Knight Ridder Newspapers

PHILADELPHIA – For eight years, Moore Bros. Wine Co. did a brisk business selling a 12-bottle mixed case of French, German and Italian wines for $100.

That price is history. A 35 percent decline in the value of the dollar vs. the euro since 2002 made the promotion unsustainable, said Gregory Moore, president of the Pennsauken, N.J., wine retailer.

“You can’t lose a little bit on every sale and make it up on volume,” he said.

The price for the mixed case, which comes in a special box with tasting notes and anecdotes about the wine-makers, increased to $125 at the end of January; Moore Bros. sold 1,200 of them at $100 in December.

Yet while the dollar’s decline has contributed to an increase in the price of imported wines here, it also has created a window of opportunity for domestic wineries, by making U.S. wines more affordable overseas.

California, which produces 90 percent of U.S. wine, exported an estimated 39.2 million cases last year, a 22 percent increase from 2003, said Gladys Horiuchi, spokeswoman for the Wine Institute in San Francisco.

The favorable exchange rate was a big factor. “We also had some terrific vintages in 2001 and 2002,” Horiuchi said.

While it is still rare for Pennsylvania wineries to export, the weaker dollar has caused some to take a second look.

The Winery at Wilcox in Pennsylvania has been looking at the possibility for about four months, owner Mike Williams said, but the costs are too high for it to take advantage.

Even though the weaker dollar makes U.S. products less expensive overseas, Williams said it hurt when his winery purchased equipment, which comes from Germany or Italy.

Tomasello’s Winery in Hammonton, N.J., typically exports 5,000 to 6,000 cases a year of its cranberry, blueberry and other specialty wines, mainly to South Korea and Taiwan, and has not yet boosted that number. Asian currencies have held fairly steady vs. the dollar.

But the weakness of the dollar vs. the euro spurred Jack Tomasello, who operates the winery with his brother Charlie, to visit potential customers in Britain recently.

“It’s probably the best time ever to try to export to the EU or the U.K.,” Tomasello said.

The 33 wineries in New Jersey sold a total of $36 million worth of wine – nearly all of it in the United States – in 2003, according to the National Association of American Wineries. Pennsylvania’s 99 wineries produced $25 million worth of wine that year.

Despite the dollar’s weakness, the U.S. trade deficit in wine has continued to increase, although the rate slowed to a virtual standstill last year: In 2004, as in 2003, the United States imported $2.6 billion worth of wine more than it exported.

European wine producers have partly offset the dollar’s impact by eating some of the difference. At a time when there is an oversupply of wine on the market, they fear accelerating their losses in market share, caused in recent years by rising competition and a shift in tastes toward easy-drinking bargain wines.

So while the dollar’s value fell by about a third, the price of that case of imports at Moore Bros. went up by only 25 percent.

“Many suppliers are not taking their prices up and are selling at break-even to stay in the game,” said Jonathan H. Newman, chairman of the Pennsylvania Liquor Control Board, which uses its clout as one of the world’s largest wine buyers to get good deals.

The amount of pressure on European wineries depends on how dependent they are on exporting, said Jim Weinrott, president of importer Sussex Wine Merchants.

He said his company bought 15 percent to 20 percent of some producers’ wine. In those cases, the burden of the weak dollar is shared between the vintners and Weinrott’s company because the vintner cannot afford to lose the business.

But others, such as the Emrich-Schoenleber winery in Germany, have Europeans lined up to buy their wines and thus are less dependent on the U.S. market, Moore said.

Because of that, prices for Emrich-Schoenleber wines have gone up here in near-lockstep with the exchange rate.

The price of Monzinger Riesling, a semidry white wine, climbed from $11 for the 2001 vintage to $14.50 for the 2003 vintage.

Even with the 32 percent increase, the price of Monzinger Riesling remains under $15.

The upper limit is $15 for what most people will spend on a bottle of wine, according to Jim Weinrott, president of Sussex Wine Merchants. His company used to have 60 to 70 products in that range that sold well, but the weak dollar has changed that.

“Our business has grown, but we’re selling more of fewer products,” Weinrott said.

Some wine-makers are redesigning products to keep them under the $15 barrier.

Moore said a French wine-maker he had worked with since starting Moore Bros. in 1996 had done that with one of its wines – using a less expensive production process – to be able to sell it for $14 instead of $18.

Such maneuvers have helped keep wine flowing to the United States from the fabled vineyards of France, but the country is losing ground in the U.S. market – in part because of lingering resentment over the country’s refusal to back the U.S. invasion of Iraq.

Australia last year shipped nearly twice as much wine to the United States as France; they were about equal in 2002, according to Gomberg, Fredrikson & Associates, a California wine-industry consultancy.

Moore, Weinrott and other proponents of small, artisan wineries bemoan the explosion in sales of mass-produced wines.

But Bobby Harmelin, an executive at Allied Beverage Group, a New Jersey company that handles Australia’s Yellow Tail wine in Pennsylvania and New Jersey, said consumers benefit.

It is not just that oversupply has helped keep prices down despite the dollar’s fall, he said. “Quality is up.”