There is one more guarantee in life besides just death and taxes – the weather’s impact on the wine industry. No matter where a vineyard manager lives in the world, most mornings this person wakes up thinking about Mother Nature’s incessant challenges: rain, heat, hail, pest invasions, etc. In California, wineries have long enjoyed consistently stellar weather, that is until the 2010 and 2011 vintages arrived with a cold, damp thud. Declared a “challenging year” and “simply nasty” by numerous media outlets, buyers shied away if they could even find wine from some less-affected wineries. In Europe, Spain has also encountered the weather’s fickle demeanor, deluges followed by extreme heat, and Burgundy growers have endured three straight years of devastating hail storms.
The stress of a weather-constrained grape supply doesn’t stop at the vineyardist’s office. If there’s a short harvest, sales, marketing, and finance teams absorb the pressure post bottling, jockeying to keep their name front-of-mind while riding out their limited supply.
When faced with less than optimal grape quantities, wineries have few levers to pull, especially an estate winery. In the cooler 2010 and 2011 California vintages, premier wineries like Pahlmeyer in Napa bottled half their normal volume and declassified many gallons into their entry-level brand, Jayson. In some varietals, like Chardonnay, the production was decreased by 75%. This forced an allocated brand like Pahlmeyer to get creative in order to maintain wine list placements and goodwill throughout the market.
Brian Hilliard, president of Pahlmeyer, described how he maintained status quo: “The extremely small amounts of wine did require wholesalers to impose allocation limits at the individual account level, where legal. To help fill some of the supply, we opened up our library and made some of our collectible hold backs of Proprietary Red from 2006-2008 available to direct customers and some of our larger wholesale markets.”
To weather the hampered supply during those same years, Michael Honig, president of Honig Vineyards, adjusted inventory releases to satisfy demand and to avoid running out of wine. “We tried to spread the pain evenly and not favor one market over another,” said Honig.
In Spain’s Priorat growing region, during the 2011 hot and cold roller coaster vintage, producers struggled with ripeness and consistency. “Small producers like Vall Llach simply didn’t make their flagship wine … there was literally very little quality to pick,” said Rebecca Hopkins of Folio Wine Partners, who imports the wine. So the winery poured their miniscule harvest into their Embruix brand and spread out allocations in the U.S. to mitigate any shortage.
The 2012, 2013 and 2014 harvests in Burgundy, particularly the growing areas of Volnay, Pommard and Beaune, endured severe hail damage. Burgundy Importer Dennis Elden of Elden Selections represents many limited-production houses who were affected. “In any farming community, when crops fail or are destroyed, small-hold, mono-culture farmers are particularly vulnerable. You can only make so much wine from a given number of vines. It’s a commodity limited by regulations on the one hand, and by the growing season on the other,” said Elden. “In normal years, producers can make a decent living.” But when available quantities are lower than normal, some are tempted to raise prices to cushion the financial damage. However, Elden warns, “Because the overall production of Burgundy is so small to begin with, ‘abnormal’ years are frequent. It might simply be the difference between getting yields of 50 [hectolitres/hectares] one year and 40 hl/ha the next. This is not catastrophic, but as a percentage of the total production, it is important. So most producers are careful not to let their prices fluctuate, preferring slow, incremental price increases over time to yearly yo-yo adjustments.“
Although California is faced with a serious drought in 2015, most wineries aren’t too concerned with the possible effect on supply. The “perfect” growing years of 2012-2014 delivered a wine windfall and producers stocked up. However, provisioning is key to maximize these opportunities.
“With good sales forecasting and supply planning, wineries usually have an opportunity to leverage good vintages to build up inventories and shorten up stocks in ‘bad’ ones, knowing a good vintage isn’t likely too far away,” Hilliard said. “While the supply issues created by the 2010 and 2011 vintages were difficult, peaks and valleys in yields and supply are the norm. Very rarely do we see a consecutive string of ‘bad’ vintages from Northern California.”
Michael Honig echoes this sentiment, stating, “There are always ups and downs when it comes to production.” He further explained that larger harvests of the past three vintages have allowed him to generate a wine cushion for any difficulties ahead.
It’s a different story in Burgundy. “Good producers should be able to cope with some sort of disastrous harvest. But serious damage three years in a row puts a heavy strain on even the most organized professionals,” said Dennis Elden.
Some might postulate that scarce supply makes a well-known winery from any prestigious area more desirable while lesser-known producers face a battle. Bad press about a vintage affects these lesser-known producers the most since they may not yet have developed the loyal following needed to assure that the label will sell. So they’re forced to get creative, work smarter, and hustle more to move their supply.
They also cross their fingers that Mother Nature delivers a promising, new vintage.