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.”
Survival and reducing costs
Merrill said growers are surviving by reducing costs, especially labor, by expanding mechanical pruning. “We are trying to squeeze labor out of the cost equation, even though we have a supply of labor available.” It’s all about producing for less cost.
Growers and wineries are often at odds on price and wine quality. Nevertheless, Merrill warned growers, “Hold up your end of bargains; do not burn bridges. This is still a very small industry. It takes five minutes for everyone to know about something you did wrong. Be the kind of business partner you want your partners to be,” he added.
To prevent misunderstandings, Merrill suggests winery/grower agreements be put into writing to get “details straight.” Also, growers should do their homework on wineries that buy their grapes.
Publicly held wineries offer “special challenges,” he warned.
“Companies like Coca-Cola have discovered that selling Coke is a lot better than getting into the wine business,” he noted.
Vertical integration can help weather the economic cycles. Never run out of working capital.
“It is a great business, but not without it challenges. “Street smarts” go a long way in the business, he added.
Merrill and Smith noted that compared to Napa and the more well-known North Coast wine growing areas, the Central Coast is still in its wine reputation infancy. It needs widely recognized “artisan brands” to put it on the wine map.
“The Central Coast has a tremendous advantage over the North Coast because it is more economical for us to produce quality wine grapes. Then why are we struggling?” Smith questions.
“We need to encourage artisan brands … not the 100,000, 500,000 or 1 million case brands. Develop personalities. We have had good success for 30 years, yet we are still an infant in the business. We need bragging rights.”
Wine broker Matt Turrentine said the just-in-time inventory management practices used during recent wine surplus years are going away as bulk wine supplies decline. Just-in-time wine marketing may result in no wine these days.
“Grape prices are firming up; inching up,” he said noting that world bulk supplies are considerably shorter than they were a year ago. This translates into better local grape prices because wineries cannot go offshore to buy cheap bulk wine for bottling here in California.
The dollar exchange rate is also making foreign wine more expensive to bring into the U.S. than it was a few years ago.
Overall, declining domestic and world wine supplies are firming prices. Although the recession is technically over, value wine brand sales continue to be strong. Profitably marketing premium wine grapes continues to be a challenge.
“Last year’s California crop was the second biggest crop in history, but we will need more wine and wine grapes this year,” he said.