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01.29.2007

The Great Winery Boom of 2006

In case you haven't noticed, dear reader, there are a lot of Big Wine Headlines that never make their way here onto Vinography. In addition to my desire to present you with the sorts of stuff that I would want to read were I in your place, I also try to filter out a lot of the stuff that is more industry marketing than real news.

There's been a lot of hype in the last 12 months about the growing market for wine in America: how Americans are drinking more wine than ever; how Americans are drinking more wine than beer; how wine is gaining a foothold on American tables; etc. etc. Most of these headlines trumpet some new study or other (usually initiated by a wine industry group) whose statistics triumphantly proclaim one more giant step towards a United States of Wine.

You know what Mark Twain said about there being "lies, damned lies, and statistics" ? Well that's a pretty good description of my opinion on these sorts of headlines. Never trust a study whose results can be interpreted as benefiting the people who paid for the research.

But wouldn't it be nice if some of these things were actually true? Well, thanks to my friend Jack over at Fork & Bottle, I now have the first piece of news of this sort that I think is really interesting and may be relevant to those hopes.

2006 saw the most number of new wineries started in the United States since anyone started tracking such things. In 2006 over 1000 new labels sprung up across the country, a spike of 28%. California added 465. Washington, 65. Oregon, 49.

The real question, is what does this mean? Or more specifically, why is there such a rush to make more wine? The answer is not simple and I won't even attempt to tease out the social and market forces that are in play. But I do take some comfort from a belief in how the market functions overall. This flurry of activity is not some remarkable coincidence of personal dreams of winery ownership all acted on in a single year. These numbers are evidence of a market reacting to some sense of demand or opportunity.

Simply put, there are a lot of people out there who are putting time, energy, and most importantly, money behind the idea that wine is going to be a hotter product in America ten years from now, than it is today.

I sincerely hope they're right.

Read the full story.

Comments (10)

Taylor wrote:
01.29.07 at 8:13 AM

Talk about competition! 465 new wineries makes it pretty hard to stand out. And that is over the 363 new wineries the year before. So now CA has 828 more wines to choose from since the end of 2004 and apparently 2,116 total. That is pretty mind boggling even if most new wineries are vainty projects with tiny production.

Jack wrote:
01.29.07 at 8:15 AM

Things I wonder about:
1) How many of these "wineries" are side-projects by winemakers and assistant winemakers of established wineries?

2) Who are these 465 new California wineries and how can I possibly become "up" on them?

3) How many new wineries were there in Alsace last year? None? Less than none? (I've heard there's no land available - if you want to expand, you have to choose another region to do it in, hundreds of miles away. Think - name a hot new winery in Alsace?!)

J.L. wrote:
01.29.07 at 8:30 AM

Alder-

Thanks for the interesting link. I'd respectfuly like to amend one sentence, however: I think it's more realistic to say, "This flurry of activity is not ENTIRELY DUE TO some remarkable coincidence of personal dreams of winery ownership all acted on in a single year." Living in Santa Ynez and being in the wine industry, I am constantly amazed by the number of folks who jump in feet first with very little knwowledge, research, etc. behind them. Much as I love wine and am glad to see it assuming a greater role in the everyday lives of "average" Americans, we should note that some fadism is at play here in the winery/winemaking explosion. By all means, I applaud their passion, desire and initiative, but I suspect that a fairly significant percentage of those 465 will not be with us in a decade.

Regards,

J.L.

Tim S wrote:
01.29.07 at 12:58 PM

Alder--Fine post; I think that a convection of forces are at play here: 1. a growing acceptance of wine in general as an every day beverage 2. an expanding interest in fine wine, coupled with an increase in discretionary income to spend on "recreational" pursuits like wine collecting 3. the collapsing of the snob factor surrounding wine knowledge and education, 3A. the ever increasing role of women as fine wine afficianados, industry players and consumers and 4. the sirens of the mystical, bucolic life of the vineyard owner and gentleman winemaker, luring those with sufficient capital to take the plunge. Net of it all, if this greater interest in wine leads to more winemakers pursuing the craft, enthusiasts like me will have an even larger pool of fine wine to choose from.
At the same time, I can't help but think of the winemaker's joke which asks,
"What's the best way to end up with $5 million in winery and vineyard assets? "
"Start with $10 million."

Hope you're feeling better. Tim

Jerry D. Murray wrote:
01.29.07 at 6:28 PM

I would have to agree with JL. As the industry grows, the competition thickens and this requires a fair bit of saavy to survive. Many of these folks who get into the wine biz are enchanted by the romantic nature of what they beleive the bussiness is like. It is farming! JL is right, unless these dreamers are willing to invest in marketing and branding, professional winemaking and grape growing they will have limited life spans. In Oregon, this increase is also the function of custom winemaking facilities, where for about $25 a case and some grapes a winemaker will make a wine for you to lable. Is this good for the industry? I don't know. I will say to all the dreamers out there, if you have a lump of cash you can't figure out a better way to spend go for it. It is the dreamers that keep me in my job.

Alder wrote:
01.29.07 at 6:32 PM

Unfortunately no one has stats for how many wineries go out of business each year...

Bob wrote:
01.31.07 at 9:01 PM

I believe you are mistakenly categorizing a new Label as a new Winery. Many established wineries are merely rebranding at many different price-points. The other reason for rebranding is to take advantage of the low cost ease of utilizing new graphics to motivate impulse buys. Labels are quite the motivation for snapping up a bottle of wine!

Bob

Alder wrote:
01.31.07 at 9:05 PM

Bob,

I may be mistaken, but these numbers represent new bonds (licenses) granted by the ATB. When you rebrand, I didn't think you ended up getting a new license. I'm not in the business, though, so I don't know for sure.

Tim McDonald wrote:
02.01.07 at 12:02 PM

Alder,
You are not mistaken in that the stats reflect new bonded wineries, not new labels. I am certain that the # of new labels exceeds the # of new licensed brands. I believe the important thing to focus on is that Americans who choose to drink an adult beverage instead of coffee, tea or soda pop are new wine consumers. And secondly, if you are a beer or spirits consumer you just might be selecting wine more often...keep up the great blogging! Tim

ss wrote:
02.04.07 at 3:03 PM

As a winegrower and the owner of a small custom crush facility I think the boom in new brands and labels is good for every level of the industry. Wineries operate at capacity, demand increases average grape prices and new products stimulate consumer interest.
Is it competive: Hell Yes.
Was it competive before: Absolutley.
Will the proliferation of brand create more noise in the marketplace: Of Course.

The market requires the esatblished players to be a little better in their farming, winemaking and marketing efforts. This new wave makes the last decades' arrivistes look like a trickle.

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