09.28.2016  
 

California Grape Crop Estimated at 3.9 Million Tons

2016 harvest coming in larger than earlier forecasts but still not a record breaker

 
by Jim Gordon
 
wine vineyard grape crush
 
Source: Ciatti Co.

Napa, Calif.—The California wine grape harvest of 2016, while far from complete, is shaping up to be a “normal” size of about 3.9 million tons, according to one of the industry’s closest observers of grape and wine supply and demand. The total crush will not be as big as the boom years of 2012, 2013 and 2014, predicted Glenn Proctor, partner in the Ciatti Co. brokerage.

“It’s more of a normal year in our estimate, but much better than we thought earlier in the year,” Proctor said during a presentation Sept. 27 at the Wine Industry Financial Symposium. He added that the crop size will be slightly larger than the 3.7 million tons recorded in 2015, however, and will help to balance the supply-demand situation for California growers and wineries alike.

Grape tonnage in California’s North Coast counties, the Central Coast and Southern California, as well as the northern interior should all see a significant increase from 2015, Proctor said. These areas had been adversely affected in 2015 by growing conditions for certain varieties including Pinot Noir. The central and southern San Joaquin Valley, however, may finish with smaller yields than last year.

Proctor and Chris Welch, also a partner at Ciatti, said the coastal regions appear to be harvesting larger crops than was predicted as recently as August, but it remains difficult for wineries to find extra supplies of the most in-demand varieties including Cabernet Sauvignon, Pinot Noir, Chardonnay and Sauvignon Blanc. Meanwhile, growers who are filling more gondolas and bins than they had contracted for are not having trouble selling the excess.

A short supply had developed after the 2015 harvest, so grapegrowers have been able to charge more this year in many cases. “Not so long ago the winery-production people had their checkbooks taken away by the financial people,” Proctor said. “But now the financial people are handing a blank check to grower-relations people and saying, ‘Here. Go get what you need.’”

With steadily increasing consumer demand for California wine at premium prices, many wineries need an increased supply of grapes to fill their fastest growing brands. But now with grape prices increasing, that puts pressure on the wineries to raise prices if they want to maintain their margins.

Proctor said that at least some winery grape buyers are being cautious about how much they buy, because as they do raise prices they might meet resistance and not require as much volume as the would have otherwise.

He added that a normal crop is healthy for the wine business in general. Balance right now means, “Sellers feel they’re selling too cheap, and buyers feel they are paying too much. But a normal crop is healthy. It’s nice when everybody can make money, not just one side or the other.”

Proctor’s advice for growers to keep up with the growing demand for high-quality grapes good enough for the $11 per bottle and higher segments was to continue to innovate and mechanize. Machine picking and high-wire box pruning require investment in machinery, but they save money on vineyard labor, for example, and can enable higher yields without sacrificing quality, he maintained.

Welch addressed the bulk wine supply-demand status in his remarks. He said it’s a balanced bulk market statewide, with good movement of bulk inventory and pricing up. Russian river Valley Chardonnay is in high demand and selling for up to $20 per gallon. Cabernet Sauvignon is also in high demand, especially from Napa and Sonoma counties, where the price is currently as high as $60 for Napa and $35 for Sonoma.

 

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