75-acre facility near Madera one of largest; weak demand blamedSANTA ROSA -- Jackson Family Wines plans to close its 17-year-old grapevine nursery near Madera, one of the largest in the country, early this summer because of limited demand from inside and outside the company.
Previously called Kendall-Jackson Nursery, the operation is completing orders for budwood and plantings this season and is scheduled to close June 30, according to Don Hartford, executive director of Jackson Family Wines. The nursery has been producing cuttings for Jackson vineyards in California from 75 acres of vines in the San Joaquin Valley.
"We are discontinuing the Jackson Family Wines Nursery operations in order to achieve cost-savings since we do not expect to develop any large vineyards of our own, and the current demand for nursery stock, outside our own use, is not high," Mr. Hartford said.
Jackson Family Wines has been trimming its work force since 2008 as consumers scaled back their spending and transitioned to lower-priced wines in uncertain economic times. But it's not unique to that company. Wine companies large and small have been seeking cost-cutting measures as sales for a number of wines retailing for more than $15 have been challenged.
Vineyard development in the North Coast and other areas in California already had slowed throughout this decade amid challenges with permitting and more recently the financial wherewithal, leaving the North Coast with nonbearing acreage as a percentage of total acreage for some varieties in the low single digits. That's below the annual rate for replacing tired, ill-suited or diseased vines, according to winegrape brokers.
Jay Jensen, chief executive officer of Santa Rosa-based NovaVine, said sales for the 2010 season, which are being taken through the end of the month as the window for vine pruning closes, are 30 percent off of 2009 sales. For much of 2008, preliminary sales of vine materials were strong for 2009 plantings, but the worsening economy through mid-2009 led to all but a few large growers backing off preorders for 2010, according to Mr. Jensen.
Next year "looks pretty good," he said. "We're in a wait-and-see mode whether sales will move ahead of previous years."
Nurseries need buyer commitments to certain vine elements by about this time in the season, yet more than a few North Coast wineries are hesitating in signing contracts for more fruit when existing inventory may be slower to sell, nursery managers report.
Usually, vines and cuttings for popular varieties and clones are prepared speculatively, but current slowness in the market is prompting Bob Herrick of Herrick Grapevines in St. Helena to be more reserved in speculative growing.
However, Mr. Jensen and he are hoping that the projected demand for grapes in the next few years will come. Demand is forecast to significantly outstrip supply in the North Coast by 2013 or 2014. That supply could tighten further as acreage requires replanting because of disease pressure such as leaf-roll virus being exacerbated by the previous few years of drought.
And at perhaps the same timeframe, a rebound in wine sales will bring an increase in sales to Jackson Family Wines.