Thursday, January 27, 2005

News from the Unified Wine & Grape Symposium (Sacramento)

The most telling quote here is ~

"Last year I said that we could see the light at the end of the tunnel," said Nat DiBuduo of Allied Grape Growers of California. "This year, the Central Valley is out of the tunnel and the coastal and North Coast regions can see the light."

[Article link]

Why do I find that interesting? Because the California’s Central Valley’s wine grapes are the major source for the ultra-bargain wines like Two-Buck-Chuck. The North and Central Coast lags are primarily due to their higher product prices, even though they have the better quality.

Also of note:
The consolidations, however, benefit the wine industry as a whole because as those megacompanies fight it out, they spend on advertising, keep wine prices low and raise the profile of wine in general, said Jon Fredrikson, president of Gomberg, Fredrikson & Associates, a wine consulting company in Woodside.

"It is a global fight, and the consumer ultimately benefits. It raises the bar. It is a dream market for all consumers," Fredrikson said. "We have a selection of wines today that is unprecedented and made much better than 10 years ago."

Fredrikson also said California wine exports are at a record level, with 39 million cases exported last year.

Those record export numbers are driven by the glut of wine here in California, and the fact that the dollar is currently weak, making our wines more affordable overseas. With an economic recovery in the wings, the potential for a stronger dollar looms, and we'll have to wait & see if the wine industry will continue to try to push more product into the openings they've gained overseas. To remain at the same sales level wineries will have to be content with their current pricing (hold the foreign currency price stable), and still be satisfied even though their margin will fall slightly.

I suppose though we should be happy it's a bigger foot in the door than we've had in recent years...


Blogger Tom said...

You have been posting great stuff, Huge!!

January 27, 2005 1:01 PM  

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