Modestly priced wines boost California industry

Sacramento BeeJanuary 28, 2009 

The California wine industry enjoyed a boost from below last year.

The recession hurt sales of high-end brands, but consumers drank more wine overall, pushing U.S. per capita consumption to a record high.

But with the economy worsening, and a tax increase and a drought looming, 2009 stands to be a tougher year for the wine industry, which is gathering this week in Sacramento for the annual Unified Wine and Grape Symposium.

To help bridge the state's budget gap, Gov. Arnold Schwarzenegger wants to increase the excise tax on winemakers from 4 cents per 750-milliliter bottle to just under 30 cents. After markups by distributors and retailers, industry groups estimate consumers would pay an additional 50 cents or more per bottle, an increase they say will hurt sales and winery profitability.

"It would eliminate thousands of jobs in California," said Robert Koch, president of the San Francisco-based Wine Institute. The tax is part of the tangle of budget proposals that the governor and the Legislature are wrangling over.

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