California Is Growing Too Many Grapes, Causing Prices To Fall Two Years In A Row

Posted: Feb 07, 2020

A combination of factors including new technologies, higher plant yields, and too much optimism about the demand for wine has led to a glut of grapes in California.

Grape growers around the state, especially those that grow wine grapes for big corporate wine producers, have seen the price-per-ton of their grapes tumble over the last two years. And the reason is that a lot of new grapevines went in a few years ago and began bearing fruit just as demand for wine began flattening overall.

As the SF Business Times reports from the Unified Wine & Grape Symposium this week, the market has shifted for wine grapes, and it's costing growers a lot of money. The data isn't yet all in for 2019, but the price-per-ton for grapes is expected to fall even further than it did in 2018, when it was $34 less than the year before.

In his State of the Industry address on Wednesday, Jeff Bitter, president of Allied Grape Growers, said, "We’re in a very difficult grape situation." And he told the audience that it was coming time to start pulling vines. "This year there were more grapes left on the vine than I’ve ever seen in my lifetime," Bitter said, per the Business Times. Growers across the state left grapes on the vine in order not to saturate the market and drive prices even further down.

The situation is thanks to new technologies for growing and harvesting grapes that have increased grape yields by a ton per acre. And more overall acreage has been planted as well, with new vines that went in in 2016 bearing fruit as of last year or the year before.

Bitter told grape growers they were going to need to look hard at their vineyards and start culling whatever is under-producing or labor-intensive. Pinot Noir, for instance, was one thing he suggested growers might want to start pulling because eventually it won't "pencil" — the notoriously slow-growing and delicate grape is one of the most difficult to ripen successfully.

The U.S. remains the largest wine-consuming country in the world, with 408 million cases of wine sold in 2018. But growth in sales all but flattened in the last two years due to a number of factors. Competition for alcohol dollars from craft beer and spirits is one main factor, and also the Millennial generation has by many accounts chosen to drink less than older generations overall. Meanwhile, the Baby Boomers are aging out of drinking altogether, and drinking less alcohol for health reasons.

By Jay Barmann
February 7, 2020
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