The Line on Chardonnay: Buy Now

For those who like Chardonnays from California’s North Coast growing areas of Sonoma and Napa counties, the last five years have been a joy. They’re seen plenty of good wine at competitive prices.

But wine industry analyst George Schofield believes that all that is going to change within the next 10 months as the state shifts rapidly from too much North Coast Chardonnay to too little. Shelf prices will rise.

Some time this year, says Schofield, whose George Schofield Co. of St. Helena analyzes the fine wine business, sellers of Napa and Sonoma Chardonnays will start seeing a shortfall of Chardonnay from the 1993 vintage. This will be due to a smaller crop of Napa and Sonoma Chardonnay in that year, combined with a demand for North Coast Chardonnays that continues to grow 20% per year while grape acreage in the region remains static.

Schofield says some of that shortfall will be made up by Chardonnays from grapes grown in California’s fast-emerging Central Coast--Monterey, Santa Barbara and San Luis Obispo counties.

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“This means that a lot of people will have to shift brands,” he says.

Five months ago, Schofield released a detailed research report showing how great the shift in consumer buying habits will have to be in the coming years. His prediction is that within just two or three years, the shortfall of Chardonnay from premium areas will split the category in two, leaving committed Chardonnay lovers vying for most of the prestige brands.

This will eliminate most of the discounting that is now rampant in California, he says. Instead of seeing Chardonnays with a suggested retail price of $18 selling for $14.99 in discount shops, those wines will be selling at least at list price. Some shops with a short supply may actually mark them up to $20.

Moreover, based on the great number of acres of Chardonnay grapes that have recently been planted in the northern third of the San Joaquin Valley, a huge amount of California Chardonnay hitting the market this year will be lower-priced warm-climate wine competing for a share of the two other segments of the wine market: pop-premium ($5 to $7) and mid-priced premium ($10 to $12).

“Right now we are in a transition between surplus and shortage,” says Schofield. “We’re going to have a shortage of North Coast appellation grapes, and they (Napa and Sonoma) will have competition from the Lodi area.”

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He describes sales of wine in the middle and upper price ranges as “a niche that has been growing at about 20% a year since 1982, even through the recession,” yet the increase in new plantings in the best regions has been no more than 5% per year.

“In some areas, vines are dying faster than we can replace them,” he adds.

A chart in Schofield’s report shows that Napa and Sonoma had combined Chardonnay production of 81,000 tons in 1993, and he estimates that last year the tonnage was at 88,850. By comparison, the northern half of the San Joaquin Valley, including the fast-growing Lodi area, had Chardonnay production of 59,700 tons in 1993, but leaped to 80,400 tons in 1994.

By using current plantings and figuring in potential plantable acres, Schofield says that as early as next year, Napa and Sonoma combined will have Chardonnay production of just 82,000 tons, while the northern interior will harvest 102,600 tons of Chardonnay--equivalent to 7 million cases of wine.

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He says because of a 13% decline in Chardonnay production from 1992 to 1993 in the north coast, “the 1993 Chardonnay crop from Napa and Sonoma is a 10-month supply.” In the lower end of the Chardonnay market, prices are still soft and will be for about two years, until demand catches up with production.

Schofield says all this creates the distinct possibility of a firming up of the prices of premium wines combined with an actual decline in prices of cheaper wines.

Clay Gregory, marketing director for the Napa Valley wines of the Robert Mondavi Winery, confirms Schofield’s projections.

“That exact thing is happening to us right now,” says Gregory. “For the first time in a long time, our Napa Valley Chardonnay is on allocation, and we removed the bulk of programming (discounts to encourage sales) starting in October.”

Gregory says that although just a year ago some Robert Mondavi wines were being discounted widely at some stores, the winery’s Napa Valley products are now being sold (or very soon will be) at prices much closer to the winery’s suggested retail.

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At present, however, a curious situation exists: There is still a substantial oversupply of prestige-region Chardonnay. Some wineries are still selling their 1991s and don’t want to release 1992s until earlier vintages are sold. But this won’t last long, Schofield says.

“What I see happening is that midway through the release of their 1993 wines this year, many wineries will see they don’t have enough wine to accommodate the market for the rest of the year,” Schofield says. “That means that the frequency and depth of the discounting they have done will mitigate substantially.”

In the under-$10 segment, big players will be Gallo; Canandaigua Wine Co., with brands such as Cooks and Dunnewood; Heublein, with Glen Ellen; and wineries such as Fetzer, Corbett Canyon, Monterey Vineyard, Mondavi (Woodbridge) and Sebastiani.

A new but important force in this area, he noted, will be Bronco Wine Co., which has moved into a controlling position with many vineyards and with brands such as Forest Hill and Forest Ville.

Others who will gain from the shift in buying patterns, he predicted, are Central Coast growers from Monterey to Santa Barbara. In 1993, there was a 29% increase in Chardonnay production over 1992 in Monterey County alone.

Ask Dan Berger

* Talk Cabs and Zins with Times wine writer Dan Berger on the Wining & Dining bulletin board on TimesLink, The Times’ online service. For information on TimesLink, call (800) 792-LINK, ext. 274

Tasting Notes

I blind-tasted 50 recently released Chardonnays last week and found eight attractive wines at fair prices, including the Montes, below:

* 1993 Haywood Winery “Vintner’s Select” ($8)--Delicate fruit of citrus and a dollop of oak. A lighter-styled, nicely structured wine.

* 1992 Konrad Winery, Mendocino ($11)--Complex notes of lemon and nutmeg; lean and crisp, great with seafood.

* 1993 Amber Hill, California ($8)--Fresh, fruity wine with a trace of banana or coconut and a soft, quaffable finish. Not very complex, but nice bright fruit. This is a second label of Raymond Vineyards.

* 1993 Edmeades Vineyards, Mendocino ($12)--Toasty aroma atop excellent fruit, juicy taste and lively acid in the finish. Excellent wine.

* 1992 Alexander Valley Vineyards ($8)--Lean, crisp aroma with a delicate hint of oak/butter in the nose; generous taste; fruity aftertaste.

* 1993 Fetzer Vineyards “Bonterra” ($10)--Complex fruit/oak aroma and an attractive silky texture; clean, bright aftertaste.

* 1993 Alderbrook Vineyards, Dry Creek, Sonoma County ($10)--Elegant fruit; not very big wine, but good balance of flavors.

Wine of the Week

1994 Montes Chardonnay, Curico Valley, Chile ($8)-- This is a good example of the bright, crisp wine that Chile is capable of producing from cooler regions. It has a delicate lemony aroma, a fruity mid-palate and a very crisp finish--a most serious wine for food. The grapes for it come from the Curico Valley, 120 miles south of Santiago, which is much cooler than Maipo Valley, the most widely known growing region in Chile. Curico is dominated by two huge producers, San Pedro and Miguel Torres. Montes, founded in 1988, is one of the smaller wineries in the region. The wine is imported by TGIC Imports of Studio City. (TGIC, incidentally, stands for Thank God It’s Chilean.)