The Golden State cometh

Long overshadowed by Bordeaux and Burgundy, California's top producers are carving out an increasingly influential position on the secondary market.

Home of Baywatch, billionaires and endless sunshine, California has no shortage of expensive and prestigious wine labels, backed by a wealthy domestic market capable of gobbling most of them up. Moreover, with a strong direct-to-consumer and mailing list culture, there was historically little incentive for California's A-list to invest significant resources in international markets. Consequently, while Bordeaux, Burgundy and Tuscany remained mainstays of the secondary market, Napa and Sonoma largely remained niche propositions outside the US in the early 21st century.

However, the ground is shifting, or so suggest the experts. According to a recent report by Liv-ex, US wines (overwhelmingly dominated by the Golden State) have increased their share of traded value on the exchange from less than 1% a decade ago to almost 8% today – one of the most significant growth stories in the fine wine market in recent times.

"Until 2015, UK buyers dominated the secondary market for US wines, but their share has since slipped, ceding ground to European and Asian buyers," explains Liv-ex analyst Sophia Gilmour.



Yet this is not simply a story of more bottles changing hands. Liv-ex data shows that traded volumes have remained broadly stable at around 3%, although buyers have become willing to spend considerably more per case. As Gilmour observes: "Buyers aren't necessarily taking on higher volumes...but they are spending more."

These findings point towards a market that is maturing rather than merely expanding - and perhaps a broader cultural shift in attitudes.

The Judgment of Europe

Over the past decade, numerous conversations with collectors, particularly those from Europe, have often led me to conclude that there remains, in some quarters, an ingrained snobbery towards Californian blue chips that is hard to ignore. As an ex-colleague - and avid oenophile - of my father once half-jokingly remarked during lunch in Toulouse: "We have never forgiven the US for the Judgment of Paris. And we never will!"

Of course, the mailing list fetish, limited production, and exorbitant prices of the top wines didn't help, but I have long suspected that many European collectors were reluctant to place Napa's finest on the same pedestal as Lafite, irrespective of quality.

Several years ago, in the midst of the Covid-19 buying frenzy, Matthew O'Connell, head of investment at Bordeaux Index, agreed that there was a degree of consumer apathy towards California's priciest bottles.

"California has been one of the less attractive investment regions over the last 12-18 months. Currency (GBP/USD) has been a headwind, as new stock onto the market from the US is constantly cheaper due to more favourable sourcing," he remarked.

He referred to a phenomenon, also identified by Harlan Estate's Managing Director Will Harlan, as a form of "Euro-centric" prejudice among collectors, stemming in part from the historic under-representation of Californian wines by critics and key influencers.

 

Meanwhile, stylistic preferences created another obstacle. It's a trite observation, but the ultra-ripe nature of Napa blue chips in the early 2000s, lavishly seasoned with oak, was hardly likely to titillate nuance-seeking collectors from Europe or indeed elsewhere. Besides, their ageing potential was occasionally called into question, and not always without just cause.

Yet Liv-ex's data suggests that demand has broadened both geographically and financially. Remarkably, average case prices for US wines have continued to rise despite weakness elsewhere in the fine wine market. "While overall average trade prices on the exchange have declined since the downturn, US wines have shown a general upward trend in average case price. This reflects buyers opting for more expensive wines rather than an increase in the price of individual wines," explains Gilmour.

Few producers illustrate this trend better than the iconic label Screaming Eagle, whose growing share of Liv-ex trading has helped to pull average values higher. Together with Opus One, the two estates regularly account for more than one-third of US wine traded on the exchange.

Lightening the load

Meanwhile, a stylistic evolution among California's leading producers, welcomed by sommeliers and buyers worldwide, is helping them to compete with Bordeaux's finest, say stakeholders.

According to Leonardo Barlondi, assistant head of wines at The Dorchester: "There has been a broader shift in drinking habits over the last decade, with consumers generally drinking less but seeking higher quality and greater balance in the wines they choose. This trend has also influenced perceptions of premium American wines."



He continues: "In particular, I have seen a noticeable evolution in California, especially in Napa Valley. Some producers have moved away from the high alcohol, heavily extracted and heavily oaked styles that were once synonymous with top-end Californian wine. There is now greater emphasis on freshness, site expression and balance."

Barlondi also identifies a growing emphasis on vineyard sites and terroir as an integral part of California's image repositioning, with producers "highlighting specific vineyards and sub-regions in a way that mirrors the approach long established in Europe." Detailed vineyard mapping undertaken by cartographer - and nuclear engineer - Alessandro Masnaghetti has further reinforced the narrative that California has come of age, encouraging collectors to think beyond the Napa Valley brand towards individual sites and AVAs, although the region remains, by its very nature, strongly producer-led.

Structural challenges remain, however. Unlike Australia, for example, the gap between everyday Californian wine and its luxury icons is still incredibly wide. The region lacks a critical mass of accessible premium wines capable of introducing consumers to the upper echelons of Golden State viticulture. Equally, pricing will always polarise opinion. The very finest US blue chips are benchmarked against Le Pin or Petrus in terms of price. And for some, that's just too much for a New World producer.



Yet sommeliers see particularly strong value in Californian Chardonnay, particularly in light of Burgundy's meteoric price inflation.

"Producers such as Clendenen Family Vineyards, Chateau Montelena, Ridge, Kistler, Hyde de Villaine and Stag's Leap Wine Cellars consistently deliver wines capable of competing with prestigious Burgundian examples without reaching very high prices," says Barlondi.

Half a century after the Judgment of Paris challenged the old hierarchy, California continues to produce some of the world's greatest wines – and not just Cabernet Sauvignon. Their growing commercial legitimacy on the secondary market, combined with a diversification of geographical demand, is long overdue. Let them drink Californian.