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North Bay Business Journal

Monday, July 25, 2011, 6:58 am

Wine grape growers see multiyear contracts return; some prices also improving

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    Walter Eagan, a Russian River Valley appellation grower of zinfandel and chardonnay grapes east of Windsor, was surprised to get a three-year zin purchase grape contract from St. Helena-based Duckhorn Wine Co. earlier this year.

    “I have not seen that for a while,” Mr. Eagan said.

    And more North Coast growers could be in that position this year, thanks to a tightening supply of grapes and wine in bulk, according to grape market experts.

    “Not only do we see light at the end of the tunnel, but in some areas of California we already are out of the tunnel,” said Nat DiBuduo, president of Allied Grape Growers, a 60-year-old cooperative representing nearly 600 North Coast and San Joaquin Valley growers.

    He gave that encouraging news to Mr. Eagan and more than 100 other growers, grape and wine brokers, and winery representatives at the trade group’s annual meeting for North Coast members, held in Santa Rosa on July 15.

    “We are also seeing competition once again for some varieties but at better price points than last year,” Mr. DiBuduo said.

    As the economy slumped in 2008 and remained constrained through much of 2010, winegrape buyers delayed buying activity to just before harvest. In contrast, grape buying activity was up in spring of this year, resulting in active offers and contracts, according to Mr. DiBuduo.

    “We are confident that all of Allied’s growers’ grapes in the North Coast will be sold, and at better prices than in 2010 prior to the start of the harvest,” he said.

    The cooperative represents more than 285,000 tons of wine and table grapes. Mr. DiBuduo projects sales of that fruit to top $80 million this year.

    However, the situation statewide, and especially for growers in the North Coast, is a mixed, Mr. DiBuduo said. Wine sales are up, but the majority of the sales are for wines retailing for less than $10 a bottle.

    On the supply side, the latest government projection for the 2011 California winegrape harvest is 3.5 million tons, or a 6 percent increase from the weather-withered 2010 harvest and bigger than the running average of about 3.3 million tons.

    But a combination of aggressive vine removal to reduce supply a decade ago plus a third year of challenging weather have squeezed availability of a number of varieties: cabernet sauvignon, zinfandel, petite sirah and pinot noir, according to Mr. DiBuduo. Central Coast vines were hit with frost in the Spring, during which time North Coast vineyards suffered from rain and less-than-ideal temperatures when the vine flowers were self-pollinating.

    So, some North Coast winegrape varieties are enjoying price stabilization because of dwindling supply of new vineyard acreage and wine available after harvest in bulk, according to Brian Clements of Turrentine Brokerage.

    “Last year, Sonoma County cab was $1,000 to $1,200 [a ton] with $1,400 on the hillside, and this year the county average is $1,900,” he said.

    Napa Valley cab shifted away from ample available grape and bulk supply last year because 32 major buyers came looking for it at one time, according to Mr. Clements.

    Chardonnay, which has enjoyed bottle sales growth on a huge base, could follow suit late this year if the 2011 crop comes in as light as expected, he added.

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    Comments

    1 Comment

    1. July 26, 2011, 2:25 am

      by ravi singh

      It’s nice to see grape prices firming up, particularly given the all the sweat & toil that goes into viticulture.. something that very often consumers forget.


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