No matter how you measure it, the U.S. wine industry has enjoyed very little good news in 2024. Market data paint a grim picture of declining overall consumption, a less interested consumer, excess grape inventories, and a growing “wine lake.” Premiumization, which offset declines in sales volumes in recent years as consumers purchased fewer but more expensive bottles, can no longer carry the industry. The post-Covid boom in on-premise sales is in the rearview. By virtually all accounts, it’s a very bad time to be a U.S. wine producer.
If you’re producing Bonanza, however, you’ve got a very different story to tell. The non-vintage California Cabernet Sauvignon, dubbed “Bonanza” by producer Wagner Family of Wine and “Baby Caymus” by its legion of devoted fans, has defied gravity to become a major growth driver for the maker of Caymus Cabernet. According to Impact Databank, the Wagner family sold 131,000 cases of Bonanza in the U.S. when the brand launched in 2020, a number that has grown by 60,000–80,000 cases annually ever since. Nearly 360,000 cases of Baby Caymus shipped in 2023, and Wagner Family of Wine owner and principal winemaker Chuck Wagner sees no signs of slowing demand.
That makes Bonanza — a somewhat lighter, brisker style of California Cabernet priced at roughly $22 and made primarily of grapes sourced from Lodi — a pretty serious outlier. The wine has sold so well in the first months of 2024, in fact, that Wagner has questioned whether he can supply the market through year’s end.
“It’s one of the hottest SKUs out in the market right now,” says Rodolphe Boulanger, vice president of wine merchandising, New World, for Total Wine & More. “It’s bucking the trends in a big way.”
That Bonanza is striking gold while many U.S. winemakers are striking out is beyond dispute. What’s less certain is exactly why Bonanza has resonated so strongly with consumers and whether that appeal can stick. Wagner always expected the wine to perform well in the marketplace, but even he is surprised — albeit pleasantly — by just how enthusiastically consumers have embraced Bonanza. “You can ask me [why Bonanza has caught fire with consumers], and I can tell you a bunch of baloney,” Wagner says. “But I really don’t know why the wine is selling so well.”
A Lunchtime Cabernet
In Bonanza, Wagner sought an homage to the days when his father — Charlie Wagner Sr., with whom Chuck Wagner founded Caymus Vineyards in 1972 — would regularly pull a bottle of Caymus Cabernet out of the cellar to serve with a simple weekday lunch. “The land in Napa wasn’t as valuable back then, and the wine wasn’t so high-priced,” Wagner says. “So he’d never be afraid to pull Caymus out of the cellar and drink it.”
A call with the vineyard’s accountant in the mid-1990s put an end to that lunchtime ritual, as Caymus had to raise the price of a bottle of Caymus from $36 to $60 (it now typically retails for $90 or more). In the years following, the cost of doing business in Napa increased steadily, driving prices of Napa appellation wines ever higher. A high-quality, inexpensive Napa Cabernet remains a difficult proposition from an accounting perspective. So when Wagner set out to create a new Cabernet at a lunch-worthy price point, he looked farther east to Lodi.
With proximity to the temperature-moderating San Joaquin and Sacramento Rivers, the Lodi region possesses some Napa-esque attributes despite its location far more inland in California’s Central Valley. Lodi growers offer plenty of quality Cabernet grapes at a lower cost than their Napa counterparts, and the fact that wine consumption has slowed in recent years has only made that fruit more affordable. That’s allowed Bonanza to price its bottles at the low end of the premium $20-plus tier that’s currently the sweet spot for many millennial consumers, according to beverage industry analysts IWSR. “Millennials are the most involved age group in the wine category, with an improving financial outlook and a continued willingness to spend more on wine,” Richard Halstead, COO for Consumer Insights at IWSR, wrote in a recent industry analysis.
“Along with Daou Cabernet Sauvignon, which is at a similar price point, this is one of the big growth stories in Cabernet, which overall appears to have leveled off,” Total Wine’s Boulanger says. “The fact that these items are growing shows that there’s some sort of differentiation here, whether inside the bottle or on the surface of the bottle in terms of packaging and branding.”
No Vintage, No Napa, No Problem
While “Baby Caymus” undoubtedly derives some brand recognition from its association with the very popular Cabernets produced under the Caymus banner, Bonanza is decidedly un-Caymus by most metrics. One glaring difference: Bonanza wines have no vintage, a rarity for a still red wine in that $20-plus price tier. Eschewing vintage allows Wagner’s winemaking team more flexibility in dialing in the flavor profile of Bonanza and keeping it consistent from year to year. Historically, consumers have placed great value on vintages, and many still do, Wagner acknowledges. “But things are changing these days, including what’s important to consumers,” he says. “Today it’s more about how a product tastes and each individual product’s perceived value.”
