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Wine sales hurt by recession

SACRAMENTO -- U.S. wine sales grew in 2008 at their slowest pace this decade as the deepening recession curbed consumers? enthusiasm for fine wine, according to figures released Wednesday.

Total wine sales increased by less than 1 percent last year to 316 million cases, a new record.

But the 2.1 million case increase was the smallest of the decade, a clear sign that wine drinkers are cutting back in response to the weakening economy, analyst Jon Fredrikson told wine executives at the annual Unified Wine & Grape Symposium in Sacramento.

?Frugality suddenly has become hip as consumers face uncertain economic times,? said Fredrikson, owner of Gomberg, Fredrikson & Associates in Woodside.

Shipments of California wines increased 2 percent, while shipments from other states rose 3.4 percent. Dragging down the total was imported wines, which fell nearly 3 percent thanks to the strong Euro keeping prices for imported wines high.

In 2007, total wine sales increased 12 million cases, a healthy 4 percent.

While the trend toward cheaper wine is causing trouble for high-end wineries, it?s a boon for big wineries with lots of inexpensive brands, Fredrikson said.

?As far as the giants, many of them had they best year they ever had,? Fredrikson said.

Massive wineries like E&J Gallo of Modesto, Constellation Brands of New York, and The Bronco Wine Company of Ceres all fared well as shoppers traded down from top-shelf brands to the lower shelves dominated by high-volume producers, Fredrikson said.

E&J Gallo performed particularly well, racking up 10 of the top-selling 25 wine brands in the nation last year.


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