10.05.2010  
 

Custom Crush Options for Grapegrowers

Many consider making wine from unsold grapes but settle for lower grape prices instead

 
by Paul Franson
 
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Custom crush facilities like The Ranch Winery offer equipment and expertise to help overstocked grapegrowers liquidate unsold fruit.
 
Napa, Calif. -- With many growers facing very low prices for uncontracted grapes, custom crush wineries throughout California are fielding numerous inquiries about their services. “We’ve been inundated with calls,” notes John Wilkinson, general manager of Bin to Bottle Winery, which also manages the newly renamed Valley Gate Vineyards, the former Kirkland Ranch Winery.

Growers are exploring what it would cost to have their uncontracted grapes made into bulk wine, but Wilkinson says that many of the growers ultimately sell their fruit, even at a low price. “The wineries are finally going out there and making deals,” he tells Wines & Vines.

Peter Molnar, chairman of California's Lake County Winegrape Commission and a grower and vintner with property in both Carneros and up to 2,600-feet altitude in Lake County’s Red Hills appellation, says that growers have been hurt not only by the weak economy that reduces grape prices, but also by an inventory glut and lack of financing to carry it. “Some growers are struggling, and some have sold their grapes, but all wineries are in an inventory-control mode.

He adds that many growers with unsold -- or undervalued -- fruit have considered making bulk wine, but only bigger growers with strong winery connections seem to be very successful that way.
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The Monterey Wine Company's huge capacity is already sold out for this year's crush.
 

Strapped for cash
Bin to Bottle created a program for growers to save them spending money on crushing and other costs. It’s called the 70-30 program, referring to the cut: 70% to the grower, 30% to Bin to Bottle after deducting production costs.

Wilkinson says many growers are selling their fruit for cash even if they might make more with the 70/30 program. He thinks it might have a lot to do with financial strain: Many growers are strapped for cash. As a result, many of the deals Wilkinson first saw have evaporated.

Wilkinson’s experience is similar to that at other custom crush outfits. Robin Babbett, a partner in Courtside Cellars in San Miguel near Paso Robles, Calif., says he expected to see more interest than he has in Courtside’s similar shared-risk program. “I’m surprised that farmers would sell their crops for so little, but it may be bank pressure.”

He is doing some crushing for growers, however, including some in which the grower simply pays for the processing and takes responsibility for selling the bulk wine. “We have some capacity, and we’d like to partner with some growers at no cost to them,” he adds.

In King City, Calif., Eric Laumann at Monterey Wine Co., another large modern custom crush winery, notes that he got more calls about custom crushing last year. “Growers last year were thinking that they could make money in the bulk wine business. I think they learned otherwise. This year, they’re just taking more severe cuts in price.”

For his company, however, it’s mostly a moot point. “We’re pretty much sold out anyway.”

Other options

The Ranch is a large custom crush winery created from a capacious old Sutter Home facility in St. Helena, Calif. The full-service facility offers both production and brokerage services for bulk wine, and the expanded storage capacity includes a variety of flexible tank options ranging from 300 to 100,000 gallons, as well as temperature- and humidity-controlled barrel storage.

Earlier this year, the company expanded its equipment and announced it was seeking to increase grower programs. Sales manager Gretchen Brakesman says she’s gotten a lot of calls about grower programs that charge $50 per ton up-front for processing, and sales shared 50/50. The Ranch isn’t accepting these programs yet. The winery is focusing on regular clients and can’t tie up tanks, though Brakesman notes that some growers have bitten the bullet and bought barrels.

She adds that come Dec. 1, The Ranch will have plenty of bulk storage space: 828,000 gallons. Trinchero’s Sutter Home continues to use part of the 6.5 million gallons on site, at least for a few more years.

Like the others, John Wilkinson at Bin to Bottle is being selective. “We’re basically only doing red Bordeaux varieties from Napa Valley,” he says. “We need to get over $12 per gallon, and we’re happy with $15 to $20, so that means Napa Bordeaux varieties.”

He says that a major reason for his grower program is to develop relationships with growers for the future, though he does have some capacity available.
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