Napa Valley In Decline?
Well, the gauntlet was certainly thrown down today.
Is the "Napa Valley" Brand in decline? Is it faltering in the face of increased competition. Is it possible that the marketing powerhouse that is Napa Valley Cabernet hasn’t kept up with the competition?
Bill Ryan, a columnist at the Napa Valley Register, essentially told his readers (those in the wine industry), either change your marketing ways or see the demise of Napa Valley as the premier wine region in the New World. It was, to say the least, a call to arms.
Here’s the gist:
"we cannot grow and sell $15 wines here. So, we have to more vigorously
market our super-premium cabs. It’s becoming clear that we aren’t able
to compete in the growth sectors of wine lists. We must improve the way
we encourage, receive and treat wine enthusiasts who still want to
visit Napa Valley. As dedicated enthusiasts, they can help us get our
wines placed on wine lists. Time is short; let them go to the many
other, sexier wine regions in the New World and risk never getting them
back. Remember, we owned that category back in the ‘80s; there weren’t
any other luxury wine destinations in the New World. Presently, we rank
far down the list."
What Ryan is noting is the obvious. There are a lot more games in town for wine lovers. it used to be that if you wanted to drink the elite, but not hit up Bordeaux or Burgundy, you gravitated toward Napa. But now, look around: Central Coast Pinot, RRV Pinot, WA Reds, Oregon Pinots, Argentina Malbecs, Aussi Extract Bombs, British Columbian beauties, New Zealand Pinots, Spanish Cults, Austrian GV’s, Israeli wines, Lodi Zins, Anderson Valley wines….It’s endless. It’s not that these places didn’t make wines before, it’s that they weren’t very visible and often weren’t imported to the U.S in much volume. Now they are. Add to that the increased availability of direct shipping and many of these wines are as available as any Napa Cabs.
Ryan concludes with his call to arms:
"Next steps call for a sea change in our approach to the only business
we have that will keep us employed, keep our hospitals open and the
school bells ringing. We need to come together, agree to engage experts
to chart a path and agree to the spending required to reestablish Napa
County as the super-premium wine region in the New World. This is the
classic case of “damned if you don’t.”
He wants more marketing, and marketing not aimed at pointing out that Napa is home to "Cult" wines since "Cult" doesn’t necessarily only apply to a Napa-made wine. Ryan suggests Napa Valley better step up its marketing efforts now, particularly with its best customers, and explain to them exactly why they can’t live without Napa Valley wines.
If it were me, the first place I’d start my new marketing efforts is inside the Napa Valley itself. Captive audiences right there in your back yard. Is there a way to speak to these folks more effectively? I wonder how visitors feel about paying $15 to taste a few ounces of wine? That’s just my first thought.
Napa Valley already does a tremendous amount of marketing that works toward maintaining the "Napa Valley" brand as the height of prestige and quality in American wine. The region is literal adult playground (assuming you can afford entry into the sand box).
I rather like these desperate calls to arms. They make people think and evaluate their position in the world. They cause controversy that ferrets out the stakeholders and identifies where they stand.
I’ll be looking forward to seeing the response that Mr. Ryan’s column gets.
In our business, we have only seen an increases in our Napa Valley wine sales. To date, our strongest days (we sell one wine per day, online to a national audience) have been those where we show a Napa Valley wine.
Reaching and retaining new customers is critical for any business. The problem for some wineries is that they don’t know or don’t have the time to run their winery *like* a business.
That said, however, I do think that some wineries are becoming smarter about reaching new customers. Some by working with companies like The Wine Spies, WineQ, American Winery and similar, while others are getting better at conducting their own consumer-direct efforts.
As for $15 Napa wines? This seems nearly impossible, given the high cost of land in Napa. The solution for Napa wineries? Broaden your marketing message by leveraging the reach and built-in audience that innovative wine retailers have. AND, by focusing on adding value within your existing customer base.
– Agent Red
Interesting and provocative, as you say, Tom. Ryan is indeed saying the obvious, but you know how people listen. (Prime example: Detroit.)
Since Italy is where I spend my time, I think his warning also applies to the high-priced Italian wine destinations, eg, Chiantishire and Piemonte — before the public wakes up.
Ryan’s argument would be remotely compelling with some actual facts (beyond a wine list from a couple of restaurants) that show a decline in sales of Napa wines. In the total absence of such, it defies logic that one would ask for a change in marketing. Australia should be making a pitch for change, not Napa.
