Americans are drinking as much wine as ever despite the massive economic turmoil. But now they stoop down in the grocery aisle to buy a cheap bottle, rather than reaching for the top-shelf luxury wine that characterized the industry only a few years ago.
"Cheap is chic," said Tony Correia, a veteran vineyard appraiser who spoke at a two-day wine conference in Napa that concluded Tuesday.
Chatter at the 19th Annual Wine Industry Financial Symposium frequently revolved around when, if ever, wine drinkers would return in large numbers to the high-end wines produced on the North Coast.
"I think the next 12 months will be very hard for the $25 and up price points," said Ray Chadwick, executive vice president at Young's Market Company, a wine distributor. "The lower price points will continue to do exceptionally well."
Retail sales are closely tracked within the industry because consumer prices trickle down and impact every part of the business – from grape prices to land valuations.
Facing financial pressures, many North Coast wineries have discounted their retail prices since 2008. The practice has generated necessary cash, but often has resulted in prices that don't cover the higher costs of producing wine in Sonoma and Napa counties.
"It is going to be challenging for the luxury market to get sustainable prices for some time," said Steve Fredricks, president of Turrentine Wine Brokerage, who spoke at the conference Tuesday.
Many speakers offered predictions for when the North Coast wine industry would hit bottom, or when wine drinkers would return to the high-end market.
"I think it's pretty close to the bottom," said Joe Ciatti, a winery broker and partner at Zepponi & Company. "But we're not going back to a time when $200 bottles are flying off the shelf."
An industry survey showed that nearly 100 percent of respondents feel wine drinkers are now more focused on value. Only 75 percent felt similarly last year, according to the annual survey conducted by Robert Smiley, director of wine studies at University of California-Davis.