What is in this article?:
- Demand turnaround on radar for Central Coast wine grape growers
- Grape sales No. 1 priority
- Survival and reducing costs
- The last decade has been a daunting challenge for wine grape growers on the Central Coast. Growers have struggled not only to get decent prices for their grapes, but often simply to find a home.
- Wineries began shopping for 2011 grapes last November at the same time some Central Coast growers watched unharvested or unsold grapes raisin on the vine. Go figure.
- “I know people who need grapes; they just do not know how badly they need them.”
Grape sales No. 1 priority
He says grape sales — not production practices — should be the No. 1 priority of a Central Coast wine grape grower. Smith echoed that with:
“If you bring your crop to the roadside and expect someone to give you a price like traditional agricultural (commodity) marketing, you are in trouble” in the wine grape business, said Smith, who farms about 3,000 acres.
Both said selling grapes is about giving wineries what they want. However, growers should receive a fair return for that. They have not been in recent years, according to Merrill.
He said prices must improve to sustain grape growers. “You cannot grow grapes here for $500 per ton. It is not sustainable.” He does not expect prices to rebound this season to Chardonnay’s $1,500 per ton levels of the late 1990s. Prices have been languishing between $600 and $1,000 since then. However, there is a shot at $1,000 per ton this year for one of the most widely planted varietals on the coast because demand is seeking supplies.
However, “The good old days are gone,” he lamented.
Without further improvement in prices, acreage will decline. Merrill points out that most of the coastal varietal vineyards are 12 to 15 years old and near replacement age. However, new vineyards are not being planted and older vineyards are not being rehabbed at current wine grape prices. And the longer wineries wait to contract for grapes, the more expensive it will become to develop new vineyards, he added. Merrill echoed a widespread viewpoint that overall California vineyards are not being developed fast enough to meet future wine sales growth projections with more grapes.
There are almost 100,000 acres of vines in Monterey, San Luis Obispo and Santa Barbara counties, more vineyards than are in Washington state.
Wine grape buyers are fewer than the past, about a third as many as were in business two decades ago. Sixty percent of the coastal grapes are purchased by wineries outside the coast. Many are used as varietal blenders, making coastal growers very dependent on the large, statewide branded wineries.
Merrill works with many people who are new to the industry. He tells them the first thing they need to determine is how to get out of the business, during good or bad times.
“You need to think about exit strategy when you get started. A lot of people do not know how to get out of the business, and it has not been easy to get out since the 1990s,” he said.
Merrill, like so many others, says don’t plant without a term winery contract. The spot market is “brutal” and is only for those who have “tremendous amounts of gold stored away.” Besides, lenders, he added, are not loaning money now to plant vineyards on speculation, even with growing demand for wine grapes.
Wine grape quality is often an issue in the grower/winery relationship and that has soured some growers on the business. It becomes less of a dispute when supplies are short like they are now, Merrill noted.
“We were told six or seven years ago grape quality was an issue and were told to reduce our crop by 20 percent to improve quality,” said Smith, who now contends it was a supply problem, not a quality issue behind the crop reduction demands.
“What wineries should have said it that we need to reduce supply. That is much more acceptable to growers than to turn an economic issue into an inappropriate viticultural issue,” Smith said.