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North Coast wine prices on rebound

  • Tasting room host Rony Carlos Perez, left, talks to Gloria and David Rice, of Tampa Bay, Florida, at St. Francis Winery & Vineyards, near Santa Rosa, on Wednesday, April 27, 2011.

The deep discounting in wine prices that characterized the last couple years may be coming to an end.

Don't expect bottle prices to shoot back up, but don't expect to find your favorite Russian River pinot noir marked 50 percent off for much longer, according to a new forecast issued Wednesday by an influential Wine Country lender.

"If you've grown accustomed to the good deals, now is the time to buy them and stick the bottles in the cellar," said Rob McMillan, who heads the wine division at Silicon Valley Bank, which authored the State of the Wine Industry report.

With the general economy improving, people are returning to luxury wines even without the discounts, according to the report. Vintners are forecast to sell nearly as much wine as they make this year, meaning their inventories are coming back into balance.

"It's exciting right now because people are coming back," said Christopher Silva, president and chief executive of St. Francis Winery in Santa Rosa. "As an industry, we are moving up from the bottom."

It is a marked contrast from the last couple years when budget-minded consumers slashed spending on luxury wine, and cases of unsold bottles began piling up in the cellars of Sonoma County wineries. Many producers were forced to cut prices just to sell the wine and generate enough cash to stay in business.

Now people are dining out more, and they have begun picking up more expensive bottles of wine.

About 71 percent of wine producers feel their inventory is either in balance or even in short supply, according to the nearly 600 coastal wineries surveyed for the report.

Not all wine areas are recovering equally. In Mendocino County, 47.4 percent of wineries reported an oversupply of wine inventory, compared with 18.5 percent in Sonoma County and 5.8 percent in Napa County.

The net effect is many wineries will stop offering deep discounts by year's end, according to the forecast, which analyzed the market for bottles costing $20 or more. Wineries might even start increasing prices on their most expensive bottles because the wealthiest Americans have largely recovered from the recession.


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