Turnaround for high-end wine sales seen in 2011

NAPA – Most wine industry executives surveyed for a major industry conference here today are expecting sales of California wine to start growing in 2011, with prices rebounding for high-end wines in three to five years, according to results released today. Yet experts at the event showed that signs of economic recovery are starting to emerge.

"It's going to be a bit of a slog," former head of graduate wine studies at UC Davis Robert Smiley told the audience at the industry Wine Industry Financial Symposium this morning. He's conducted surveys of executives in the business for a decade in conjunction with this annual meeting.

A common theme from in-depth interviews conducted with select executives in conjunction with the survey was conservative spending, such as cutting back on unnecessary expenses and delaying or passing on 2009 grape purchases, Dr. Smiley noted. About half the executives interviewed said they were increasing marketing efforts, and some where launching brands in the segments of the market that are most active, largely wines selling for $7 to $10 per standard-sized bottle.

Out of 412 responses for wineries, grape growers, distributors and ancillary services, mostly in Napa and Sonoma counties, 48 percent predicted a return of high-end prices in three years, 50 percent foresee it in five years and the remainder thinks it will happen in a year. A common theme from the interviews was that more wineries are looking to have more offerings in different price points to reduce the risk to the sales when consumers look for deals amid another dip in the economy, according to Dr. Smiley.

Wineries and growers have been facing the same "inventory-induced recession" that has plagued producers of manufactured goods, as distributors and retailers late last year started radically reducing inventories as consumer sales dropped or shifted to lower-priced products, he continued.

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