California's Grape Depression

By Stephen Koepp. Reported by Mark D. Smith/San Francisco

With sales losing their sparkle, vintners are awash in wine

This fall's California grape harvest was a race against the sun. Unseasonable heat of up to 105DEG threatened to ripen the fruit too quickly and spoil it for winemaking. But as the last bunches of plump red and golden grapes were dumped safely into crushers last week, growers and vintners were in no mood to raise their goblets to Bacchus. Because of a worldwide glut of wine, this year's harvest of nearly 2 million tons of grapes will be far more than needed. "We are in a hell of a bind here," says Earl Rocca, a grower near Fresno. "We're in a grape depression." While consumers are savoring the lowest wine prices in years, some growers are being pushed close to bankruptcy.

During the 1970s, the California wine boom seemed like a party that would never end. In the past ten years, growers boosted wine-grape acreage by 26%, to 363,000. Nearly 100 new wineries took root between 1978 and 1982 in the Napa Valley and adjoining Sonoma County. But sales, which had grown by an average 6% annually during the 1970s, suddenly flattened in 1982 at about 360 million gal., and have grown only marginally since then. Growers who planted their vines in anticipation of blossoming demand are finding a market that has shriveled like a raisin. Thompson seedless grapes, a basic variety that fetched $200 per ton in 1981, now sell for as low as $50. For many farmers, such prices are far below the cost of growing the grapes.

While sales of higher-priced varietal wines, named after specific grapes like the Cabernet Sauvignon and Pinot Noir, remain strong, low-cost generic labels, the Burgundies and Chablis produced by such vintners as Inglenook and Almaden, have fallen off. The price of a gallon jug of domestic wine sold in food stores has been cut in half since 1981, to about $3. Meanwhile, foreign vintners have flooded the U.S. Helped by a strong dollar that has made their wines cheaper for American buyers, foreigners boosted their share of the American market this year to more than 25%, up from 13% in 1975. Italy, the biggest seller to the U.S., uncorked the low-price segment with fruity, fizzy Lambruscos like Riunite and dry soaves like Folonari. Italy's shipments increased from 3.7 million gal. in 1970 to 69 million last year.

Underlying the problems of California's vintners is the general stagnation in U.S. wine sales. Says Ann Clurman, a social-trends researcher for Yankelovich, Skelly & somewhat." White: The fetish "Wine for has lost fitness, its along status with increased minimum drinking ages and stiffer drunk-driving laws, has stalled U.S. adult per capita wine consumption at about 2.2 gal. annually.

This temperance trend has produced another new competitor called the wine cooler, which combines fruit juice, carbonated water and wine in a drink that is only about 6% alcohol, roughly half as much as traditional vintages. First cococted in 1981 by a Coors beer distributor, the beverage is available in at least 27 brands. Among West Coast producers, California Cooler, the leading firm, ranks just behind the traditional wineries of E. & J. Gallo, Seagram and Almaden in sales.

To recoup profits, some California vintners are stepping up production of premium wines that cost at least $7 a bottle. At the same time, they are trying to broaden their market to reach the estimated 130 million U.S. adults who do not drink wine. Last week the winemakers could at least take consolation from the misfortunes of one of their rivals. A plague of rain and clouds afflicted growers in France as they neared harvest time, portending an undistinguished crop .

With reporting by Mark D. Smith/San Francisco