As the president of Allied Grape Growers, a winegrape marketing cooperative with nearly 600 members across California, Nat DiBuduo is a California vineyard expert. The San Joaquin Valley native’s history with agriculture begins when his family planted winegrapes in the early 1970s. DiBuduo earned a bachelor’s degree in plant science and viticulture from California State University, Fresno, in 1973.

He has managed acreage not only in the Central Valley but also on the Central Coast, Napa Valley and in Sonoma County. Although he doesn’t currently own any vineyards, some of his family members still grow grapes in Madera and Tulare counties. DiBuduo will be a featured speaker at this month’s Unified Wine & Grape Symposium in Sacramento, Calif., during its annual State of the Industry session.

Wines & Vines: What sort of movement are you seeing in grape prices?

Nat DiBuduo: Grape prices throughout California increased in 2011 over 2010. Particularly in the coastal areas, which were plagued by inclement weather and a resulting smaller crop, prices on the spot market were significantly stronger than in the past two years. In the interior regions of the state, the crop appears to have been lighter than in 2010. This, coupled with very strong consumer demand for value and mid-priced wines, caused a measureable increase in grape prices across the board in Lodi and regions south.

Generally speaking, the interior region’s grape market provided prices that were at least 20% stronger than the previous year. Varietals in the Central and South Valley, which were mostly priced from $300 to $400 in 2010, rose to levels starting at $400 and above for 2011. In Lodi, the same percentage increase existed, with Chardonnay moving up significantly to be priced at or above $500 per ton. In 2010, the spot market was closer to $350 per ton. Merlot and Cabernet, which didn’t break $450 and $500, respectively, on the spot market in 2010, saw prices increase above $500 for Merlot and above $600 for Cabernet in 2011. Zinfandel for red wines was also in high demand from Lodi and experienced contract and spot market prices from $400 all the way to $1,000 per ton, depending on the vineyard site, age, etc.

In the coastal regions, prices are much more variable due to the plethora of AVAs and resulting bottle prices, but there are some reference points. Napa Cabernet Sauvignon, which was a hard sell in 2010, was extremely sought after by buyers in 2011. Spot market prices rose up to, and exceeded, the previous year’s average reported price, something we haven’t seen much of in recent years.

In Sonoma County, Chardonnay also experienced exponential increases in spot pricing, which moved from under $1,000 per ton in 2010 to more than $1,500 per ton in 2011. Certain AVAs, like Russian River, could easily fetch more. Sonoma County Cabernet Sauvignon also experienced a significantly stronger market, and even Merlot from most coastal areas was marketable, whereas in the past it was a challenge to move.

Coastal areas outside of Napa and Sonoma experienced much stronger pricing for both white and red grapes than in recent years. Where coastal spot market prices for Chardonnay, Merlot, Cabernet Sauvignon and Zinfandel may have been just slightly higher than Lodi prices in 2009 and 2010, the 2011 market allowed the coastal growers to come closer to the traditional margins they have seen in grape prices over their interior counterparts.

Even Sauvignon Blanc, which had been a grape marketing nightmare the previous two years, experienced high demand and prices that were closer to the prices paid prior to the recession of 2008-10.

W&V: Should growers plant more grapes? What varieties and in what areas?

DiBuduo: We have seen a quick turnaround in the market for grapes. Much of this is due to the impressive shipment numbers at the value and mid-priced segments of the market, and a good part of it is due to the shorter crop in 2011. The relatively weak U.S. dollar has huge implications, as imports are less attractive. But just because we have seen a stronger year doesn’t mean we need to plant thousands of acres of grapes. The strength of the market may be a short-term phenomenon based on current conditions. If those conditions remain in place, then it can become a longer term opportunity.

Nobody should be making planting decisions based on the performance of the market over any one- or two-year time period. It is more important to look at the growth rate of the industry (in terms of acres planted) over the past five years, as well as the growth rate of wine sales. Most of the data suggest that we have not been planting vines quick enough to keep up with vineyard removals and long-term market growth potential since about 2007. So our position is still not to do any speculative planting, but the industry could use additional acreage each year to keep up with potential market growth.

Those new acres should be planted under contract with guidance from buyers on what varieties are needed and from what regions. There are two primary market forces determining what should be planted today. The first is vineyard removals. Much of what is being removed are older vineyards (generic varieties) that have served as the base for value-priced wines or as blenders into value-priced varietal wines. Due to this age phenomenon, there is an opportunity to plant generics in the value-priced segments of the market (i.e. the Central Valley).

The other force driving planting is the “what’s hot today” phenomenon. And today, there are a number of “hot” varieties: Cabernet Sauvignon tops the list, and florals such as Muscat of Alexander are obviously there, but Chardonnay, Zinfandel and Pinot Grigio surely get honorable mentions. Not-so-desirable varieties are still Sauvignon Blanc, Merlot and Syrah. Pinot Noir’s appropriateness in warmer regions is still questionable, although the market remains strong, which presents lots of long-term questions for those thinking about it.

W&V: As a result of cost considerations and ongoing labor shortages, is more mechanization probable in California’s vineyards?

DiBuduo: As one looks at the harvest of the 2011 winegrape crop as well as many agriculture commodities, we saw a shortage of skilled labor to hand-harvest the crop as well as maintain the sk illed labor to run the machine-harvesting crews. We see the availability of agriculture labor without a comprehensive immigration reform program continuing to get more challenging every year.

We saw similar labor shortages in the coastal regions as well as the interior, with difficulty in getting grapes harvested before the rains in October. There were North Coast growers that were offering bonuses to get workers, so some wineries in the coastal areas are experimenting with various harvest machines.

Harvest timing has been variety specific and quality sensitive. There are a number of different machines, some with optical sorters, being tried this year. One example is the Pellenc harvester. Some planting layouts (hillsides, slopes, etc.) may offer some challenges to machine harvesting, but never discount engineering ingenuity when the present and future needs demand a solution.

Because of grape quality considerations, I believe machine harvesting will not be the highest priority for some growers and vintners in the North Coast. But based on our observations, I do believe we will see more machine-harvested fruit throughout California and even in the North Coast. Machine harvesting has already made its way into the Central Coast with acceptance by both growers and vintners for many years.

Having machines in the vineyard has also provided other mechanical viticulture practices. The first viticulture practice being utilized is mechanical pre-pruning, pruning or hedging of the vineyards. This isn’t widely done yet in the San Joaquin Valley, although there are a handful of large growers that have been doing it for years. It’s something that growers are looking at because of the labor shortages. Many of these practices have been utilized around the world, especially in labor-strapped Australia.

A resident of the Santa Cruz Mountains, Laurie Daniel has been a journalist for more than 25 years. She has been writing about wine for publications for nearly 15 years and has been a Wines & Vines contributor since 2006.