COOLERS GO FLAT : Fizzy wine drinks have fallen from favor, and the field of competitors has dwindled.

The fizz has gone out of the sales of wine coolers, the beverage phenomenon that soaked up the glut of Central Valley grapes and once accounted for one of every five bottles of wine sold.

What some hailed as a vibrant new category of wine beverage appears headed the way of such predecessor fads as Gallo’s Cold Duck, Spanada and Boone’s Farm--all fizzy-sweet drinks more akin to soda than wine. And a field that once counted more than 150 brands of coolers has quickly dwindled to a battle between two brands: Seagram Wine Cooler and Gallo’s Bartles & Jaymes, trailed by a handful of also-rans, including pioneer brand California Cooler, a distant third.

E. & J. Gallo and Joseph E. Seagram & Sons, which entered the field in mid-1985, evenly divide two-thirds of the wine cooler market, whose peak years were 1986 (119.6 million gallons sold) and 1987 (122 million gallons sold). That was about 20% of all wine products sold in those years, according to the Wine Institute, which represents California wineries. But sales plunged 12.6% last year to 106.6 million gallons, and estimates of a further fall in 1989 range to 35%.

‘A Dying Category’

“What we’re seeing now is some vigorous ‘end-game’ activity--some very bold moves of the queen and the knight,” said Paul Gillette, publisher of the Los Angeles-based Wine Investor newsletter and Beverage Hotline, referring to new ad campaigns launched this summer by Gallo and Seagram. “I still see the category as dying.”

By the end of the year, he predicted, sales will have fallen “about 40%” from the peak.

Only somewhat less pessimistic is Anita Rosepka, managing editor of Beverage Media, a family of trade publications based in New York. “There’ll be a place for wine cooler,” she said. “It won’t be as big as it was, but there will be a place for it. What you have is a shaking out.”

True, bottles of California Cooler, the brand that started the whole thing just eight years ago, continue to speed along a bottling line in Van Nuys, but it is far outstripped by Gallo and Seagram.

Detroit-based Stroh Brewery Co. produces California Cooler’s six flavors under license from Brown-Forman, which had paid $164 million four years ago to the two young Californians, Michael Crete and Stuart Bewley, who founded the firm on a shoestring in 1981.

Their inspiration had been something they called “Crete’s Concoction,” a mixture of cheap wine, soda and fruit juice that they and their friends brought along to beach parties near Santa Cruz. They figured that folks just might be willing to pay for a ready-made version.

In cashing in on their phenomenon near the height of the cooler craze in July, 1985, Crete and Bewley thus displayed unerring timing for a second time. With their profits, both formed new investment companies. Crete’s Fountainhead, in his hometown of Lodi, overseas such ventures as China King Express, a fast-food company, while Bewley heads Linc Venture Partners in neighboring Stockton.

Only two months before Bewley and Crete sold out, Gallo introduced Bartles & Jaymes. By then, Seagram and a number of other really big players were in, including Hiram Walker, New York’s Canandaigua Wine Co. and Anheuser-Busch. More than 100 “me-too” entrants were to come and go.

Today, most have fallen before the huge salvos of promotion and price-cutting fired by Gallo and its fictional hucksters, Ed Bartles and Frank Jaymes, by Seagram with actor Bruce Willis and by California Cooler with its nostalgic scenes of fun on the beach.

Alarming Decline

For the half-dozen largest brands remaining, Rosepka predicted, “their sales will do well.”

Even if that proves to be so, however, coolers will no longer shore up flagging wine sales, said Jon Fredrikson, president of Gomberg-Fredrikson Associates, a winery-consulting firm in San Francisco. Excluding wine coolers, wine shipments for the first four months of this year dropped 3%, a decline that Fredrikson called “alarming.” Cooler shipments themselves fell 8%.

“In prior years if you took out coolers,” he explained, “the industry was up because the premium segment offset (declines in) jug wines. But this year, the premium segment is maybe breaking even and jugs are still plummeting.”

Wine Investor’s annual survey of the U.S. market for table wines similarly concluded with a warning: “Unless a new, faddish product catches fire as coolers did at the start of this decade, 1989 should show a fairly substantial decline (in table-wine consumption), something on the order of 3% to 5%.” Moreover, the report saw no evidence that wine cooler drinkers were “trading up” to traditional wines or even to other wine products.

“I’m not saying that they won’t gravitate toward wine but that I haven’t seen them gravitate toward wine,” publisher Gillette explained. “Clearly, these people have been lost, at least temporarily. Where they are going, I don’t know.”

Added Malt Version

Brown-Forman later licensed the flagging brand to Stroh Brewery, producer of a malt-based cooler, White Mountain, that targets a specialty market in certain states--including Utah, Ohio and Pennsylvania--that allow beer and malt-based products to be sold in convenience stores but not wines, wine products and other alcoholic beverages. (Miller Brewing in Milwaukee produces another malt-based cooler, Matilda Bay.)

Stroh has added a malt version of California Cooler for that same limited market. Moreover, the company has filtered out the fruit pulp that was a trademark of the original California Cooler and reformulated all six flavors, including a new “Cranberry Mist,” to be less sweet. Gallo similarly issued a new “blush” flavor this summer that it promotes as “drier.”

“The cooler market is declining in volume,” said Gallo spokesman Dan Solomon, “but Bartles & Jaymes is building market share.”

According to wine consultant Fredrikson, however, Gallo shipped fewer than 11 million gallons of Bartles & Jaymes in the first four months of this year--down 18% from a year earlier. California Cooler’s California plants shipped 1.8 million gallons, off nearly 53%.