By Doug Fabiolli

Balancing An Industry

I have been in the middle of the maturing of the Virginia wine industry over the past couple decades. When we talk about maturing, I don’t want folks to think that there is an end to this part of our state. There are different challenges that we take on as we plant more grapes and hopefully sell more wine. Trying to find the balance of how many grapes we get off our plantings against how much our consumers are buying of our products over a given year. Also, what type of wines they are buying and what grapes those wines are made from.

In 2012, the sales of Virginia wine were moving faster than the vineyards could supply. So wineries, including myself, started purchasing fruit from out of state so we could keep the customers satisfied and keep business moving forward. Many in the state, including myself, also planted more acreage to fill the void of our growing industry – remember, however, it takes five years until that planting is at full production. If I grow more of a certain varietal than I need to fill my production needs, I have a few winemakers that will buy that fruit. We teach our customers to appreciate and recognize the locally grown fruit. We also teach them that not all grapes grow in Virginia.

As those recent plantings in Virginia continue to come into fruition, we are seeing the scale tip a bit. With the good season that we had this year, many wineries brought in more fruit than they anticipated. Also, they are buying less fruit from out of state. While I was in California, I witnessed the boom and bust of the grape market and felt the ripples through the industry. In Virginia, a minute industry compared to CA, those ripples can have great impact on a number of wineries.

One of areas that give us some flexibility in our inventory balance game is bulk wine. As much as winemakers plan which wine program the grapes will go to, in heavy years the excess grapes will be processed as a sound and stable wine that another winemaker may purchase at a later date. Often times a new winery needs product to sell before its vineyards are in production. A new wine label may be developed for a certain retail effort. Years ago I made “Amici and Amanti” for Whole Foods. I was able to use excess wine to make the blend. Another option is excess wine can be used to turn into brandy at one of our local distilleries. It’s best to plan that use ahead of time so the base wine is made to the specs of the distiller.

The preferred use of the increased production is to sell the wine in the bottle. Virginia has seen an increase in sales of 14% in the wholesale market. This means that more Virginia wines are selling in wine shops, restaurants and box stores. Yes, wineries love to sell their wine out the front door, but the culture of our customers wanting more of a tasting experience persists. We get less income selling it out the back door, but we have less costs incurred in selling that wine.

So today’s take home message is once again, to buy, drink and share your Virginia wine. Your commitment keeps us planting more lands, hiring and training staff, and improving our operations for your enjoyment. We will continue to find the balance point at higher levels as our wine continues to be recognized as the best on the East Coast. Enjoy a bottle with your Thanksgiving Dinner!