I sense a bubble.  Only a couple of years ago $18 a bottle was commonly available in tasting rooms in most California wine regions.  Now $26 is the lowest price almost everywhere.  Winery tasting rooms are being added to all regions at a rapid pace.  Little Geyserville in the Alexander Valley has gone from two to four tasting rooms in the last few months, and nearby Healdsburg is up to 24, at least as of a few days ago.

I’ve seen a lot of booms go bust.  The recent housing and mortgage collapse was easy to see well ahead of the loud pop we heard not long ago.  I sense over-investment in the wine tasting industry and increasing consumer resistance to prices.  It will happen and is unavoidable.  Whether we have a gentle correction or a painful one is a big question.

As usual in business booms the last businesses into the game will be the first to fail.  They are usually under-capitalized for a prolonged decrease in business and usually have paid inflated prices for resources and usually with heavy debt.  They don’t have the option of lowering prices to adjust to the market.

There is a ceiling to how much tasters are willing to pay and it is being explored now by wineries in all regions.  Interesting times should soon be coming to the tasting industry.

- jim

This entry was posted on Saturday, October 4th, 2008 at 10:14 am and is filed under California, Wine biz and media. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.