Where has the California overproduction of wine grapes come from? The Central Valley! Where these Central Valley vineyards once produced jug reds and whites, they now produce varietal jug Chardonnay and jug Merlot.

In 1988 raisin grapes, table grapes and the wine varietals Chenin blanc and French Colombard comprised 60 percent of the California's harvest, in 2002 that has fallen to 30 percent.

In 1988 Central Valley Chardonnay, Cabernet Sauvignon and Merlot accounted for only 1 percent of the state's crush, today that number has grown to 21 percent. The current excess supply of wine grapes has come from new vineyards planted in the Central Valley of California in the past 20 years.

Today, six of every 10 bottles of California Chardonnay, Cabernet Sauvignon and Merlot comes from the Central Valley of California. Chardonnay is now the largest produced wine varietal in California with 60 percent of it produced in California's Great Central Valley.

2002 prices for Chardonnay grapes from Kern, Kings and Tulare counties averaged only $175 per ton, while Cabernet Sauvignon grapes brought only $95 per ton. By comparison, the 2002 average price for Napa Chardonnay grapes was $2,317 per ton and Cabernet Sauvignon was $4,020.

Fifteen years ago Napa Valley produced one in every four bottles of Chardonnay and Cabernet Sauvignon and one in every three bottles of Merlot yet produced only 3.5 percent of the state's total wine production. The 2002 Napa Valley harvest of 130,742 tons still represents only 3.5 percent of California's total crush, yet Napa now only produces one bottle in 25 of Chardonnay, one bottle in 10 of Cabernet Sauvignon and Merlot.

Sixth largest crush

Additionally, the 2002 crush ranks only as the sixth largest in Napa Valley history with 1997, 1991, 2000, 1992 and 1989 as larger years of production. Current Napa Valley Chardonnay production is actually down 14 percent from 1988, while the state's production has increased five fold. The state's production of Cabernet Sauvignon has followed that of Chardonnay with a similar five-fold increase of production over the past 15 years.

Wines from the Central Valley will always compete based on price. Napa and Sonoma wines can never compete on price for very long and still be economically viable, but must always compete on quality and scarcity. The market is saturated with inexpensive Central Valley wine that can and is having a minor and temporary rub on the premium wine market. New wineries trying to pierce the ultra premium market will retreat to reasonable pricing, wineries with a proven track record for quality will continue with strong demand and the consumer will enjoy the benefit of low pricing for ordinary quality wine.

The premium wine industry has failed to adequately differentiate itself from the new inexpensive varietal wines from the Central Valley that comes with a California appellation.

To help see the future, you have to look closely at vineyard plantings. A 20-year average of Napa Valley's total vineyard acreage shows that 12 percent of the total acreage usually is non-bearing, which is a combination of new and replanted vineyards three years and younger. For 2001 the state's non-bearing Chardonnay is 9.5 percent and Napa's is 11 percent. Non-bearing Merlot acreage is the same for both the state and Napa at 12 percent; the state's non-bearing Cabernet Sauvignon is 24 percent and Napa's is 27 percent.