Constellation’s recent purchase of Sea Smoke, a premier pinot noir producer in Sta. Rita Hills, was a blockbuster announcement. But it wasn’t a surprise.

Constellation has been moving fast into the premium wine industry to get ahead of the trend towards consumers buying less but buying better. Sea Smoke will join Schrader, Booker and others in Constellation’s growing portfolio.

The deal also is just an inkling of the shakeup that is yet to come in California. With profits squeezed as sales plummet, more and more privately held companies are going to either cave to lucrative offers from large corporations, such as Constellation, or declare bankruptcy. I think many of the small producers who launched in the last decade are going to close up shop in the next several years. Many of them are over-extended now.

I also believe you will see many struggling wineries cut back production and eliminate poor selling wines in an attempt to hold prices. I’m seeing a lot of great deals suddenly appear on the market by third-party vendors, such as Wine Spies and Wine Slash. Many of these wines are from producers I’ve never heard of but who are located in good regions. Their sudden appearance on the bargain market indicates soft sales. Maybe even desperation.