Roughly 20 percent of California's winegrape harvest doesn't ever become wine. Typically, 400,000 to 600,000 tons of California grapes are crushed for the juice concentrate market each year. It's a significant business, but it's also a complicated one that is tied to the world fruit sugar market.

The Sugar that isn't "Sugar"

Grape juice concentrate is used in various food-processing applications. It increasingly replaces corn syrup and table sugar in bakery goods, jams and jellies and desserts as health-conscious consumers opt for products labeled "no sugar added." It's always been in bottled and canned grape juices, of course, but the proliferation of fruit-based beverages has expanded its potential considerably. Companies such as Snapple, Nestle, Tropicana, Coca Cola and Minute Maid are among those buying grape juice concentrate.

According to a report from the California Association of Winegrape Growers (CAWG), the U.S. imported grape juice and grape juice concentrate from 13 countries in 1999, with five of those countries--Argentina, Brazil, Spain, Mexico and Italy--supplying 86 percent of those imports. Of the five, Argentina was by far the greatest supplier, providing 55 percent of American imports. Total U.S. imported grape juice and concentrate was 180,517,000 liters in 1999. Exported juice and concentrate was much smaller in volume (86,961,000 liters) for the same period, but closer in dollar value (imports $78,178,000 versus exports of $69,608,000), reflecting the higher price--and presumed higher quality--of the U.S. product. Canada and Japan are easily the largest markets for U.S. juice and concentrate, each buying over 30,000,000 liters in 1999. The total of all three of the next largest markets--Hong Kong, South Korea and Taiwan--account for about two-thirds the total of either Canada or Japan.

There are several major juice concentrators in the San Joaquin Valley. San Joaquin Valley Concentrates, whose ownership includes members of the Gallo family, but which is not part of E & J Gallo Winery, is the largest. Others include Canandaigua Concentrates, Vie Del, Fruit Tec and Delano Growers. Anil Shrikhande, Ph.D., president of Canan­daigua Concentrates, the second largest of these concentrators, explained that "white grape juice concentrate is normally used as filler juice. It's a backbone sweetener and also is extensively used for dilution of Concord juice, which has a strong, 'foxy' flavor." While Thompson Seedless grapes typically provide the great majority of the white concentrate, with French Colombard and Chenin Blanc playing lesser roles, any variety of grape can be crushed for white grape concentrate according to Shrikhande.

In California, red grape concentrate is traditionally made from the Rubired, Salvador and Royalty varieties and provides coloring in many juice drinks. The most significant of these is the Rubired, which was developed at University of California at Davis in 1962. Its deep color is much more stable than that of European and South American grapes grown for the same purpose.

"Grapes are picked at optimum maturity and crushed into juice; then are centrifuged, filtered and concentrated and stored, which rapple juice concentrate). We need to do a quality pro­duct, even in the concentrate area."

"I think California is probably the best quality, but we're not competitive pricewise," said Anil Shrikhande. "Delivered-in-U.S. prices of international grape concentrate are cheaper than that from here."

Agricultural Statistics reports from the State of California suggest that actual planted acreage of winegrapes is about 554,000 acres with only 424,000 of them currently bearing. The balance of those acres (which includes new plantings and replantings) are coming into production. "We're going to see an overall grape supply," offered Barry Bedwell, "that will increase by about one third." Bedwell is currently a partner with Ciatti Grape Brokerage LLC and formerly headed Allied Grape Growers. "Where will the potential oversupply manifest itself?" he continued. "In the lower portions of the market … which is supplied by the southern parts of the Central Valley. We'll see (the results of this oversupply) begin as soon as this year. Grapes planted for wine certainly will find their way into the concentrate market, as well as going for brandy uses and for general alcohol. We're expecting a general price decrease of 30-40 percent for white grapes going into concentrate. Growers will be faced with the tough decisions of what to do, but growers will do whatever they have to do in down markets."

It would appear that some grapes otherwise planted for wine production will end up in the concentrate market, even their growers may find it a crush of last resort.

Bivona believes that "99 percent of American concentrate buyers would cut back international purchasing if California products were competitive and available. It's important for these buyers to know why California product is better. It's there when you need it. It has much better quality [in terms of] consistency, so you know you'll get what you order." Quality, however, is not the determining factor in concentrate--it's price. "In white it's difficult to compete with Argentina," observed Bivona. "Typically California [white] concentrate is available for about $7 a gallon. White from Argentina might be available--delivered on the East Coast--for $6.25-$6.50. White concentrate is all about acid, pH, color, and cost is strictly a function of price of grapes. With reds, it's a function of price and color of grapes in a given year. Returns on red grapes can be altogether different--even if prices are the same--in different years because of the amount [quality or density] of color."

New York broker Herb Barber echoed the theme that the concentrate market is volatile and dependent on price. "The market comes and goes with the volume," he said. "I understand the prices will be lower (this year) because of the size of the crop."

John Ferreiro, a fruit juice broker in Coral Gables, Florida, said that concentrate "is a global business and it has become very competitive. The cost of fruit accounts for 60-70 percent of the cost of the concentrate. It's hard to tell the future. It's all determined by availability and cost of the raw material."

"There are very few contracts on Thompsons," said Andy Bivona, "but many Rubireds are on contract," citing the specific use of that variety to the concentrate industry. Karen Ross of CAWG suggested that "longer-term contracts would be helpful," but that isn't likely, in Andy Bivona's view. "I don't see it happening," he said. "Growers might like it but we'd never get the buyers to go for it "We've never done contracts that extend beyond a year."  wbm