Industry rep 'bullish' on wine grapes

Spot prices for winegrapes fall as consumers scale back

By WES SANDER
Capital Press

Wine grape growers have reason for optimism about long-term prospects, according to an industry representative, even thought import pressure, economic malaise and a large harvest are dragging down prices.

"We're bullish on the winegrape industry," said Nat DiBuduo, president of the marketing cooperative Allied Grape Growers.

California Department of Food and Agriculture has assessed the state's 2009 wine grape harvest as the second-largest ever, at 4.1 million tons. It's only the second time reaching that mark since 2005, when growers delivered 4.3 million tons to wineries.

The tally is up 11 percent from the 3.7 million-ton crush of 2008.

As the market adjusts to consumer demand for a lower-priced product, wine makers have declined to renew many multi-year contracts, DiBuduo said. That has expanded the spot market as prices fall, while some growers continue receiving the higher prices in existing contracts.

"The gap between the haves and the have-nots has really expanded," DiBuduo said.

Imports of Chardonnay from Australia are dragging down prices. CDFA's report shows returns to Chardonnay producers in regions that saw $500-per-ton prices in 2008 dropping to around $200 in 2009, DiBuduo said.

Reports so far suggest Australia's crop is reduced this year by up to 30 percent, encouraging news for domestic growers, DiBuduo said. But long-term opportunities are also appearing in the Central Valley, which has lost grape acreage in the past decade while coastal regions entered the market with higher-end varieties.

As consumer choices adjust, wine makers are looking for multi-year contracts at adjusted price points in the San Joaquin Valley, DiBuduo said.

"I don't think we're oversupplied, I think we're underdemanded," he said.

California vineyards rebounded in 2009 from an off year in 2008 that suffered freeze impacts. More of the industry's higher-priced grapes were crushed this year and fewer of the lower-priced raisin- and table-grape varieties, leading to an increase in the average price.

Industry-wide, the average price rose to $574 per ton, up 5 percent from 2008, although prices among the basic categories were mostly down. Red wine grapes were up 1 percent to $671 per ton, while whites dropped 1 percent to $536. Raisin varieties dropped 24 percent to $171, and table varieties fell 21 percent to $143, according to CDFA's report.

Regionally, grapes from the Napa Valley received the highest average price at $3,415 per ton, down less than 1 percent from 2008. Some growers with existing higher-end contracts, especially in coastal regions, received more than $6,000 per ton.

Link

The final grape crush report is available from the National Agricultural Statistics Service in conjunction with California Department of Food and Agriculture at: www.nass.usda.gov/ca