Asked to come up with pros and cons for growers engaging in custom crushing, Madera County wine grape grower and vintner Steve Schafer said he found it challenging to come up with positive observations.
On the other hand, the “cons” part was simpler for him. That, he said, involved a one-word answer - “Don’t.”
In the end, Schafer came up with some pointers on how custom crushing can work to benefit the grower, as did Jeff Bitter, vice president for operations with Allied Grape Growers (AGG). But both cautioned that it is not often a successful venture in the San Joaquin Valley’s Fresno and Madera counties.
The two spoke at a grower educational tailgate in Madera presented by the San Joaquin Valley Winegrowers Association in conjunction with the California Sustainable Winegrowing Alliance and the U.S. Department of Agriculture’s Risk Management Agency.
Commanding a higher price
Growers may turn to custom crushing at a time when they can’t find a home – or a reasonable price – for their grapes. They hope to command a higher price later. It doesn’t always turn out that way.
Schafer, a grower and vintner with San Joaquin Wine Co., talked of the cost of processing the grapes that must be penciled into the picture. Bitter talked of deals gone bad on occasion.
As a child growing up in the Valley, Schafer heard horror stories about “bad years and long markets” and growers unable to find a home for their grapes or being unsatisfied for the offering price for their grapes.
“So they went out and custom crushed and I don’t ever recall one of them turning out the right way,” he said.
Loads of custom crushing experience
Bitter knows custom crushing well. He is in charge of custom crushing for AGG, a Fresno-based cooperative that sells grapes from Kern to Lake counties. He says it’s rarely done in Fresno and Madera counties, but is more common in Napa County and elsewhere.
“I’m not saying it’s never a good idea,” Bitter said.
He opened his portion of the discussion by citing the reasons “grower wine” can be a good idea. For one thing, it can be a way to get feedback on wine produced from the grower’s grapes.
“It’s a way to understand what you’re doing as a grower,” Bitter said. “If your grapes are going into a mega-tank with grapes from 10 other growers, you’re not getting feedback on how your wine turned out.”
Custom crushing can “prove quality” for the grower’s and/or buyer’s knowledge. Bitter said there are some large wineries that do small lots of wine to provide growers with feedback, and it’s helpful to have samples on hand.
He said a grower can custom crush a portion of the crop, perhaps a couple of loads out of 500 tons, but it might be unwise to crush the entire crop.
Bitter said custom crushing is a way of extending marketability by months or even years.
“There’s not the pressure of having a perishable crop.”
It’s also a way of controlling the harvest schedule, the Allied leader says, adding that it can be frustrating to grow a crop, and then watch it drying on the vine as a winery calls for a delayed harvest so that it will reach a certain flavor profile.
Custom harvesting is a way “to expose your product to buyers who don’t buy grapes,” Bitter said. There are many such buyers out there who only source wine, buyers who lack the manpower, experience, or equipment to process grapes.
“They put it in a bottle and market it,” he said. “They know nothing about grape growing. They’re good at marketing.”
Bitter said custom crushing has been going on for decades, and there are processors who have programs where costs and “the upside” may be split between the crusher and grower.
“You don’t have to go it alone,” he said.
While the Fresno cooperative has had considerable success with custom crushing, Bitter said there have been setbacks. He said one “error in judgment” was crushing Merlot in 2003 and ending up having to sell it at $2 per gallon two-and-a-half years later.
Highly sought after varieties or those from an American Viticultural Area can bring a higher likelihood of success when custom crushing and can strengthen the hands of negotiators.
Bitter gave an example of how Allied uses custom crushing as a negotiating tool on occasion. He said Pinot Grigio last year was sought after since it was in short supply and there was considerable demand.
“There was a $600 (per ton) offer,” he said. “We crushed in August and in November sold at $7.50 per gallon. After all our costs, we got a return of $900 per ton.”
By waiting about three months, the grower return increased 50 percent. This approach works best when there are multiple buyers interested. It doesn’t work so well if a grower simply decides not to take a loss when no one will buy the grapes to begin with.
“Your first loss may be your best loss,” Bitter said. “Sometimes it’s better to bite the bullet and take the $200 a ton.”
Bitter said custom crushing is likely not the best way to go when the grape is “commoditized,” a generic such as the Valley’s French Colombard or dry reds that can otherwise be used by larger wineries for blending.
“People don’t go to the bulk wine market for volume varieties,” he said. “The only time you’re going to have success is when there’s a really short crop. And you’re usually going to be offered a pretty high price for the grapes if the crop is short.”
Another down side to crushing is the effect on cash flow. The cash for the crop does not come soon after harvest. It can take months or years to recoup costs and possibly turn a profit.
And there’s a cost to processing. Schafer said it can amount to $250 to $500 per ton.
It also costs money to get samples out to buyers. Bitter said that can amount to a cost of $50 per case to get samples to a single broker, and it’s best to send samples to four of them. He said samples should go out to brokers monthly.
Real relationships critical
Bitter and Schafer warned against custom crushing if there is no “real” relationship with the processor or wine broker.
“Can you sell the wine?” Schafer asked. “The hard thing to do is getting it sold.”
He said it is vital to locate a customer.
“Find your market first,” he said, adding that it is also wise to find a “consulting winemaker” to work you and with the winery you choose.
Schafer said there has been some limited success in selling unfermented juice to wineries out of state.
“If there’s a unique varietal in demand like Muscat Canelli was a few years ago, Viognier, even Sauvignon Blanc, you can transport white juice fairly easily in a refrigerated tanker,” he said.
Wineries in Texas and Washington sometimes offer decent deals for the chilled juice, he said.
Bitter cited a failed effort that came for one grower after he fared well on one custom crush, nearly doubling his money at a time when floral varieties were hot.
“He said, ‘I’m going to do this every year,” Bitter said.
But the next year when he sold 400 tons of custom crushed grapes, the market had turned. He had to liquidate it at 30 cents a gallon, which didn’t even pay for the processing. He lost his complete crop, along with what he had made the year before.
Bitter said it’s best to take a ‘keep-it-simple’ approach to custom crush, so that it will be marketable to a broad range of customers. He said the wine should not be oaked and it should not be too “one dimensional.”
“Don’t go too crazy on one flavor profile,” he said.
Bitter said it’s a “horrible idea” to custom crush if there is any quality issue including mildew or rot.
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