Surplus of wine forcing price cut

Less demand, competition from imports result in bargains for consumers

April 22, 2002|By Melinda Fulmer | Melinda Fulmer,SPECIAL TO THE SUN

A surplus of many types of wine is pressing the nation's vintners to cut prices - reversing the trend of the wine boom of the past few years.

Weaker demand after Sept. 11 and more intense competition from imported wines have made it more difficult for wineries to move inventory, analysts say. Consequently, more wineries are lowering prices, offering special promotions or rolling out some of their wine in much larger bottles.

"There is a lot of wine out there to sell right now," said Gladys Horiuchi, spokeswoman for the Wine Institute, an industry trade group in San Francisco.

"It's highly competitive," she said, "so many are having to compete on price."

Horiuchi said the wine market is more competitive than it has been in a decade, as a strong dollar has made imports cheaper and helped secure these wines more space on supermarket shelves.

Imports' share of the U.S. market has risen to 22 percent, up several points in the past few years and fast approaching the historically high levels of the early 1980s.

But some imports actually lost ground here, most notably Chilean and inexpensive French wines, as Australians began making greater inroads into the market.

California wineries, growing at a rapid clip for most of the 1990s, sold 450 million gallons last year, just 1 percent more than in the previous year, according to a report by Gomberg Fredrikson & Associates.

Hardest hit, analysts say, have been wines that sell for $3 to $6 a bottle.

Consumers have traded up as low-cost imports from Australia have entered the market, and as more high-quality wines become available for just under $10.

Canandaigua Wine's popular brand Vendange, for instance, usually selling for around $5 a bottle, slid to $3 in recent months, said Vic Motto, senior partner with MKF, which issued sales statistics for the industry last week..

For wines selling under $8, the price of a case slid on average 3 percent last year, according to MKF.

"There is just more of this stuff out there than people want," Motto said.

There were a few bright spots. Wines priced between $8 and $15 posted sales increases of 13 percent last year, reflecting the number of affluent baby boomers continuing to trade up. And sales of wines priced at more than $70 held steady as collectors looked to stock their cellars.

But vintners say premium wines in the $20 to $60 range have been a harder sell. And more wine bound for restaurants has wound up in chain stores and discounters.

As fat expense-account lunches and fancy dinners have been pared back, and restaurants begun scaling back their stocks, prestigious wine companies were forced to curb price increases or begin offering discounts.

Some of the biggest discounts for consumers may come in Chardonnay.

Sales of America's favorite varietal wine flattened for the first time in years, as more consumers switched to red wines such as Cabernet, Merlot and Pinot Noir.

Melinda Fulmer is a reporter for the Los Angeles Times, a Tribune Publishing newspaper.

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