California Business Minute™

Hi, I am Tim Johnson and welcome to the California Business Minute.

According to the ‘Annual Grape Crush Report from the California Department of Food
and Agriculture and the U.S. Department of Agriculture, California wineries squeezed
about 3 million tons of wine grapes during the harvest, down about 6% from the previous
year.

Most of the decline in the 2008 wine-grape harvest came in just two varietals. The amount
of cabernet sauvignon grapes crushed fell 24% to 325,000 tons. Cabernet Sauvignon, the
largest red wine variety, dropped a staggering 24% in 2008 compared to 2007 which is a
decrease of 17 million gallons or almost 85 million bottles. The shortfall was most acute
in the most desirable appellations such as Napa Valley, down nearly 27%, and Sonoma
County, which was down nearly 24%.

Merlot fell 26% to 225,000 tons, the equivalent of 13.4 million gallons or 66 million bottles
of wine. The decrease for Merlot was driven both by a reduction in bearing acres and lower
yields per acre.

A spring frost and then sparse rain for the rest of the growing season caused the decline in
those grapes, which are the two most popular red-wine varieties.

Pinot Noir, still the fastest growing red wine, bucked the trend of other red varieties. Pinot Noir
was up 17% in 2008 compared to 2007. That reflects an increase of over 2.6 million gallons or
over 13.1 million bottles of wine. However, the North Coast crop was down in most areas. The
largest growing area, Sonoma County, decreased by 0.46%, 134 tons or 115,000 bottles despite
a substantial increase in the number of acres.

White-wine grapes fared better. The harvest declined only 2% to 1.3 million tons.The reason they
were down just 2% statewide is because it is driven by a strong performance of grapes used for
generic white wines. Chardonnay in the interior of the state was down by 5.4%, 18,069 tons or
15.4 million bottles. Statewide, Sauvignon Blanc was down 13%, which equals over 2.4 million
gallons or 12 million bottles of wine. Fortunately, while the tonnage produced was down for many
varieties, newly planted vineyards boosted production for Pinot Grigio which is the fastest growing
white variety in the United States.

Once again, chardonnay accounted for the largest percentage of the total harvest -- 15.4%. Grapes
from Napa County garnered the highest average price -- $3,390.64 a ton, up 4% from 2007.

I am Tim Johnson and this has been the California Business Minute.