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Irrespective of the way you measure it, the U.S. wine trade has loved little or no excellent news in 2024. Market information paint a grim image of declining general consumption, a much less shopper, extra grape inventories, and a rising “wine lake.” Premiumization, which offset declines in gross sales volumes lately as customers bought fewer however dearer bottles, can now not carry the trade. The post-Covid growth in on-premise gross sales is within the rearview. By nearly all accounts, it’s a really dangerous time to be a U.S. wine producer.
For those who’re producing Bonanza, nevertheless, you’ve received a really completely different story to inform. The non-vintage California Cabernet Sauvignon, dubbed “Bonanza” by producer Wagner Household of Wine and “Child Caymus” by its legion devoted followers, has defied gravity to turn into a significant progress driver for the maker of Caymus Cabernet. In line with Affect Databank, the Wagner household offered 131,000 circumstances of Bonanza within the U.S. when the model launched in 2020, a quantity that has grown by 60,000–80,000 circumstances yearly ever since. Almost 360,000 circumstances of Child Caymus shipped in 2023, and Wagner Household of Wine proprietor and principal winemaker Chuck Wagner sees no indicators of slowing demand.
That makes Bonanza — a considerably lighter, brisker model of California Cabernet priced at roughly $22 and made primarily of grapes sourced from Lodi — a fairly severe outlier. The wine has offered so effectively within the first months of 2024, in reality, that Wagner has questioned whether or not he can provide the market via yr’s finish.
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“It’s one of many hottest SKUs out out there proper now,” says Rodolphe Boulanger, vp of wine merchandising, New World, for Whole Wine & Extra. “It’s bucking the developments in an enormous means.”
That Bonanza is hanging gold whereas many U.S. winemakers are hanging out is past dispute. What’s much less sure is strictly why Bonanza has resonated so strongly with customers and whether or not that attraction can stick. Wagner at all times anticipated the wine to carry out effectively within the market, however even he’s shocked — albeit pleasantly — by simply how enthusiastically customers have embraced Bonanza. “You may ask me [why Bonanza has caught fire with consumers], and I can let you know a bunch of baloney,” Wagner says. “However I actually don’t know why the wine is promoting so effectively.”
A Lunchtime Cabernet
In Bonanza, Wagner sought an homage to the times when his father — Charlie Wagner Sr., with whom Chuck Wagner based Caymus Vineyards in 1972 — would frequently pull a bottle of Caymus Cabernet out of the cellar to serve with a easy weekday lunch. “The land in Napa wasn’t as worthwhile again then, and the wine wasn’t so high-priced,” Wagner says. “So he’d by no means be afraid to tug Caymus out of the cellar and drink it.”
A name with the winery’s accountant within the mid-Nineties put an finish to that lunchtime ritual, as Caymus needed to elevate the value of a bottle of Caymus from $36 to $60 (it now sometimes retails for $90 or extra). Within the years following, the price of doing enterprise in Napa elevated steadily, driving costs of Napa appellation wines ever increased. A high-quality, cheap Napa Cabernet stays a troublesome proposition from an accounting perspective. So when Wagner got down to create a brand new Cabernet at a lunch-worthy worth level, he seemed farther east to Lodi.
With proximity to the temperature-moderating San Joaquin and Sacramento Rivers, the Lodi area possesses some Napa-esque attributes regardless of its location way more inland in California’s Central Valley. Lodi growers provide loads of high quality Cabernet grapes at a decrease value than their Napa counterparts, and the truth that wine consumption has slowed lately has solely made that fruit extra reasonably priced. That’s allowed Bonanza to cost its bottles on the low finish of the premium $20-plus tier that’s at the moment the candy spot for a lot of millennial customers, in response to beverage trade analysts IWSR. “Millennials are essentially the most concerned age group within the wine class, with an bettering monetary outlook and a continued willingness to spend extra on wine,” Richard Halstead, COO for Shopper Insights at IWSR, wrote in a latest trade evaluation.
“Together with Daou Cabernet Sauvignon, which is at the same worth level, this is likely one of the huge progress tales in Cabernet, which general seems to have leveled off,” Whole Wine’s Boulanger says. “The truth that this stuff are rising exhibits that there’s some type of differentiation right here, whether or not contained in the bottle or on the floor of the bottle by way of packaging and branding.”
No Classic, No Napa, No Drawback
Whereas “Child Caymus” undoubtedly derives some model recognition from its affiliation with the highly regarded Cabernets produced underneath the Caymus banner, Bonanza is decidedly un-Caymus by most metrics. One obvious distinction: Bonanza wines haven’t any classic, a rarity for a nonetheless pink wine in that $20-plus worth tier. Eschewing classic permits Wagner’s winemaking crew extra flexibility in dialing within the taste profile of Bonanza and holding it constant from yr to yr. Traditionally, customers have positioned nice worth on vintages, and lots of nonetheless do, Wagner acknowledges. “However issues are altering nowadays, together with what’s vital to customers,” he says. “At present it’s extra about how a product tastes and every particular person product’s perceived worth.”
“I believe that primarily based on the success of Bonanza they see potential for wines which are California-appellated. It’s a transfer away from geography figuring out the success and high quality of a model, and towards these different attributes.”
