CALIFORNIA UNCORKED RECORD WINE SALES FOR '97.

Byline: Associated Press 

Driven by the growing popularity of red wine and a link between moderate drinking and health, Americans spent a record amount of money on wine last year, making it a banner year for the state's industry.

Despite higher prices, winery revenues statewide jumped 11 percent to a record-breaking $5.7 billion, analyst Jon Fredrikson said Wednesday at the annual Unified Wine & Grape Symposium in Sacramento.

``This was the greatest year ever for the California wine industry,'' Fredrikson declared. ``There is no other way to describe last year than as the most extraordinary seller's market in the history of the California wine industry.''

A shortage of premium grapes and the strong demand allowed growers and vintners to raise prices and profits in 1997. But the upward spiral in prices appears to be ending. The shortage of grapes is expected to become a surplus this year, following a big harvest in 1997 and new vineyards getting ready to yield their first fruit.

So wine drinkers are expected to see lower prices and more choices on store shelves, especially for wines priced below $7 a bottle, experts said.

Already, bulk wine prices are down 50 percent from last year's highs, said Bill Turrentine, a San Anselmo wine broker.

The boom has been pushed by the growing popularity of red wines, favorable health news and a strong U.S. economy, Fredrikson said. Sales of reds have more than doubled since 1991 after reports suggested the French have lower rates of heart disease because they drink wine.

``Red wine and health are driving this whole market,'' Fredrikson said.

Vintners and growers, who saw demand drop in the 1980s, were caught off guard by the surge.

``We ran out of wine last year, in many cases. We just didn't expect it,'' Fredrikson said.

California vintners rationed their wines to distributors, raised prices to dampen demand, reduced discounts and promotions, and delayed advertising programs yet still sold out.

Many U.S. wineries imported bulk wine from France, Italy and Chile to fill the void and keep their labels on store shelves. They imported 18.2 million gallons of bulk wine last year, up from 7.5 million gallons the year before.

The increased demand and record prices also convinced vintners to plant thousands of acres of new vineyards across the state. As those come into production, the supply of grapes will increase and prices likely will fall, Fredrikson said.

Production of chardonnay is expected to increase 53 percent in California over the next three years, mostly from vineyards in the San Joaquin Valley, said Barry Bedwell, president of Allied Grape Growers.

Making of cabernet sauvignon is expected to grow 56 percent over the next three years, while yields of merlot will jump 71 percent, he added.

Thanks to big yields from Mother Nature and big prices from wineries, the value of the 1997 grape crop jumped 37 percent last year, reaching $1.6 billion, Fredrikson said.

He predicted a ``slight excess'' this year, led by a big increase in production from the San Joaquin Valley. The last time that happened was in 1990 and 1991.