How did the Napa wine auction do this year? (quite well, Oprah said Napa is her new favorite place which will only attract more money, more celebs, and more attention(not that that’s all good)) How much did ScrEagle raise its prices by this year? ($250 per bottle, to $750). Are any wineries lowering prices? (no) Is the market for Napa Cabernet grapes short or long right now? (its short, prices continue to increase) Are there subtantially more acres to plant in Napa? (no) Is the county approving new wineries? (no, less than 10 have been approved since 2000). Are there fewer visitors in Napa? (I still hit heavy traffic south of St. Helena every time I go through there)
Are there risks? Sure, Sharpshooters, Global Warming, competition from outside Napa, etc. But, why arbitrarily start lowering prices just because a restauranteur says Napa wines are getting expensive? If people stop buying them, prices will fall until they start buying again, simple economics. The market is working fine, why try to proactively fix it if it ain’t broke?
I think Mr. Ryan had a 3″x12″ space to fill and little time to do so….
V
Those of us living in Napa already get to drink for free.
Tom, I don’t agree at all with Bill Ryan. Although he lives in the valley and may have a greater understanding of it than I do, I don’t think Napa Valley is suffering from a lack of tourists (although the economy may be hurting a little). Napa is California’s Bordeaux, and doesn’t need to dumb itself down to attract. The surest way for Napa Valley to remain famous and profitable is to keep the allure of elitism.
Even if reducing the price weren’t already impossible, you would in effect be doing more long-term damage by devaluing the brand perception of Napa Valley as a whole.
Like Mr. Ryan said, in the ’80s Napa owned that space. Napa has immense brand equity as being the FIRST in the states. That’s a great space to own, until you turn it into being the first in the states to break down and betray any brand loyalty Napa has with its current, and more wealthy clientele.
Napa can learn from the brand of Harvard University. People “ooo” and “ahhh” when they hear someone goes to Harvard. It’s an impressive feat. Why? Because they have created and maintained the identity of an elite school, as a SYMBOL OF STATUS. They’re extremely picky of who they bring in, and are renowned for cultivating/turning out great talent, the same talent which then attracts great minds to teach there.
Harvard also has an extremely high price point for tuition. But that doesn’t keep people from paying for it, in fact they have to turn down THOUSANDS of people every semester. People that want to be a part of that brand, they want to be associated with what it means to be from Harvard so people will then say “ooo” and “ahhh” to them.
People will pay for status.
If anyone in Napa is truly worried about this article by Mr. Ryan, then join forces and refocus your efforts on boosting perception of Napa Valley by creating its own uncontested space. You need to take what’s true to Napa Valley as a status symbol apart from anyone else and own it. Everyone from the region will benefit from it, loyal members will feel honored to have stayed loyal, and a new wave will surely want to join this sexy club called Napa.
If you want me to say what that space is, I welcome all Napa growers and their money for the answer.
Bill Ryan knows nothing about what is going on in the wine business of the Napa Valley. Consider for a moment…he writes for the Napa Register! I should stop there.
I ,for one, am happy to see wines other than Napa wines on the lists of our restaurants. We don’t really need their business. Demand for Napa Valley grapes, wine, and property is not just good, it’s explosive. There is no recession here.
I would like to see the list of wine destinations that the Napa Valley “ranks far down.” There is not an appellation in the New World that remotely approaches the average grape, bottle, and real estate prices of the Napa Valley. There are only a few small areas in Europe that approach it. And that’s only because of the euro. Ryan should get out from behind his keyboard and actually check out what is happening north of him in the real Napa Valley. One would think that he would have at least seen what is happening in downtown Napa with the river resort construction, the Oxbow market, Copia, up valley he apparently hasn’t seen the new Gehry architecture on the outskirts of St. Helena? Did he think Montelena was a fire sale? Has he ever tried to find a room or table reservation up valley? Does he know what a room costs at Meadowood?
What a dope.
I agree with Morton and Steve H. here. As Steve said, I think the Napa elitism is still working in the valley’s favor. SPeaking from the East Coast, I think for the average wine lover, Napa still represents high quality, with prices to match, as well as THE best place to tour wineries, still. If tourism were down drastically, there would be reason for concern. How long the economic downturn lasts could change things, but in the meantime, I think it’s still holding its equity.
Garlicoon, the Food & Wine Network has created a space for Wine Bloggers to introduce and promote their Blog. Join our Wine Blogger’s Group at http://www.garlicoon.com/group/winebloggersgroup and connect with other Wine Bloggers.
Thanks,
Carsten
http://www.garlicoon.com
Garlicoon, the Food & Wine Network has created a space for Wine Bloggers to introduce and promote their Blog. Join our Wine Blogger’s Group at http://www.garlicoon.com/group/winebloggersgroup and connect with other Wine Bloggers.
