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Why I am feeling optimistic about 2009

I just got back from the national sales meetings of Vineyard Brands (which represents our wines nationally) in Birmingham, Alabama.  I present to the sales team each January, and these meetings give me a chance to get the pulse of the national wholesale wine market as well as catch up with old friends. 

This was the first time in the seven years I've made this presentation that our wholesale sales were down the previous year, which made the presentation a little more challenging.  Still, being down only 11% was a relatively solid performance amidst the meltdown of the economy during the last quarter of the year.  The same week, I spent a day in Atlanta working with a couple of the key account specialists with Empire, our Georgia distributor.  This was a great day, with every stop we made ordering multiple wines.

In the conclusion of my presentation to Vineyard Brands, I mentioned that I thought our fundamentals had never been stronger, and that I was looking forward to 2009.  I think it can be hard to think long-term (and looking a full year ahead qualifies as long term) amidst some of the more pessimistic views of the fine wine market this year. (Feeling too euphoric after reading this blog?  Check out predictions from Tom Wark's Fermentation.)  Still, I am feeling quite hopeful as we move into 2009.  And here's why:

  • Between 2005 and 2008, we've seen a remarkable succession of strong vintages at Tablas Creek, each with their own distinctive character. These are the wines that will be on the market in 2009 (and beyond).
  • We're a part of three hot categories within the world of wine: Paso Robles (and, more broadly, California's Central Coast), Rhone varietals (particularly Rhone blends), and wines made with organic viticulture.
  • We have an ever-growing base of enthusiasts, driven by some 22,000 visitors to the Tablas Creek tasting room in 2008.  This visitor total is up 4% from 2007, and I think it's hard to overstate the importance for a relatively small winery like us of sharing the experience of Tablas Creek with over 40,000 people over the last two years.  I am a strong believer that it's worthwhile to make fans one at a time, and that the cumulative impact of this one-on-one outreach is enormous.  It's worth noting that our direct sales, including tasting room and phone/internet, were up 15% last year.
  • There is a move in the wine markets, as in the consumer markets in general, away from show and toward substance.  Since we've never been very good at show, but feel that we offer a lot of substance, this is good for us.  Want to see what I am talking about?  Take a look at the small aside on designer Karl Lagerfeld near the end of a recent blog post by Steve Heimoff.
  • Our press has never been better.  Last year, we received very nice writeups from Robert Parker's Wine Advocate and Stephen Tanzer's International Wine Cellar.  And, just before Christmas, we got the best score in our history from the Wine Spectator on the 2006 Esprit de Beaucastel.
  • Everyone is looking for value, to the point that it's almost a joke seeing the food and wine press trip over itself offering value recipes and value recommendations alongside the same advertisements for luxury items that we've seen for years.  And, if you look at what top examples from major wine categories will cost you, it can be daunting.  The top wines from Bordeaux and Burgundy have been astronomically priced for years now.  And the top California Cabernets, Merlots, or Chardonnays will set you back triple digits, at least.  Even the top Chateauneuf-du-Papes will set you back $90 or more.  But the Esprit de Beaucastel wines, which at $40 and $45 represent some of the best of California Rhones?  Pretty good values, I submit.

Finally, independent of anything that we at Tablas Creek are or are not doing, all the demographics of the world of American wine consumption are pointing in the right direction.  American wine consumption rose to its highest-ever level in 2008, according to Wine Business Monthly, and this growth is being driven by the changing tastes of younger consumers, who are adopting wine as their drink of choice as their parents' generations never did.  I analyzed American wine production and consumption data in September, and concluded that we saw a "vibrant, growing market, and great prospects for growth over the next decade".  Economic troubles notwithstanding, I see this as true now as it was four months ago, and feel that we're well positioned to take best advantage of the market opportunities we come across in 2009.