Another winery bites the dust

[LANDM]

The industry-negative discussion here treats the wineries as if they are all the same......an industry-wide average group of wineries who all have their percentage of past production in storage. Nothing could be further from the truth.
As with anything, there are more successful and less successful wineries out there. Some are doing well and some are not.

Wine purchases are nebulous at best and are a bizarre mix of quality and marketing. The notion that "ready-to-drink" is the end statement is ludicrous in an industry that holds at its pinnacle wineries that go back hundreds of years and product that is revered and consumed decades later. I would love to see the ready to drink argument put forward to winemakers in France.

The fact is that yes, most wine is consumed very quickly. However, the reality is that not all wine *needs* to be consumed quickly. Wineries can take advantage of this by averaging out their sales/production over time and storing unsold product. With successful wineries this works well and can create demand for certain product, with proper marketing, that can be sold at a premium.
For unsuccessful wineries, it creates the situation that has been described in prior posts......a glut of inventory that, frankly, won’t be sold at appropriate prices....ever.

However, to lump the two together is silly.....this is not an industry that "averages" well. There are good, bad and middling. You don’t want to be the latter two but then, would you want to be that in any business?

[twobits]

The industry-negative discussion here treats the wineries as if they are all the same......an industry-wide average group of wineries who all have their percentage of past production in storage. Nothing could be further from the truth.
As with anything, there are more successful and less successful wineries out there. Some are doing well and some are not.

Wine purchases are nebulous at best and are a bizarre mix of quality and marketing. The notion that "ready-to-drink" is the end statement is ludicrous in an industry that holds at its pinnacle wineries that go back hundreds of years and product that is revered and consumed decades later. I would love to see the ready to drink argument put forward to winemakers in France.

The fact is that yes, most wine is consumed very quickly. However, the reality is that not all wine *needs* to be consumed quickly. Wineries can take advantage of this by averaging out their sales/production over time and storing unsold product. With successful wineries this works well and can create demand for certain product, with proper marketing, that can be sold at a premium.
For unsuccessful wineries, it creates the situation that has been described in prior posts......a glut of inventory that, frankly, won’t be sold at appropriate prices....ever.

However, to lump the two together is silly.....this is not an industry that "averages" well. There are good, bad and middling. You don’t want to be the latter two but then, would you want to be that in any business?

I do agree with you for the most part. You also have to agree that most wine produced here (95%) is intended for immediate consumption. And by immediate, I mean once bottled. That leaves 5%, and that is generous.....probably much less, for vintages that come out truly special and there is a business case for holding some of the vintage back for future sale and hopefully a price increase. It is not going to get better in the bottle. It just becomes rare and more expensive because it is sought after.....not because it got better in the bottle. Reality is that it might get worse.
My point here is that we have a situation where we have bottled wine that is "not special" in massive quantities being stored. It is not being stored as a business case for holdback and future appreciation in value. The bulk of it is just plain old bottled wine that could not be sold. And that is the alarm I see and the secret that no one in the wine industry wants to admit to. Why? Quite simply because the truth would rattle the romanticism and false valuations of the local industry.
Medium and large scale quality wineries will be valued correctly. It is the prolifera of farm gate wineries that are going to get a reality check on valuation.

[youhavegottobekidding]

This is still an evolving industry in the Okanagan. I think there will still be corrections in pricing. I buy a lot of Okanagan wines, but usually when I’m entertaining visitors to the valley or for a nice dinner with friends. For my day to day glass of vino, I’d much rather spend $13 for a nice glass of French Syrah or Argentinian Malbec than spend $26 for a similar quality Okanagan wine.

who in their right mind would pay $13 for a glass of wine? :)

[LANDM]

This is still an evolving industry in the Okanagan. I think there will still be corrections in pricing. I buy a lot of Okanagan wines, but usually when I’m entertaining visitors to the valley or for a nice dinner with friends. For my day to day glass of vino, I’d much rather spend $13 for a nice glass of French Syrah or Argentinian Malbec than spend $26 for a similar quality Okanagan wine.

who in their right mind would pay $13 for a glass of wine? :)

Millions of people around the world every day.

[Jhunter199]

This is still an evolving industry in the Okanagan. I think there will still be corrections in pricing. I buy a lot of Okanagan wines, but usually when I’m entertaining visitors to the valley or for a nice dinner with friends. For my day to day glass of vino, I’d much rather spend $13 for a nice glass of French Syrah or Argentinian Malbec than spend $26 for a similar quality Okanagan wine.

who in their right mind would pay $13 for a glass of wine? :)

$9-$15 is pretty standard these days

[RupertBear]

who in their right mind would pay $13 for a glass of wine? :)[/quote]

$9-$15 is pretty standard these days[/quote]

Oops, my bad. I meant $13 for a bottle, not a glass. I don’t think I’ve ever paid $13 — let alone $26 — for a glass of wine. Sorry for the confusion.

[Fancy]

Oops, my bad. I meant $13 for a bottle, not a glass. I don’t think I’ve ever paid $13 — let alone $26 — for a glass of wine. Sorry for the confusion.

