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California North Coast wine grape crop $1.7B, down 15%

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The value of the 2019 North Coast wine grape crop fell 15.3% to nearly $1.7 billion, as the harvest across the region weighed in almost 17% lighter than the record 2018 crop but North Coast prices inched up just 1.5%, according to the annual grape crush report released Monday.

North Coast tonnage brought into wineries last fall totaled almost 491,000 tons, making it the sixth largest for the region but on par with the five-year average, according to preliminary figures from the National Agricultural Statistics Service. The annual report is a benchmark for grape purchase contracts.

Sonoma County’s crop last year came in at 223,244 tons, down 19.1% but in line with its five-year average. Napa County’s tonnage amounted to 153,804 tons, off by 16.7% from 2018 but 1.4% above average. Tonnage crushed in Mendocino County was down 18.0%, to 67,210, and Lake County’s haul was about the same as in 2018, at 46,644. The North Coast appellation also includes Green and Suisun valleys of west Solano County, but those figures aren’t tracked separately in the crush report.

The North Coast’s top grape by tonnage, cabernet sauvignon at 155,303 tons, was down 14.1% from 2018 but up 7.5% from the average. Chardonnay came in at 117,795 tons, down 20.0% from 2018 and off by 3.6% from the average. The region’s pinot noir crop was 3.9% above average at almost 65,000 tons, but down 19.2% from 2018.

Napa County’s weighted average price was $5,713 per ton, up 3.4% thanks to a 1.6% bump for its king grape, cabernet sauvignon. It crossed $8,000 a ton ($8,009) for the first time.

However, brokers of excess grapes and wine said pricing increases in the report say more about the prevalence of multiyear contracts for than the direction of demand to put more wine in bottles, which they said been easing over the past year.

“During this part of the market when it’s oversupplied it’s very hard to get an idea what the actual price is,” said Brian Clements, partner of Novato-based Turrentine Brokerage. “The actual price for nonsubappellated Napa Valley floor cab is nowhere near $8,000 a ton.”

Glenn Proctor, partner of San Rafael-based grape and wine brokerage Ciatti Company said wine available for purchase in bulk from wineries is selling at prices less than half of where they were two or three years ago. The first months of this year have brought back more activity from buyers of excess wine than in a number of months, he said.

Clements said his firm has seen pricing for bulk Napa Valley cab not sourced from star appellations garnering moderate interest at $18-$25 a gallon. At the top end of that range, it translates into $3,975 a ton.

Turrentine figures the Napa County average for spot-market cab — 2020 crop tonnage not under contract — is about $2,387 a ton for truckload quantities (over 22 tons) of fruit not from premier growing regions in the valley. That’s down from spot-market pricing for Napa cab of $4,766 a year before as vintners were starting to scale back their purchases of excess fruit, Clements said.

Some unsold Napa cab grapes were going for around $1,000 a ton at harvest, he said.

“When we get into the part of the (wine business) cycle where it changes, it’s always this way,” Clements said about spot-market pricing being so far below county averages in the crop report.

But some of the market softness is represented in the report itself, according to Proctor. For example, about 2,900 tons of Napa cab was sold for $2,000 a ton or less last year.

“Those could have been bigger than they were,” Proctor said. Growers have been receiving notices from vintners that they would be buying at lower prices or not as much as tonnage as per the purchase contract. “In Napa and Sonoma there were grapes that went unpicked last year, but it was not like Paso Robles.”

An estimated 8,500 tons of Central Coast cab was left on the vine last year because of lackluster demand, Clements said. Some of that softness is reflected in the nearly 7% dip last year in pricing in the crush report for Mendocino County cab ($2,103), Clements said.

“Lake and Mendocino make fantastic-quality grapes, but there are not enough labels there,” Clements said. “In years of shortage, (the growers) come into Napa and get a good price, but when there are a lot of grapes in Napa and Sonoma for wineries to buy, the growers have a tough time.”

Statewide, the winegrape crop was down 9.1% last year, to 3.89 million tons, over 2% below average, and pricing was down 7.8% to $812 a ton.

The average price in the crop report for Sonoma County wine grapes was $2,784, down 0.3% from 2018 and the first correction in the county average since the 2009-2010 slump in fine-wine sales after the Great Recession. The county’s top grape, chardonnay, eked out a 1.0% gain in its average price, to $2,379 a ton, but Sonoma County cab retreated for the first time since 2010, dipping 2.5% to $2,973.

The price for Sonoma pinot noir, about tied for second with cab for top tonnage in the county, was up nearly 3% last year, to $3,895 a ton, rebounding just above the 2017 price after a 2018 dip. Turrentine has the average price of spot-market Sonoma pinot at $1,000 a ton less, and the going price for bulk Sonoma pinot wine at $7-$9 a gallon works out to $1,050 a ton for grapes to make the top end of that excess wine, Clements said.

"A grower could ask for that average price of $3,800 a ton, but right now a buyer would be hard to find at that price," Clements said.

According to the crop report, around 2,400 tons of Sonoma cab last year went at a tonnage price of $1,500, 1,900 tons of Sonoma chardonnay sold for $1,200 a ton or less, and 622 tons of pinot noir were purchased for under $1,200 a ton, Proctor noted.

“A lot of this market right now is about managing and controlling inventory. Buyers and wineries don’t want to have it,” Proctor said. Some vintners are holding onto excess wine in the hopes that prices will rebound, but recent reports of slowing U.S. wine sales growth suggest that selling the excess as casegoods may not take care of the overage as quickly as adjusting supply, he said.

“I’m sure that we’ll overreact and pull out too many grapes, and buyers will go out looking for grapes they thought would be here,” Proctor said. “We’re in for another challenging year in 2020.”

He advises North Coast growers to raise the quality of their grapes and maintain positive relationships with vintners going through this cycle of oversupply. Clements thinks the excesses in the grape and wine market will persist through next year.

Jeff Quackenbush covers wine, construction and real estate. Contact him at jquackenbush@busjrnl.com or 707-521-4256.

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