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Wine executives lament year of drinking cheaply
San Francisco, Sept 29: Is a two-dollar bottle of wine nicknamed `Two-Buck Chuck` the California wine industry`s savior or bane?
San Francisco, Sept 29: Is a two-dollar bottle of wine nicknamed "Two-Buck Chuck" the California wine industry's savior or bane?
That's the question wine industry executives debated as they gathered this week in the famed Napa Valley to discuss depressed market prices which have closed a number of quality wine producers but also sharply pushed up consumption of California wine overall.
The wine chiefs were trying to hammer out strategies to "adapt to the challenges of today's marketplace" and asking themselves whether a turnaround for the embattled industry could be around the corner.
The annual Wine Industry Symposium in Napa focused on the impact of a grape glut and a lingering US economic slump that is depressing wine prices, organizers said.
The two trends together have brought the 14-billion-dollar California wine industry its worst year financially in more than a decade.
At least a dozen wineries in the leading districts of Napa and Sonoma Valley have been forced to close, file for bankruptcy or sell assets to avoid closure.
Last month, small Napa Valley winemaker Fife Vineyards became the latest to file for Chapter 11 bankruptcy protection, after 12 years in the business.
Ironically, that has happened in a period when, by another measure, the industry is booming.
US wine sales by volume rose six percent in 2002 over 2001, according to a new report, and they are continuing to rise in 2003.
Most of that increase owes to the phenomenal success of extremely cheap wines like "Two-Buck Chuck," the popular name for the Charles Shaw brand that goes for 1.99 dollars in a supermarket chain.
Taking advantage of the wine grape oversupply, Bronco Wine Co. rapidly produced and sold four million to five million cases of "Two-Buck Chuck" after introducing it in 2002.
Grudgingly acknowledged by connoisseurs as more drinkable than cheap wines of the past, Bronco could sell as many as six million cases of Charles Shaw wine during 2003, analysts said.
Bronco's success is not unique. According to a market survey released by New York-based Impact Databank this week, Americans drank nearly 14 million more bottles of wine in 2002 than in 2001.
Most of the increase comes from wines in the under-seven-dollars-a-bottle range, including discount brands competing with Charles Shaw and low-priced imports from Italy, Chile and Australia.
But this surge is hardly good news to producers of premium and deluxe wines -- those over 10 dollars a bottle -- who have been forced to slash prices or production to stay afloat.
The top California winemakers are also looking to penetrate deeper into the tough European wine market to boost their fortunes.
But some high-end winemakers are criticizing their low-priced counterparts for cheapening the product and making consumers resistant to buying higher-priced wines.
Even so, with a healthy fall harvest underway that suggests another tough year ahead, prominent up-market producers like Robert Mondavi Corp. are themselves creating brands for the low end of the market.
The success of competitors' cheaper wines contributed to a 90 percent fall in profits at Mondavi in the year to June 30. Bureau Report
That's the question wine industry executives debated as they gathered this week in the famed Napa Valley to discuss depressed market prices which have closed a number of quality wine producers but also sharply pushed up consumption of California wine overall.
The wine chiefs were trying to hammer out strategies to "adapt to the challenges of today's marketplace" and asking themselves whether a turnaround for the embattled industry could be around the corner.
The annual Wine Industry Symposium in Napa focused on the impact of a grape glut and a lingering US economic slump that is depressing wine prices, organizers said.
The two trends together have brought the 14-billion-dollar California wine industry its worst year financially in more than a decade.
At least a dozen wineries in the leading districts of Napa and Sonoma Valley have been forced to close, file for bankruptcy or sell assets to avoid closure.
Last month, small Napa Valley winemaker Fife Vineyards became the latest to file for Chapter 11 bankruptcy protection, after 12 years in the business.
Ironically, that has happened in a period when, by another measure, the industry is booming.
US wine sales by volume rose six percent in 2002 over 2001, according to a new report, and they are continuing to rise in 2003.
Most of that increase owes to the phenomenal success of extremely cheap wines like "Two-Buck Chuck," the popular name for the Charles Shaw brand that goes for 1.99 dollars in a supermarket chain.
Taking advantage of the wine grape oversupply, Bronco Wine Co. rapidly produced and sold four million to five million cases of "Two-Buck Chuck" after introducing it in 2002.
Grudgingly acknowledged by connoisseurs as more drinkable than cheap wines of the past, Bronco could sell as many as six million cases of Charles Shaw wine during 2003, analysts said.
Bronco's success is not unique. According to a market survey released by New York-based Impact Databank this week, Americans drank nearly 14 million more bottles of wine in 2002 than in 2001.
Most of the increase comes from wines in the under-seven-dollars-a-bottle range, including discount brands competing with Charles Shaw and low-priced imports from Italy, Chile and Australia.
But this surge is hardly good news to producers of premium and deluxe wines -- those over 10 dollars a bottle -- who have been forced to slash prices or production to stay afloat.
The top California winemakers are also looking to penetrate deeper into the tough European wine market to boost their fortunes.
But some high-end winemakers are criticizing their low-priced counterparts for cheapening the product and making consumers resistant to buying higher-priced wines.
Even so, with a healthy fall harvest underway that suggests another tough year ahead, prominent up-market producers like Robert Mondavi Corp. are themselves creating brands for the low end of the market.
The success of competitors' cheaper wines contributed to a 90 percent fall in profits at Mondavi in the year to June 30. Bureau Report