Nat DiBuduo predicts California wine grape prices will likely remain strong this year, but should stabilize after two years of price surges tied to global crop shortages.
“I would love to have significant grower price increases again in 2013,” says DiBuduo, president of Allied Grape Growers  in Fresno, Calif. “I also like the idea of price stability and fair pricing moving forward,” DiBuduo said.
DiBuduo shared his California wine grape forecast during the State of the Industry seminar at the 2013 Unified Wine and Grape Symposium held in Sacramento, Calif. in late January.
A record 13,400-industry members from 30 countries across the Western hemisphere attended the 18th annual symposium; 1,000 more attendees than last year’s event.
To help stabilize the California wine grape industry, DiBuduo urges growers to practice moderation in planting over the next several years.
“It’s important that California wine grape growers plant vines in moderation to reduce the possibility of overproduction which can lead to lower prices for growers.”
Several times, DiBuduo hammered a key point about new vineyard plantings — only plant vineyards with a winery contract. Even then, DiBuduo said, “Be careful. Read all of the small and large print in the contract, including the terms and conditions.”
Many grape contracts are “form agreements” written by attorneys for wineries; agreements designed to protect the winery but not the grower, DiBuduo says.
“Ask questions about any provision the grower doesn’t like or understand.”
He added that some wineries ask producers to waive their producer lien right in the contract.
“Do not waive the lien right under any situation,” DiBuduo stated.
Under the producer lien right, the grower has a lien on the wine product until paid. Allied was among the groups instrumental in bringing the lien right to fruition.
DiBuduo is a respected wine-grape leader with 40 years in the California grape industry. Last year, he received the California Association of Winegrape Growers’ “Leader of the Year” award.
DiBuduo spent much of his time discussing the results of a new confidential and voluntary survey which Allied conducted with California nurseries last year to determine which vine varieties were sold the most and the planting locations for vines.
The results strictly represent the 2012 nursery vine sales. The findings represent about 90 percent of the major vine sales in California by variety and region.
Survey results suggest that about 24 million wine grape vines were sold last year in California; enough to plant 27,000 to 36,000 acres, depending on the vine spacing. This number represents the largest vine sales in recent years.
DiBuduo’s PowerPoint slides listed the top varietals sold. Notably, nearly two thirds of all vines sold last year (62 percent) were red varietals; compared to about one-third (39 percent) of white varietals.
On the red side, Cabernet Sauvignon vines topped the sale list at 25 percent, followed by Pinot Noir (10 percent) and Zinfandel/Primitivo (6 percent).
For whites, French Colombard (13 percent) was the top seller. Chardonnay was second at 10 percent.
The top varietals sold in previous years included: 2011 - Muscat of Alexander (white) followed by Cabernet Sauvignon; 2010 – in order, Cabernet Sauvignon, Chardonnay, plus Rubired (grown mostly for concentrate); 2009 – Chardonnay and Cabernet Sauvignon; and 2008 - Pinot Noir and Chardonnay.
The 2012 survey results also indicate a shift in where new vines were planted. More planting occurred in higher wine price areas in California.
Muscat of Alexander and French Colombard vines were planted more in the value-priced wine regions (mostly the San Joaquin Valley). Pinot Noir was planted primarily in the high-end wine regions including Napa, Sonoma, and Santa Barbara counties.
More Primitivo and Chardonnay vines were planted in the mid-range wine priced regions, including Monterey, Mendocino, and Paso Robles.
Looking at 2013, DiBuduo predicts about 15,000 new net acres of bearing vines to add to current production potential.
DiBuduo discussed whether California wine grape vines are overplanted. He shared a PowerPoint slide which supported both sides of the issue.
DiBuduo said, “California wine grapes are not overplanted. I believe the industry is right on target with moderate expansion, but we better be careful to not overplant.”
If significant plantings continue over the next few years, similar to 2012, the wine grape leader says an oversupply could occur in the future.
“I suggest we all exercise planting caution to avoid oversupply from the year 2016 forward. I’m not saying stop planting. We still have the need for grapes. Use your head and get a contract.”
DiBuduo also discussed major bearing acreage variety trends from the survey. Statewide, bearing Chardonnay acreage will expand to about 120,000 bearing acres in 2016; up from about 100,000 acres in 2010.
“This is good moderate growth in Chardonnay,” DiBuduo said.
Moderate growth is also found in coastal acres with Cabernet Sauvignon which will total about 120,000 bearing acres in 2016.
Muscat grapes and Moscato
One of the largest California planting increases is muscat grapes grown to produce Moscato wine; a trendy product with younger consumers. Muscat of Alexander bearing acreage is estimated to almost quadruple by 2016; from its base of 4,000 acres in 2009.
Most of the supply has been imported from Italy, Argentina, and Australia to fill the supply gap created by the explosive demand.
Muscat of Alexander production in California will likely increase about 25 percent annually from 2012-2016 which DiBuduo calls “good, on-target growth.” The increase could quash Moscato wine imports.
“Bye-bye imported Moscato,” DiBuduo chuckled.
DiBuduo discussed last year’s record-breaking California wine grape crop. The National Agricultural Statistics Service estimates the 2012 California grape crush at 4,383,100 tons, up 13 percent from the previous year.
“The record 2012 crop was a blessing, not a curse,” DiBuduo said. “The immediate future looks relatively balanced regarding supply and demand.”
DiBuduo discussed grape price upswings over the last two years.
The increases are tied to: a relatively weak U.S. dollar expected to remain weak; competition from alternative crops, primarily almonds; and forethought by California buyers who bought more wine grapes on the spot market due to the worldwide shortage of grapes.
“California growers were very lucky to play the spot market,” DiBuduo said.
As the 2013 crop year begins, what prices can California growers expect for wine grapes? DiBuduo believes last year’s wine grape prices will serve as a starting point for 2013. A higher price would be based on market demand.
A myriad of factors impact the California wine grape industry, DiBuduo concluded, including global competition, economic uncertainty, regulation and taxation, fluctuating crop sizes tied to weather, plus “indecisive and fickle consumers.”