State Wineries See Benefits in Italian Scandal

What is being called “the worst wine scandal in Europe’s history” has arrived at an opportune time for long-suffering California producers, who say they expect to benefit from the economic fallout resulting from the 20 fatalities linked to methanol-laced Italian wine.

However, the contamination problems in Italy, domestic producers say, could also cast a pall over all wine products, regardless of origin, and lead fickle consumers to other alcoholic beverages.

Even so, most producers expect the poisoning to be a boon for a domestic industry which has endured several consecutive years of flat sales, primarily as a result of low-priced European imports. Sales of California table wines increased only 1.4% between 1980 and 1984.

“It’s the greatest thing that ever happened to us,” said one California vintner, who asked for anonymity.

“Everyone has been losing their shirts (in the California wine industry),” said Jon Fredrickson, president of Gomberg, Fredrickson & Associates, a San Francisco-based consulting firm. “The (Italian) problem will benefit this state’s producers; it just depends how long it drags on.”

Others believe that the attention focused on the poisoning could erode confidence in all wines.

“Anything that effects the No. 1 wine producer in the world will have consequences beyond its borders,” said John A. De Luca, president of the Wine Institute in San Francisco.

In either event, the scandal is likely to change the way Italy’s wines are marketed in this country for years to come.

“This is a case of people who are trying to save a few pennies and are blatantly adulterating wines,” said Michael Mondavi, president of the Robert Mondavi Winery, one of the state’s leading wineries. “Once these people who were buying Italian wines try California (wines), then they will stick with us because (we) have a better product and you don’t have to worry about all these other problems.”

Mondavi and others expressed sympathy for the many Italian producers who are not involved in the current poisoning. The knowledgeable U.S. wine drinker, he said, will realize that Italy’s quality wineries are not involved.

However, several experts criticized manufacturing and sanitation conditions in the Italian wine industry and faulted that nation’s health officials.

“There are some questions about quality control (in Italy) and wine producers in the United States will make the most of it in their own public relations material and are likely to pressure the federal government to put tighter controls on imports,” said George Vare, a San Francisco-based consultant for the wine industry.

To date, none of the contaminated wine has been found in the United States and seems to be primarily confined to Italy. However, some quantities of the adulterated substance surfaced in France and Germany; the wine was being shipped there to be blended with inexpensive French and German varieties.

The response in this country to news of the Italian scandal has been confusing at best.

The U.S. Bureau of Alcohol, Tobacco and Firearms--after rescinding an order that Italian wines be removed from stores--warned American consumers last week against drinking any Italian wines until testing for contaminants has been completed.

A spokesman for the Italian Wine & Food Institute called the bureau’s alert “indiscriminate.” And several supermarket chains seemed to believe that the bureau was also exaggerating the danger. Lucky Discount Centers, Alpha Beta Co. and Trader Joe’s Markets did not follow the action taken by five other food retailers, who pulled Italian wines from store shelves late last week.

Nonetheless, the federal government’s warning, coupled with the removal of Italian wines from major chains, presents a serious blow to the heretofore improving image of Italian wines.

And much more than image is at stake. In 1970, foreign wines accounted for only about 10% of all wine purchased in this country. Today the figure is about 25% with half of the 130-million gallon total coming from Italy. The total value of imported wines and brandies has been estimated at more than $1 billion a year.

The most pressing concern is whether the Italians can regain the credibility lost with American consumers as a result of the tampering, the second such incident within the last year. Also at issue is whether recently announced price increases of between 5% and 10% for some of Italy’s most popular wines will go into effect as scheduled, May 1.

Additionally, U.S. regulatory agencies are likely to require that all Italian wine imported to this country be laboratory certified as free of contaminants even after the current situation has been resolved. A certification requirement will also mean greater costs for Italian producers and begin to eliminate the price advantage they have enjoyed over their California counterparts, one analyst said.

The most recent contamination with methanol, or wood grain alcohol, was done to boost the alcohol content in otherwise worthless products. An Italian Wine & Food Assn. representative said that several individuals have been apprehended as suspects in the adulteration and the related deaths. Italian authorities, meantime, have been sampling thousands of bottles of wine.