Watchers of the California wine business have been warning that the supply of grapes was spilling toward advantage vintners. And the newly released tally of the huge 2018 harvest further reveals an opening for opportunistic vintners to reach for success in the excess.
One of the players eying the opportunity to pick up excess wine from renowned and up-and-coming premium regions is Cameron Hughes. He co-founded his eponymous San Francisco-based wine company in 2001, during another cyclical overhang in supply. At that time, a wave of late-1990s plantings of red-wine varieties, often tied to the “French paradox” documentary on health benefits, rolled into California wineries together with the dot-bomb economic recession that curtailed spending on fine wine.
And now, he’s hearing opportunity calling from wineries’ excess fine wine. When they have more wine in their tanks than fits with the flow of bottled wine out the door, a common tactic is to turn to the market for selling wine to other wineries or vintners like Hughes, styled after the French negociants who produce brands but don’t have their own production facilities or vineyards.
“Pricing has moderated significantly from highs of a year ago,” Hughes said. “Napa cab probably has seen a 30% decline in price. With growth in sales of high-end wine flattening out, there is plenty of extra wine available. The problem is, people paid a fortune for that fruit and have got it on their books. So there’s a standoff for people like me, because the wineries have such high cost of goods.”
Napa Valley cabernet sauvignon wine available for purchase from winery tanks was said to be priced as high as $70 a gallon before the 2017 harvest and seems to have come down to $25–$50 a gallon. Sonoma County pinot noir in bulk is said to be going for $20–$25 a gallon, and the county’s chardonnay in bulk has transitioned from $15-$20 a gallon to $10-$12, and in some cases $7-$10 to find buyers, per some sources.
“It’s not a surprise that we’re where we are,” said Steve Fredricks, president of Turrentine Brokerage in Novato. “Prices for North Coast bulk wine have been trending down for a year and a half, not just when we turned page to 2019.”
Buyers of this wine include negociants building new brands and established wine companies that had been hard-pressed to supply brands at a given shelf price as grape and bulk-wine prices climbed, Fredricks said.
Hughes had learned the bulk-wine market earlier in stints with The Wine Group and at a French negociant. Cameron Hughes Wine launched in 2004 with the label Lot 1, a Lodi syrah. Fifteen years later, he’s created over 600 wines in the Lot Series.
The company hit hard times with other parts of the wine business in the Great Recession. In a court deal to settle troubled loans, Santa Rosa-based Vintage Wine Estates purchased Cameron Hughes Wine in a court settlement two years ago for $15.5 million. Today, Hughes wines are produced in Vintage’s Calistoga and Mendocino County wineries.
The deal has given Vintage a vehicle with a track record of producing ultrapremium and luxury wines sold directly to consumers. Hughes also can tap Vintage’s sources for excess wine.
Cameron Hughes Wine offers wine from $100-plus Napa cabernet for a third of the price, and $60 pinot for under $20. The latest release is Lot 671, a Napa Valley 2016 Meritage blend from a top Oakville estate fermented in purpose-built concrete tanks and aged in new French oak. Lot 671’s suggested retial price is $24.