Red, White and Robust : Wine Country Savors Bouquet of Prosperity

Vintners in the famed Napa Valley get giddy when they contemplate the growing cadre of customers like Suzanne Patmore.

The entertainment industry executive used to spend no more than $10 for a bottle of wine. Yet there she was on a recent Friday night, clutching a wine magazine’s list of recommendations as she strolled the aisles of a chic liquor shop in West Los Angeles, scrutinizing labels on bottles marked $20 and up.

“I’m sort of branching out to decent stuff, to things that actually rate on the Wine Spectator scale,” said Patmore, 28, as she stood in line at Wally’s. “I’m trying to start a wine cellar, and for the first time I’m buying wines costing $30.”

Attitudes such as hers are making for heady times in Napa Valley and adjacent Sonoma County, the center of California’s booming premium wine trade.

Customers once content with $5 to $10 bottles are trading up, up, up. As a result, demand for better California wines is soaring. And the wine country is giving off a piquant bouquet of prosperity and optimism.

Savvy shoppers are finding that the plentiful bargains of recent years, to dry up an ocean of excess wine, are history for now. Prices are rising in many categories, especially on such hard-to-find varieties as Merlot, an increasingly popular red wine.

And price increases of 5% to 10% might be in store for next year and beyond, when vintners release wines produced from the high quality 1995 harvest, which was diminished by last year’s rains.

After a difficult decade--much of it spent replanting vineyards in an effort to eradicate a ruinous pest--winery owners are reaping the benefits of vast improvements in quality and years of campaigning to get more space on retailer shelves and restaurant wine lists.

“It’s an exuberant time,” said John Skupny, vice president and general manager of Niebaum-Coppola Estate Winery in Rutherford, owned by director Francis Ford Coppola. “It’s all starting to pay off.”

Thanks to growth in premium segments, particularly reds, the California table wine industry in 1994 and 1995 enjoyed its best years since the mid-1980s--even though overall consumption of wine, particularly wine coolers, is declining in the United States.

Adding zest to the surge is a wave of favorable publicity touting the health benefits of moderate consumption of alcohol, particularly red wine. In an about-face bound, the federal government acknowledged for the first time earlier this month that one or two drinks a day might lower the risk of heart attacks.

It isn’t an unbounded windfall for the wine industry, of course. Vintners’ costs for grapes, barrels, bottles, corks and labels are also shooting up. And there is concern that unfettered price boosts could prompt hard-won customers to turn to cheaper wines from other states or overseas. Meanwhile, dwindling supplies have forced some wineries to ration sales, a practice that upsets retailers.

Despite all that, the chief lament of most winery owners seems to be that they can’t put their hands on enough quality juice.

After last winter’s torrential rains, vintners prayed for a warm, sunny spring and early summer. What they got was more downpours--and, unbelievably, hail in June. Doug Shafer started scrambling. By early September, he was frantically offering growers $2,500 for a ton of merlot grapes--a crop that normally would have sold for $1,800. “There was nothing out there,” recalled Shafer, president of Shafer Vineyards, the winery founded in 1972 by his father in Napa’s prestigious Stags Leap district. The good news was that a warm October made the crop come in beautifully. And wineries are well aware that a couple of years of lower production could help strengthen their position after a long period of oversupply and price discounting.

“It’s common to see wineries with 25% increases in sales and 50% increases in profits,” said Vic Motto, a principal with Motto, Kryla & Fisher, a wine country consulting firm in St. Helena.

In the early 1990s, California wineries were faced with a vocal anti-alcohol movement, recession, higher taxes and health concerns.

In addition, a 1991 study by the Bureau of Alcohol, Tobacco and Firearms, the federal regulatory agency overseeing the industry, showed potentially dangerous levels of lead in some domestic and foreign wines. One result was that wineries immediately set about finding alternatives for the lead foil wrappers that had traditionally been used to cover the corks.

The tide started turning in 1991, when a “60 Minutes” segment spotlighted scientific theories linking moderate drinking of red wine to improved health in France. That news was bolstered last November, when the same CBS program reported on studies in Denmark showing a link between longer, healthier lives and moderate drinking.

In the two weeks immediately following, Americans scooped up 26% more red wine than in the same period the year before.

As Patmore, the connoisseur-in-the-making, found on her recent shopping excursion, many wineries have been out of their most popular brands for several months.

Wine Club, a discount warehouse operation with outlets in Santa Ana, San Francisco and Santa Clara, was miffed when its allocation of the high-end Opus One was cut in half. In another instance, Wine Club is getting just 10% of the “special select” wines it used to receive from Caymus Vineyards.

As demand continues to outstrip supply of wines--particularly those costing $7 or more--it is tempting for wineries to bump up prices. After production costs soared, Mondavi recently raised the price of a magnum of Woodbridge Chardonnay to $12.99 from $9.99.

“We held our breath, but sales have increased 50%,” said Martin Johnson, senior vice president of marketing at Mondavi.

With producers in such command of the market, can price gouging be far behind?

“Everybody [in the premium wine business] understands it’s an extremely long-term proposition,” said Michaela Rodeno, chief executive of St. Supery, a French-owned winery in Rutherford. “You work hard to develop fans. Even if you have a big, fat opportunity, you’d be a fool to take advantage of it.”