The chief executive of Constellation Brands has rejected a suggestion that consecutive large harvests in California will lead to an expression of cheaper wine from the US province.
An analyst on the Robert Mondavi wine producer's financial results talks call yesterday (8 January) questioned whether extra supply from California's bumper harvests in 2012 and 2013 would lead to fee wars between brands and retailer own-marks. Exact facts for California's 2013 grape haul are not due until 10 February, but the harvest is expected to match 2012 at around 4m tonnes following excellent conditions in most regions. Decanter.com earlier reported on some wineries' need for more tank capacity to store the extra wine. 'In the areas that matter to us, I would say that we're not expecting an inundate that would drive lower pricing,' Constellation's chief executive, Rob Sands, said. 'I reckon that we see a pretty balanced situation.'Bob Ryder, the wine firm's chief financial officer, http://1000-facts-about-wine.com added, 'consumer demand for wine continues to be very robust. We in fact need more supply just to satiate demand.'Glenn Proctor, California-based partner at global wine and grape broker Ciatti Co, largely agreed. 'There's an optimism about sales progression. Five years ago, everybody was burying their head in a hole and saying "Oh my God".'He said most wineries be with you that it would be 'a recipe for disaster' to cut prices on brands because of extra supply. But, in the small-term, 'we might see some private marks and one-offs if there's bulk available that's excellent quality'. Despite reports that some California grape growers are ripping out vines in favour of more lucrative crops such as almonds, Proctor said around 121,000 acres of vines have been planted in the last two years. Most growers are profitable at current grape prices, he said. In its results statement, Constellation said fiercer-than-expected fee competition means full-year operating profits for wine and spirits may only equal last year, at best.Subdue, Constellation's net wine sales rose http://1000-facts-about-wine.com by 3% in the three months to the end of November versus the same period a year earlier, to US$711.9m.Its share fee jumped by around 10% on its results statement, which also showed a near-doubling of overall net income and sales for the quarter driven by its acquisition of 100% of the Crown Imports beer business, which sells Corona in the US. Beer accounted for around half of Constellation's profits in the quarter.