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Optimistic Wine Industry to Unveil New Wines, Survey Finds

September 14, 2007

Optimistic winemakers will introduce a host of new wine varietals during the coming year, according to a recent survey of wine industry professionals conducted by Robert Smiley, professor and director of wine studies in the Graduate School of Management at the University of California, Davis.

Smiley will report his survey findings, as well as results from a survey of wine industry executives, at 8:30 a.m. Tuesday, Sept. 18, during the Wine Industry Financial Symposium to be held at the Napa Valley Marriott in Napa, Calif.

"Winemakers are optimistic -- even more so than last year -- about the future of the industry," Smiley said. "They note that consumer perception of the health benefits of wine, as well as the ability to directly ship their wines to consumers, will continue to increase sales."

He added, however, that a crop shortfall is expected this season, particularly from Central Coast vineyards, due to less-than-optimal weather conditions.

Survey of wine professionals

Smiley's survey of wine professionals, now in its 16th year, included responses from 104 wine producers, wine grape growers, distributors, retailers and lenders. It is the largest of its kind in the wine industry.

"Both winemakers and vineyard owners strongly predicted improvements over the next two years in the profitability of the California wine industry," Smiley said. He noted that winemakers were considerably more optimistic than vineyard owners, whose farming operations are more vulnerable to factors beyond their control, such as adverse weather.

The respondents predicted that 2007 will bring a shortfall in the wine grape crop from the Central Coast, resulting in a shortage in the supply of several wine grape varieties including pinot noir, chardonnay and zinfandel.

When asked to name the top five factors affecting growth of California wine sales in 2007 compared to 2006, the respondents cited the perceived health benefits of wine and new laws that enable winemakers to ship wines directly to consumers. They also noted that wine is becoming more of an everyday beverage in many U.S. homes, much as it traditionally has been in Europe.

The major challenges to growth in wine sales during the next three years will be increased government regulation, consolidation of wine distributors, global competition and consolidation of wine retailers, the survey participants predicted.

Both winery owners and grape growers predicted that the greatest growth in consumer demand and resulting sales will be seen in pinot noir, followed by pinot grigio and chardonnay wines. A decline in sales was projected for white zinfandel.

"White zinfandel is thought to be an 'entry wine.'" Smiley said. "As consumers become accustomed to drinking wines, many branch out to try other varietals."

In addition to the introduction of new varietals, the survey participants predicted that new types of wine packaging will be on the market in the coming year and, to a lesser extent, new twist-off caps and bottle sizes.

Survey of wine executives

Smiley's ninth annual wine executives survey of the heads of 26 key wine operations, ranging from growers to distributors, found that environmental issues will likely top the list of industry concerns in five to 10 years.

The industry's impact on global climate change in terms of carbon production, as well as the effect of the anticipated warming on grape-growing conditions, will be key environmental issues, the executives said.

Also of long-range concern will be global competition, inadequate supply of vineyards and a shortage of glass for wine bottles.

Executive survey respondents also predicted that:

  • Sales of "global brands" will increase among the less expensive wines in the coming years, but more serious wine drinkers and wine collectors who buy expensive wines will still prefer wines from specific appellations or growing regions.
  • Wine producers will need to take the lead in introducing alternative packaging and caps.
  • Industry and government will need to work together to determine what ingredient information consumers want on wine labels.

Results of both surveys are available online at: http://www.gsm.ucdavis.edu/2007winestudy.

The Graduate School of Management will continue its work with California wine executives when it collaborates with the UC Davis Department of Viticulture and Enology in offering the Wine Executive Program March 9-13 in Sacramento. The four-day program will focus on "Blending the Business and Science of Winemaking." More information about this spring program is available online at http://www.wineexecutiveprogram.com.

Media contact(s):

  • Robert Smiley, Graduate School of Management, (530) 752-7662, rhsmiley@ucdavis.edu (While at the Wine Industry Financial Symposium Sept. 17-18, he can be reached. on cell phone at (530) 304-1048.)
  • Pat Bailey, UC Davis News Service, (530) 752-9843, pjbailey@ucdavis.edu

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