Napa’s hangover is your opening.
In the Door · Issue 2 · A five-minute read for the owner who is doing everything
The Financial Times ran a very long piece on Napa Valley this week, and the word in the headline was “hangover.” Signorello in bankruptcy. Treasury Wine Estates writing down more than $800 million of its US assets. Prices at the Premiere Napa Valley auction down 39 percent in three years. A Napa Cabernet that sells for $45 to $85 under its own label sitting at Grocery Outlet for $9.99 under somebody else’s. If you own a winery anywhere else in the country, it is tempting to read all that and feel two things at once: relief that it is not you, and dread that it is coming.
I read it a third way. That article is a very expensive diagnosis of exactly the problems you can still fix, and the buyer who used to spend $150 on a Napa Cabernet is about to go looking for a winery that still feels like a winery. That could be you.
First, though, you need a feel for the Napa the FT found, because it is not the one in the brochure. Two passages, so you know what we are talking about:
“Julio Palmaz, the doctor who invented the balloon-expandable heart stent… chiselled a winery into a mountain, carving an 18-storey building so the Cabernet Sauvignon could flow through the winemaking process by gravity alone. Real-time fermentation data is projected on to the cavern walls. It is a winery that a Marvel villain should own.” (FT, “Napa Valley’s hangover,” Oct 12)
“Will Phelps no longer has a winery… Phelps, who looks something like a Christian Bale character without a dark side, is wearing a Rolex Submariner Black Dial as he pours his Hensel West Proprietary Red ($200)… With no tasting room of his own, he’s bringing clients to his buddy’s two-year-old members-only Napa Valley Car Club, where the bar sits next to a Rolls-Royce and a McLaren.” (same piece)
Gravity-flow caverns, a Rolex, a McLaren next to the bar. That is the Napa that is struggling. And it matters for you, because underneath the Rolexes and the heart stents the piece makes four points, and none of them are about the wine.
What actually went wrong up there
First, the club aged out. David Pearson ran Opus One for sixteen years and now chairs Joseph Phelps, and he said the quiet part: for thirty years the valley sold to Boomers, and the Covid buying spree only “shrouded the demographic cliff.” Older members are now calling to be taken off the list because their cellars hold more wine than they have years left to drink it. Nobody was lined up behind them.
Second, the door got expensive. Rob McMillan at First Citizens Bank has been warning about this since 2018: too many tastings require an appointment, run a couple of hours, and cost an average of $81 a person. Even the Palmaz family, with the Marvel-villain cavern, is not sure about it: when the CEO is asked what they charge, her answer is “$150? It’s outrageous! And it’s not a profit centre.” McMillan’s words: “The solution isn’t simply lowering their prices. It’s figuring out how to get people to come into the winery.” Nick Kokonas, who built Tock, admits his own platform taught wineries to charge for everything back in 2017, and that “people forgot it was important to give away some of it for free and create your next generation of wine drinkers.”
Third, the price got ahead of the wine. Stu Smith on Spring Mountain put it plainly: when he started, the quality was out in front of the price, and today the price is out in front of the quality. Tim Mondavi called it being “on the horns of a disaster.” Everyone agrees prices are too high, and nobody wants to be the first to move, because in Napa a sale means you have left the luxury club.
Fourth, the middle fell out. Republic National, the second-largest distributor in the country, went bankrupt in July owing Napa wineries tens of millions. The surplus is now so large that bulk offers to grocery buyers have gone from a few thousand cases to two hundred thousand, and Kroger went from zero 90-point wines to twenty in two months. The shelf is not your friend right now.
Why that is good news for you
You are not Napa. Your Cabernet is $45, not $400. Your tasting is probably $25, not $150. Your county does not have a $425 average hotel room. The buyer who is about to trade down from Napa is not trading down to Costco. She is trading down to a region that still feels real, with an owner behind the bar and a bottle she can afford to open on a Tuesday. Paso, Walla Walla, the Willamette, Virginia, the Hill Country… this is your customer, and she is about to come looking.
But she will only join if the four things above are not quietly true at your winery too. So here are the four moves, in the order I would make them.
Move one: find out how old your club is
Not how old you think it is. Pull every active member, add the year they joined, and look at the last 24 months of new signups next to the cancellations. If the newest members look like the oldest members, you have Napa’s problem on a smaller scale, and the timeline is the same. This takes an afternoon and it changes every decision after it.
Move two: build a door that costs less than the tasting
Napa’s answer this year was Pilates in the vineyard (Turnbull), trivia night (Clif Family), outdoor movies (Laird), pickleball (Whitehall Lane). Those are serious wineries, and they are doing it because a tasting fee is a wall and an evening is a door. You do not need a fight night. You need one reason a month for someone under 45 to come to your property that is not “taste six wines for $30,” and a tasting fee that comes off the first bottle so the guest never feels like she paid to shop.
Move three: add a way in, not a discount
Dave Gibbs, the new owner at Ritchie Creek, is launching with a $150 Cabernet and a cheaper second wine “to try to entice people who can’t afford a more expensive bottle.” That is the whole play. Do not cut the price of your flagship; in a premium category, a sale reads as a confession. Add a real entry point instead: a second label, a three-bottle tier, a club level under the one you have. The new buyer joins where she can and moves up when she trusts you. Issue 1 covered why the twelve-bottle unit is the real problem. This is the fix.
Move four: stop planning around the distributor
If the Republic National collapse taught the industry anything, it is that the wholesale tier can disappear in a week. The craft distillers hit by the same collapse are telling their trade group that their own tasting rooms are where sales are holding up. Every dollar you move from “hope the distributor sells it” to “sell it at the door and ship it to the club” is a dollar you control the price of. In a market where your neighbors’ wine is showing up at Aldi and Costco under $30, that control is the whole game.
One thing to do this week
Do move one. Pull the club list, add the signup year, and count how many members joined in the last two years against how many left. Then put that next to your average member’s age. If both numbers make you wince, you are not in trouble yet. You are early, which is the only place this gets fixed cheaply. Napa is what happens when nobody looks for ten years.
If any of this sounds like your winery, the Snapshot is where I would start. It is a free, one-page read of how your club, tasting room and website look to the buyers with money in your area, and the first thing I would fix. Yours whether we ever talk.
Trisha Cancilla · unWINEd Consulting · Nashville
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