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Calif. winemakers see banner 2005 harvest

November 2, 2005

By Jim Christie

SAN FRANCISCO (Reuters) – Thanks to a cool, dry summer and
recent warm spell, California’s grape harvest will exceed
expectations in volume and quality, setting the stage for a
banner 2005 vintage of affordable wines, winemakers say.

They expect a harvest of 3.15 million tons, which would be
the state’s second-biggest and up 14 percent from last year,
with grapes of exceptional flavor and color.

“There is going to be a lot of really good wine to work
with,” said Peter Byck, chief executive of Winery Exchange Inc.
in Novato, California, which makes wines for retailers,
including Costco Wholesale Corp. and Albertsons Inc. “Consumers
can expect really good value for 2005.”

That will be seen at all price levels, with the 2005
vintage on par with the state’s 1997 vintage, one of its best
ever, Byck said.

“Across the board you’re going to see good value,” he said
of 2005 wines, which will begin to appear on store shelves next
year. “We think it bodes well for later next year for the
whites and the following year for the reds.”

With grapes to spare, winemakers will pay less to make
their wine and will be able to pass along low prices, which
U.S. consumers have come to expect with the explosion in
value-brand wines.

California’s $15 billion wine industry, long focused on
making pricey premium wine, has been in a roll since Bronco
Wine Co. launched its Charles Shaw brand for $2 a bottle.

Nick-named “Two-buck Chuck,” the wine was an instant hit
with cost-conscious consumers. Low-cost Australian brands and
domestic rivals followed, adding impetus to consumer awareness
that inexpensive wine need not be plonk.

BENEFIT AT LOWER PRICES

California’s 2005 harvest will allow winemakers to offer
affordable bottles with greatly improved structure from prior
vintages.

“The moderately priced and lower prices wines will probably
be where the consumer sees the greatest benefit,” said Dan
Berger, publisher of Vintage Experiences newsletter. “This is
what the vintage winemakers have been waiting for so they could
make wines that are crisp and go better with food.”

The volume of grapes points to intensifying competition
among everyday wines of California and coastal appellations
selling for $5 to $8 a bottle, said Don Sebastiani, chief
executive of Don Sebastiani and Sons, a Napa Valley winemaker.

“There are just too many damned grapes,” said Sebastiani,
whose winery makes Pepperwood Grove and Smoking Loon wines.
“Napa Valley is just drowning in excess fruit.”

The Pinot Noir harvest likely will be down from last year,
but grapes used for Chardonnay, Cabernet Sauvignon and
Zinfandel wines are thick on the vine, Berger said.

Winemakers will be challenged to add capacity to make and
store 2005 vintage wine, said Mark Houser, vineyard manager for
Hoot Owl Creek Vineyards and Alexander Valley Vineyards in
northern California.

“Some grapes probably will be left on the vine because
wineries can’t take them … They just don’t have space.”

One outlet may be the export market, providing some comfort
to grape growers concerned that prices will fall if domestic
wineries turn them away.

“It feels a little bit like 1997 when the vineyards just
kept on giving,” said Glenn Proctor, a grape and wine broker
with the Joseph W. Ciatti Co. in San Rafael, California. “It
will allow California to be a little more aggressive with its
bulk exports to Europe.”




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