Also: Foster's targets May demerger for; Ascentia names Kenton as CEOSome winegrape crop watchers were expecting 2010 North Coast tonnage to be 10 percent to 30 percent below the size of the big 2009 harvest because of late-season heat and rain damage.
Yet at 425,781 tons, the 2010 North Coast crop was only 4.7 percent smaller than the big 2009 harvest, according to the first version of the California Grape Crush Report, which will be adjusted in coming months as more data come in. Even with the challenges last year, the region's crop was larger than the frost-bitten 2008 harvest of 358,642 tons.
Decreases of 10.7 percent and 3.1 percent in Sonoma and Napa counties, respectively, offset 10.2 percent and 0.5 percent increases in smaller-scale producers in Mendocino and Lake counties. [Comparisons of tonnage and pricing for North Coast counties and major varieties for several years are posted at NorthBayBusinessJournal.com/29605.]
Tonnage increases in inland California regions were good news for producers of in-demand wines retailing for less than $20 a bottle, and North Coast decreases were somewhat welcome for producers, according to Brian Clements of Turrentine Brokerage.
"That was embraced by wineries that had been saying to growers the least amount of fruit they can deliver is great," he said.
The extent of sunburned Sonoma County chardonnay and zinfandel grapes were reflected in tonnage decreases of 10.7 percent and 31.3 percent, respectively, below that of 2009.
One of the tough challenges for chardonnay growers in California coastal regions has been finding buyers at prices high enough to cover long-term farming costs, according to Glenn Proctor of Ciatti Co.
Regional revenue was $902.6 million, a decrease of 13.6 percent, or $142.6 million, from 2009. Contributing to that were decreases in county weighted-average prices per ton of 6.6 percent in Napa to $3,068, 9.6 percent in Sonoma to $1,951, 8.8 percent in Lake to $1,129 and 17.1 percent in Mendocino to $1,092.
Mr. Clements pointed out that county average prices have more to do with the 70 percent to 80 percent of North Coast grapes that are under multiyear contracts. Grapes for sale on the spot market have been selling for significantly less in the past two years, particularly those going into lower-priced wines.
"Major North Coast varieties in the bulk market are doing better in the bulk market than they have been, and more are talking about what they need for this year than in 2010," Mr. Clements said.
Particularly, there's interest in Napa Valley cabernet sauvignon and sauvignon blanc, Russian River Valley chardonnay and pinot noir as well as zinfandel, especially from Dry Creek Valley. Real grape buying activity is expected to start when vines start budding this spring.
"It does feel better at this point in the season than at the same point in 2010," he said.
Grape contract negotiations in Napa and Sonoma counties as well as in Lodi are starting to explore how much of farming costs can be pruned to meet the desired wine quality, according to Mr. Proctor.
"Some are saying, 'If we do not hand-pick we will sell it to you for a couple hundred dollars cheaper per ton,'" he said. "They are asking what is needed to maintain quality and what things do not."
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Australia-based beverage giant Foster’s Group on Tuesday announced it wants to complete a demerger of its wine business, called Treasury Wine Estates, in May.
Two years after starting a strategic review of the organization, Foster’s on Tuesday laid out a timeframe for spinning off Treasury as a separate company. If approved by shareholders in late April and Australian courts in May, the demerger of the wine business would take effect in May with the trading of Treasury’s shares on the Australian Securities Exchange.
Treasury’s portfolio includes Napa Valley wine brands Beringer, Etude, St. Clement and Stags’ Leap, Chateau St. Jean in Sonoma Valley and imports Lindemans, Wolf Blass, Penfolds, Rosemount, Wynns Coonawarrra Estate and Castello di Gabbiano.
Wine unit sales in the first half of fiscal 2011, ended in December, totaled the equivalent of 18 million 9-liter cases, a decrease of 5.9 percent from a year before, and A$923.7 million, a 2.7 percent decrease on a constant-currency basis.
Treasury is reviewing potential cost savings over two years after the split from "acceleration of wine making and vineyard operations efficiencies, optimization of marketing and promotional spending, continued process improvements, reduction in global administrative and selling costs, and benefits arising from the implementation of new IT systems."
