San Benito County’s wine-related businesses won’t be toasting
the industry’s current outlook, a sobering thought in more ways
than one.
Local wineries and retailers have not escaped California’s slump
caused by a spike in grape production and the poor economy.
San Benito County’s wine-related businesses won’t be toasting the industry’s current outlook, a sobering thought in more ways than one.
Local wineries and retailers have not escaped California’s slump caused by a spike in grape production and the poor economy.
“I’ve noticed a decline in wine sales. … it’s the luxury items that go first,” said Karen Gentsch, director of marketing for Pietra Santa Winery.
The state’s grape production increased by an expected 8 percent from 2001, according to the Wine Market Report, which has led to lower prices and stiffer competition among wineries and retailers.
Even with the glut-induced decrease in prices, 32 percent of wineries polled in mid-December expected sales to drop from 2001, according to the report.
Joe Zanger, a partner at Zanger Vineyards in Hollister, blamed several factors for the slow year, including the grape glut and the poor economy.
“There are too many people producing,” Zanger said.
The number of wine-related businesses in the state has boomed during the past decade. Wineries doubled to 1,000 and the state now accounts for 90 percent of the nation’s production and 7 percent worldwide, according to the California Association of Winegrape Growers.
Zanger said intense competition for consumer business has also hindered business – not only from new vineyards within the state but also from an increased presence from foreign wineries.
“It’s also from Chile, Argentina and Australia,” said Zanger, just naming a few.
Arturo Medina, owner of Casa Medina in San Juan Bautista, was quick to cite his store’s decreased wine sales on one major factor.
“I think it’s really tied to the state economy as a whole because two years ago this was not an issue,” Medina said. “Everybody was expanding.”
During difficult economic periods, consumers generally give up luxuries such as premium wine, he said.
“They give up the Mercedes and get themselves a Toyota,” Medina said.
Zanger, whose winery mostly produces for sale at the Pacheco Pass location, said smaller wineries were struggling to compete with larger sellers, such as Safeway. Smaller wineries were mostly without a market right now because of higher costs, he said.
“We’re not able to discount like a larger winery is to move our product,” Zanger said.
Industry analysts predicted the overproduction of grapes months ago for the growing season that generally runs from April 1 to Oct. 31.
“Demand is not there to support all the fruit,” said Rob Levy, manager of Gimelli Vineyards in Hollister.
The San Joaquin Valley experienced the state’s worst drop in grape prices, Levy said. He blamed the struggles on a comparably lower quality of grapes. The price for grapes in the San Joaquin Valley in some cases dropped from $800 per ton in 2001 to $50 per ton in 2002, Levy said in a previous report.
Prices on the Central Coast dramatically dropped, too, in some cases from $1,000 per ton in 2001 to $500 per ton in 2002, he said.
“We’re scrambling to find contracts,” Levy said. “We can’t make a profit at the prices offered right now.”
He said the success or failure of agriculture comes in cycles, and currently the industry was in the downside of one. Levy said he remembered one similar setback during the early 1980s and he hoped for another economic recovery, adding it would jump-start the industry.
“If you’re a farmer at heart, if it’s something you enjoy doing, something you feel is worthwhile, I think you’ll survive,” Levy said.
