So the wine industry is facing the same problems as the Social Security System. I'm not a Baby Boomer. I always felt left out. I was born in 1944. In 2024, baby boomers are between the ages of 60 and 78. The baby boomer generation is defined as those born between 1946 and 1964. But I was never much interested in wine. And no one I know in Napa who is younger than 40 cares much about wine. Most of the "young uns" I know drink a lot of Coors Light (ick!), not even craft beer, followed by the M&Ms: margarita, mojito, manhattan, Pina Colada (oops).
It’s as if no one expected the boomers to age and die off. I’ve watched the boomer blindness happen in other areas. There was once a frantic building of schools to accommodate the boomer bulge. Then the boomers aged out of school. Now school buildings sit empty and decaying, or even demolished. Perhaps the developers of the high end resort planned for the Krug land should be thinking in terms of a retirement community with assisted living accommodations rather than an expensive hotel. (I’m a couple of years older than the first boomers.)
I like thinking about this as a correction. I expect some small wineries to be purchased by corps and some will disappear. Not sure that there will be ripping out of vineyards. Corps seem to make decisions that small businesses would not, more insulated from risk perhaps. So they may have an optimistic outlook, make many big purchases and bank on some kind of bounceback that will recover the investments. No idea what will happen for lodging businesses. If NV can move into rebranding as a destination for things other than wine, like wellness retreats, then perhaps lodging businesses can stay afloat.
I disagree with you on one aspect. I think it is the big boys who will go under (or get out of the wine business), and it is the small wineries that will survive. The conglomerates have bitten off more than they can chew and are frantically divesting themselves of properties. The small wineries have a loyal customer base; they haven’t expanded beyond their ability to meet the demand; they don’t have a huge backstock. If they stay within those parameters, I think they will be okay. That, along with the diversity that you suggest, could save our little piece of paradise.
Interesting perspective. Would appreciate any links to resources showing the "frantically divesting themselves," as that would be very interesting data to dig into. Thank you for sharing.
You may be right and I would prefer that smaller rather than corp wineries win out. We had Vintage Wine Estates that sold off properties. Do you know about any others? And I think you will be right about some small wineries. But they, too, are going to feel the part of this decline that is due to loss of Boomer consumers. The question is how much will that be the case for them. One way for small wineries to potentially insulate themselves is to produce wines that appeal to the under 40's. There is little of that on the market and I think a lot of room. Lower priced "naturals" is what many young consumers prefer. If corps drop many properties ... that will get very interesting.
the wine industry has gone overboard in creating more vineyards and wines. And then charging huge prices for its wine. This was bound to happen that people would lose interest in this because of the over doing of this industry. There used to be fields of walnuts, sheep, cattle and horses in this valley and they are gone. I hope that it does not become all houses as we do not have water for more homes!
Not being addressed—yet again—are the impacts of the climate emergency on the agricultural industry. From sea level rise to drought (including the overdrafting of water basins), fires, and even floods, we are entering a new era of disaster management. How will the industry (and politicians) adapt if it continues operating as if it's "business as usual"?
Thank you for your feedback. Have you had a chance to explore our “Climate Crisis” section, updated every Wednesday? We’ve also posted several recent articles on the topic, one of which you can find below. If you believe there are additional angles to cover, feel free to submit your own piece for consideration. If it meets our editorial standards, we’d be glad to share it with our readers. Thanks again for contributing to the conversation.
Napa's wine production is roughly 2.8% of total U.S. case sales and about 4 tenths of 1 percent of the total global wine market.
According to LiveEx, the London based B2B fine wine trading platform, in 2010 the US share of wines transacted on the platform was .1% Today it exceeds 6%. In the past five years Napa listings have increased by 250%. To quote David Parker, founder of Benchmark Wine Group, "The reputation of the top 50 Napa producers now is such that it's very equivalent to classified Bordeaux producers. So, there's a real analogy between the two regions in terms of consumer vision. That's a first because Bordeaux used to be king."
