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Lighter Crops May Lead to More Balanced Market

by Kerana Todorv
August 13, 2021
Napa Valley vineyard, August. 2021. Photo by Kerana Todorov


The wine industry’s top concerns this harvest season include the drought conditions that have led to smaller canopies and less crop—as well as the risk of wildfires and an ongoing pandemic.

Overall, the crop yield may be light though quality looks good, said Glenn Proctor, partner at Ciatti Brokerage Company. It also may be an early and compressed season, with everything coming in at once.

Crop expectations vary. Dave Michul, president at Beckstoffer Vineyards, expects crop yields to be down 25 to 30 percent, with some areas worse than others. Beckstoffer Vineyards farms 1,000 acres in Napa, 1,300 acres in Mendocino, and 1,800 acres in Lake County.

Michul attributed the crop size to the drought which has led to less growth and small berries.

Stu Smith, general partner and founder at Smith-Madrone, an estate winery on Spring Mountain in the Napa Valley, expects a modest crop. Harvest is about 10 days off.  He finds few reasons to celebrate this year given the drought, the risks of wildfires and smoke from other areas. “It’s not a fun time,” Smith said.

His vines—for now—are doing well. “So far so good,” he said.  However, the vines could stop growing. “It’s really too early to tell,” he said, referring to this year’s crop.

In the Central Coast, Michael Haddox, manager of Central Coast operations for Allied Grape Growers, also expects yields to be down, possibly 10 to 20 percent below average. The drought has affected vineyards differently.

Still, Haddox remains optimistic, given the rebound in the grape market.  Fruit that did not sell for the past four years has been sold, he said. “It was more active that I have ever seen,”  Haddox said.

Statewide, a short 2021 harvest would be the second small crop two years running. About 3.4 million tons of fruit were crushed in 2020 in California—or 15 to 20 below an average crop year, according to industry reports.

How Will This Affect the Bulk Wine Market?

There were more grape purchases and bulk wine deals than in a normal year, said Steve Fredricks, president and partner at Turrentine Brokerage. Some aspects of the market have slowed now that these deals have been made, a normal trend this time of year.

There is hesitancy among buyers, Fredricks and others said. “People are thinking, looking ahead and saying ‘hey, maybe I don’t need what I thought I was going to need…I’ll wait to buy it later,’” Fredricks said.

Some producers are pulling their bulk wine inventory from the market in case they do not have enough supply from the 2021 crop, according to Ciatti.

Ongoing issues include rising labor costs and not enough case goods being sold, according to Proctor.

Bulk wine supplies from the Central Valley are particularly tight, brokers said.  Wineries have been reducing inventories over the past few years in the Central Valley, where there was oversupply, Fredricks said. Then came a short 2020 crop. There is now more in balance in the market.

John Hughes, owner of H&H Wine Brokerage, a Napa Valley-based broker, does not anticipate much bulk wine to hit the market this year statewide.

“It’s definitely a seller’s market at the moment,” Hughes said.

Producers selling California-appellated wines at a reasonable price to Costco and other large retailers did very well, he said. These producers need a lot of fruit, he said, referring to crops from the Lodi and the Central Valley. For that reason, he and others said, little bulk wine from the Central Valley is available.

Availability varies by variety.  For instance, there is Cabernet Sauvignon available, according to Turrentine. However, there is little Chardonnay available and no Russian River Pinot Noir for sale, Fredricks said. The Pinot Noir crop was short and smoke concerns led growers to leave fruit on the vine. Buyers do keep an eye out for Sauvignon Blanc, Fredricks said.

Hughes and others said some producers whose fruit sustained fire damage in 2020 took crop insurance and sold bulk wine at deep discounts. The publicity also makes it more difficult to sell good wine from the 2020 vintage, said Hughes, who does not expect the market to recover until 2023.

Wineries are waiting with anticipation to see what happens with the 2021 harvest, he and others said, referring to wildfires, the drought and the pandemic.

At this stage, bulk wine buyers may pass up on the 2020 vintage and wait for the 2021 wines. Producers that have enough wine to bottle up will wait, Hughes said.

Drought, wildfire and the pandemic are not only the wine industry’s concerns. Everybody in the North Coast worries about fire and water, Fredricks said.

In June, people thought things would be different by August, he said, referring to the pandemic. That has changed. “We’re transitioning to something different now,” he said, adding, “No one knows how the restaurant industry will recover.”

But it’s not all bad news.  “I think there is cautious optimism,” Fredricks said.  

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