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Grapea Glut

Lots of juice means lower prices


The wine cups of the world runneth over. For the past few years, reports have circulated that soon the world would produce more juice than consumers could drink. Well, the wine surplus is here. The year 2002 is the year of the grape glut.

What is not good for wine producers is a bonanza for wine lovers. Here's what happened. Wine is a cyclical industry. The last glut occurred 10 years ago. Several factors contributed to the current situation.

First of all, vineyards were planted around the world at a dizzying pace during the 90s. Even small countries like New Zealand had significant increases in the number of vineyards: from 30 in 1994 to 429 today. People in the wine industry assumed wine had a great future in the US. After all, surveys showed that Americans did not drink as much wine per capita as the French, Italians, Spanish or other Europeans. But they could and probably would given the right set of circumstances.

This belief fortuitously coincided with the 1991 airing of CBS' 60 Minutes report of the French Paradox that cited proven health benefits from drinking red wine -- and wine consumption in the US did increase. Add to this motivation the free spending nature of the 90s, the decade of decadence, and a wine producers' dream market was created. Then grapes became scarce. Prices soared.

People planted more vineyards. The vines planted in the mid-90s were coming online at the close of the century. Suddenly new vineyard owners, many of whom had bought land and planted vineyards with stock market winnings, realized they had over-planted. Also, this year's favorable weather conditions contributed to a larger than normal harvest. The California Department of Food and Agriculture predicted the 2002 wine grape crop at 3.3 million tons as compared with 3 million tons last year. The estimate for the worldwide oversupply of juice has been estimated at 1.5 billion gallons.

Where are the American wine drinkers? The economy changed. Suddenly Americans who spent thousands of dollars for a bottle of Screaming Eagle cabernet during the stock market bubble were now seeking good value wines. Upper-end drinkers who sought the status of boutique California cabernet or legendary French Chateau were now finding less expensive bottles delightful. Cheap was the new chic.

On the heels of last year's bountiful harvest and the sour economy came the aftermath of September 11. The wine world was corked. Business and tourist travel was off. Hotel beds and restaurant seats were not filled. Highly prized, strictly allocated wines -- boutique wines that would have been snapped up in San Francisco, New York, and Florida -- were making their way to lesser markets like Charlotte.

The sluggish American economy together with brisk global competition was not a good thing for wine producers. Now they needed to decide what to do with all that juice. Some growers have thinned and pruned their crops to improve quality. Some wineries have opted to develop "second labels," bottling juice to sell for less than their established brands so their regular label would not be tarnished by discounting the price. This is the retail clothing equivalent of removing the tags. Some wineries have responded to the glut by adding better juice to less expensive bottles, thus raising the overall quality. Others have simply reduced prices.

Angie Packer, sales manager of Tryon Distributing, a beer and wine wholesaler, said, "There have not been any price increases in our wines during the past year." She further noted that some wine companies, such as the Chalone Wine Group that produces Acacia, Chalone, Echelon, and Edna Valley among others, specifically requested that any reduction in price on their wines be passed onto the consumers.

These new prices are evident at many wine shops. Owner Robert Balsley of Arthur's Wine Shop at Belk said, "I'm seeing prices come down dramatically, especially California chardonnay. And the competition is brisk. Unfortunately, the small wineries -- the mom and pop shops -- might be gobbled up by the big boys."

Manager Brian DuBois of The Wine Shop said, "When we pick up a good deal -- a great wine that has been reduced by 20 to 30 percent -- we send it out in our weekly email so our customers can take advantage of it."

This is good news for Charlotte wine drinkers. Wines, especially California chardonnays, are priced to sell. Shelves are filled with good quality, reasonably priced wines at most price points, especially in the $8 to $20 range. Plus those once elusive highly allocated wines are available in the Charlotte market. As the year winds down, consumers can expect to see some new private labels, perhaps of uncertain origin.

Tim Wallace, owner of the Wine Vault, said, "This year has been great. There were over 9,000,000 cases of chardonnay left over last year and overall the price has decreased or at least stayed the same. The market is just flooded with inexpensive wines that aren't bad."

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