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Glub, Glub, Globalism (and a Foot Note)

Just as a glut of grapes has been driving wine prices down domestically -- Exhibit "A" being the wines marketed under the Charles Shaw label, concerning which I have previously written more than a little -- the weakening U.S. Dollar is opening foreign markets to California wines. MSNBC (with the San Francisco Business Times) reports the story:

The surge in California wine exports has come none too soon for the state's wineries, whose margins were squeezed by a recent gusher of high-quality grapes that pushed the price of even many acclaimed bottles under $10. Compounding the supply issue were years of recession and economic uncertainty that left many wineries with faltering sales and an uncertain future.

Now, with the American dollar down in the last year 20 percent against the Euro, 15 percent against the pound and 10 percent against the Japanese yen, California wines suddenly enjoy a price advantage in overseas markets. What's more, other "New World wine" producers like Chile, who have traditionally been able to underprice the United States, have also seen their currencies rise against the dollar, in Chile's case by 21 percent over the last year.

The Los Angeles Times runs a similar story (registration required, the bums) on its front page this morning. That story also emphasizes that the conditions that have been fueling the "race to the bottom" in California wine pricing may be subsiding:

The confluence of a massive invasion of inexpensive imports and a statewide surplus of grapes appears to be ebbing. Mother Nature, the removal of 50,000 acres of vines around the state and a sagging U.S. dollar are finally turning things around.

"A lot of the factors that worked against us are now working for us," said Vic Motto, who heads consulting firm MKF Group in St. Helena, Calif.

State agricultural officials won't issue their report on the 2003 wine-grape harvest until next month. But many believe the amount of grapes crushed in the fall was 10% to 15% below 2002's yield of 3.1 million tons. An odd pattern of hot and cold weather, as well as rain at the wrong times, cut into the 2003 crop, especially for Merlot.

The result: There is less cheap bulk wine on the market, and wineries are moving out some of the surpluses that they have long had in stock.

Tom Selfridge of the Chalone Wine Group is cited as predicting that "the best deals for bargain-hunting wine drinkers will have been crushed out of the market" by 2005.

It should be noted that there is apparently no truth to the rumor that grape growing or winemaking will soon be outsourced to India and Thailand.

Digression: The MSNBC report, as an example of a company taking advantage of those improved export opportunities, cites the Barefoot Wine Company, a division of Sonoma County-based Grape Links, Inc. The Barefoot wines were readily available nationwide -- not only at the Trader Joe's market chain -- well ahead of the recent successes of "Two-Buck Chuck." I won't vouch for all of them, but the Barefoot Zinfandel is usually worth your time if you are seeking an enjoyable accompaniment to lower-brow cuisine such as pizza or something hot off the backyard barbeque; it has been seen priced as low as $4.99 and probably should not top $6.00 in other parts of the country. Like the Charles Shaw wines, the Barefoot wines tend to be bottled young, with the fruit components very much up front. Perfectly pleasant drinking and a relaxing and unpretentious accompaniment to a relaxing or unpretentious meal, but without the layers of complexity that more prestigious bottlings bring to the fore.

The "Barefoot" name was originally used for jug wines produced by San Francisco journalist turned vintner Davis Bynum. (A brief history attributes the name to a crack by Herb Caen.) Bynum sold the rights to the name to a friend, Michael Houlihan, in 1986; Houlihan continues to operate under the Barefoot brand with winemaker Jennifer Wall at the helm. The Barefoot Wines website is here. The Davis Bynum Winery has continued most respectably without the Barefoot brand in its repertoire, and enjoys an ongoing relationship with winemaker Gary Farrell, whose own winery is rightly admired for its Pinot Noirs and Zinfandels.

(Half the fun of following California wine is keeping track of the players, histories and personal and professional relationships.)

Comments

Rick Coencas

Glub, Glub, Globalism (and a Foot Note). Shouldn't that be "and a Fool Note"?.

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