California wine prices predicted to rise

A bad harvest, increasing demand and fussier consumers mean higher California wine prices in the near future.

By Paul Hodgins December 12, 2011
The Orange County register
A number of factors point to more expensive California wine in the future.

First off, the industry has been struggling with the effects of lousy weather over the last two years.

During my visit to Sonoma last month, several winemakers told the same story: cloudy, wet, unseasonably cool weather, a no-show summer, bad gambles over grapes that refused to ripen. At the end of the season many growers cut back the vines' canopy to expose the grapes to more light and heat. They were rudely surprised when hot, sunny conditions unexpectedly appeared for a few days and burned the crop.

On the Central Coast, there was a rare and hugely damaging frost in April.

Severely limited or abandoned 2011 harvests resulted in very low grape yield in many areas. Sonoma was especially hard-hit: the yield is down about 20 percent this year from the five-year average.

There's also less land devoted to viticulture than a few years ago, when the word "grape glut" was on everybody's lips. In Sonoma, there are 3,000 fewer acres of vineyards than at the region's peak a few years back. Statewide more than 100,000 acres of vines have been abandoned. Some industry observers predict that California's overall grape supply this year will be at least 9 percent below 2010 levels. A few say it will be much more.

At the same time, grape buyers are returning to the market; demand for grapes could rise by 7 percent this year, according to a reputable industry source.

All of this will of course affect wine prices, especially at the low end of the spectrum. "I think there will be fewer bargains for consumers six to nine months from now due to supply shortfalls," said Doug Walker, COO and partner with Plata Wine Partners, to the North Bay Business Journal.

Adding to the upward pricing pressure, consumers - even the bargain hunters - are getting more knowledgeable and fussier about their wine. That's the major reason why The Wine Economist argues in this 2007 article that the golden age of cheap wine will inevitably end.