I was talking the other day with my friend Arthur (The Wine Sooth), and he raised an interesting question: In light of the pressure on the part of producer to maintain profits while maintaining competitive pricing, are we likely to see an overall decline in wine quality as a result of the current economic downturn?

I have to admit that I’d never really thought about this before, but it’s kind of an obvious question to ask as more producers struggle to maintain their revenues and market share while facing an increasingly cash-strapped and reluctant buying public. I’m not really sure of the answer, but there’s certainly both a pro and a con side to this issue.

On the “Pro” side (quality should decline), most obvious is the fact that reducing retail prices while maintaining positive revenue means more and more of the wine on the market has to come from mass-production Central Valley vineyards. These grapes, nothing special to begin with, are then rammed through a fermentation and aging process (if any) that emphasizes doing things on the cheap (to maximize net profit). As more and more wines on the shelves are made of 100% or 25% low-quality Central Valley fruit, on average, we’d expect to see a greater level of mediocrity. As more poor quality California wines enter the market, the lower the overall (average) quality of California wine. It’s a fact of life that fine winemaking and $7.99 retail really don’t pair very well.

But I think it goes further than that. As a producer, can you (or should you) spend the same amount of money to make what used to be a $30 wine that now only fetches $15-20 a bottle? Likewise, if you’re a grape grower who used to get $4,000/ton, and you can’t even get half that now, are you able to (or can you afford to) put the same amount of effort into farming? Measures that lower the cost of growing or producing wine will in all likelihood result in lower quality wine.

Additionally, when you’re already struggling to make a small profit on your wines and you pride yourself on making a high-quality product, why would you want to expand production, or even maintain production, beyond what you’re pretty certain you can sell? It follows that if less high end wine is being produced, the overall quality of wine has to be affected.

Also on the “pro” side is the consolidation that’s taking place in the wine business. To some extent, this is due to the ongoing trend of larger companies buying up smaller ones - a trend that’s accelerated in these hard times. In addition, larger companies are gaining market share at the expense of smaller companies that can’t compete in the lower end of the market. Either way, if you believe, as I do, that smaller wineries as a rule make better wines, the declining market share of smaller wineries should translate into lesser overall quality. It’s a matter of the proportions of what’s on the shelves.

That’s the “pro” side of the argument. But there’s a “con” side as well.

Grapes from the most prestigious areas (e.g., Napa, Sonoma) are still being grown and harvested and turned into wine, and it’s unlikely this will change to any significant degree. So if the best vineyards are still being harvested and wine is being made from them, we should expect that the quality at the high end, as always, will be maintained. Or, at least, that’s the argument.

Also on the “con” side is the general trend towards improvement in grapegrowing and winemaking that we’ve witnessed over the last few decades. This improvement, though minimal from one season to the next, over a period of years has to help the general level of wine quality irrespective of the prevailing economics in any particular year. Even in the Central Valley. And the argument can be made that if, after an economic recovery, wines labeled California continue to be made from Central Valley fruit, market pressures will drive improvements in growing in that region – leading to better (if still not stellar) wines.

And the ultimate “con” argument is that the present economic pressures will dissipate, and we’ll be back to business as usual in a few years. That raises the question whether we’re witnessing a basic change in the wine business that won’t be undone whenever the good times return. Its really going to depend on the consumer, who may, or may not, have permanently altered their view of what’s an acceptable wine. I guess, in the end, that’s the $64,000 question.