Smaller grape harvest could help state's winemakers

Mother Nature gave California's winemakers a break last fall.

The state's wine industry, already struggling with slowing sales because of the poor economy, won't be dealing with a glut of grapes from last year's harvest, according to a report released Tuesday.

California wineries squeezed about 3 million tons of wine grapes during the harvest, down about 6% from the previous year, according to the annual grape crush report from the California Department of Food and Agriculture and the U.S. Department of Agriculture.

The smaller harvest should help prevent wineries from developing a large backlog of wine inventories and reduce pressure to slash prices to move the current vintage, said Steve Fredricks, managing partner of Turrentine Brokerage, a large wine-grape broker.

"The last few times we had a recession we also had huge inventories because of vineyard plantings and large crops, and that hurt prices," Fredricks said.

But most analysts believe that California's wine industry this year will have only modest growth at best. Sales of wine in restaurants dropped 10% to 12% last year, according to wine industry consultant Jon Fredrikson of Gomberg-Fredrikson & Associates. He predicted that 2009 overall growth would be the slowest the U.S. wine market has experienced this decade.

Shoppers are gravitating to low- and moderately priced offerings, and "selling higher-priced wines is going to still be challenging in this economy," Fredricks said. Even Pinot Noir, the red wine popularized in the 2004 film "Sideways," could see prices fall, he said.

Though overall tonnage of red-wine grapes harvested dipped 9% to 1.7 million, the popular pinot noir varietal grew by almost 17%. Fredricks said much of that growth was fueled by demand for the wine by restaurants, which have seen wine sales slide.

The industry is dealing with the changing shopping habits of consumers such as Ed Hardy of Fontana, who lost his music-industry job in June.

Hardy, who has a taste for red wines, dropped out of the wine clubs of four wineries in the Central Coast region, extending from Santa Barbara to Santa Cruz. Wineries use wine clubs as a profitable way to bypass distributors and ship wine, often on a monthly or quarterly timetable, directly to consumers.

"The wine clubs were the first to go, even starting prior to the layoff," Hardy said. "And if I am buying a bottle of wine now, I trade down. There are so many places to buy wine these days. Ralphs and Vons are tripping over themselves with sales. You can go into Vons and pay $6 for a bottle of wine that used to sell for $15."

Most of the decline in the 2008 wine-grape harvest came in just two varietals. The amount of cabernet sauvignon grapes crushed fell 24% to 325,000 tons. Merlot fell 26% to 225,000 tons.

A spring frost and then sparse rain for the rest of the growing season caused the decline in those grapes, which are the two most popular red-wine varieties, Fredricks said.

White-wine grapes fared better. The harvest declined only 2% to 1.3 million tons.

Once again, chardonnay accounted for the largest percentage of the total harvest -- 15.4%. Grapes from Napa County garnered the highest average price -- $3,390.64 a ton, up 4% from 2007.


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