Is Napa Valley pricing itself out of the market for wine tourism and for wine?
Author: Per Karlsson
The average tasting room tasting fee in Napa is $128 for a “reserve tasting” and $81 for a “standard tasting”. The average suggested retail price of a bottle of Napa wine is $108. These astonishing numbers come from the 2023 Direct to Consumer Wine Survey by the Silicon Valley Bank. They position Napa as far more expensive to visit and to drink than any other wine region in the USA, and probably in the rest of the world too. Is Napa Valley pricing itself out of the market for wine and for wine tourism or are these fees long-term sustainable?
Per Karlsson, a member of the Wine Travel Awards community (this year his wife Britt Karlsson took part in the WTA as a nominee in the Top Guide category, and his travel agency BKWine Tours was nominated for Travel Operator of the Year), shared with D+ his article published on the portal www.bkwinetours.com. We found these observations incredibly interesting and worthy of further research. After all, the current cost of American wine and the shift towards direct sales are trends that could revolutionise the world of wine.
The 2023 Direct to Consumer Wine Survey by the Silicon Valley Bank is based on a survey so it is not necessarily scientifically exact numbers, but it is still astonishing. Napa Valley is very expensive both to visit and to buy the wines from. Direct-to-consumer (DTC) sales are increasingly important in the US. These sales are, of course, to a large extent done on-line or “off-line” through mail-order. But some of it is also done at the cellar door, hence the importance of the wine tourism numbers. Rob McMillan, author of the report, notes that today DTC sales are almost 75% of the average winery’s sales, compared to only half ten years ago.
Tasting room fees
The survey focuses on all aspects of direct-to-consumer sales, and one important DTC channel is winery visits, or, as it is usually labelled in the US (and in this report), “tasting room” visit. Perhaps that’s a sign of that most visitors don’t much care about visiting the wine cellar or taking a look in the vineyard and instead just want a glass (or two or three) of wine and to do some shopping?
In 2012, just over a decade ago, the picture was different. Almost 25% of wineries nationwide did not charge any tasting fee at all. The average Napa tasting fee was $22 and the national average was $8.50. How times have changed.
Tasting room visits declined significantly during the covid years, but the most dramatic shift since the pandemic began is the move from “walk-in” (without appointment) to “by appointment”. Here again, Napa stands out, followed to some extent by Sonoma. Over 60% of wineries in Napa do not accept walk-in visits; you have to pre-book. In Sonoma, the number is almost 50%. The other regions are much more open to visitors without a pre-booking.
There used to be a time when you could go to a winery or a tasting room and pay only a nominal charge or even nothing at all. This is no longer the case, at least not in the US. (It is still fairly common in some regions in Europe.) Here again, Napa stands out, being, by very far, the most expensive. According to the SVB survey, the average tasting fee for a “reserve” (premium) tasting in Napa is $128 (or for a standard tasting, “only” $81).
From an international perspective, this is an extraordinary price level, almost unheard of. I can’t help wondering if visitors feel they get value for money with these tasting fees. We (BKWine Tours) do winery visits in many different wine regions across the world on three continents (although not in the US). Some rare wineries approach or even surpass the average Napa tasting room fee. But that’s extreme cases. No region is even close to having an average fee even close to Napa. Is Napa simply the world’s most expensive wine region for wine tourist? It seems so.
Sonoma follows with an average reserve tasting fee of $72 and the standard one at a comparatively affordable $38. For the other regions, the reserve fee ranges from $20 to $61, and the standard one from $14 to $34.
The survey does not touch on the subject of what is included in the fee. In many other parts of the world, a winery visit would often include both a tasting and a visit to the winery and perhaps even to the vineyards. In many European regions, you would also stand a good chance of meeting the winemaker or the owner (especially if you travel with BKWine), who might even conduct the tasting and show you around. I doubt that is the case in Napa.
In the report, Rob McMillan notes, “a few wineries have stopped charging fees altogether, which may signal the end of the tasting fee arms race.” However, I suspect that those wineries only receive very few visitors and the ones that they do open their doors for are very special guest, maybe only their biggest customers. I doubt that the free tasting room visit or free winery visit for all is coming back to Napa.
Tasting room sales
As noted at the beginning of this text, a substantial amount a winery’s sales is today done at the cellar door (i.e. directly at the winery). The sales numbers in the survey confirms this.
If Napa collects the most money for the tastings, the same goes for the tasting room purchases, the bottles that the visitors carry home. Here, the gap between Napa and all the others is even greater, with Sonoma a distant second. The average shopping basket at a Napa winery’s tasting room is almost $500 ($487.87) in 2022 (!!), approximately a 50% increase from the previous year (2021). This is almost a 200% increase of the value of a shopping basket over a decade.
Sonoma is at $235, and most other regions are around $160 on average for tasting room purchases. Clearly, it can be profitable to sell your wine at the cellar door.
An additional benefit is, of course, that the winery has a much higher margin on the sales at the cellar door. No distribution costs, no margins to share with others.
Wine tourism, travellers coming to the vineyard or tasting room for a visit, has become big business in Napa and, to some extent, also in the other regions. With over one thousand monthly visitors in Napa, an average winery generates substantial revenue from the visiting wine tourists.
Wine prices — Napa average bottle price is $108
The average price of a bottle of Napa County wine has now reached $108 ($107.79 to be exact), according to the survey. This is almost double the average price of a bottle of Sonoma wine, at $57.26. After these two regions, there is a group of wine regions that hover a bit above the $50 mark, although not quite in the order one might perhaps expect (in decreasing price order below):
- Santa Barbara
- Paso Robles
- Oregon
- Washington
At the bottom end of the scale, we have “other California” at $35 and Virginia at $32. And finally, the rest of the US at $26, less than a quarter of the Napa prices.
But one should perhaps be careful of interpreting these numbers too literally, as statistic “truth”. They are based on a survey with a total of 332 respondents (wineries), a quarter of which are in Napa. But even if it is not statistically rigid for all wines and all wineries, it clearly shows that Napa is far ahead of everyone else. When it comes to price.
A few things strike me, as an international observer, about these numbers. First, of course, the exceptionally high average price of Napa wines. I cannot think of any other wine region in the world that would fetch an average price on that level, just like no other wine region in the world charges similar visitors’ fees.
The other remarkable thing is the overall price level across all regions in the US. American wines are expensive, apparently. Even the lowest category, “other US”, comes in at an average price of $26.08. Few wine regions in other countries would come even close to that average price per bottle on a domestic market. One can understand if US wine would be struggling in export markets.
It also seems, surprisingly, that Oregon and Washington, two wine regions with a long tradition of premium wines and with a very prestigious international reputation, have been overtaken by Paso Robles and Santa Barbara.
Napa has become an astonishing success on the US wine scene, both for wine sales and for wine tourism. But is Napa Valley starting to price itself out of the market? After reading the Silicon Valley Bank Direct-to-Consumer Survey 2023, one might be justified to ask the question. One can only hope that the consumers feel they get value for money.
You can find more details on US direct-to-consumer wine sales in the SVB survey report here.
Why has this happened?
One can only speculate on why and how this has happened. Are Napa wines twice as good as everyone else’s and better than all other wines in the world? Of course not. Quality plays a role but it has mainly to do with other drivers of the wine market.
But this is not a question that is discussed much in the report. It would perhaps be an interesting business case for some business school professor to write up? Anyone feel up to it?
