The past 18 months have been the best in decades for California grape growers. Demand for wine grapes has been strong and that looks to be the scenario for the immediate future.

However, it has been a costly decade of economic malaise for growers, not only because of the prices received, but in the loss of acreage. Roughly 125,000 acres of vines have been removed. Granted, most of that was Thompson seedless raisin varieties. However, many acres of Central Valley wine grapes came out, replaced by more attractive alternatives. And even with historically high raisin prices and excellent wine grape prices, vines are still coming out because there are more economically attractive and stable alternatives like almonds, pistachios and walnuts.

Grape growers have short memories. They recall well recent years when grapes were left hanging on the vine; when wineries imported Chardonnay wine and killed that domestic market; when they were forced to custom crush or were compelled to take what they could get from wineries at the crusher. This is particularly true in the San Joaquin Valley where the overwhelming majority of grape production is located. More than a few SJV grape growers now call themselves almond growers.

During this decade of tumult, wine consumption has steadily increased to the point that the compelling question is are there enough grapes in the ground now and will be there be enough in the future in California to meet that growing wine consumption?

Allied Grape Growers President Nat DiBuduo and Vice President Jeff Bitter offered their 2-cents worth on what the future holds in Allied’s most recent member newsletter.

Allied represents 600 growers statewide in marketing grapes. Last year the cooperative sold more than 250,000 tons of grapes valued at more than $100 million.

DiBuduo and Bitter acknowledged that the feel of a “short supply” market may be disguised as “market equilibrium.”

 

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“History and economics tell us that it is technically impossible to stay at true equilibrium, and if you look at almost any market for any product over time, it will point to the argument that cycles always exist,” DiBuduo and Bitter acknowledge.

However, the two grape industry veterans say the cycles ahead are not likely to have the depth and severity of past cycles.

Increasingly more people “are hanging their hats on the argument that, as we enter a period of increasing grape supply based on a relatively short market over the last couple of years and increased plantings, we will do so gradually and in a managed fashion.”

The question is how quickly and just how far the pendulum will swing the other way.

“Based on what we know today, it’s likely going to be a few years before we have to worry about any substantial oversupply of grapes, if at all,” they contend with the caveat “there are many, many factors outside of our control that can influence production and shipments in either direction.”