January 28, 2009
Unified Wine & Grape Symposium: state of the industry

Day two of the 2009 Unified Wine Grape Symposium kicked off this morning in downtown Sacramento, with E&J Gallo Winery being named "2008 winery of the year." The Modesto-based winery was especially lauded for its bargain-friendly Barefoot Cellars brand, which E&J Gallo purchased in 2005. Barefoot Cellars wines found the largest revenue and volume increases of all brands in food stores, and was the seventh overall largest brand. E&J Gallo's total volume grew by some 1.5 million cases to all markets in 2008.

Bogle Vineyards of Clarksburg and the 7 Deadly Zins brand of Lodi's Michael-David Winery were noted as "hot American brands and wineries in 2008" for their strong sales.

News was mixed in the "state of the industry" report, which opened the morning general session. Sales remain strong for "everyday wines" sold for $7 and under - the "Two Buck Chucks" of the wine world - but a proposed excise surtax on alcoholic beverages remains a specter on the wine industry, especially its potential impact on bargain wines.
Domestic shipments of California wine were up 2 percent in 2008, but this growth was the least seen by the industry in a decade.

Other highlights from the "state of the industry" session:

- The size of domestic wine grape crops is in a three-year decline, and the size of 2008's crop was smaller than the previous year. Vine removal and drought are driving this trend.

- Pinot noir remains an increasingly popular grape for planting, but there are questions of pinot noir's viability in "value" growing regions of California such as the Central Valley. Plantings of pinot noir may also be reaching market capacity.

- The "millennial" generation (ages 32 and under) is seen as key for the growth and viability of the wine industry.

- Sales of wine over the holiday season were overall solid, bucking the downward trends seen at other retail. Cabernet sauvignon at both low and high price points sold exceptionally well, as did bargain chardonnay.

-Frugality is now seen as "hip" and consumers continue to seek values and lower priced wines.

Panelists for the "state of the industry" included: Nat DiBuduo (Allied Grape Growers), Andrew Waterhouse (Univeristy of California, Davis), Jon Fredrikson (Gomberg-Fredrikson & Associates) and Bill Turpentine (Turrentine Brokerage). The panel was moderated by Michael Silacci (Opus One, and president of the American Society for Enology and Viticulture).

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