And you're confused about paying $13 for a bottle? I'll pay a bit for a good glass of wine with a meal or a sippin' one and I'll pay $13 for a good wine for a good dinner with friends. That's the low end of the scale for sure (for a bottle).

[twobits]

And you're confused about paying $13 for a bottle? I'll pay a bit for a good glass of wine with a meal or a sippin' one and I'll pay $13 for a good wine for a good dinner with friends. That's the low end of the scale for sure (for a bottle).

There are plenty of good wines at the liquor store near that price range. Problem is that most do not come from our Valley. I would be eternally grateful if someone could explain to me why a $13 bottle of Chilean or Australian wine, shipped thousands of miles is comparable to 18 or 20 dollar bottle BC wine?

[common_sense_guy]

Read the story. They didn't just 'fall on hard times'. They bought a peach and apricot orchard in 2003, decided (as many other orchardists in the valley did) that they could make a killing if they ripped all the fruit trees out and planted wine grapes instead. So now there's a big glut of wine on the market and they want out. Would you buy this vineyard now? Anyone with a lick of business sense wouldn't. So Vegas 1500. Are you sure it was a decision that they wanted to pull up all the fruit trees and change or the fruit trees were actually at the end of their productive life cycle as fruit trees do and were forced to by economics.. the way that you talk about how they decided to rip up all the fruit trees sounds as if you know exactly what the owners were thinking because you've talked to them. your post makes it sound as if you are 100% sure and no where do you say this is what I think. You stated it as fact when I truly believe you are only stating your opinion

[seewood]

There are plenty of good wines at the liquor store near that price range. Problem is that most do not come from our Valley. I would be eternally grateful if someone could explain to me why a $13 bottle of Chilean or Australian wine, shipped thousands of miles is comparable to 18 or 20 dollar bottle BC wine?

Several reasons have been explained to me. Cost of land here, cost of putting in a vineyard ( $18,000.00 + acre) taxes, water cost, labour cost, economies of scale.... Dad visited an Australian winery many years ago. One company's property was pretty close to all of Naramata's bench land.
I know several growers that recently ( 3-4 years ago) were receiving upwards of $1.20-$1.50 pound for quality reds with desired brix. They mentioned years ago before they ripped and re-planted, the apple variety they had was returning $.20- $0.30 pound, pretty much break even. Grapes use a lot less water as well, less spraying....

But as mentioned, the return growing grapes has gone down I think because of the glut and competition. I see wineries spending hundreds of thousands on new tasting rooms/areas and advertising to come over and play board games while you drink our wine... One has attempted twice now to apply for a restaurant licence to no avail. ( middle of a residential neighbourhood.)

[twobits]

[
Several reasons have been explained to me. Cost of land here, cost of putting in a vineyard ( $18,000.00 + acre) taxes, water cost, labour cost, economies of scale.... Dad visited an Australian winery many years ago. One company's property was pretty close to all of Naramata's bench land.
I know several growers that recently ( 3-4 years ago) were receiving upwards of $1.20-$1.50 pound for quality reds with desired brix. They mentioned years ago before they ripped and re-planted, the apple variety they had was returning $.20- $0.30 pound, pretty much break even. Grapes use a lot less water as well, less spraying....

But as mentioned, the return growing grapes has gone down I think because of the glut and competition. I see wineries spending hundreds of thousands on new tasting rooms/areas and advertising to come over and play board games while you drink our wine... One has attempted twice now to apply for a restaurant licence to no avail. ( middle of a residential neighbourhood.)

And your post just confirms what I have been saying. The Okanagan Wine industry has a glut of production in both wine and grapes. The prices for both fruit and product are a bubble that cannot and will not compete in the long term. Prices for land have been driven by a a "goldrush" mentality. There is no way in hades that the market price for Ag land such as it is here is sustainable. If they were real, there would not be a peach or apple orchard left in the valley if the returns were so lucrative. People need to think about that. Add in labour and other multitudes of variable costs here and it is no wonder why a 12 dollar bottle of wine from Chile competes equally with a 20 dollar bottle of BC wine that have to pay the same punitive "sin" taxes at the retail point of sale.
There will inevitably be an industry consolidation and market price adjustment for both land costs and existing small scale winery operations. The party is over and anyone saying otherwise is blowing smoke up investors arses to perpetuate the myth to preserve their own investment.

[vegas1500]

Read the story. They didn't just 'fall on hard times'. They bought a peach and apricot orchard in 2003, decided (as many other orchardists in the valley did) that they could make a killing if they ripped all the fruit trees out and planted wine grapes instead. So now there's a big glut of wine on the market and they want out. Would you buy this vineyard now? Anyone with a lick of business sense wouldn't. So Vegas 1500. Are you sure it was a decision that they wanted to pull up all the fruit trees and change or the fruit trees were actually at the end of their productive life cycle as fruit trees do and were forced to by economics.. the way that you talk about how they decided to rip up all the fruit trees sounds as if you know exactly what the owners were thinking because you've talked to them. your post makes it sound as if you are 100% sure and no where do you say this is what I think. You stated it as fact when I truly believe you are only stating your opinion

Ummmm, I didn’t say that....check the posts. It originated with CF....