Cerulli Associates, in their report of High and Ultra High net worth markets, estimate that $84 trillion in assets will change hands over the next 20 years from Boomers to their Gen X and Millennial offspring. It's being called the greatest wealth transfer in history.
What if Napa is in the Luxury Wine market, not the broad market below $20 retail?
What if Napa wines are perceived as highly prized by global, high net worth, wine drinkers?
What if those same consumers are about to come into a lot more money?
What if, Napa acreage continues to decline -- we lost 130 vineyard acres just last year alone? What if that continued scarcity makes Napa wines even more desirable?
Tim, I've had a terrible time all my life in this business getting at Luxury Wine Data. Anything you can do to sleuth that out would be really really interesting!
In the meantime, I'd be worried about making decisions that do not take into account the consumer segment that Napa really plays in.
Thank you for the thoughtful insights. Boomers have not been known for passing down their wealth, but we shall see. Here's an article on how challenging the math is no matter how you cut it ( https://napavalleyfocus.substack.com/p/the-wine-boom-is-over). Your point about Napa's luxury positioning is well taken, but the very idea of luxury spending is changing (https://napavalleyfocus.substack.com/p/the-end-of-tourism-as-we-know-it). Here’s an article we published recently exploring recent LiveEx data (https://napavalleyfocus.substack.com/p/under-the-hood-heat-spike-intensifies) Interestingly, only five California brands (four from Napa) make up the California 50 (10 vintages of each brand), and the entire index is showing a continued decline from its peak - Again, thank you. Your support for local journalism is truly appreciated.
The wine industry and the tourist industry is savvy and I believe things will naturally balance out as new ideas develop. The Napa Valley is not going to collapse into economic ruin.
So the wine industry is facing the same problems as the Social Security System. I'm not a Baby Boomer. I always felt left out. I was born in 1944. In 2024, baby boomers are between the ages of 60 and 78. The baby boomer generation is defined as those born between 1946 and 1964. But I was never much interested in wine. And no one I know in Napa who is younger than 40 cares much about wine. Most of the "young uns" I know drink a lot of Coors Light (ick!), not even craft beer, followed by the M&Ms: margarita, mojito, manhattan, Pina Colada (oops).
It’s as if no one expected the boomers to age and die off. I’ve watched the boomer blindness happen in other areas. There was once a frantic building of schools to accommodate the boomer bulge. Then the boomers aged out of school. Now school buildings sit empty and decaying, or even demolished. Perhaps the developers of the high end resort planned for the Krug land should be thinking in terms of a retirement community with assisted living accommodations rather than an expensive hotel. (I’m a couple of years older than the first boomers.)
There is plenty of data to suggest such a strategy be considered. Thank you for sharing.
I like thinking about this as a correction. I expect some small wineries to be purchased by corps and some will disappear. Not sure that there will be ripping out of vineyards. Corps seem to make decisions that small businesses would not, more insulated from risk perhaps. So they may have an optimistic outlook, make many big purchases and bank on some kind of bounceback that will recover the investments. No idea what will happen for lodging businesses. If NV can move into rebranding as a destination for things other than wine, like wellness retreats, then perhaps lodging businesses can stay afloat.
Thank you for sharing.
I disagree with you on one aspect. I think it is the big boys who will go under (or get out of the wine business), and it is the small wineries that will survive. The conglomerates have bitten off more than they can chew and are frantically divesting themselves of properties. The small wineries have a loyal customer base; they haven’t expanded beyond their ability to meet the demand; they don’t have a huge backstock. If they stay within those parameters, I think they will be okay. That, along with the diversity that you suggest, could save our little piece of paradise.
Interesting perspective. Would appreciate any links to resources showing the "frantically divesting themselves," as that would be very interesting data to dig into. Thank you for sharing.
