A continuing grape surplus, married with rising rates of mergers and acquisitions, should give consumers good California wines at moderate prices in the next year, predicts an expert on wine economics at the University of California, Davis.
"The grape glut means that better-quality grapes are available to wine makers at lower cost. Producers say they plan to work off those excess inventories by offering new labels of good wine at lower prices," said Robert Smiley, dean of the .
Mergers and acquisition should benefit wine drinkers by reducing manufacturing costs, and therefore consumer prices, and by improving distribution for smaller wineries, Smiley said. "Getting the attention of the distributors will give consumers a broader selection of wines on the shelf in the market."
In the past year, Foster's Beer bought the Beringer winery; Diageo bought some Seagram brands, including Sterling Vineyards, Monterey Vineyards and Mumms Napa Valley; and last week, Gallo bought the Louis Martini winery.
Smiley discussed the results of his annual survey of the California wine industry, as well as his recent telephone survey of 25 leading winery CEOs, this morning at the Wine Industry Financial Symposium in Napa.
This is the symposium survey's 11th year. The 2002 respondents were 254 California wineries, growers, distributors and wine sellers.
The grape surplus Smiley reported at last year's symposium continues this year, a result of increased plantings of Cabernet Sauvignon and Chardonnay in the 1990s that have now reached full production.
"The CEOs expect the grape supply to balance with demand in two or three years," Smiley said. "But for now, the harvest has begun, and tanks are still largely full of juice from last year and before." In the region with the most unused grapes -- the Central Valley south of Fresno -- some growers are beginning to pull out grapevines, the survey showed.
Another factor at work in the industry this year was the post-Sept. 11 decline in restaurant visits and destination travel. That drop in sales hurt high-priced wines -- those $40 and over at the table -- the most, Smiley said.
In the next year, producers, distributors and retailers expect the $7 to $18 price category to see the greatest sales growth, and the hot varietals to be Pinot Grigio and Sauvignon Blanc from the whites and Syrah and Pinot Noir from the reds.
"The price-quality comparison is growing in importance because so much wine now is being sold through discount chains and supermarkets. That's moderately priced wine being drunk on an everyday basis," Smiley said.
The invitation-only symposium, held at the Napa Valley Marriott, began Tuesday. About 300 winery owners and executives, grape growers, financial-service providers and other industry professionals are attending the event, which was organized by the Wine Industry Financial Symposium Group.
will be posted online later today.