2009 wine grape market highlights value of contracts for Central Coast growers

The economic recession is beginning to take a toll on grape growers on California’s Central Coast, as declining land values put more financial pressure on owners who bought vineyards recently.

And consumers are buying fewer $20 to $40 bottles of wine, further reducing the value of coastal grapes.

Growers without winery contracts have felt the recession even more. Some Central Coast growers learned a valuable lesson last season when they held off signing contracts, waiting for higher prices, says Lowell Zelinski, Precision Ag, Inc., Paso Robles, Calif.

Some growers delayed signing contracts, thinking the short 2008 crop, reduced supplies of bulk wine, and expectations of a smaller-than-normal harvest in 2009 would improve prices.

“Earlier in the season, growers were signing contracts to sell 2009 Cabernet Sauvignon for about $1,000 a ton,” Zelinski says “Indications were that grape prices would go up during the season or, at worst, stay the same. Some growers expected grape prices to increase as much as $1,500 a ton.”

Instead, prices continued to drop, while a normal size crop developed.

“By the end of the year, Cabernet Sauvignon was selling on the spot market for less than $250 a ton,” Zelinski notes.

Central Coast growers are anticipating a bigger crop this year.

“We’ve had good rainfall this winter. Any rain in February and March would put us above average for this time of year. Usually, this type of situation equates with good yields.”

TAGS: Grapes
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