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Wine Wake-Up Call
By W. Blake Gray
Feb 7, 2012
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We all know wine is a business, not a romance, but it's still a major wake-up call to visit the US wine industry's biggest annual get-together, the Unified Wine & Grape Symposium.

You know what's big?  Chocolate-infused wines.  Sweet red wines.  Muscat, the cheaper the better.  Flavored sake sales are up 30%.  Eeek!

We knew Malbec was hot, but did you know sales of unoaked Chardonnay have doubled?  Meanwhile, Syrah is harder to unload than a cursed gypsy button, with sales down 13% at a time when overall wine sales are up.

An event like Unified (that's what everyone calls it) is a nice reminder that the kinds of wines we love don't exactly put us in the 1%, but well, sometimes they do.  About 61% of wine sold in this country is under $7 a bottle; only 20% is over $10.

Unified is held in Sacramento, and many attendees are growers from California vineyards that never get their names on labels.  From their perspective, the future looks brighter than you'd think after two difficult harvests, because now there isn't much bulk wine available, so wineries are signing contracts for grapes.  Nat DiBuduo, president of Allied Grape Growers, also said that unlike 10 years ago, Central Valley farmers are getting good money for almonds and other alternative crops, so they don't need to plant vineyards without having contracts in hand ahead of time.

And because the construction market is bad, suddenly farm labor isn't a problem.  DiBuduo asked a huge auditorium of more than 3000 people, "Has anyone had trouble getting labor, anywhere in the state?"  Nobody raised their hand.

You'd be surprised at what grapes are in demand.  Merlot is one; hardly anybody planted it after "Sideways," but varietal Merlot wines never stopped selling, and now it plays a key role in those red blends with clever brand names -- whether $7 or $75.  If you can't find the name of a grape on the label, you can bet there's Merlot in it.

Zinfandel is also in demand because it's good in suddenly trendy sweet red blends (sales tripled last year) for the same reason it's good in white Zinfandel:  It gets ripe enough to deliver fruit flavors with plenty of sugar.  Moreover, the best Zinfandel vines are old and get less productive every year.

Meanwhile, there's actually Pinot Noir to be had on the bulk market to sell in $10 private label bottles, at a time when you can't easily buy bulk Merlot.  Fancy that.

Speaking of $10 bottles:  They might be $12 bottles this year, thanks to the worldwide bulk wine shortage.  And forget about those $15 bottles of store-brand Napa Cabernet; there isn't any bulk Napa Cab to fill them.

Steve Fredricks, president of Turrentine Brokerage, says the world hasn't had this little bulk wine available in 11 years.  Two small crops in California -- producer of 9% of the world's wine -- are a big reason, and Italy (17%) had its smallest crop in 60 years.  Production is also down in Spain (14%), Australia (4%) and Argentina (5%).

France is one of the few countries that had a good crop in 2011, but remember, we're looking up from the bottom of the tank here, not down from the first growths.  Fredricks said, "There is plenty of wine in Bordeaux if they could ever figure out how to make wine to meet the world market."  Oh, the historical irony.

Jon Fredrikson, the keynote speaker, put numbers on a phenomenon we all know is true:  More wines trying to get through a narrower pipeline.  In 1995 the US had 1800 wineries and 3000 distributors.  Today, we're up to 7000 wineries and down to 675 distributors, with just 10 of them controlling 60% in sales.  And last year the TTB approved 120,000 new wine labels, which means ever more competition for your local store's shelves.

But there is good news for importers:  Sales of French wine were up 25% in dollar value; Argentine wine was up 23%, while Italian wine was up 19%.  Some of that is at the expense of Australian wine, which has just about fallen off of high end wine lists in this country.  If you haven't had a Yarra Valley red wine, you don't know what you're missing.

And despite all the gloom over the economy, sparkling wine sales last year were at their highest level since 1988 -- higher even then the expected spike for the last year of the last millennium.  Speaking as a guy who could drink bubbly every day, that's something to celebrate, although as soon as I reach for my J Vineyards vintage Brut, because it costs $48, I'm moving right into the 1%.  Please don't Occupy my wine cellar.