Allied Grape Growers President Nat DiBuduo’s cell phone rings these days like a Salvation Army bell ringer at Christmas. It’s wineries calling to buy wine grapes.
What do they want to buy?
“Anything that looks, tastes, smells, sounds or feels like a grape,” says DiBuduo describing the demand for Northern and Central Valley grapes. It’s almost that good elsewhere in the state.
(For more, see: 848,000 acres of California grapes in 2011)
“For the longest time, wineries were mad at me for calling,” said DiBuduo, president of Allied, the state’s largest wine grape marketing cooperative. ”Now they are mad at me for not calling them back.”
The California wine grape industry has completed a decade-long economic circle from the days when growers struggled to find homes for grapes to today when prices are reaching record levels as the wine grape supply reaches “the cusp of a shortage,” DiBuduo told the annual spring outlook conference in Visalia, Calif., sponsored by the California Chapter of the American Society of Farm Managers and Rural Appraisers.
This impending shortage could be a long lasting one because in recent years, grape plantings have not kept up with the repeated projections of increasing demand. Last year California wine shipments were up 6 percent to 7 percent.
One reason plantings have been lagging behind projected future demand is that it has been a fickle wine grape market versus more stable prices for other permanent crops like almonds, pistachios, walnuts, olives, pomegranates and more.
In fact, an estimated 150,000 to 175,000 acres of these crops have gone in on the carcasses of bulldozed vineyards within the past decade, according to DiBuduo.
New vineyard plantings have picked up in the past three years, but “it may be too late” to meet immediate future demand.
Based on an average yield of about 7 tons per acre from an estimated 550,000 acres of wine grapes, the shortfall could reach 600,000 tons by 2014. DiBuduo is projecting the majority of that, 265,000 tons, could come with the 2012 crush. That 7-ton average is optimistic based on what happened in 2011 when the average yield was just 6.62 tons. The state average has been below 7 tons four out of the past seven years.
DiBuduo projects 45,000 new bearing acres will be added to the supply side within the next three years. However, that is tempered by the projection that 20,000 acres will come out over that same period, for only a net gain of about 30,000 acres.
Prices going up
Planting contracts for 10 years and longer are being offered by wineries today for value and mid-range wines at prices of $500 to $600 per ton for Central Valley Chardonnay; $400 for generic reds and whites. These prices are double what was paid just five years ago. Prices being offered for grapes from the Northern San Joaquin are even higher.
(For more, see: California wine blankets America as shipments explode)
North Valley Zinfandel converted from white to red on the vine is being contracted for up to $900 per ton.
“Prices now are 25 percent to 30 percent higher than paid last year,” DiBuduo says.
“The time for acreage expansion is here. But, like consumption, it must be done in moderation,” he says.
DiBuduo says his optimistic outlook stretches for at least the next five years, but he tempered that with the recognition that foreign wines either in bulk or bottle could take a share of that boom.