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Stacey Vanek-Smith: New Year’s Eve is here. Time to buy some bubbly, watch the clock, and fight the feeling that you should be somewhere a little more fabulous than wherever it is you are. If you opt to imbibe some homegrown spirits tonight, you’ll be helping make it a happier new year for the U.S. wine industry. Kaomi Goetz has more.
Kaomi Goetz: Stu Smith grows grapes for his small winery Smith-Madrone, nestled in the hills of Napa County. He says a lot of people in his industry are struggling these days.
Stu Smith: They estimated that 20 percent of the Sonoma County grape crop would be left on the vine. That’s pretty startling.
Smith says he hasn’t seen anything like it in his 40 years in the business. Growers are letting their grapes rot rather than take a bath trying to sell them in a glutted market. Distributors are still trying to unload back inventory from last year. Small wineries that sell to restaurants are having abysmal sales. Smith says it’s causing a lot of jitters.
Smith: Are we looking at a new paradigm? Or are things going to get better after the next six months or a year, and everybody goes back to their old ways? You know, I don’t know.
Positive spinners will tell you people are still drinking wine. That’s true, but fewer are buying wines costing $30 or more.
Christian Miller: What’s interesting about this recession that’s quite different from the last two is the effect on the baby boomers.
Christian Miller researches the wine industry. He says people in their late 40’s to early 60’s drove the upscale wine market, even during past recessions.
Miller: This recession, because it’s impacted their wealth significantly, has had a much more significant impact on the outlook and purchasing of the baby boomers.
The upmarket labels are scrambling to find the new selling sweet spot. Some wineries are offering as much as half off and free shipping on the Internet. And with distributors hurting, analysts say wineries are increasingly trying to bypass stores and restaurants to connect with consumers directly.
I’m Kaomi Goetz for Marketplace.