SACRAMENTO, CALIF. ? The nation has nearly drunk its way out of a six-year wine glut.

Whether that’s good news depends, of course, on whether one is in the business of making wine or consuming it.

For the 10,000 U.S. wine business players who converged last week in Sacramento for the annual Unified Wine and Grape Symposium, the waning glut should mean some reprieve from years of low prices and slim profit margins.

“We’re emerging from excess,” said bulk wine broker Bill Turrentine, speaking during a panel discussion addressing the state of the wine business.

The three-day convention draws representatives from many of the nation’s 5,000 wineries, as well as from the vast array of affiliated businesses that fuel the country’s $162 billion wine-related economy.

Booths displaying hundreds of wine-related products – from robotic pruning machines to automatic barrel-washers – filled the Sacramento Convention Center’s exhibition hall, and discussion sessions about the latest wine issues spilled over into nearby hotels.

The shrinking surplus marks a recovery from a wave of vineyard overplanting in the late 1990s, Turrentine told a full house in the 1,300-seat ballroom at the Hyatt Regency Sacramento.

That overplanting was driven by the era’s scarce wine supplies and high prices – as well as the excess cash and general exuberance that accompanied the Internet bubble. Since then, many vineyards have been ripped out, and consumption has risen steadily, drawing down the surplus.

Market globalization

For U.S. consumers, who bought a record 300 million cases of wine in 2006, the tightening supply signals a likely increase in prices – but not necessarily a steep one.

That’s because the last few years also have seen a dramatic globalization of the U.S. wine market. Foreign wines, especially lower-priced brands from Australia and Chile, now make up a record 29.4 percent of the market, and that competition is not expected to go away.

grapes and red wine

In addition, the world’s leading wine producers, France and Italy, face plummeting sales at home. That has led to an oversupply so grave that a great deal of French wine was used to make ethanol last year.

The increasingly competitive landscape has meant that wineries have had to innovate and develop products for every market niche.

American consumers now have 100,000 choices when buying wine, ranging from the type of wine to the size of the bottle or box that it comes in, said consultant and market analyst Jon Fredrikson, with Woodside, Calif.-based Gomberg, Fredrikson & Associates.

Fredrikson, whose read on the wine market carries an almost Alan Greenspan-esque authority.

He opened a keynote address by strolling through the aisles of the Hyatt ballroom, a wireless microphone clipped to his lapel.

“There are no one-liners in the wine business,” he began as a way of explaining the complexity of the industry.

Growth industry

On the whole, Fredrikson’s take on the U.S. wine industry is bullish. As wine becomes increasingly mainstream, and as new health benefits continue to be announced, he sees a continued growth in overall U.S. sales.

As a rule, the more expensive the wine, the more popular it is: Sales of bottles over $15 rose 27 percent last year.

But Fredrikson sees pockets of trouble, too.

So-called “extreme value” wines – those less than $3 – are struggling. Supermarket sales in that category fell 3 percent last year, while sales at virtually all other price levels rose.

Many farmers who grow the low-end grapes used to make those wines are ripping out their vineyards to plant almonds or other crops, said Nat DiBuduo, president of Fresno, Calif.-based Allied Grape Growers.

“The bulldozers are working in Fresno and Madera counties,” he said.

Growers have taken out 10,000 acres – of a state wine-grape total of about 480,000 acres – since fall, DiBuduo said.

Fredrikson also praised several of the nation’s more dynamic and successful labels, including Bogle Vineyards in Clarksburg, Calif.

Independently owned Bogle is now the 19th largest winery in the country, according to Wine Business Monthly, and it’s growing fast.