Those gathered for the 64th annual Allied Grape Growers (AGG) annual meeting July 7 in Fresno, Calif. received a sobering look at the likelihood that still more vines will need to come out in the southern San Joaquin Valley (SJV).
In addition, growers heard which varieties were hot and which were on the outs, about the changing demand demographically, and an overall decline in the demand for the bulk of wines out of the region – wines priced at under $10.
AGG President and Chief Executive Officer Nat DiBuduo unveiled what could become a raisin program for its growers. DiBuduo said the cooperative, which represents more than 500 growers from Kern County to Lake County, this year bought raisin crop insurance for the first time.
DiBuduo said that no price has yet been set for green Thompson Seedless grapes, a raisin variety that is also used in concentrate, alcohol, and dry white wine. He said during his tenure with Allied that he has seen prices grow from $65 to $320 a ton for Thompson Seedless.
But he is frustrated that this year dehydrators are offering to buy grapes at under $200 a ton.
“That’s a tragedy,” he said, urging growers not to sell at that price.
Raisin crop insurance
DiBuduo urged growers to buy raisin crop insurance before the July 31 deadline and to buy raisin paper “just in case, while we do everything possible to market grapes.
“We did not tell you to make raisins, but we did say, ‘Get prepared.’”
Many Thompson Seedless growers have pulled out vines or are selling their vineyards, DiBuduo says. He estimates about 10,000 acres have been pulled since last year’s harvest.
Varietals - What's hot and not
There is interest in Rubired, Pinot Grigio, and “believe it or not” organic Thompson Seedless.
“These are the only varieties of wine grapes that growers are not pulling out,” DiBuduo said.
He adds that wineries are not buying SJV grapes at this time, “and if they are talking, it’s not at prices that are sustainable for growers to continue farming wine grapes.
“Today, we are seeing contracts expire and not being renewed.”
Bright future for North Coast grapes
At the same time, DiBuduo says the demand for North Coast wine grapes has strengthened in prices and tonnage needed.
“Overall, this is one of those years the North Coast membership is carrying its weight and helping stabilize the coop for prices and demand in the San Joaquin Valley,” said the Allied leader.
Among the Valley’s challenged wines is Old Vine Muscat, often hand-harvested.
“We do not see wineries wanting to handle hand harvested grapes due to unpredictable labor and not at sustainable prices,” DiBuduo said.
The result was many growers have pulled out their vineyards.
The same thing happened with Grenache and Carignane after many wineries did not renew contracts.
DiBuduo said there were also “lackluster indications” for Ruby Cabernet, Syrah, Barbera, and French Colombard.
He believes up to 35,000 acres of grapes will be removed in 2015, two thirds of the acreage in wine grapes.
Certified Sustainable gains traction
DiBuduo says “sustainability” is a buzzword gaining fast traction among winery marketers. Sonoma and Napa counties have declared intentions to become 100 percent “Certified Sustainable.”
He added, “I believe that all Allied Grape Grower members should be proactive in the sustainability arena and would like to ask each of you to become engaged in the process.”
In addition, AGG is applying for a grant to hire a person “to help our growers navigate the process.”
“With this help, I hope that someday soon we can (cite) the value-added advantage of buying grapes from Allied in their sustainability program,” DiBuduo said.
But he cautioned wineries, “There’s no free lunch. We need to get the added costs recouped. We expect a bonus from wineries.”
Declining demand - under $10 wine
Vern Crowder, Rabobank’s senior vice president and senior analyst for the Food and Agriculture Advisory Group, delivered the keynote address.
He echoed DiBuduo’s words about declining demand for wines under $10 and the likelihood of still more vine removals in the region. Crowder cited a decline in the consumption of wine by Baby Boomers while at the same time the demand is up among Millennials - those born roughly in the mid-1980s to the early 2000s.
Millennials pour cash for high-tier wine
“Boomers are drinking less and saving their money for retirement,” he said.
An improving economy has put many Millennials in a position to purchase wines at higher prices. Millennials now represent a larger chunk of the nation’s population than Boomers.
Crowder expects growth in “upper tier” wine purchases to remain strong. He expects California could see record yields from wine grapes by 2017 as considerable acreage comes into production in the Lodi-Sacramento area.
“There is a mismatch in the San Joaquin Valley with a demand decline as the supply is going up.”
Crowder says about 57,000 of acres of vineyards have been added to the region since 2012 and should enter commercial production by 2017.
Asked about the impact of the drought on wine grapes, Crowder said it appears not as severe as for some other crops, including tree fruit.
He says it could be problematic, however, if supplemental water purchased in anticipation of the continuing drought cannot be delivered as expected.
For the latest on western agriculture, please check out Western Farm Press Daily and receive the latest news right to your inbox.