Another one bites the dust….

Well, here we go. Blackstone winery in Sonoma Valley is closing its doors as of March first this year. Here’s the story, if you’d like to read it.

It’s just another move in Constellation brands recent sell-off. It’s also sold off most of its Australian wine brands as well as some others. In addition to that, Fetzer and Sonoma Cutrer (of Brown-Forman) are up for sale too. I’m sure there are more I’m missing and others that none of us know about.

I think we all saw this sell-off coming, but it’s a sad day in this industry when a winery closes. Apparently, Constellation is still going to make Blackstone wines at another facility, but the Blackstone location is being put on the market. Jobs will be lost. Lives will be changed.

And all of this going on at a time when we’re seeing an increase in fine wine sales – the first uptick in over 3 years. But the problem is that many wineries are so behind in inventory that they will never catch up. Many wineries are so back-logged with inventory that they are having major sales of up to 50-75% off retail prices. I feel like this is devaluing the industry. Give consumers a great deal and they will expect it again and again. But at some point an owner may run out of options and the only choice left is to sell or scuttle operations to other facilities to help keep costs down.

You know, the winery business model is not set up for short-term success. Plus you really need tons of cash to get it going. Think about it. Plant some vines. Wait 3-4 years for those vines to produce grapes. Crush the grapes, ferment them and let them sit in the barrel for 1-2 years. Then bottle and let them sit in the bottle for another 3-6 months. Now you’re ready to sell. A few cases here and there at first, then hopefully more. So, let’s see, it’s 5-6 years before there is any revenue coming in and many more years until what’s coming in matches what’s going out. Not a great business plan, but one that many entrepreneurs have somehow found a way to make work.

This isn’t the first winery we’ve seen disappear. It’s sad, for sure. I hope it’s not a trend we see continue, but I have a feeling this is just the beginning of a huge shift in the wine industry. Only time will tell, of course.

So, please raise a glass for all the folks at Blackstone and wish them well in finding new (work) homes. I hope it comes easy for them.

Cheers!

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