You may be right and I would prefer that smaller rather than corp wineries win out. We had Vintage Wine Estates that sold off properties. Do you know about any others? And I think you will be right about some small wineries. But they, too, are going to feel the part of this decline that is due to loss of Boomer consumers. The question is how much will that be the case for them. One way for small wineries to potentially insulate themselves is to produce wines that appeal to the under 40's. There is little of that on the market and I think a lot of room. Lower priced "naturals" is what many young consumers prefer. If corps drop many properties ... that will get very interesting.
the wine industry has gone overboard in creating more vineyards and wines. And then charging huge prices for its wine. This was bound to happen that people would lose interest in this because of the over doing of this industry. There used to be fields of walnuts, sheep, cattle and horses in this valley and they are gone. I hope that it does not become all houses as we do not have water for more homes!
Thank you for sharing. It’s a dilemma.
Not being addressed—yet again—are the impacts of the climate emergency on the agricultural industry. From sea level rise to drought (including the overdrafting of water basins), fires, and even floods, we are entering a new era of disaster management. How will the industry (and politicians) adapt if it continues operating as if it's "business as usual"?
Thank you for your feedback. Have you had a chance to explore our “Climate Crisis” section, updated every Wednesday? We’ve also posted several recent articles on the topic, one of which you can find below. If you believe there are additional angles to cover, feel free to submit your own piece for consideration. If it meets our editorial standards, we’d be glad to share it with our readers. Thanks again for contributing to the conversation.
https://open.substack.com/pub/napavalleyfocus/p/under-the-hood-climate-changes-growing?r=gf7tj&utm_medium=ios
Well done.
Napa's wine production is roughly 2.8% of total U.S. case sales and about 4 tenths of 1 percent of the total global wine market.
According to LiveEx, the London based B2B fine wine trading platform, in 2010 the US share of wines transacted on the platform was .1% Today it exceeds 6%. In the past five years Napa listings have increased by 250%. To quote David Parker, founder of Benchmark Wine Group, "The reputation of the top 50 Napa producers now is such that it's very equivalent to classified Bordeaux producers. So, there's a real analogy between the two regions in terms of consumer vision. That's a first because Bordeaux used to be king."
Cerulli Associates, in their report of High and Ultra High net worth markets, estimate that $84 trillion in assets will change hands over the next 20 years from Boomers to their Gen X and Millennial offspring. It's being called the greatest wealth transfer in history.
What if Napa is in the Luxury Wine market, not the broad market below $20 retail?
What if Napa wines are perceived as highly prized by global, high net worth, wine drinkers?
What if those same consumers are about to come into a lot more money?
What if, Napa acreage continues to decline -- we lost 130 vineyard acres just last year alone? What if that continued scarcity makes Napa wines even more desirable?
Tim, I've had a terrible time all my life in this business getting at Luxury Wine Data. Anything you can do to sleuth that out would be really really interesting!
In the meantime, I'd be worried about making decisions that do not take into account the consumer segment that Napa really plays in.
Keep up the great work!!!
Thank you for the thoughtful insights. Boomers have not been known for passing down their wealth, but we shall see. Here's an article on how challenging the math is no matter how you cut it ( https://napavalleyfocus.substack.com/p/the-wine-boom-is-over). Your point about Napa's luxury positioning is well taken, but the very idea of luxury spending is changing (https://napavalleyfocus.substack.com/p/the-end-of-tourism-as-we-know-it). Here’s an article we published recently exploring recent LiveEx data (https://napavalleyfocus.substack.com/p/under-the-hood-heat-spike-intensifies) Interestingly, only five California brands (four from Napa) make up the California 50 (10 vintages of each brand), and the entire index is showing a continued decline from its peak - Again, thank you. Your support for local journalism is truly appreciated.
The wine industry and the tourist industry is savvy and I believe things will naturally balance out as new ideas develop. The Napa Valley is not going to collapse into economic ruin.
Thank you for sharing.