“Wow!” is just one of the superlatives used to describe the 2012 winegrape harvest after two difficult years for growers, said Nick Frey, President of the Sonoma County Winegrape Commission (sonomawinegrape.org), at the Moss-Adams LLP Wine Industry Financial Roundtable.
[caption id="attachment_66110" align="alignright" width="324"]  Nick Frey (left), president of the Sonoma County Winegrape Commission, and John Wilkinson, director of the Napa Valley Grapegrowers, gave an update on the 2012 harvest and prospects for the future.[/caption]
Other adjectives found in wine trade journals include “ideal, excellent, outstanding, fantastic, amazing, concentrated, balanced and bright,” said John Wilkinson, managing partner of Bin to Bottle, and a director of Napa Valley Grapegrowers (napagrowers.org).
More than 100 wine industry representatives attended the roundtable, held Nov. 15 at the Hyatt Vineyard Creek Hotel in Santa Rosa.
According to Mr. Frey, 2012 grape yields are expected to top 220,000 tons in Sonoma County, up from 166,000 tons in 2011, resulting in revenues $100 million higher than last year.
Early estimates for Napa County in 2012 are between 160,000 to 180,000 tons. In 2010, crop size was 139,000 tons and in 2011 it totaled 122,000 tons.
“The quality of the harvest was superb due to ideal weather conditions that produced balanced fruit and great flavors,” Mr. Wilkinson said.
Overall, average grape prices increased in Sonoma County. Early buyers were paying prices above those seen in 2011 and demand for pinot noir and cabernet sauvignon grapes was strong, while chardonnay price increases were more limited.
Higher prices weakened as the unusually large crop size became apparent, Mr. Frey said. Base contracts were generally up, but extra tons were often discounted from contract amounts.
He said from a market balance perspective, while current bulk wine inventories are at historic lows. He believes a bountiful harvest will return stocks to more normal levels, bringing them close to the balance point.
At the same time, world grape production was down in 2012 by six percent and harvests in European Union countries, Argentina and New Zealand were off. During the recession, imported wine did not make significant inroads on domestic wine.
The big question is will this uptick continue? Looking ahead to 2013, Mr. Frey said a lot depends on U.S. and European economic recovery -- which he considers to be a key variable along with consumer acceptance of price increases at retail. The poor harvest in Europe could also improve U.S. market conditions.
“It remains to be seen if consumers will continue to buy more wine at $20 a bottle or higher -- a price point critical for Sonoma County.”
Mr. Frey said California remains short on grape acreage to meet demand and has not planted new acres. However, he predicts that Sonoma County will soon increase its planting to 63,000 acres, up from 60,000 today.
He also expects yields to return to normal levels in 2013 -- probably lower than in 2012 -- and said the industry can assume that weather probably won’t be as favorable.
“The biggest risk we face as an industry is whether or not the country will slip back into recession, or if policy makers make wrong decisions.”
Mr. Wilkinson said 2012 will be remembered as a “Goldilocks” growing season -- not too hot or too cold.