Joseph Phelps: Uncorked

News & Events
	Fall/Winter 2002 General Winery News Wine Industry Profile Uncorked! From our Winemaker New Releases Special Report Personnel Corner

Reviewing the Current Wine Market

There is an unmistakable air of nervous energy amidst the chaos that currently defines
the American wine market. After a decade of unparalleled growth and unbridled optimism,
the shocking events of September 11th, followed in close order by the disquietudes of
financial markets, ominously coincided with macro-level disruptions in the very structure of the wine world.

News of the Beringer sale to Foster’s Brewing Company accompanied gloomy reports from various wine grape growing regions of California that the once vanquished specter of over-supply had returned.

Along with falling grape prices came the realization that American distribution channels would be usurped by a pipeline of off-shore wine from a country where labor, land and currency are available at roughly half that of California.

Distributors confronting the monolithic demands of a muscle flexing Diageo in the wake of their purchase of Sea-grams began to sense the unpredictability of a twenty year crusade toward consolidation.

Meanwhile, Federal Judge Melinda Harmon issued her long awaited decision invalidating a Texas claim that the Twenty-First Amendment, which provides a veil of protection for a patchwork of arcane liquor laws, trumps the Commerce Clause of the Consti-tution. Her decision finally provided an opening for proponents of direct shipping and opponents of franchise protection.

In spite of Juanita Duggan’s impassioned sermons to the WSWA choir, it appears as if the wholesalers may be losing their more than 60 years of control over the three-tier system. An expected court ruling in New York could bring on a flood of common sense state legislation that will benefit wine consumers across the nation.

At home in Napa Valley, the past year has yielded more than a few surprises. A new conservation ordinance will severely curtail new vineyard development and may presage huge spikes in vineyard land prices with the realization that the world renowned qualities of Napa are astonishingly scarce. Protection of the Napa Valley appellation system will be the question when the California Court of Appeals opens oral arguments on November 19th. Vintner Fred Franzia will square off against the State of California and the Napa Valley Vintners Association in a case that may decide the limits of entitlement to the use of the Napa Valley name.

If chaos is indeed the progenitor of opportunity, then there is much for consumers to look forward to in 2003. New channels of distribution will likely increase consumer access to wine. The return of a buyers market will slow, if not reverse, wine prices at all levels and, with luck, a consumer who purchases a wine with Napa on the label may be reasonably assured that Napa grapes are in the bottle.

Next News Story