Bonanza does lean into Caymus’s riper, rounder model of Cabernet, however Wagner vinifies it to a lighter, extra quaffable spec, retaining the beneficiant fruit present in most California Cabernets however providing softer tannin and a leaner general profile. With out asking the Cabernet grape to masquerade as one thing it’s not, it manages to subtly nod towards the “gentle reds” at the moment trending among the many millennial and Gen Z customers the U.S. wine trade so desperately must woo. Some hardcore terroirists and lovers of wealthy, decadent California Cabernets could not approve, however there’s an urge for food for this leaner, extra approachable model of Cabernet. “Whether or not it’s Bonanza, whether or not it’s Daou, whether or not it’s Josh — Josh is at a unique worth level, however it’s the most important model in Cabernet by way of circumstances — all of them have this approachability and ease of ingesting as a calling card,” Boulanger says.
Bonanza’s gross sales figures lend credence to Wagner’s notion {that a} significant cohort of customers doesn’t significantly care a few wine’s classic or the specifics of its terroir. A yr after Bonanza’s launch, Wagner Household of Wines launched a brand new extension of its Caymus Vineyards wines, identified colloquially as “Caymus California” (a wine that some customers have additionally taken to calling “Child Caymus”). Not like Caymus’s Napa appellation flagship Cabernet, this expression incorporates grapes sourced from growers all through the state. Priced at roughly $60, it slots into the pricing ladder neatly between Bonanza and Caymus’s Napa Cab and permits one other avenue for customers to pour a glass of Caymus with out approaching a triple-digit outlay at retail.
“I believe that primarily based on the success of Bonanza they see potential for wines which are California-appellated,” Boulanger says. “It’s a transfer away from geography figuring out the success and high quality of a model, and towards these different attributes.”
It’s Not So Unhealthy
With Bonanza having fun with double-digit year-over-year quantity progress and Caymus as standard as ever amongst its legion of loyal followers, Wagner isn’t sweating the broader trade slowdown an excessive amount of. “When there’s a downturn, folks grasp for a purpose,” he says. “I believe we’re in a down cycle. However we’ve been there earlier than, a number of occasions, and each time a down cycle occurs we’re all apprehensive that, ‘Oh, that is going to stay, issues are by no means going to be the identical.’ However they do cycle again.”
In line with IWSR analysts, issues could not cycle again the identical means, nevertheless. Customers are ingesting dearer wine at decrease general volumes, and whereas premiumization has offset some declines in general case quantity lately it could possibly’t accomplish that indefinitely. The post-Covid restoration in on-trade gross sales has additionally slowed amid a backdrop of rising costs and inflation. Oft-cited trade information posits that youthful drinking-age adults merely aren’t ingesting wine (in the event that they’re ingesting in any respect), that means there is no such thing as a incoming cohort of younger customers getting into the market as demand from boomers wanes. Many count on the ripple results of declining general wine consumption — significantly on the low finish of the retail worth spectrum — to harm growers throughout the board as an oversupply of grapes drives costs down.
“I believe that we’re into it for not less than a yr or two or three. And that can enable us to safe the contracts and grapes we want so we are able to proceed making the identical wine, or higher, and retain the identical worth.”
Bonanza’s meteoric success inside this flagging market might rightly be ascribed to its “Child Caymus” affiliation, or to its perceived bang-for- buck amongst lovers of California Cabernet. However what if there’s a less complicated clarification? Maybe issues aren’t as dangerous as they appear.
The inaugural BMO Wine Market Report printed by BMO Monetary Group earlier this month offers a number of takeaways that run counter to the extensively accepted narrative of a wine trade in perilous, irreversible decline. As an example, BMO’s quantity crunching discovered that premiumization is in reality driving progress within the general wine market, pushing general gross sales to greater than $107 billion in 2023, outpacing 2022 gross sales by greater than $5 billion. A overwhelming majority of small wineries count on to notch year-over-year income progress this yr (solely 6 % count on income to say no).
Most notably, BMO’s evaluation discovered customers have considerably underreported how a lot they really drink, negatively skewing demand projections. Furthermore, the present downturn in gross sales quantity has extra to do with Covid-era stockpiling than with flagging shopper curiosity. As BMO tells it, the present transitory dip in demand will appropriate itself as customers drink via their backlogs and start frequently shopping for once more.
Gross sales of bottles costing greater than $10 in grocery shops — venues wherein Bonanza thrives — have been up 34 % final yr in contrast with 2019’s pre-Covid numbers, a promising stat for a $22 bottle of California Cab with strong identify recognition. And the place silver linings are involved, the present lull in demand for grapes has helped Wagner guarantee Bonanza can maintain performing for years to return by guaranteeing plentiful fruit and decrease enter prices.
“I believe that we’re into it for not less than a yr or two or three,” Wagner says of the trade’s present woes. “And that can enable us to safe the contracts and grapes we want so we are able to proceed making the identical wine, or higher, and retain the identical worth.”
In that one respect, not less than, Bonanza hasn’t succeeded regardless of the broader trade slowdown however fairly due to it. And judging from the place issues stand now, Child Caymus has loads of room to develop.
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