By: Reuters, 1/28/2000

SAN FRANCISCO (Reuters) -- California's wineries posted a record $5.4 billion in wine sales in 1999, with a hot economy and millennium celebrations encouraging consumers to uncork more bottles than ever, according to industry analysts. "I see this market as the finest we have ever had in California," analyst Jon Fredrikson of Gomberg & Fredrikson told an industry meeting in Sacramento this week. California's total wine shipments rose 3 percent in 1999 to a record 422 million gallons, or 184 million cases. Winery revenues rose almost 9 percent to reach a record $5.4 billion, according to industry estimates seen Friday. Not every winery enjoyed the same growth, however -- with those selling more expensive premium wines doing best. Toast the economy Sales of premium California wines, which go for more than $7 per bottle, jumped by 13 percent last year compared with a growth of just 1 percent for everyday wines priced at less than $7, Fredrikson said. "The high end of the market is going crazy. Unfortunately, the low end of the market is not doing well," he said. Other analysts said the strong economy -- coupled with successful efforts by some wineries to move their products on to more expensive shelves -- was helping the entire industry to move more upmarket. "A lot of that has to do with the strong economy. There are many more people who have more disposable income and that tends to bode well for wine sales," Gladys Horiuchi of The Wine Institute, a San Francisco-based industry group, said. "And consumers will always have an interest in premium product." Release of vintage year Sparkling wine sales spiked in 1999 thanks to demand for millennium parties, which ended a 15-year decline in champagne sales. Sales of California and imported sparkling wines jumped by some 25 percent to 15 million cases, some two-thirds of which came from California producers, Fredrikson said. Wine analysts say California wineries enjoyed a particularly lucrative year last year thanks to the arrival on the market of the large 1997 vintage, the largest grape crop in the state's history. The harvest ended three years of relatively skimpy supplies which had pushed prices sharply higher -- and prices were remaining at relatively high levels, especially for premium wines, despite the increased supply. Copyright 2000 Reuters Limited. All rights reserved.

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