Allied Grape Growers president Nat DiBuduo could only gaze in bewilderment as he drove from the marketing cooperative's annual San Joaquin Valley gathering in Modesto, Calif., to a similar meeting for North Coast members in Santa Rosa, Calif.
“People are still planting wine grapes,” bemoaned DiBuduo. “It's unbelievable.”
With one in four of the state's wine grape vineyards non-bearing; wine tanks bulging from last year's crush and wineries daily canceling commitments for wine grapes; uninspiring domestic wine sales increases and a 2001 crush expected to be at least equal to last year's 3.9 million ton crush, wine grapes continue to be planted in California.
It is only going to get worse before it gets better, DiBuduo told 500 Allied members at the two meetings. This downslide is the third since the 1970s, but the trough this time will be deeper than the one then and another downside in the 1980s.
“We have been through this down cycle before, and we will come through it again. Wine grape growers and farmers are the original survivors,” he said.
There was no wine grape price down cycle in the 1990s and that attracted new wine grape growers. “Eighty percent of the wine grapes in the Paso Robles area in the past five years were planted with no winery contract,” said DiBuduo, who said many of these owners are likely newcomers to the business and have no memory of the 70s and 80s. That is a very high percentage, but it is not uncommon to find vineyards where the grapes have no home on the eve of the 2001 crush.
The reality of the oversupplies and poor prices hit many last year, even Allied. And it is hitting more this year. Some 2000 wine grapes were sold for as little as $2 per sugar point and prices have softened since last year.
DiBuduo said he is behind last year's sales pace when he sold 210,000 tons for Allied members to 60 wineries for $49 million.
Allied has basically closed its memberships. DiBuduo said there is an “opportunity list” for people to list their available grapes. “We are committed to placing our member's grapes first. If the opportunity comes up to place other grapes, we will reach out to those on the opportunity list,” he said.
However, one thing has not changed; quality gets contracts and high prices, said DiBuduo. “Quality is what will get the attention of grape buyers in an abundant supply cycle,” he said, adding that while he sold grapes for $2 per sugar point in 2000, he also signed contracts for growers who received $4,000 per ton last year in an oversupply market.
Allied's role in the current wine grape marketplace is not only to successfully market member's grapes, but also to help producers produce quality grapes at cost-effective prices and to help growers “make tough decisions” about cultural practices to save money or improve quality, changing varieties to meet market demand or even pulling out vines altogether, said DiBuduo.
While a reduction in supply would obviously help the oversupply problem, DiBuduo continued to harp on the long-standing refrain of increasing domestic consumption.
“If there is a bright spot today, it is that wine shipments are up over last year and that exports are up 21 percent so far over last year,” he said.
“The best way out of this is to sell our way out — work with wineries and get consumption up — get more consumers to buy more bottles of wine,” he said.