Thanks,
Carsten
http://www.garlicoon.com
Napa has been exploring the limits of the marketing/pricing/BS envellope since long before Bob decked Babe. If you drink around much, you know that the reason Mondaviland was possible is that Napa is a great place to grow tasty wine. That hasn’t changed. That’s what is selling and always has sold our high-priced wine- a reputation earned over time. People aren’t stupid. We make good wine here, wine that’s worth more than wine from other places. When that changes, due to global warming, or collective ego-driven self-immolation, or Batman, or Whatever, we got a problem. Until then, just make the best wine you can, and Devil take the hindmost. Napa Valley sucks, but Napa Valley wine ROCKS!
Being in the wine industry I think Mr Ryan is wrong. Over the course of the past 4-5 years I have seen the industry change. The change has been increasingly positive (for sales) as prices for tastings and tours has gone up from $5/a and a souvenier wine glass to 25-50 dollars for a tasting and no you can’t keep the glass. The change has been the consumers we attract, buyers versus lookers. Mr Ryan might want a return to free wine tastings and souvenier glasses so he can fill up his van with visitors and friends and increase the number of people who visit but I for one am glad that has gone away. Wineries are businesses and it takes a lot of people to handle 5-10 busses, limos and other free loaders who come to the valley looking for a free drink and end up scaring and crowding away enthusiasts and collectors and other serious buyers. The slowing economy does mean we see less people packing crowds in an SUV and driving up for a free tour and tasting…. I hope the economy gets better, but I hope these non-wine people stay home. Its great when people are interested and new to wine but its horrible when people who absolutley do not like wine come up to look around and see the gift shop.
I agree with Strappo here that facts are in order to support the idea that the brand is in decline. Anecdote can be thought-provoking and facts can provide reasons to take action.
There are some facts that are not great for California in the mid to long-term. The trade research (from the Wine Market Council, the Gomberg Fredrikson Report, and places like Wine & Spirits annual restaurant survey and Wine Business Monthly) do show California steadily losing plenty of marketshare in the US to imports despite the obvious deflation of the dollar vs. the euro in the last several years.
Our own research at Vinesse (http://www.Vinesse.com) among our wine club members show that a lot of wine drinkers around the country are interesed in CA wines (including Napa) as one of their possible sources of wine in a world with dramatically higher competition for their dollar from abroad and from other states.
The recent study on wine tourism in the Wine Business Monthly showed that tourism which drives the direct business for wineries is in large part a local phenomenon. What’s true in Napa is true in Oregon, Washington, New York, Texas, etc. That Californians live in a California bubble has never been truer.
Does all this ad up to a “brand” in trouble? Not necessarily. It’s possible to view the circumstances as Napa in acendancy at the same time as other wine regions are in equal or faster ascendancy. We don’t play a zero sum game in this business and have not for a while. This business is very fractured and it’s possible for everyone’s CA wine sales to be up and this still not necessarily be great news if other regions are growing faster.
So, I’m with Tom in liking these kinds of wake-up calls. As the global competition continues to eat away marketshare from California, it becomes all the more important to keep Californians focused on coming to Napa in person and choosing Napa wines. Local is the new green (and all).
I also would offer anecdotally that the restaurant wine gate-keepers seem to be turning away from Napa all around the country. I wouldn’t be so quick to dismiss this with “who needs them.” In an increasingly outward-looking America, Napa needs MORE than great wine–it needs a compelling story to keep its place on lists.
After reading the article again as well as the comments I will add that there are plenty of great wines made in Napa that are at the 30-50 dollar range. The reason the wine is this expensive vs $15 is labor costs in the US vs labor costs in S America and elsewhere. Also I have found in some restaurants that I visit that their fairly priced wine list is anything but. $68 for an $18 Dolcetto, 48 dollars for a 15 dollar Chenin Blanc. These young sommeliers might not have an intimate relationship with Napa Vintners but they definealty have a relationship with how business works. Why sell a restaurant patron a Napa Valley wine for 75 dollars that cost them 35 when they can sell them a 68 dollar bottle of wine that only costs them 10-12 dollars. This is not a Napa problem its a restaurant-patron problem. Thats why I rather pay the corkage or have beer.
There are people who think marketing is everything. Thousands of campaigns have failed because people didn’t like the products promoted. I always wish these people who believe marketing is all should be stuck promoting pickled herring ice cream with chocolate sauce and dill pickle chips.
Ken:
I’ve had Dill Pickle Chips. They aren’t so bad.
tom…