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Bulk Wine Update: Weather, Market Trends Stabilize Pricing

by Kerana Todorov
January 23, 2018

 California bulk wine market prices are likely to be stable or slightly up in 2018 as the harvest is expected to be lighter than anticipated, according to The Ciatti Company’s January Global Market Report.

Heat waves wrought havoc around the world; in Europe the ‘Lucifer’ anticyclone caused record setting heat, especially in France, Italy and Spain and resulted in some of the shortest and smallest harvests on record.

In California, following a wet growing season, grape growers were predicting the 2017 harvest to total 4.2 million tons at the midyear mark--4.8 percent more than in 2016. But following a series of heat spikes, the harvest is anticipated to total 3.9 to 4 million tons.

“It wasn’t a normal year,” Ciatti parter Glenn Proctor told Wine Business Monthly in December.

The crop load in the North Coast region was above average going into August after a wet winter and early spring. Then a heat wave hit over Labor Day weekend, forcing grapegrowers to re-consider picking dates.

“You couldn’t have put enough water to combat the heat,” Proctor said. “I do not recall that kind of heat before—not with that intensity.”

Vineyards in deeper soils in the Napa Valley and along the Russian River were unaffected. But hillsides Zinfandels on the hillsides were “boiling” he said. “They were cooking…it was so hot.”

The crop suddenly appeared smaller.

Pricing and the End of Premiumization?

Chardonnay’s prices this year are likely to increase due to a short inventory, according to the Ciatti report. Cabernet Sauvignon’s prices are expected to be “flat or down slightly” while Zinfandel prices may be down “a little,” according to the report.

Profit margins are getting squeezed as grape prices statewide are expected to remain stable or increase. “This, together with signs that the premium end is slowing, is persuading brand owners to seek alternative supply to fulfill their brands instead of increasing retail prices, even if that means switching or downgrading their appellations – for example, from a Sonoma appellation to a North Coast or even to a ‘California’ one,” according to the Ciatti report.

Proctor sees the market is not as active as a year ago. “We are seeing people being a little more cautious with their purchases,” he said. “It does not mean the price is going to go down. But it probably means the price is going to be a little more stable.”

Brian Clements, vice president and partner at Turrentine Brokerage, told the Sonoma County Grapegrowers’ 27th Annual Dollars & $ense Seminar and Trade Show on Jan. 11 that North Coast prices have been “so high for so long,” buyers look for other areas to buy grapes.

Impact of Fires on Supply

Most of the fruit had been picked when deadly fires exploded Oct. 8 in Sonoma, Napa, Mendocino and Lake counties. “We saw a lot of sharing of resources, wineries and growers reaching out a hand to help other wineries and growers to help them through the process,” Proctor said.

While most of the fruit was in, the fires nonetheless disrupted harvest and crush activities.

“It’s the hardest vintage I’ve ever had to deal with,” Rick Aldine, North Coast grape supply manager at Agajanian Inc., said in December.

Like others, Aldine expects a lighter crop and a continued, high demand for premium bulk wine. “There is a strong demand for quality wine and supply is short. We need more grapes to fill supply,” he said.

Top Varietals

Ciatti reported in its report that by mid 2017, the 2016 vintage Pinot Noir, Chardonnay and Sauvignon Blanc were the “hottest categories.” U.S buyers also sought Malbec after struggling to source fruit from Argentina. Pinot Grigio prices were “softening off the back of a bumper 2016 created by new plantings reaching optimal productivity,” according to the report.

The average wine grape price for 2016 vintage was $789 per ton – or 14 percent more than in 2015.

Click here to view Ciatti’s Global Market Report in full.


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