Grape Glut 

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Have you ever dreamed of owning your own winery? If so, it’s a good time to buy. Hard times are hitting the California wine business and there are bargains to be had, from single bottles to entire businesses. Due to a glut of grapes in California, wine prices have already fallen by 10 to 15 percent, and you can expect them to fall even more. That may be bad news to California grape producers, but it’s good news for consumers.

Due to overproduction, a soft consumer economy and a wine boom that has characterized the California wine business in recent years, experts estimate that approximately 75,000 tons of grapes will be left to rot in California vineyards after this year’s 2002 harvest. What that grape glut means is that winemakers can pick and choose, buying better quality grapes from grape growers at lower prices than usual. Will that translate or “trickle down” into lower prices at the wine store? Well, yes and no.

I wouldn’t rush out to buy high-end 2002 California cabernet sauvignon when it’s released, thinking you’ll be getting a bargain in this overabundant year. Because due to at least a couple of factors, prices for expensive California 2002 wines probably won’t see much of a drop. First, high-end wine producers and boutique wineries won’t want to “cheapen” their image by lowering their prices. So don’t expect to find bargains in the $50 and higher range. In addition, most of the 75,000 tons of surplus grapes come from the drier, hotter Central Valley of California. And those less desirable grapes are typically used to make lower-end and medium-priced wines, usually blends.

But overproduction in California’s Central Valley could be good news to bargain-minded wine drinkers like myself. Because the glut of those lower-end grapes should lead to lower prices for wines in the $5 to $20 range. The situation is so severe, in fact, that I expect to see wines that normally sell for $10 or $12 dropping down to $7 or $8.

How did it happen? Well, in the mid- to late-’90s, there was actually a wine-grape shortage in California, which coincided with a booming economy. So wine grape growers, thinking that the party wouldn’t end, planted and planted and planted and planted. Even as recently as last year, 40,000 acres of new vines came into production in California. To provide some perspective, in 1992 approximately 300,000 California acres were planted with wine grapes. The total for 2002 approaches 500,000 acres.

But the party has apparently ended. A weak domestic economy, combined with a strong dollar abroad, means that imported wine is cheaper than it has been in years. And growers of cabernet sauvignon in the Southern and Central California Valleys are being forced to sell their grapes to wineries this year for $65 to $75 per ton, compared with anywhere from $125 to $325 last year.

It’s a well-known dictum of economics that when supply exceeds demand, consumers win. Such is the case with the 2002 harvest, which should provide abnormally low-cost wines for consumers for years to come. Lest you think this news is all glum for the California wine industry, there are those who see their wineglasses as half full, speculating that lower prices will make wine more appealing to new customers (i.e., beer drinkers). Even so, don’t expect to see customers quaffing low-priced wine with meals at Denny’s anytime soon. Glut or no glut, we’re still a soda-pop society.

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More by Ted Scheffler

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