You can expect wineries to change their buying habits, says Rob McMillan, EVP and found of Silicon Valley Bank‘s Wine Division.
He notes demand has flattened, but bearing acres continue to increase. “We’ve arrived at a tipping point in supply,” he says, adding: “That will change a lot of things going forward.”
One indicator of a possible market change: “In the past month there have been stories of wineries rejecting fruit. Smoke taint is the reason cited which is reasonable when there is taint. But growers are suggesting the real reason for rejection is those wineries have more supply than needed,” he says.
“A better indicator: Last week, both of the major wine brokerages came out with their harvest updates. Both commented on the good quality fruit from most regions and both hinted at a large harvest.
“For the past several months, both brokers have suggested wineries might be changing their buying patterns, but as is often the case when we are at this point in a cycle, harvest is the final arbiter.
“It looks like the verdict is nearly in now and we may end up with a record harvest in California which will further tip the scales.”