Ciatti Bulk Wine French Oak

Ciatti California Bulk Wine Report March 2024

California’s bulk wine inventory was larger in February than it was in February 2023, particularly on Cabernet and Chardonnay, and will continue to grow as the 2023-vintage supplements it.

We suspect that if market activity was greater, still more bulk supply would emerge on the market. The situation on Cabernet is the most acute: Inventory registered with us was nearing 9.0 million gallons in February and buyer interest is highly limited. Zinfandel is not far behind Cabernet in terms of interest levels relative to availability levels.

Bulk wine suppliers are now fully cognizant of the slow sales dynamic and some have softened their price expectations, although it remains difficult to characterize market pricing as transactions have been few. Prices generally remain too high for
negociant buyers – fulfilling retailer and private label programs – to make many moves, but it is a positive that negociants are present on the market in the first
place, suggesting deals can be done if both buyer and seller can meet on price.

In recent weeks there has been an uptick in spotty, small-volume activity on bulk wines at opportunistic pricing. In the Coast, there has been some smallvolume interest in 2022 North Coast and Russian River Pinot Noir, 2022 Alexander Valley Cabernet, and 2022 Paso Robles Cabernet. There have also been some small pockets of 2022 Merlot interest. 

Some of the wines involved have been organic and have commanded a slight premium because of it, as buyers seek points of difference for their programs.
Similarly, buyers supplying canned wine or RTD programs have also been in evidence, looking for limited volumes, and there have been some inquiries
into low-alcohol wines.

In the Interior, bulk market activity has been off and on since the turn of the year. Much of the more concerted interest is on whites: Limited volumes of 2023 Chardonnay, Sauvignon Blanc or Pinot Grigio have been getting acquired here or there, the pool of buyers shallow. There has been some limited demand for 2022 or 2023 Lodi Cabernet, and highly intermittent, small-volume activity on Zinfandel and Petite Sirah.

Interior suppliers are having to be aware of price competition emanating from some Coastal areas and also from Washington state, where oversupply has led to some discount prices that may prove attractive to certain programs that can use
wine from outside California.

None of the aforementioned activity, in the Coast or in the Interior, will put much of a dent in the state’s bulk wine inventory. Nor, as they currently stand, will sales at the retail end.

In recent weeks industry analysts SipSource have published some gloomy  distributor depletion data showing that full-year 2023 (-7.5%), January 2023-January 2024 (-8%) and November 2023-January 2024 (-9%) depletions of
wine were all down significantly. SipSource added, however, that it expected depletions to stabilize in the coming months, partly thanks to more favorable comparisons. It is hoped this expectation proves accurate: Greater stability of sales through 2024 would aid forward visibility and reduce buyer hesitation on both bulk wine and grapes. Brighter spots for the wine industry currently include premixed wine cocktails and on-premise wine cocktails, according to SipSource.

Wine’s struggles are not unique: Beer and spirits are "suffering similar sales trends, suggesting the problem is alcohol industry-wide. Alcohol is currently in the
firing line of a great deal of health messaging, driven by the World Health Organization and its – some might say, overzealous – pronouncement in January
2023 that “No level of alcohol consumption is safe when it comes to human health”.

Source: Ciatti California

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