MKF Research Monthly Reports Growing Shortage of Top Quality Varietal Grapes.

NAPA VALLEY, Calif. -- The latest issue of the MKF Research Monthly, released today, forecasts that rising demand for top quality wines is outpacing the development of vineyards to supply suitable grapes. (www.mkf.com)

"The demand for the best wines continued to rise, although at a somewhat slower pace than during the boom years of 1998-2000," Barbara Insel, Managing Director of Research noted. The high-end wine segment is the fastest growing and most profitable segment of the U.S. wine market -- and one where California has successfully defended its market share from imports and other U.S. regions.

MKF Research estimates that California will need to develop nearly 18,000 additional acres of top quality vineyards by 2010 to meet demand for its wine. While some of this development may come from replanting or better management of existing vineyards, new vineyard development will be needed to satisfy much of the growing demand.

"Only a limited number of regions in the state are suitable for the development of the needed vineyards," Ms. Insel stated. "Overreaction to the grape cycle discouraged new planting of top quality vineyards from 2001 to 2003, although the high-end of the market saw relatively little of the pricing pressures experienced in the lower priced segments of the market. There was always a market for the best quality grapes," she said.

The North Coast, for example, where much of the high-end wine is produced, has seen only about a 10% price drop on average since 2001, compared with 23% or more in the Central Valley.

The study combines MKF Grape Trends 2005 analysis of wine grape planting through 2005 and production through 2012 with MKF Wine Trends 2004 analysis of wine shipments since 1999 by price segment and varietals to draw a picture of the supply and demand for wine grapes through 2010 for Chardonnay, the Cabernets Merlot and Pinot Noir in the higher price segments.

About the MKF Research

The MKF Research Monthly, launched in October 2004, provides in-depth analysis of the critical business challenges facing the wine industry today. Available by subscription from MKF Research, this targeted, concise report reflects the questions and concerns MKF hears daily from its wine business clients.

MKF Research, a Division of the MKF Group LLP, is a leading research source on the U.S. wine industry. MKF Research conducts original research on wine market trends and publishes a number of industry economic studies. MKF Research also provides confidential consulting on a range of wine business and strategy issues to wine industry enterprises, investors and suppliers.

MKF is the leading group of wine business advisors, providing wine business consulting, wine market research, wine investment banking and wine industry CPA services to hundreds of wine businesses through its affiliated firms. MKF has served the wine industry exclusively for 22 years. MKF Group LLP, Motto Kryla & Fisher LLP, Global Wine Partners LLC