Industry

Balanced market strengthens wine grape prices

June 29, 2011
Western Farm Press

Reflecting a rebound in demand for wine as supplies of grapes for making wine get tighter, California growers are watching prices for their 2011 grapes get stronger and stronger.

“As a general statement, prices for most varieties have increased between 10 percent and 20 percent over last year in the interior regions of the state,” says Jeff Bitter, vice president of operations for Allied Grape Growers, the state’s largest wine grape marketing co-op, based in Fresno, Calif.

“Even within this year, prices are up for some varieties. For example, we’ve seen the price of Chardonnay rise by almost 20 percent since February.”

Improving prices reflect a supply/demand balance, he explains. The moderate size crops harvested earlier this year by growers in Australia and South America didn’t add appreciable volume to world supplies. And, increasing pressure from diseases in California vineyards this summer — the result of adverse weather this spring — could hurt yields this fall.

Contrary to the views of some industry observers, Bitter doubts wet conditions this past winter and spring will result in bigger berries and heavier bunches that create a larger than average crop, as occurred in 2005 when similar conditions produced a huge California crop.

“Our Allied Grape Growers average bunch count this year in the San Joaquin Valley is down by double digits across the board on all major varieties compared to last year,” he says “These bunch counts indicate that California may have a crop that is closer to average than last year.

“For example, our bunch counts on all San Joaquin Valley Merlot and Chardonnay and north valley Zinfandel are down significantly from 2010. The Zinfandel and Chardonnay crops on the coastal areas appear to be light his year, too. It’s hard to have a big crop this year, starting from a much smaller potential. It’s not impossible, but it would be a real challenge.”

Even a likely solid Thompson seedless crop this year, the result of bunches stretching nicely during the mild spring, isn’t weakening market prices for the variety, considering demand for the grape for raisin, concentrate, brandy and wine uses, Bitter says.

Supplies available to domestic grape processors are also being limited this year by a weaker U.S. dollar, which helps discourage imports of foreign bulk wines, a big factor in their total grape and wine supply.

Bitter expects California’s interior grape growers will profit more from this year’s higher prices for their crop than those in the coastal regions. For one thing, the market is favoring the lower-end grapes produced in the San Joaquin Valley.

Also, the expected increase in prices won’t be enough to compensate Central Coast growers for the production they potentially lost in the early April frost. And, prices in the North Coast likely won’t rise to the level growers need to compensate them adequately for their higher production costs.

Bitter is also concerned that, despite any impact on production volume this year, the rain and cool temperatures this spring could harm grape quality.

Conditions have encouraged growth of large leaves and plenty of shoots and canes, which will produce fuller, tighter canopies, minimizing penetration of pest-killing sprays, sunlight and air flow — all of which are critical to developing good quality fruit. Opening up the canopies to reduce these threats and help speed crop development adds to production costs, and increases the risk of sunburn.

Depending on location, California’s grape crop is from about two to three weeks later than usual.

“If growers hold their vineyards to reach a target Brix of, say, 24 or 25, that could put the start of harvest of major varietal reds into mid September, finishing late in the month of October,” Bitter says. “That would increase the risk of losing the crop to fall rains.”