Wine Industry Racing To Meet $10 To $20 A Bottle Demand

Posted: May 28, 2017

Consumer thirst for wines retailing for more than $10 a bottle is set to grow with California winegrape acreage for such brands growing by double digits in the next few years. The trend has already propelled price increases for fruit from outlying areas of the North Coast, an expert said at an industry seminar in Napa on Wednesday.

For winegrapes bound for $10-$20 wine, cabernet sauvignon acreage reaching commercial production is estimated to grow by 20 percent 2016–2019, an increase of 35,000 acres, said Nat DiBuduo, president of grape marketing group Allied Grape Growers. He spoke at the 22nd annual Vineyard Economics Seminar.

“This is the hottest price segment,” he said, about interest from wineries. “Everybody wants a $10-$20 bottle of wine.”

All the major winegrape varieties but zinfandel and merlot are set to have growth in bearing acreage in this target bottle-price range, he said. Chardonnay is projected to be up 9 percent; pinot noir, 14 percent; sauvignon blanc, 5 percent; petite sirah, 27 percent; and pinot grigio, 16 percent.

Merlot is estimated to be down 2 percent, and zinfandel flat.

Mitigating this growth will be replanting of cab vines that have reached their commercial life or have been struck by diseases such as red blotch, DiBuduo said.

Producers in this price category are extending they supply further by blending with lower-cost grapes or wine up to allowed limits, he said.

For above-$20 per bottle wines, a sweet spot for Napa and Sonoma counties, cab acreage is set to grow 3 percent by 2019; chardonnay, flat; pinot noir, up 7 percent; petite sirah, up 7 percent; pinot grigio, up 4 percent; sauvignon blanc, flat; and merlot and zinfandel, each down 4 percent.

In addition to a potential bubble forming in pricing for cab of this quality, DiBuduo wondered aloud about wine regions being in jeopardy of monoculture, like Napa Valley’s reputation for top cab.

“Some great sauvignon blanc vines are being pulled out for cabernet sauvignon in not a good cabernet sauvignon area,” DiBuduo said. “When you’re getting $6,000 a ton for cabernet sauvignon, everyone is trying to plant it.”

This is driving plantings in other North Coast areas. An analysis of six years of prices for the region from the California Grape Crush Report showed Solano County’s average up 13 percent through 2016, driven by Suisun and Green valleys, DiBuduo said. Those western-county appellations are part of the North Coast winegrowing region.

Caymus Vineyards expanded from Napa Valley east, acquiring acreage and building a big winery. E&J Gallo has also purchased vineyards in west Solano.

Cabernet sauvignon has driven Lake County’s average price is up 7 percent over six years and Mendocino County’s up 3.5 percent. Sonoma is up 8 percent, and Napa 6 percent. Napa’s price shift would be even bigger, if pricing for the 2017 crop is figured, DiBuduo said.

“Demand for grapes this year is shaking the world,” he said.

The seminar was put on by the Wine Industry Symposium Group, owned by Wine Business Monthly.

May 24, 2017

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