Special Report: The International Wine Crisis

“Wine is a mystery that holds the promise of an explanation.”

—Randall Grahm, Bonny Doon Vineyard

The international world of wine may be entering an industry-wide crisis it has not faced since Prohibition.

What, you say—wine is everywhere you look. Shelves and shelves. What could be bad about that?

Fair enough.

Let me start by telling you something that is not obvious to the average consumer.

All of a sudden, it is not selling like it used to.

Retail stores and restaurants are at the end of the pipeline. There are forces at work—some related to each other, some separate—that are severely affecting the flow.

At this point you may be saying:

“I do not even drink much, and when I do it is likely to be beer or bourbon.
Why should I read this?”

That being said, you might feel an impulse to exit the site.

But wait.

There is a moral to this story. Let me explain….

I am no expert, but I have been a serious consumer for a long time.

I have an ample cellar. I have traveled to wine regions, domestic and international. I have developed contacts at every level of the market and, as a result, keep my ear to the ground.

At every level—vineyard owners, wineries, wholesale and retail firms—the news is frightening.

Let me give you one example to capture your attention.

I have a friend who writes about the business of wine and, consequently, spends time with people at every level of the industry. His major focus is Napa Valley.

On a recent trip, a source who chose to remain anonymous confided this:

Growers of top-rated vineyards who formerly sold their Cabernet for $5,000 per ton were forced to sell their grapes for $1,000 per ton—or even less.

Other sources reported that they actually dropped fruit on the ground rather than “give it away” or spend the money required to ferment and store their excess.

For some, the problem was that they still had last year’s wine sitting in the barrels needed for aging.

Impressed yet?

If I were a reporter, I would be struggling to gather enough research and expertise to document all of this thoroughly.

But as a mere consumer—and a translator of interesting phenomena—I will try my best to help you see and understand what is happening.

A Brief History Lesson (That Matters)

Let me start with Napa Cabernet.

In 1976, Napa Cabernet won a very high-level tasting in Paris against the best Bordeaux. Some California Chardonnays had similar success against white Burgundy.

This event catapulted American wine back into the world market, which had been depressed since Prohibition.

Suddenly, California was back in the game.

Consumers and collectors who had long adopted French wine took notice. They traveled to Napa. They requested California wines from their merchants back east.

Unfortunately, the number of premium wineries—those that survived Prohibition or were founded in the late 1960s and early 1970s—was limited, and production was small.

For several years, I was able to buy wines from that historic tasting at very reasonable prices.

Then everyone wanted in.

Prices soared.

A wine already sitting in my cellar suddenly became a collector’s item—one I could no longer afford to replace.

So my friends and I chose to celebrate our “loss” by building special dinners around Cabernets and Chardonnays that now lived in the cellars of celebrities and captains of industry, and appeared on wine lists at famous restaurants—such as Bern’s Steak House in Florida—for prices that would shock you.

These wines became benchmarks for the burgeoning California wine market.

I tell you this so you can better understand what came next.

Fast Forward

Wine became fashionable.

It became a symbol of sophistication.

We were no longer the Budweiser generation.

When invited to dinner, it became customary to arrive with a bottle in hand. If your hosts were “wine people,” you might feel intimidated—hoping not to commit a faux pas.

At some level of society, wine had become culture.

This lasted for some time.

Other beverages came and went. Some people became cocktail people, bourbon people, tequila people.

But for those of us who grew up in wine, we still valued our cellars. We still discussed vintages and favorite varietals.

Then, almost suddenly, things began to change.

Health concerns rose. Once believed to be beneficial for heart health, red wine—and alcohol in general—came under scrutiny. Studies warned against any alcohol consumption. Drinking itself was framed as a disease, or at least a cause of obesity.

At the same time, studies began reporting that the last two generations were either not drinking much at all or switching to alternative beverages.

Meanwhile, another force was quietly building.

The surge in wine consumption and collecting over the last forty years encouraged massive vineyard expansion. New wineries opened. Vineyards were planted in regions that had never produced wine before.

Overproduction became inevitable.

Private equity firms and large beverage companies aggressively acquired small wineries in preferred regions like Napa and Sonoma. Long-established family names became brands—with production scaled up to satisfy investors.

Bottom line:

Wine became commodified. A product bought and sold for profit—not necessarily for quality.

Why This Matters

Supply and demand became distorted.

Massive investment required continuous growth. Advertising created desire where none had existed. Winemakers became celebrities. Beautiful destinations beckoned us from glossy ads—even if we never went there.

A sea of very good wine, and plenty of mediocre wine, began pressing against the floodgates of oversupply.

That is where we are now.

If this were purely a market correction, lower prices might eventually solve it.

But the adjustment is painful.

Retailers and wholesalers are sitting on mountains of inventory. Some have already closed. Overseas shippers face canceled contracts.

When an entire supply chain backs up, the damage spreads far beyond the obvious players.

The Human Cost

What matters most to me are the small farmers and the cellars that vinify grapes and bottle the finished nectar.

Vineyards and wineries are rural enterprises. They create communities. The people who make wine are neighbors, friends, families.

If they fail, everyone feels it.

Wine is, at its heart, a farm product—subject to the same vulnerabilities as any crop. One violent hailstorm can wipe out an entire harvest and devastate a household’s livelihood.

And yet, wine is also the most natural alcoholic beverage in existence.

Pick grapes. Place them in a clean container. Protect them from insects and fungus. Within days, natural yeasts begin fermentation.

Historians tell us the first cultivated grapes were fermented in buried clay vessels. When spring came, villagers unearthed them and declared—party time.

This magic likely began in the Middle East and spread across the Mediterranean with trade and conquest.

If the international grape glut continues, small farms—and centuries of artistry—may vanish.

In southern Europe, some vineyards have been farmed by the same families for hundreds of years.

This is history.

This is culture.

This is a way of life.

The Moral

If any of this resonates with you—or even sparks curiosity—here is what you can do.

Support independent growers and producers.

If you buy retail or online, pause before your next purchase. Ask questions.

Where is this wine made?
Who owns the vineyard?
What is their philosophy?

It is often possible to trace the wine in your glass to a real place, made by real people.

Why buy mass-produced, proprietary wine if you can drink farm-to-table bottles that are sustainably grown, often better, and frequently less expensive?

With a little homework, we rarely pay more than $25 a bottle—and often much less. We know the wine’s heritage. We can call the winery and speak to real people.

And don’t worry.

There will always be giant machines, endless rows of meticulously tended vines, and massive factories producing perfectly consistent wines—with beautiful labels—waiting for you at the supermarket.

No awkward conversations required.

“I’m always carried back to why wine was seen as magic or divine from the beginning.
I suspect it’s because it is the most familiar act of transformation.
And it is one of the very few remaining rituals that many of us have.
It makes the meal into a ritual that it otherwise would not be.”

— Paul Draper, Ridge Vineyards

With care for the vine and those who tend it,

Clay

P.S. We’ve considered forming small wine group with online and in person meet-ups. If you’re interested in going deeper, drop me a line.