California’s and the world’s largest winery, E&J Gallo, has tossed out the first California wine grape price pitch of the season. It was low and away.
A price of $125 per ton for open market Thompson seedless grapes and other low value white grapes has San Joaquin Valley grape growers taking for a ball and looking for the next pitch they think may come.
The first Gallo price is $25 more than the marketer of 75 million cases of wine per year offered last year. About the only thing growers can say positive about it is that the delivery came earlier than last year. Gallo did not come out with its $100 price in ’05 until October. This year’s price announcement came out around the “normal” time frame for Gallo.
No one is standing up and saluting the generosity of the Gallo. Some think Gallo or another of the largest wineries in the state will have to run a better price up the flagpole to get anyone to salute.
A price of $125 is an inauspicious beginning that the president of the state’s largest wine grape marketing cooperative hopes is not a harbinger of what’s ahead for wine grapes higher up the quality ladder.
“I hope this is not the floor for future wine grapes this season,” said Nat DiBuduo, president of Allied Grape Growers. “I was hoping for higher price. Surprised? I am not surprised by anything that goes on in this industry any more.
“All we as growers are asking for is parity and we do not get it. Production is lower across the board in most varieties, except for Cabernet Sauvignon and Merlot, and I hope it is premature to look at that Thompson price at the floor for other wine grape prices.”
He noted: “We started harvesting early Thompsons in the central valley and the first vineyards came in at 7.5 tons per acre. We were thinking maybe 8 tons this season.”
DiBuduo said at 7.5 tons $125 per ton is a gross income of $1,000, $400 to $500 less per acre than it cost to produce the grapes “and that is if you have the ranch paid off.”
Glen Goto, head of the Raisin Bargain Association, said growers made $70 more per ton last year making raisins than selling green and he does not expect the raisin price to drop this season.
One industry observer calculated the “green equivalent” for making raisins this year is about $175 per green ton, $50 less than Gallo is offer.
The unknown factor in that equation is labor availability to hand harvest raisins. With the recent heat wave, tree fruit growers have experienced labor shortages, not a good sign for the raisin harvest set to begin in late August.
A saving grace to the labor availability dilemma raisin growers face is that the crop is smaller and hopefully that will lead to earlier maturity and a timely harvest, and maybe a longer harvest window to compensate for any labor shortage.
What makes the low open price more frustration is that Gallo is the only winery offering prices right now. DiBuduo said it remains deafeningly quiet as it has been all summer in the wake of the largest wine grape crush in history last year that filled winery tanks to the brim. Wineries have crawled into their holes and are not sticking their necks out with price quotes until they must.
The $125 price is for uncontracted Thompsons. Gallo said it will pay its contract growers $150 per ton in Districts 23 and 14, which is the wine grape growing region in the central San Joaquin Valley. The open price for dark red concentrate and generic reds is $200 per ton. Here are the contract prices for Gallo growers on other varieties: Chardonnay, $300 per ton: Merlot, $300; Cabernet Sauvignon $300;White Zinfandel, $225 per ton Muscat, $225 and Rubired, $200 per ton.
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