The Labor Day weekend has just passed here in the United States and the wine grape harvest is picking up steam. This is always an exciting time of the year, but there is also anxiety this time around because in some cases the tanks are still full of wine from earlier vintages and the new crop, even if it is not unusually large, presents a series of problems.
Recent reports suggest that there is a lot of bulk wine available here in the U.S. market. Even bulk Cabernet Sauvignon is a tough sell because of over-supply. The surplus problem seems to be even worse in Australia, which suffers from many of the same problems as other global wine regions plus the consequences of lost sales to its previous top export market, China.
This situation reminds me of a Wine Economist column from pre-pandemic 2019 that still seems relevant today. Australian readers should read “Shiraz” in place of “Cabernet Sauvignon” to make more sense in your particular situation.
Wine Economist / July 30, 2019
The wine grape harvest is just around the corner in California and Washington State and, while that’s a great time of the year, it will present economic challenges to some winegrowers. There’s going to be an awful lot of Cabernet Sauvignon harvested this year. Most of these grapes are contracted, but some will be looking for buyers and it might not be so easy.
Cabernet has been the top choice for new plantings for the last several years and it is easy to understand why. It is a noble grape and can make terrific wine. Consumers love it, so growers have responded enthusiastically. The problem, as has been noted here before, is that wine demand generally has slackened just as new supply is reaching the market. For a few years at least there is likely to be a surplus of Cabernet Sauvignon in many regions.
In fact, the surplus is already here, or at least that’s how I read the recent reports from Turrentine Brokerage. Turrentine data show the highest level of Cabernet on the bulk market for many years. Add the 2019 harvest to the current market and you have a problem — not for everyone, but for those who are left with unsold grapes or wine.
Econ 101 Meets Yao Ming
What do you do when you have too much Cabernet? Econ 101 suggests price adjustment — cheaper grapes, cheaper wine, and so on. But there are limits to this strategy, especially since the lower price tiers of the retail market are in decline.
Export sales are another Econ 101 solution and certainly there is an opportunity here, especially if President Trump succeeds in talking the dollar’s exchange value down. But the president’s trade wars have had an offsetting impact on wine exports.
Countries that compete with us in the export markets, notably Australia and Chile, have aggressively sought out free trade agreements to boost sales. The U.S. has recently taken the opposite strategy. U.S. wines are therefore a tough sale today in many export markets including especially China, where Australian and Chilean wines find great success.
Yao Ming, the Chinese basketball legend, has trouble selling his signature Napa Cab back home because of 93% tariffs imposed in response to the Trump administration’s policies. If Yao can’t sell Cab in China, there is not much hope for the rest of us. Export markets are unlikely to absorb very much of the surplus Cab. Other options?
Searching for alternatives, I consulted the most recent Nielsen market figures in the current issue of Wine Business Monthly and found a few ideas to consider if you find yourself holding excess Cabernet this year.
#6 Two Words: Red Blends
Red blends are a useful market category because you can blend away unfashionable or surplus grape varieties without consumers necessarily noticing what’s up. Syrah and Merlot are not as popular as they once were as varietal wines, for example, but blend them together, call the result a Red Blend, and consumers snap them up. Cabernet blends would be very competitive at the right price. This market segment is fairly large but, unfortunately according to the Nielsen data, its growth has stalled a bit this year. That means we need to think about …
#5 Three Words: Sweet Red Blends
See “Red Blends” above but add some residual sugar. I don’t have a lot of personal experience with these wines, but I see them everywhere. 19 Crimes, which tastes sweet to me, has a successful varietal Cabernet Sauvignon, so this is not uncharted territory. Even better, why not try …
#4 Rosé of Cabernet
Rosé is the fastest growing market segment in the Nielsen table. A lot of that Rosé comes from France, to be sure, but the market is large and fluid. Picked at the right time, Cabernet makes a nice Rosé and in fact there are a great many produced both here in the U.S. and around the world.
As I noted here earlier this year, there are tricks to the Rosé trade to consider. Rosé is not that easy to make, since color is a concern, and can be tricky to sell because consumers prefer the most recent vintage and demand seasonality is a factor, too. If you like the idea of Rosé of Cabernet, then I think you will also like …
#3 Sparkling Rosé of Cabernet
Take two fast-growing categories — sparkling and Rosé — make the wines from Cabernet and you are ready to go. The only thing that could be better is …
#2 Canned Sparkling Rosé of Cabernet
… because canned wine is also a thing (watch for a report here in the near future) and it is growing fast. Have you seen all the new canned wine displays in the supermarkets? Don’t dismiss canned wine too quickly.
Canned sparkling Rosé of Cabernet leverages three hot trends to use up your excess Cab. It is a perfect storm of wine. What could be better? And while you have the mobile canning equipment hooked up, you might consider …
#1 Canned Sparkling Cabernet + Black Currant Spritz
I am paying more attention to the canned wine displays and one thing I note is that canned wine spritz is generally right beside the other canned wines. These seem generally to be mixtures of wine, fruit flavors, and carbonated water. They sound refreshing and they have less than half the alcohol of regular wine. A Cabernet and Black Currant spritz sounds drinkable to me on a hot day, but you might prefer blackberry or some other fruit flavor that’s great, too..
Since the consumer segment that is interested in low alcohol products is growing, I can see how this trend might persist. Something to consider.
Seems Like a Stretch?
Bottom line. The U.S. industry is going to need to find uses for its excess Cabernet Sauvignon if the potential surplus materializes. These examples are ways to take advantage of the small number of growing wine market segments. If it seems like getting Cab products into these segments is a stretch, then it shows how much more pressure there will be on the traditional product markets.
I hope the market can absorb all the Cabernet that’s coming its way. Fingers crossed.