Bubbly aplenty, while caviar shortage is real

Much less caviar will be available this season because of a plummet in Russian exports, from 170 tons in 1999 to about 50 or 60 tons in 2000. According to Russia's State Committee for Fishing, this drop is due mainly to pollution, overfishing and a large increase in poaching. Sturgeon, the fish whose eggs are most prized, are further threatened by Russian oil company Lukoil's plans to drill in the Caspian Sea region, which would likely cause extinction within a few years. Prices for the Caspian Sea delicacy have already skyrocketed to numbers twice that of last year, often nearing $80 an ounce.

Champagne, on the other hand, is in abundance. In and around the champagne industry, reports circulated in advance of last year's millennium celebrations indicating a shortage of premium wines so severe that all but the well prepared and the very rich would be drinking $4.99 bottles of mass-produced bubbly. Those dire predictions quickly popped, however, and producers of champagne and sparkling wines were left with ample inventory after the celebrations. Food & Wine editor in chief Dana Cowin said much was made of the "shortage or surplus" question in 2000, but "this year supply and demand should be back up to par."

NO CHAMPANGE SHORTAGE

"We're certainly not having a shortage," said Eileen Fredrikson, partner at Gomberg Fredrikson, San Francisco, a wine-industry consulting firm. Champagne and sparkling wines remain a special-occasion market, which means a sudden buying up of bottles is unlikely. "Americans do not appear to be convinced this is the real millennium and the hoopla is not there," she said.

Anthony Dias Blue, wine editor at Bon Appetit, agreed. "There's plenty of champagne to go around. Even if there's extra champagne, the price points stay about fixed, and the Veuve Cliquots and [Louis] Roederers are going to sell for the same prices. Since it is an agricultural market, however, it depends on the good year-'95 and '96 were both good years, so we're looking at a surplus in the market. High-end vintages like Cristal and Krug always go first and are in very short supply. But 75% of champagne is non-vintage-there's plenty of Moet to go around."

"Caviar, on the other hand, is a real serious problem," Mr. Dias Blue added. "World demand keeps going up-huge demands in airlines and other hospitality services-and the source keeps diminishing. Farming is not enough to offset shortages in the Caspian."

Sturgeon are protected by strict export regulations as dictated by the Convention on International Trade in Endangered Species (CITES), signed by 151 nations including Russia. The animals committee will meet this month in West Virginia, but reports are expected to show that numbers of the fish have declined dramatically and are much lower than estimated.

Experts foresee big changes for the caviar trade, as the CITES committee may impose even stricter export limits on Russia, Iran and the other caviar-producing countries with as little as 90 days' notice.

The best caviar in the world is produced from Caspian Sea sturgeons which constitute more than 90% of the global caviar trade. For Americans, the standard egg fare has typically come from Russia, but caviar from the Iranian side of the Caspian is generally touted as tastier and of a higher quality due to different production procedures and better sea conditions.

Because President Clinton lifted a ban on select Iranian luxury imports in March, highly prized Iranian caviar has again been permitted by the Food and Drug Administration to enter the U.S.-for the first time since 1987-but the caviar shortage hasn't been alleviated.

Though an exorbitant $100-plus an ounce, Iranian beluga is flying off the shelves. For conservation reasons, Iran will produce only 70 tons of caviar this year; according to Hossein Aimani, owner of New York-based shop Paramount Caviar (paramountcaviar.com). Iran has raised prices 100% over last year due to the sturgeon shortage. When it saw what Iran was getting for caviar, Russia raised its own prices to stay in the game. However, Mr. Aimani added that if the prices go higher, significant resistance will set in.

Alternatives include farmed caviar, but experts don't see French or Spanish roe becoming competitive in quality and quantity for at least 10 years. "Even if they started early-five or six years ago-the caviar tends to be blander and softer. For better or worse, there's no competition," Mr. Aimani said.

STIFF COMPETITION

Paramount's public-relations and marketing firm, The Hall Company, New York, doesn't see its holiday mailings or activities much affected by changes in global market.

"Regardless of shortages, there's still competition in the market," said Sam Firer, VP of The Hall Company. "We continue along the PR route rather than blanket advertising because editorial speaks better for the caviar market. We've gone successfully beyond industry news to charity events to get a profile and a name out there, along with interviews and features for the BBC, Travelocity, Talk, Fortune, Food & Wine and Gourmet."

A 1998 report by TRAFFIC, a group that tracks the wildlife trade, estimated that the global trade in caviar was worth $125 million a year, half of it from illegal sources. Last year, several black-market traffickers illegally imported endangered species of fish eggs to the U.S., smuggling caviar from the Caspian Sea region through other Arab countries.

UNPRECEDENTED FINE

The most significant case required company officials at U.S. Caviar & Caviar to pay an unprecedented $10.4 million fine for engineering a multimillion-dollar contraband operation. The company was also convicted of passing off American sturgeon caviar as the Caspian Sea real deal (standard American paddlefish caviar sells for about half the price of Russian beluga caviar, which costs $70 to $80 an ounce).

However, said Sheila Lukins, food editor at Parade and co-author of "The Silver Palate Cookbook", fresh salmon caviar, American whitefish and paddlefish "can be a great buy for a lot of people."

"The range in price is dramatic," said Ms. Lukins. "Some people don't need to spend the dollars on osetra-though it's my favorite, because it's not as salty as sevruga-and so they buy fresh salmon caviar, which can be quite good and not very expensive."

Contributing: Alice Z. Cuneo