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What's Up, What's Going Down


Buyers of moderately priced wines will soon have a pleasant surprise: deep discounts in their favorite brands and a sharp increase in quality.

The reason: greater availability of wine in the U.S. than the still-growing demand for it.

After short harvests in 1994, '95 and '96, 1997 output was massive. According to the California Department of Food and Agriculture, 3.9 million tons of wine grapes were crushed in California last year, up 34% from 1996 and 25% greater than the previous record harvest in 1982.

Analysts anticipate a return to conditions a decade ago when some wines, called Fighting Varietals, sold at two for $7 or three for $10. And more upscale brands that just six months ago sold in the teens will sell for $7 or $8 a bottle. The discounting will even have an effect on important brands such as Robert Mondavi and Beringer.

This doesn't mean you should expect price breaks on rare, limited-production wines--the Domaine de la Romanee-Conti just released its 1995 Romanee-Conti at $1,000, the first four-digit wine release ever.

And even those small-production California wines that typically sell out at $25 to $30 a bottle, such as the Grgich Hills Chardonnay or Beringer Aluvium Cabernet Sauvignon, should hold their ground. But with many of the more moderate-priced brands, if you don't like the prices you're seeing on your favorites, go back later in the spring when the '97 vintage hits the stores. They may have dropped.

"The discounts have already started," says San Francisco wine industry consultant Ed Everett. "I anticipate a real softening of prices in Chardonnay and Merlot and very sharp declines in white Zinfandel."

Everett says a huge crop of Chardonnay and Merlot in California last year (up about 60% over 1996) will allow wineries to drop their prices while improving quality.

"What seems to be happening," he says, "is that brands known for their price will be enriching their blends with much higher-quality fruit, so we'll see some very nice Chardonnays and Merlots from rather ordinary labels."

During the years of shortage, importers weren't asleep. Dozens of importers from France, Chile, Australia and other wine-savvy nations took advantage of California's weakness and began filling shelves with lower-priced wines.

And in the last year, wineries that a decade ago were under Communist control have begun to offer wine here at prices so low that consumers for whom price is critical are switching down and buying the $2.99 specials from places like Moldova and Bulgaria, and some are finding the wines quite acceptable.

In addition to imports that weren't around before the three short crops, major California wineries have another factor to cope with: Gallo. The world's largest winemaker was only a minor player in the fine-wine game at the start of this decade, but today Gallo represents one of the most powerful forces in the game.

Using some 2,000 acres of vineyards in Sonoma County as a base, Gallo has developed a strong presence with multiple labels at multiple price points, affecting each and every wine producer in the state.

Here is a brief look at some of the better-known California wineries and where they stand. Note how many are creating new labels to protect their existing brands from deep discounting.


Kendall-Jackson: This highly successful winery recently topped 1 million cases per year of its popular Vintner's Reserve Chardonnay. The recent shortages prompted the company to aggressively pursue grapes so it wouldn't run out, and rumors are that the company has a huge reserve of Chardonnay in warehouses all over the state. The suggested retail price for this wine is $13 a bottle, but a number of supermarket and discount operations have it for $7.99.

Beringer: The superb value in the Napa Ridge line of wines, Beringer's second label, combined with very strong sales of Beringer White Zinfandel have made this Napa Valley-based company so strong it went public recently and acquired Chateau St. Jean along the way. Rumors are, however, that the Napa Ridge line is not where the company intends for its next major growth spurt to be. Industry insiders say Beringer intends for Meridian Chardonnay, made in California's Central Coast, to triple in production and soon to become a 1-million-case item. Moreover, to keep the prices for its Beringer Napa Valley brand insulated from discounts as much as possible, the company plans to introduce a line of midpriced varietals called Hudson Estate.

Sutter Home: To take advantage of increased amounts of Merlot grapes on the market, this White Zinfandel specialist recently introduced an excellent new wine, a 1997 Merlot Rose. Moreover, a decade ago the closely held family winery made plans to control its own destiny by buying raw land and planting grapes, and today is insulated against the pressures of high grape prices. Soon the company will introduce a line of wines called M. Trinchero, priced at $10 to $12 and made entirely of Napa Valley grapes from its own vineyards.

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