01.30.2008  
 

Positive Wine Industry Vibe

Even beleaguered growers are optimistic at Unified Symposium

 
by Jim Gordon
 
2008 Unified Wine and Grape Symposium
 
Sacramento, Calif. -- The turnout was so big for the Wednesday morning session of the Unified Wine & Grape Symposium that one speaker, Jon Fredrickson, said next year's event would have to be moved to a stadium. He was exaggerating the point, but organizers of the expanded four-day event said they counted about 1,000 more people on the event's first day, Tuesday, Jan. 29, than they did last year. At that pace the attendance could surpass 2007's record of 10,400.

Exhibits in the accompanying trade show were also up, from 500 last year to 524, but there still was not enough room available at the Sacramento Convention Center to accommodate a waiting list of about 100 more wine industry suppliers. The robust attendance seemed to reflect the same very positive vibe that pervaded the Wednesday general session in which Fredrickson and four other speakers gave their views on "The State of the Industry."

While wine sales have continued to grow and many wineries have been celebrating their successes for two to three years, the financial health of vineyards tends to be a trailing indicator of the overall wine industry's performance. This year even California grape growers have some reasons to celebrate, said Nat DiBuduo, the president of Allied Grape Growers. After a 10-year period in which 125,000 acres of winegrape vines were pulled from California's interior, "There may be a need for some new planting," he said, but only for growers with solid winery contracts. Chardonnay, Pinot Noir and other varieties have gone from a surplus situation to a balanced or slight shortage status in the last year.

"All planting, like drinking, should be done in moderation," DiBuduo cautioned. California's shrinking share of U.S. wine sales concerns him and his association's members. "But the pendulum is swinging and I think wineries now want our grapes." He urged growers not to be complacent, but to "make the products to get us back our market share." He received a round of applause, presumably from growers, when he said that it's time for the vineyard business to prosper along with the winery business. "Growers are entitled to a good return on their investment, just as wineries are," he said.

Jon Fredrickson, a consultant and publisher of the Gomberg Fredrickson Report, showed with graphs and tables how healthy the US wine economy is. California wine shipments increased an estimated 2% from 2006 to 2007, while imports shot up by 9%, taking more than 31% of the total. Now with 11% of the world's wine consumption in volume, the US appears to have passed Italy to become the No. 2 consuming market. With an estimated $30 billion in retail sales, the US is already the biggest in that category.

Fredrickson listed the top performing wine brands of 2007 in terms of growth, including Barefoot, Clos du Bois and Diageo Chateau & Estate wines, and named Ste. Michelle Wine Estates as his 2007 Winery of the Year for its hot sales and profit performance. He said the publicly traded company had $59.9 million in profit on sales in the mid $300 million range.

Ted Baseler, the president of Ste. Michelle happened to be on the morning's panel. He said his company's performance was due in part to its success in creating brand sustainability. Baseler noted with satisfaction that, "Wine has gone from being a special occasion drink to being very mainstream," explaining the steadily and rapidly expanding consumption. But he cautioned that as profitability increases among US wineries they also become more obvious targets for international competition.

Glenn Proctor of the Ciatti Company, who buys and sells bulk wine, filled in the background regarding supply and demand of grapes and wine, by explaining the current state of the global bulk wine market. Australia had a short harvest in 2007 because of drought and may have another below-average vintage this year, too, he said. California had two moderate crops in 2006 and 2007. The French government has been incentivizing growers there to remove vines. These and other factors have started to dry up the global glut of wine that had many growers worried in recent years, but which spawned thousands of new inexpensive wine brands.

On the imports' challenge to domestic wineries and growers, Proctor observed that since imports have continued to grow despite the weak dollar (which tends to make imports cost more here), "It means they're here to stay."

The publisher of Wine & Spirits magazine presented a snapshot of the ultra-fine wine on-premise market with his company's annual restaurant wine poll. Joshua Greene said that in high-end restaurants, diners' tastes are changing, and are being heavily influenced by the restaurants' staff. "It used to be that 45-year-old sommeliers were recommending wines to their 45-year-old customers," Greene said. "Now, 25-year-old sommeliers are recommending wines to their 55-year-old customers."

Greene said the survey showed that diners have moved dramatically toward favoring lighter, less rich white and red wines between 1997 and 2006. He said domestic wineries have opportunities to sell more very high-end lighter style wines, but warned that some California varietals, such as "thick, chunky" Pinot Noir are sending mixed messages to diners.

The Unified Symposium is co-sponsored by the California Association of Winegrape Growers and the American Society for Enology and Viticulture. It continues through Friday. Find more details at unifiedsymposium.org.

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