The much heralded turned corner in the California wine grape growing business does not mean there is clear sailing ahead for producers this season, according to Allied Grape Growers president Nat DiBuduo.
The state of affairs for wine grape growers is like the little boy who peaks around the corner of barn to see if the coast is clear.
It's not all clear, according to DiBuduo who said at the marketing cooperative annual meeting 2005 will be better than the past five seasons, but there are too many issues to break into a refrain of “Happy Days Are Here Again.”
There is no way to go but up for wine grape growers who are coming out of the deepest economic trough in the modern day history of the industry. During the past five years growers have left grapes hanging to raisin on the vine because no winery would buy them and more than 100,000 acres of vines have been removed or abandoned. Bearing acreage has leveled off. However, it may decline more if prices do not improve significantly. There are too many economically attractive alternatives to grapes for producers to continue struggling to make a profit from grapes.
“We're going forward,” DiBuduo said. “In 2004 we saw prices strengthen; grapes harvested and even some new grape vineyards planted. So far the 2005 crop looks good; there is improved winery interest at prices generally better than last year.”
Demand is good for most varieties this season as the harvest moves into full swing. “We are surprised and elated that some wineries have seen the wisdom of offering term contracts again.”
However, there are market challenges, especially for Central Coast Cabernet Sauvignon.
Mudding the wine must is what most in the industry consider an absurd state crop estimate of 2.5 million tons of raisin varieties, a 21 percent increase from 2004. DiBuduo calls this “very inaccurate and may lead wineries, concentrate processors and raisin packers to believe there is a bigger crop than reality, trying to dry down prices.”
Three major issues — hang time, vintage dating and use of water in wine fermentation — continue to largely divide growers and vintners.
While lowering the year's vintage dating requirement to 85 percent from 95 percent has the support of the Allied Grape Growers directors, the other two issues are dividing growers and vintners.
DiBuduo says all three issues could be called the “new Perfect Storm.”
For Allied, the issue can be resolved simply by wineries compensating growers for lost weight from grapes left hanging after reasonable maturity parameters.
The president of the marketing cooperative that sold more than 200,000 tons of grapes valued at about $35 million last year believes the industry is “working together to straighten out the issues that divide us. We can get the train tracks lined up, get through the tunnel we call farming and see better times ahead for growers and wineries.”
He said the industry is at “a major crossroad today between trust and fear.”
Growers he said have been “beaten down by low prices and lower than ideal demand for some varieties in recent years” and remain anxious that prices this year will not be where they should be to pay the bills and make a profit.
“Wineries have asked us for our trust — just hold on and it will get better. They indicate there is more demand for grapes in 2005 and possibly even better in 2006.”
DiBuduo said growers need better profits now “so they can not only pay the bills but also have an opportunity to make a profit as the wineries do.
“Both growers and wineries have enough challengers from outside that try to beat us up and defeat us. We can't do it to ourselves,” chastised DiBuduo.