Bulk market sales providing welcome relief for ’05 hangover

Growers hit hard over the past few years competing in a market with excess tonnage and diluted demand should see some relief in 2007. “We’ve had more sales in the bulk market the first quarter of 2007 as compared to the first quarter of 2006,” says Steve Fredricks, vice president and partner with Turrentine Brokerage. “I think the market is coming into balance, but we’re not there yet. We still have a way to go before prices get to sustainable levels for vineyards.”

That assessment is echoed by Glenn Proctor, Partner with Joseph W. Ciatti Company. “The ’05 crush at 3.8 million tons was so huge we’re still suffering from that hangover,” he says. “However, the hangover is fading as we move further away from it. Last year’s crush was 3.14 million tons which is a little more normal and it looks like ’07 will be a normal crush as well.”

Proctor reports activity on ’05 Cabernet which will be used in other vintages. Even so, there is still an oversupply of Cabernet and Merlot from ’05 when significant tonnage remained unsold or custom crushed. Pinot Noir has been the rage but could be coming back down to earth, while Zinfandel, Sauvignon Blanc and Chardonnay are balanced. “We have seen an uptick in Chardonnay recently that flows off the shorter harvest of 2006 of 550,000 tons statewide,” he says.

That uptick is more noticeable in the premium markets, according to Fredricks.

“We’ve seen higher demand for Chardonnay from areas such as Napa and Sonoma,” Fredricks says. “However, there is still a lot of ’05 out there to contend with. On the positive side, there aren’t many new acres that have been planted. The overall trend in Chardonnay sales is growing, but the acres are not.”

The domestic Chardonnay picture could see continued improvement if the Australian crush falls short of normal as expected. “There are two major suppliers of New World Chardonnay – Australia and the U.S.,” Proctor says. “Australia is forecasting a crush of only 1.1 million metric tons. If that holds true, a lot of the buyers who went to Australia may be coming back to the U.S.”

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.