CA "Cult" Cabs coming to a close or just a close call?

[Roy Hersh]

http://www.bloomberg.com/apps/news?pid= ... refer=home

[Andy Velebil]

A little of both actually. I know many wine drinkers this year who have stopped buying from lists or who have significantly cut back on what and who they buy from...and at what price. IMO, pricing got way out of hand when even small start-ups were charging outrageous prices for wines with no proven track record. As an example - I was at a recent trade tasting for Howell Mountain Caberbets and there was a new start up winery that only had one Cab...priced at $175/bottle I almost couldn't contain myself when they told me that, as it wasn't even a 90 point wine IMO. I'm sure a year or two ago people would have had no issues buying it, but not now. At that price I don't see the winery being able to survive unless the owners are already weathly and they can afford to take a massive loss.

So while most, if not all, the larger Cali Cult producers will survive, albeit with lower pricing, the smaller wineries are really going to struggle to survive, and some will no doubt fold, in these tough economies.

This isn't limited to just Cali cults. While I didn't get to read the full article, I saw one that mentioned UK Bordeaux Agents were going to boycott and not buy the 2007 Bordeaux's unless pricing came back down. I think the wine world got a little over their heads with those massive price increases and now that the economy can't support them, they have some tough decisions to make in regard to the pricing of their new offerings. It isn't easy to roll back prices 20-30% and justify to your customers how the previous vintages they bought are really worth the premium price paid. In this regard the Port Producers have a leg up. While prices went up a little over the past few years they have not gone up anywhere near the rest of the wine world. Now that the economy is in shambles it's easy for them to roll back pricing a little for the 2007's as they possibly indicated, and not come off as being greedy like many other wine companies are now looking like.

[Glenn E.]

It isn't easy to roll back prices 20-30% and justify to your customers how the previous vintages they bought are really worth the premium price paid.

Honestly, I don't understand all of this. Why does the vineyard need to justify previous prices to the people who bought them?

It's called supply and demand, and the customers are the ones who drove the prices up in the first place.

Sure, it's frustrating to buy something only to see a cheaper (or better) version of it available right away, but no one forced you to buy it, right?

[Andy Velebil]

High prices on the secondary market are one thing, when a company is faced with rolling back prices that much there is a negative perception with consumers that they were gouged when buying prior vintages. That has the potential to make customers very unhappy to say the least.