Barrel Survey Report: Wineries Reduce Barrel Purchases in 2009

With wineries cutting costs, it’s no surprise that barrel purchases are cooling down this year. Barrels are usually the second largest part of the winemaking budget. It has been estimated that somewhere between 325,000 and 350,000 barrels are sold each year in North America.

The latest Wine Business Monthly Barrel Survey shows a three-fold increase in the number of respondents that are decreasing the number of new barrel purchases. This was true of respondents from all winery sizes but most dramatic for those from mid-sized wineries.

Thirty six percent of all winery respondents said they will cut back on barrel purchases this year, 41 percent said barrel purchases would remain steady, while just 22 percent said they’d increase. That’s a shift. During the last three years, more wineries had reported they would increase barrel purchases than said they would decrease them.

Among those wineries saying they will decrease purchases, on average the wineries said they would decrease purchases by 42 percent. 

High-end red wines are the most likely wines to be aged in oak barrels. Almost all the white wines that are “barrel-aged” are premium Chardonnays that have been fermented in the barrel. In both cases, wineries are purchasing fewer barrels, and they are using barrels they already own or using alternatives to flavor and age their wines.

The survey also indicates that winemakers may be using barrels for longer than they used to, with an average life of a wine barrel reaching 5.6 years for reds, and 4 years for whites.

Wineries are also postponing purchases despite discounts offered to order early, ordering most of their barrels during May and June rather than March or April.
 
Barrel Usage, Adjuncts and Alternatives
The breadth of usage for all oak alternatives except oak powder has been contracting over the last few years. Since respondents could choose more than one alternative, this contraction should not be considered a decrease in usage so much as a consolidation of usage. Winemakers are finding the particular oak alternatives that work for them with the exception of oak powder.

Oak powder is used a little differently than other oak adjuncts or barrel alternatives.

The more important trend is the point at which the respondents would consider moving from using barrels to using barrel alternatives. The number of respondents that list a bottle price in the $14 to $25 range continues to increase while those that put this transition down in the $7 to $10 range continues to decrease.

Together these shifts indicate that the critical bottle price point has moved up from $7 per bottle a few years ago through the $10 to $14 price point and up to somewhere between $14 and $25.
Still, current usage of micro-oxidation remains fairly low. Only 15 percent of the respondents indicated that they have used micro-oxidation.

For more on the 2009 Barrel Survey see the December 2009 Wine Business Monthly. Click here to subscribe and receive the December issue.