Interior: Written by Marc Cuneo

The beginning of the year has brought a lot of change to the market for broad California appellation or interior wines.  Last year at this time the majority of bulk wine sellers in the world were feeling that inventory was a liability.  Now due to the challenges of harvest, as outlined in the International market update, sellers are generally feeling inventory may be an asset again.

Bulk demand has remained consistent and growing for quality wines, primarily Cabernet Sauvignon, Pinot Noir and high color red blenders such as Petite Sirah and Petit Verdot.   Clients are buying for growing varietal wine programs targeted at higher retail price points.  Recent sales of Cabernet Sauvignon have been in the $6.50 to $8 per gallon range.  California appellation bulk wine gallons for actively sale for all vintages and varieties have dropped from 11 Million gallons one year ago to 7 Million gallons today.  Inventory has been decreasing as a result of bulk market sales and gallons going back in house for existing bottle programs.  There is still very little bulk demand for dry red or dry white programs at the super value bottle price point.

Pinot Noir from the Interior remains in strong demand especially for the highest quality lots.  As a result, buyers are agreeing to production contracts for 2016 and beyond.  Recent sales of 2015 Interior Pinot Noir lots have been in the $7 to $8.50 per gallon range.

Interior Chardonnay demand is moderate, which is an improvement from last year.  Buyers are in the market because of continued slow growth in cased goods sales, but also because the Coastal crop was so short in 2015.  It is important to remember Chardonnay is still the largest single varietal and accounts for approximately 20% of all cased goods sales and consumer sales continue to grow.

The market is still challenged for older vintage Merlot, Zinfandel, or older style blenders.  Merlot, Zinfandel and traditional older style blenders, Carignane, Alicante, Rubired are directly competing with newer available gallons of Petite Sirah and Peitit Verdot, which are preferred for adding color and intensity to a blend.

North Coast: Written by Steve Robertson

Although there is a strong bulk market for Cabernet Sauvignon from all North Coast regions, Napa Valley wines remain king.  In Napa Valley, gallons actively for sale are decreasing but supply of 2014 and 2015 continue to become available, so make sure you are on our list to see new lots.  Asking prices have continued to escalate and just may have peaked.  As asking prices have increased, more buyers are slowing down their purchases or backing out of the market.  Recent sales of 2014 Cabernet Sauvignon wines have been in the $40per gallon range and reserve quality or sub appellation have been in the $55 to $65 per gallon range.  There are very few gallons of Sonoma County Cabernet Sauvignon available and demand continues to exceed supply.   Recent sales have been in the $25 to $30 per gallon range. This strong market activity means wines are only on the market for a few days.  Lake County and Mendocino County Cabernet Sauvignon volume actively for sale is down and recent sales are consistently in the $18 to $20 per gallon range.  We have plenty of buyers interested in the remaining gallons, but $20 per gallon asking prices seems a bit too Buyers high at this point.  Some buyers are hoping the market will soften and others are looking at options from other regions to maintain price points.

Demand for dark red blenders in the North Coast has increased and recent sales have been in the low to mid-teens per gallon.

Pinot Noir in Napa Valley and Sonoma County continues to sell quickly when available and priced right.  Asking prices have increased and buyers remain more conservative in chasing

Pinot Noir at a high price vs. Napa Valley Cabernet Sauvignon.  Supply remains limited.

The selection of Chardonnay available from all North Coast regions including Sonoma County is not very extensive.  We continue to advise buyers to not assume it will be available.  Sonoma County recent sales have been in the $18 to $20 range.

Central Coast: Written by William Goebel

Activity remains steady in the Central Coast for 2014 and 2015 bulk red wines, but continues to be slower for the whites as we move into the second quarter.  Cabernet Sauvignon continues to be a focus for most buyers, but availability and asking prices above $20 per gallon are holding the market back.  Recent sales of Paso Robles lots have been in the range of $18 to $20 per gallon and other Central Coast appellations have been in the $14 to $17 per gallon range.  Buyers are also actively sourcing Cabernet Sauvignon in other regions to make up for volume they did not get in 2015 or because they are priced out of the current bulk market in their desired area.  Merlot has seen a very slight bump in interest due to the limited supply of cost-effective Cabernet Sauvignon for price sensitive programs, but demand continues to be directed at darker red varieties such as Petite Sirah, Petit Verdot and Malbec.  Recent sales of Merlot have been in the $8 to $10 per gallon range and some good opportunities are available.

After coming off large harvests in 2013 and 2014, most wineries are feeling more balanced in their supply of Central Coast Chardonnay even after the below average crop of 2015.  Gallons actively for sale are down and there are not as many buyers in the market.  Recent sales of Central Coast Chardonnay have been in the $13 to $16 per gallon range.

Summary

In summary, the markets are dynamic and every client has a different need, so please call and talk to your Turrentine Broker to get an update on the dynamics that are most important to you.  With our broad base of understanding and experience in the market, Turrentine Brokerage will come up with creative ways to help you, even in challenging markets.

Steve Robertson, Broker/Partner

William Goebel, Broker

Marc Cuneo, Broker/Partner