grapes for ethanol more profitable than wine????

Washington View: Local vintners can learn from French woes

Tuesday, October 25, 2005
DON BRUNELL for The Columbian

Pouvez-vous le croire? Translated it means "can you believe it?"

Fine French wine destined for upscale American restaurants is being turned into ethanol for gasoline, some of which is sold in the states! That means that, if you want to experience a nice bottle of Chateau d'Esperite (Castle of Hope), you may have to go to your local gas station.

What's going on?

Battered by increased competition and falling prices, the French are distilling millions of bottles of quality wine into fuel. That is hard to swallow in a culture where winemaking is more of an art than a business. It is a labor of love in which growers work for generations to create the perfect vintage.

French wine is losing ground in the world market as wine drinkers turn to brands from Washington, Australia and Chile. In addition, some Americans are boycotting French wine because of that country's stand on the Iraq war. Adding to this "perfect storm" is a crackdown by French authorities on drinking and driving.

The resulting glut of wine continues to drive prices down and is sending France's wine industry into a tailspin. In some cases, prices have tumbled by more than half. In an effort to prop up income for growers, the European Union, pressing its members to use more renewable fuels, implemented a program to turn the equivalent of 133 million bottles of wine into ethanol, which is then sold to oil refineries.

Turning French wine into vinegar or ethanol is not new, but it has been the low-quality wine grapes that have been distilled. Last year was the first time high-end wines have been turned into gasoline additives, and only champagne and the highest quality Bordeaux, Burgundy and Loire wines remain unaffected.

This crisis in the French wine industry holds a lesson for those of us in Washington who watch as our wine industry takes off.

Washington wines are growing in market share and popularity as the number of acres in production has almost tripled in the past 10 years. Today, Washington growers produce more than 16 million gallons of wine worth almost $685 million. In all, our state's wine industry contributes $3 billion a year to our economy.

But, as we've seen in France, success can turn into disaster in the blink of an eye.

Viticulture is a particularly fragile industry. Not only must growers battle fierce global competition where product and production costs are pivotal, but they are at the mercy of bad weather and diseases that can destroy their delicate vines. For example, in 2004, the Walla Walla area was hit by a hard winter freeze that killed or severely damaged many of the vines producing the area's high-end wines. As a result, it is hard to find a Walla Walla Valley 2004 merlot or cabernet sauvignon.

With all that our state's winemakers have to deal with, they should not have to battle Olympia as well. Last year, outgoing Gov. Gary Locke proposed adding 34 cents tax to every bottle of wine to raise $37 million to balance the 2005-2007 budget. The proposal died after it met a firestorm of opposition from Eastern Washington lawmakers who pointed out that the tax would hurt the very industry that our state wants to promote.

The lesson here is Washington elected officials ought to be careful about taxing success. Like fine wines, if not properly treated, this industry could turn into vinegar.

Don Brunell is president of the Association of Washington Business, Washington state's chamber of commerce. Visit www.awb.org.