Consumers Switch to Cheaper Wine Options

The vines may be above ground, but some vineyards are financially under water.

Sonoma was very busy as tourists enjoyed spectacular weather and free wine tasting at Roche Winery's free tasting room just off the square.  With good, inexpensive imports competing and consumers still very much minding their dollars, there are wine bargains galore.

"Some people are taking advantage of the fact there is a recession. They're also going to get wine at a much better price. And, the other side is... tourists or people that wanted to kind of indulge in the higher end wine are taking advantage of the fact that prices have come down." said Randy Neely, a tourist from Washington.

"Wine processing drives grape prices... and grape prices drive land values. So, we've seen some softening on some of the vineyard values and on some of the wineries."

Tony Correia, one of wine country's leading appraisers of wine properties says residential vineyard estates may be down about 10 to 20 percent and commercial vineyards down 10 percent, but "the best properties in the best areas we don't see any decline in value at all."

Sean Maher, a St. Helena-based vineyard broker says highly leveraged properties where owners owe more than the land is worth are most vulnerable to expected buyouts and foreclosures.  "Prices are off and the market for vineyards right now... is slow...the trend will be more properties available."

While wine country has not been impervious to the recession, one thing is true in recovery.  This is some of the most valuable and desirable land on the face of the earth.

Correia says ""There's only so many places in the world where we can create really good wine. .. and those places are extremely limited by geography and climate."