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Wine Industry Symposium Charts Trends for the Millennium


Jeff Morgan
Posted: June 21, 1999

A bevy of luxury vehicles filled the parking lot at Napa's Marriott Hotel conference center on June 16, as 300 influential California vintners, wine businessmen, bankers and political lobbyists gathered to discuss wine trends and the state of the wine industry. Judging from what these movers and shakers are driving, it doesn't take an expert to know that the wine business is booming.

In proven fine-wine regions such as Napa Valley and Sonoma County, demand for vineyard land continues to outstrip supply, precipitating skyrocketing prices. "The escalation in [Napa Valley acreage] sales went from the $40,000 to $60,000 range for planted vineyards directly to the $100,000 range in the last year," said Jim Rizza, a vice president at Pacific Coast Farm Credit in Napa.

If the predictions of those attending the Wine Industry Symposium 1999 Vineyard Economics Seminar are correct, the boom should continue well into the future as vineyard acreage and wine production increase. Vintners are optimistic that consumer demand will continue to support expanding vineyards; California plantings mushroomed from 350,000 reported acres in 1995 to 500,000 acres in 1998, according to the California Agricultural Statistical Service, a government agency.

The value of California's annual grape production mirrors its physical expansion. "In 1985, California's grape crush was worth $550 million," said Barry Bedwell, president of Allied Grape Growers, a grower-owned marketing cooperative with some 550 members statewide. "By 1997, crush was valued at $1.7 billion."

The wine boom is not just occurring in the United States, which ranks fourth in worldwide production after France, Italy and Spain. Australia has rapidly become a major international player, ranking No. 11. That's significant for a country with a total population of 18 million -- just half that of California. South Africa was also mentioned with rising interest at the conference; its wine production is expected to grow by 75 percent in the next three years, according to a study by the South African Winegrowers Cooperative Association.

"The panic of the 1996 wine shortages is gone for now," said Steven Fredricks, vice president of San Francisco-based Turrentine Wine Brokerage. Fredricks was referring to shortages that occurred in California partly because of weather conditions and partly because of the widespread replanting needed to replace vines destroyed by the phylloxera louse. At the time, many California wineries were forced to import bulk wine from France and South America to keep up with consumer demand. Fredricks indicated that currently abundant wine reserves could cause bulk-wine prices to drop, leading to lower consumer prices across the board.

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