“I think that based on the success of Bonanza they see potential for wines that are California-appellated. It’s a move away from geography determining the success and quality of a brand, and toward these other attributes.”
Bonanza does lean into Caymus’s riper, rounder style of Cabernet, but Wagner vinifies it to a lighter, more quaffable spec, retaining the generous fruit found in most California Cabernets but offering softer tannin and a leaner overall profile. Without asking the Cabernet grape to masquerade as something it’s not, it manages to subtly nod toward the “light reds” currently trending among the millennial and Gen Z consumers the U.S. wine industry so desperately needs to woo. Some hardcore terroirists and lovers of rich, decadent California Cabernets may not approve, but there’s an appetite for this leaner, more approachable style of Cabernet. “Whether it’s Bonanza, whether it’s Daou, whether it’s Josh — Josh is at a different price point, but it’s the largest brand in Cabernet in terms of cases — they all have this approachability and ease of drinking as a calling card,” Boulanger says.
Bonanza’s sales figures lend credence to Wagner’s notion that a meaningful cohort of consumers doesn’t particularly care about a wine’s vintage or the specifics of its terroir. A year after Bonanza’s launch, Wagner Family of Wines introduced a new extension of its Caymus Vineyards wines, known colloquially as “Caymus California” (a wine that some consumers have also taken to calling “Baby Caymus”). Unlike Caymus’s Napa appellation flagship Cabernet, this expression incorporates grapes sourced from growers throughout the state. Priced at roughly $60, it slots into the pricing ladder neatly between Bonanza and Caymus’s Napa Cab and allows another avenue for consumers to pour a glass of Caymus without approaching a triple-digit outlay at retail.
“I think that based on the success of Bonanza they see potential for wines that are California-appellated,” Boulanger says. “It’s a move away from geography determining the success and quality of a brand, and toward these other attributes.”
It’s Not So Bad
With Bonanza enjoying double-digit year-over-year volume growth and Caymus as popular as ever among its legion of loyal fans, Wagner isn’t sweating the broader industry slowdown too much. “When there’s a downturn, people grasp for a reason,” he says. “I think we’re in a down cycle. But we’ve been there before, several times, and every time a down cycle happens we’re all worried that, ‘Oh, this is going to stick, things are never going to be the same.’ But they do cycle back.”
According to IWSR analysts, things may not cycle back the same way, however. Consumers are drinking more expensive wine at lower overall volumes, and while premiumization has offset some declines in overall case volume in recent years it can’t do so indefinitely. The post-Covid recovery in on-trade sales has also slowed amid a backdrop of rising prices and inflation. Oft-cited industry data posits that younger drinking-age adults simply aren’t drinking wine (if they’re drinking at all), meaning there is no incoming cohort of young consumers entering the market as demand from boomers wanes. Many expect the ripple effects of declining overall wine consumption — particularly at the low end of the retail price spectrum — to hurt growers across the board as an oversupply of grapes drives prices down.
“I think that we’re into it for at least a year or two or three. And that will allow us to secure the contracts and grapes we need so we can continue making the same wine, or better, and retain the same price.”
Bonanza’s meteoric success within this flagging market could rightly be ascribed to its “Baby Caymus” association, or to its perceived bang-for- buck among lovers of California Cabernet. But what if there’s a simpler explanation? Perhaps things aren’t as bad as they seem.
The inaugural BMO Wine Market Report published by BMO Financial Group earlier this month provides several takeaways that run counter to the widely accepted narrative of a wine industry in perilous, irreversible decline. For instance, BMO’s number crunching found that premiumization is in fact driving growth in the overall wine market, pushing overall sales to more than $107 billion in 2023, outpacing 2022 sales by more than $5 billion. A vast majority of small wineries expect to notch year-over-year revenue growth this year (only 6 percent expect revenue to decline).
Most notably, BMO’s analysis found consumers have significantly underreported how much they actually drink, negatively skewing demand projections. Moreover, the current downturn in sales volume has more to do with Covid-era stockpiling than with flagging consumer interest. As BMO tells it, the current transitory dip in demand will correct itself as consumers drink through their backlogs and begin regularly buying again.
Sales of bottles costing more than $10 in grocery stores — venues in which Bonanza thrives — were up 34 percent last year compared with 2019’s pre-Covid numbers, a promising stat for a $22 bottle of California Cab with solid name recognition. And where silver linings are concerned, the current lull in demand for grapes has helped Wagner ensure Bonanza can keep performing for years to come by ensuring plentiful fruit and lower input costs.
“I think that we’re into it for at least a year or two or three,” Wagner says of the industry’s current woes. “And that will allow us to secure the contracts and grapes we need so we can continue making the same wine, or better, and retain the same price.”
In that one respect, at least, Bonanza hasn’t succeeded in spite of the wider industry slowdown but rather because of it. And judging from where things stand now, Baby Caymus has plenty of room to grow.
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