Big grape crush only part of story

The 4-million ton 2009 California grape crush has been called a shocker.

It is. However, there is perhaps more unsaid from the crop.

It may have been the second largest crush in history, topped only by the 2005 4.3-million ton crop that took at least two years to work off.

The USDA-NASS report does not include grapes unharvested due to late harvest rains ruining on the vine. And it does not include undamaged grapes left hanging because they could not be sold. Not reported are similarly no-home grapes growers elected to custom crush, hoping to market them as bulk wine.

“Going into spring grower meetings, I was optimistic about this crush,” said Nat DiBuduo, president of Allied Grape Growers. Then imports started hitting. “When the Australian surplus Chardonnay hit the U.S., Lodi Chardonnay prices went down from $500 quoted earlier to $165.”

Imports had a major impact on all wine grape prices in 2009.

Industry Pollyannas counter with the fact average price for wine grapes increased 8 percent to $605 from 2008’s $561 per ton, boosting the gross value of the 2009 production by 32 percent to $2.24 billion.

The substantial increase in total revenue generated by the 2009 crop was due much more to the big jump in production, rather than any price increases, Bitter says.

“The final crush report doesn’t include the grapes that weren’t purchased at all or were custom-crushed by growers, which in a stronger market, would have been reported,” explains Jeff Bitter, vice president of operations for Allied Grape Growers of California. “So, looking at the report you don’t see the true impact of the softening spot market for these wines.”

The economy has also played a major role in wine grape prices in 2009 and the year before. Consumers are buying fewer premium wines in this recession, opting for value wines from places like Costco.

This has sent shockwaves through the premium wine grape growing areas, where shipments were down 20 percent last year.

DiBuduo said a major question is what will happen when prosperity returns to America. Will consumers who have learned to seek out value and quality at discount prices return to paying for higher priced wines just because they have the money? “Consumers have learned to find great wines at good prices. Will they go back to pre-recession buying habits when the economy recovers?”

Although higher priced coastal grapes were left hanging last season, grapes targeted for the value priced wine market are in big demand.

“I could not find buyers for available Cabernet Sauvignon from the North Coast, yet I did not have enough Cabernet Sauvignon from the Central Valley to meet demand,” said DiBuduo.

However, DiBuduo is not encouraging a resurgence of SJV Cabernet Sauvignon plantings. There is far too much market uncertainty to plant on speculation.

Right now the only vineyards being planted are Rubired and Muscat.

“I am sticking to the story I have been telling for 10 years: Don’t plant any new vineyards anywhere in California without a winery contract,” DiBuduo said.

DiBuduo admitted that there is grower interest in replacing some of the SJV wine grape vineyards pulled out over the past decade. “I hear some people say that maybe there are enough almonds in the Valley, and it is time to plant more grapes as a means to diversify, even if growers can only recover expenses with the prices of grapes,” he said.

Seventy-four percent of the total 2009 crush was from the San Joaquin Valley. Seven-one percent of the wine grapes were from vineyards in the Valley. The remainder came from the Central and North Coast and other non-interior wine grape growing areas.

The grape acreage is divided roughly 50-50 between Valley and coastal vineyards. However, Valley vineyards yield more grapes per acre.

The 2009 crush was up 11 percent from 2008’s 3,673,858 tons; the increase is a bit misleading since a significant amount of the crop two years ago was reduced by frost.

The total wine variety crush was 3.7 million tons, 200,000 more than the highest industry estimate.

“It definitely surprised the industry,” Bitter says. “To be substantially above 3.5 million is shocking — no one expected it to be that large. It’s only about 100,000 tons shy of the record 2005 wine grape crush of 3.8 million tons.”

Total wine grape tonnage was up 23 percent over 2008. Production for the San Joaquin Valley south of the Lodi District was up just 2 percent to 5 percent, depending on district. Meanwhile, tonnage increased by double digits in just about every other district.

Compared to 2008, for example, production in Sonoma District rose 26 percent; in Mendocino District it climbed 30 percent; and in Lodi District by 45 percent. Much of these large percentage increases were due to the short, frosted 2008 crop.

“Frost thinned out the crop in the Lodi and coastal areas in 2008, and it bounced back last year,” Bitter says. The lower part of the Central Valley had no 2008 frost.

“The southern San Joaquin experienced two good-sized crops in 2007 and 2008. As a result, the 2009 crop was off. Had the 2009 crop in the area south of Lodi been very large, the total crush for the state would have blown past the 2005 level,” said Bitter.

What’s more, significant rains statewide last fall — which caused rot in some vineyards and softening of demand for higher-priced wines, causing some coastal growers to leave their grapes on the vines — may also have prevented the 2009 crop from setting a new production record, he notes.

The price of all wine grapes increased an average of 8 percent from 2008’s $561 per ton to $605 in 2009. At the same time, the total value of wine grapes shot up 32 percent.

The substantial increase in total revenue generated by the 2009 crop was due much more to the big jump in production than any price increases, Bitter says.

And the 2009 crush figures don’t fully reflect the weakening in demand for California’s higher-priced wines last year. Although the average price of Sauvignon Blanc (which dropped 3 percent from 2008 to 2009) and Cabernet Franc and Cabernet Sauvignon (each of which declined 5 percent from 2008 to 2009) or Pinot Noir (which fell 18 percent) were reported as down. The actual value of these premium-priced grapes may have dropped even more.

The total tonnage of all grapes crushed for concentrate was down significantly from 747,925 tons in 2008 to 499,323 tons in 2009.

“That difference was due almost exclusively to increased imports of cheaper Chinese apple concentrate last year and a much smaller table grape stripping crush,” Bitter says. “Also, there was a sufficient amount of grape concentrate inventory carried over from 2008, due to an extended table grape stripping crush, which put a damper on grape concentrate buying in 2009.”

Most of the 2009 raisin grape crush went for concentrate. Bitter estimates that some 240,000 tons of the total 2009 raisin grape crush of 307,360 tons were used for concentrate. The rest was made into sparkling wine, brandy or lower-priced wines.

Prices of raisins and raisin grape concentrate differ significantly. Bitter estimates at least a $100 per green ton difference between the price growers could get for drying their grapes for raisins and selling them for concentrate. In some cases, while 2009 raisins were selling for the equivalent of $265 a green ton, they were getting just $165 a ton for raisin grape concentrate, Bitter says.

“That’s a significant difference in revenue for growers and shows that, because of the imports of Chinese apple concentrate, the demand for grape concentrate dropped substantially.” For comparison, in 2008 the winery price for Thompson Seedless was $225/ton.

This year-to-year price yo-yo continues to weigh on Valley Thompson seedless growers who struggle each year with going green or drying the crop for raisins.

“Thompson seedless vineyards continue to come out,” DiBuduo said. “These are older vineyards that yield less than 10 tons per acre.

“What makes the Thompson thing tough is that there are a lot of growers 65 to 85 years old who farm an average of 40 acres. It is tough to start over for many of those Thompson growers. They need more money for their Thompsons to survive.”

Although not included in the Grape Crush Report, Bitter notes that the 2009 Thompson seedless crop was much smaller than the previous year. The raisin varieties crush decreased about 38 percent from 494,124 tons in 2008 to 307,359 tons last year.

He says part of this decrease in crushed tonnage was due to a Thompson crop that was 10 percent below average in yield and about 27 percent lighter than in 2008. The industry had been expecting an average size crop, but problems with rot during harvest resulted in a lighter crop than most observers expected.

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TAGS: Grapes
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