Most observers would agree that the style of wine which now dominates the high end of the wine rankings and price scale has evolved over the last couple of decades, toward higher alcohol, higher extract, higher pH and higher levels of new oak. One of the consequences of chasing these high scores is that many winemakers have insisted on leaving the fruit on the vine longer before harvest than before, often to the point that the grapes become partially dehydrated.
In many vineyards, grapes are not truly ripe when the sugar level is just above the minimum contract specification. This is because sugar accumulation is only one component of grape maturation. The skins, pulp and seeds, as well as the acids and salts in the juice, each have maturation curves that are not strictly interdependent or coincident. The flavor of the fruit itself changes as the grapes mature. Fruit can be sweet but not taste ripe, and the evolution of the high-scoring style has put a premium on a flavor profile that tends to the over-ripe. Winemakers may be waiting for a physiological indication of ripeness other than sugar, or they may be waiting for a particular flavor, but they are not waiting simply in order to pay the grower a few percent less.
Bringing in fruit with high sugar content creates potential problems for the finished wine. The first is high alcohol: more sugar means more alcohol produced by fermentation. High alcohol in and of itself is not always a problem, but there is the elusive question of balance to be considered — some wines just taste wrong if the alcohol is too high. The second is the effect on yeast. Dan Berger acknowledges that high sugars can lead to stuck fermentations. I have written before on how high sugar and high alcohol can stress yeast to the point of distress, causing them not only to stop fermenting sugar but also causing them to produce toxins that can make the wine taste hot or that lead to allergic reactions or migraines in sensitive individuals. An uncorrected stuck ferment also means the wine is left with some residual sugar — not a bad thing in itself, as many consumers actually prefer their wines slightly off-dry, but a wine with residual sugar must be sterile-filtered or treated with Velcorin™ if the winery wants to avoid the economic disaster of having it re-ferment in the bottle.
Every vintage, Nature and man conspire to deliver us less than perfect grapes. In waiting for seed ripeness — which is my number one criterion for determining when to pick — the tradeoff may be a higher sugar level. It seems to me that adding some water to the tank is a very minor correction, by which one can avoid too-high alcohols, stuck ferments and their attendant negative effects on wine composition, and filtration or other sterilization. I utterly reject the notion that there is anything deceptive, underhanded or unnatural in this practice.
I expect that winemakers in hotter climates have always been adding a little water to their too-ripe tanks before fermentation. That water addition (along with irrigation) is outlawed in most Continental appellations suggests it has been practiced there as well. However, European vineyards receive more rainfall late in the season than we do here in California. Consequently most European appellation regulations allow addition of sugar before and during fermentation (which is prohibited in California) to bring the potential alcohol of the finished wine back into balance if Nature gives washed-out fruit.