's reputation for high-quality, labor-intensive wine production.
Understanding the challenge
Local winemakers clash with large wine corporations on the practice of importing bulk wine for blending. Hoss Milone, winemaker for Brutocao Cellers in Mendocino County, says he believes “any wine used at any percentage that is not 100% USA-grown and produced should say international on the label. I also believe it should show the country of origin and percentage used.”
Where is all this imported bulk wine going? Much of it is easily found on your local grocery store's shelves, labeled as "American" wine. Under Federal TTB (Tax and Trade Bureau) rules, up to 25% of a wine that's labeled as "American" can actually be made from foreign grapes mixed with those from California. In addition, many established California wine brands are incorporating significant amounts of these imports. While some bottles are marked "American," others clearly state they are from Chile, Australia, Italy, or New Zealand. Spotting the country of origin on the label can often be a challenge. Unfortunately, these international wines are often placed right alongside domestic ones, potentially misleading consumers who may think they are supporting local California vineyards.
This issue threatens both the economic stability and the integrity of Sonoma County's wine industry, known for its premium products. Meanwhile, prices on the good stuff are going up, says AVV’s Wetzel. “Packaging, insurance, labor, and even grape costs have increased.”
Market dynamics and consumer impact
Incorporating non-AVA grapes could affect consumer perception and the exclusivity of the Sonoma County label. Price competition from larger producers using cheaper bulk wine may pressure smaller vintners, potentially altering the sales landscape for 100 percent AVA-sourced wines. Additionally, the quality and profile variations from blending could impact the reputation of the AVA's wines.
Challenges and perspectives in the industry
Sonoma County's wine industry faces competition, economic pressures, climate change, and the need for sustainable practices. Does the blame really lie with cheap imports?
Glenn Proctor, an international wine broker at Ciatti Company, offers a nuanced perspective. “To blame it on imports and bulk imports is, in my mind, too simplistic... It's a bigger issue here,” Proctor says.
“We’re definitely going through tough times in the industry. But to blame it on bulk imports is, in my mind, too simplistic. We’ve grown 2.5 to 3 percent a year in overall demand from the early ‘90s through 2016. Even when we had a few too many grapes or inventory, you could grow through that. So we were pretty lucky for a long period. I think what changed was in 2016. We've really seen a steady decline in consumption. That's a bigger issue here; wine consumption is declining.” He adds, “It’s across the board. It doesn't matter if you sell your wines for $50 or eight bucks. We're seeing a decline. It's pretty generally across the board.”
Proctor highlights the challenge of competing with bulk imports. "When it comes to bulk wines entering the market, we see many priced at points where California growers can't compete profitably. The market's pushing for wines at $5 or under $10 a bottle, and honestly, it's a tall order to grow grapes in California to hit those figures without losing money. It's not as simple as swapping all sub-$10 wines with $15 or $20 bottles from California vineyards; you'd be waving goodbye to your sales,“ he said.
Tessa Gorsuch's positive view
Tessa Gorsuch, estate manager for family-owned Martinelli Winery in Forestville, provides an optimistic perspective. “We must continue to educate the consumer to support small brands and know where their wine comes from,” she advocates. Emphasizing the importance of consumer education, Gorsuch sees a silver lining, “If those big brands are introducing young consumers to wine, we'll take it, hoping that eventually their palates become more refined and they start drinking the premium Sonoma County stuff.”
