The Time Has Come For Assessments

The leader of one of the top winegrape grower groups believes the time has come to charge growers a mandatory assessment on their grapes and pool the money to promote American wine. Nat DiBuduo, the president and chief executive officer of Allied Grape Growers, a winegrape marketing cooperative with more than 500 California grower-members, said the U.S. is simply importing too much foreign wine at the expense of American growers.

Now, nearly one-third of the wine consumed in the U.S. is imported, and that figure keeps going up, says DiBuduo. All the growers say that needs to stop, but that won’t happen unless the growers do something about it.

“We need to take them head on,” he says. “We have a great product — we just need to make sure consumers know it.”

DiBuduo, who serves on American and Western Fruit Grower’s Editorial Advisory Board, knows he’s something of a contrarian in this age when other groups that assessed growers for marketing are being gutted, such as the Washington Apple Commission a few years ago. But the situation with winegrapes is a little different. Because most wineries are going to want to promote their own products and wouldn’t enter into a generic marketing effort, it’s up to the growers to regain market share.

Steady As She Goes
The recent year went gratefully smooth after a couple of years of oversupply of winegrapes in 2005 and 2006, says Nat DiBuduo of the growers’ marketing cooperative Allied Growers. The crop was average-sized in pretty much all areas, the exception being California’s Central Coast, which was down 15% to 35%, depending on the variety.

The drought in Australia certainly didn’t hurt U.S. growers in 2007, as it brought one big player, Canadaigua, back into the U.S. market, says DiBuduo. The industry giant had originally said it would buy 100,000 fewer tons of grapes in 2007. The huge impact on the industry points up the tremendous impact that consolidation has had on the industry. That trend doesn’t appear to be slowing down, as late in 2007 Constellation snapped up several labels, including Clos du Bois and Geyser Peak. “It means less competition for grapes,” he says, “and more challenges for growers.”

Everything points to a great year, says Dibuduo. Planting has slowed over the past couple of years, so as long as yields stay relatively normal, the outlook appears rosy. “Provided we have another average-sized crop,” he says, “I’m anticipating more demand, and better prices.”

And make no mistake about it, that market share is quickly being eroded. Our competitors abroad have had great success through the years gaining a foothold in the U.S. market, says DiBuduo, noting the success of Pinot Gris from Italy, Pinot Noir from France, and a variety from Australia called Syrah that the Aussies have had the audacity to give their own name — Shiraz — even in the U.S. “Where we’ve had a void in the past, they’ve stepped in to fill it,” he says. “The problem is they never go home.”

We’ve Got The Market

DiBuduo says the U.S. will become the largest wine-consuming country in the near future, and that fact certainly hasn’t gone unnoticed by our competitors abroad. “All foreign countries are targeting the U.S.,” he says. “In order to combat that, we need to stand up for our industry. We need a mandatory assessment.”

DiBuduo is not sure precisely what form the assessment should take. Though it would be on growers, he’s not even sure which ones should pay. While he has understandably thought of it in terms of a California effort in the past, as California does produce 87% of the U.S. total, there’s no reason to limit the effort to the Golden State. “The more partners involved,” he says, “the better.”

However, no matter who is assessed, there’s no question the assessment would have to be value-based, says DiBuduo. It simply wouldn’t be fair to base an assessment on acreage or volume. Most such organizations charge something akin to a box tax, but because of the disparity in winegrape prices, that wouldn’t work. “Eighty acres of Merlot in the San Joaquin Valley may gross less than 15 acres of Cabernet in the Napa Valley,” he says. “We need to find parity.”

If you’d like to contact DiBuduo about the proposed assessment, his e-mail address is: [email protected].

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