NAPA -- Vintners and growers generally look to a recovery of sales of fine wine to 2007 levels in one to two years for volume and two to three years for profits, according to a poll of 28 industry executives presented at the Wine Industry Financial Symposium this morning.
The proportion of 109 professionals polled in a wider survey of the industry showed that nearly 60 percent this year thought sales growth and profitability will improve, according to the survey organized by former U.C., Davis Professor Robert Smiley.
Optimism surpassed the roughly 55 percent predicting growth just before the financial markets crash in 2008.
Those predicting positive growth in sales of California wines two years from now was nearly 97 percent, three-quarters for recovery next year and 51 percent for this year. Comparatively, only about 18 percent last year were optimistic about a turnaround in 2009, which proved to be a tough year for sales of fine wines without steep discounts.
As for this year, the market for finding buyers for unsold grapes and bulk wine from Napa and Sonoma counties remains challenging from a cash flow standpoint as most interest is for lower-priced wines, according to Steve Fredericks of Turrentine Brokerage.
The wine industry's big push into social marketing to tap a much-anticipated surge in direct sales to "millennial" generation consumers might pay off in reaching older consumers as the spending power of the younger group has suffered along with the economy, a wine marketing veteran said.
By 2005 the millennial generation -- the oldest among them about age 30 -- became seen as "driving the wine train" for growth in sales because of a greater proportionate affinity for wine than Generation X, Hahn Family Wines President Bill Leigon told the symposium gathering of about 220 mostly winery and banking executives.
Trouble is, the recession left a greater percentage of millennials underemployed or jobless than older consumers, and there is somewhat of a shift in dominant use of social media to baby boomers, he said.
"If you are targeting social marketing to millennials, you're missing the point," Mr. Leigon said.
He said a senior analyst with Palo Alto-based online social network Facebook Inc. told him that boomers' use of the online social network is closing in on that of younger generations. Older users are logging on to connect with family and long-lost friends, while younger consumers are taking their networking more to spoken or virtual interactions on their mobile phones.
Yet the catchword for boomers since the financial market tumble of late 2008 is authenticity, making online evaluations of wines and other products by friends and trusted bloggers an invaluable marketing tool, Mr. Leigon said.
Yet in taking this route, wineries will need to give up some control of the brand in exchange for genuine emotional connections with it. Social marketing should be incorporated into direct-to-consumer sales as well as those through distribution, because the weight of bottled wine makes it expensive to ship, particularly for producers of more than 10,000 cases a year.
"It's easy to sell wine, but it's tough to deliver," Mr. Leigon said.