California wine industry faces long road to recovery

The Sacramento BeeJuly 23, 2010 

After a year that showed the California wine industry's worst performance in more than a decade, the road to recovery remains a long haul. The best that winery owners and grape growers can say today is: At least the wine market's not getting worse.

The latest research from longtime industry consultant Gomberg, Fredrikson & Associates shows that shipments of California wine were up 0.4 percent for the first four months of 2010. That slightest of upticks is more than welcome.

"In the wine market these days, they say, 'Flat is the new up,' " said Warren Bogle, president of Bogle Vineyards in Clarksburg.

The 2009 numbers were enough to make any winery owner wince. California wine shipments were down 1.2 percent compared with 2008 – the state's first drop in shipments in 16 years. The estimated retail value of wine sales in the United States fell by 4 percent.

Tight consumer spending and increased competition from imported wines remain challenging as the 2010 wine grape harvest approaches.

"There's certainly been improvement between some nice increases in exports and discounting that's spurring consumption," said Jon Fredrikson of Gomberg, Fredrikson & Associates. "My guess is the total market is up 2 to 3 percent for consumption. That being said, it's a difficult business climate for the vast majority of California wineries."

The slumping economy has forced some local wine merchants to change their business strategy. Rod Farley of Beyond Napa, a wine boutique in the Lyon Village shopping center on Fair Oaks Boulevard, saw his customers trade down once the stock market started tanking.

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