25 replies to this topic

[DavidW]

Anyone else notice this, and have any thoughts?

Excerpt from article on their website.

Looking ahead to this fall, it is just too early to say what may or may not happen, though, indicators point to potential shortages and higher prices.

[WineMan2008]

Anyone else notice this, and have any thoughts?

Excerpt from article on their website.

You have to wonder when we as home winemakers will say "It's less expensive to purchase commercial wine than making it at home", except we can't put a price on camaraderie, family, and down home fun!

[glenn1959]

I spoke with Nick from M&M and the commercial industry is picking up and the demand for grapes will be up which makes grapes for homeowners less available.

[Tomer1]

Time for fruit wines then

[Knucklehead]

I was just by a Winery in Winters, Ca last Saturday. I purchased some Viognier fruit from them last year and told them I may want to purchase some more in a few years. He said that he is pretty much sold out. He said that after the grape glut of 10 years ago here in California, there have been very few new plantings. During that time wineries have gradually been adding volume, until here we are. Shortage time again! It seems to me that as little as 2 years ago I heard stories of grapes left to rot on the vines due to no buyer. I told the same Winery/Vineyard owner that I was looking for Petite Sirah. His response was "Good luck! If you find any let me know!". My evidence is all anectodal, but I've also had a couple growers I used in the past say that all of their grapes have already been contracted for 2012. All points to a shortage in California! And this is in April!

[Lindsey S]

There was actually an article on msn.com this morning talking about the price for commercial wines going up due to shortages. For those of us like me who are new to this and have no wine of our own built up, I may need to start stocking up before it gets too pricey!

[Chris_Austin]

I have a friend who owns a commercial winery in the Sonoma area. He recently told me grape prices are up nearly 50% from last year. I also talked with another industry person who has been changing their grape sourcing from CA to south america due to pricing concerns.

[Doyle]

One thing you need to keep in mind, if there are shortages, it will also affect the commercial wineries and their prices will go up as well. The commercial wines available in the grocery stores for $12-$15 can't begin to compare with the wines I can make at home. Clearly, living in California we have a bit more availability and selection because of the number of sources.

[gregorio]

Speaking as a commercial winery, the shortages this year are mostly "anticipated". We cannot accurately predict the crop but historically, a dry winter leads to lighter crops no matter how much rain we get in the spring or how much water we put on all summer. Most of the realized shortages are from the past couple years where wet springs killed fruit set and cold summers killed ripening. Not all growers or areas were hit the same so it is spotty as to where the shortages really are. Plantings of mainstream varietals (Cab, Merlot, Pinot, etc) are still increasing each year but we saw fewer acres planted overall in each of the last 4 years compared to the average for the decade before. Obscure varietals like Aglianico, Canaiolo, Dornfelder and Sieggerbee saw little if any increases.

On top of all that, we are seeing contracts from the midrange to large wineries increasing their tonnage and prices are already expected to be back to their peaks in 2007-2008 if not above.

[wxtrendsguy]

I was just at an industry trade show last month and the grape shortage is true, but some growers are beginning to step up production but that is at least 4 years down the road...there was mention that Gallo was planting a million new vines this spring...The other problem is growing grapes has become ever more expensive, fuel, pesticides, farm land have all be sykrocketing in price. In PA it can easily cost $1500 a ton to produce French vinifera, and near $1000 for hybrids. But wholesale prices were near $1200 and $800 respectively last year so why would a grower produce. Add in shipping of anywhere between $100 and $500 a ton. Then double the price for the typical retail mark up that home retailers sell for and yep grapes are going up. So $50 for a 36lb lug is not all that far off...

But hey here is the good news a $50 lug means that the grapes are worth $3 a bottle, with a bottle cost of say $1 and another $1 for yeast and other goodies and you are still making it at home for probably less than $5 or $6 a bottle. Plus dont forget all the fun...heavy lifting, cleaning, H2S, VA, and so on...

[Juniper Hill]

Hopefully the impact of this projected shortage will be modest. I might have to consider making more hybrid wines...hopefully they aren't following that trend.

My own vines are a long way from producing much, and will never fully meet my winemaking needs.

[cnorth3]

I heard that the price increase of grapes from Chile for the 2012 harvest is due, at least in part, to the shortage in CA. Not sure why this would be the case, unless Chilean vineyards/wineries are selling grapes/juice/bulk wines to CA wineries.

[DavidW]

I might have to consider making more hybrid wines...hopefully they aren't following that trend.

They likely will, though maybe not as great. In the lumber business, when one species gets hot, there are always some "substitute" species that are kinda/sorta/maybe similar that get the trickle-down effect.

I heard that the price increase of grapes from Chile for the 2012 harvest is due, at least in part, to the shortage in CA. Not sure why this would be the case,

See above. You make wine with grapes regardless of where they come from, so if CA (a significant global supply) is going up I would expect all to follow to at least some extent.

[Nick Coppola]

Hello All,

Mine is but one perspective into the current state of the industry and everyone has an opinion, but please allow me to validate some of your comments and provide some additional perspective.

The wine grape industry is absolutely tied to a global market. A combined reduction in yielding vineyards, increased fuel costs, poor weather, Chilean earthquake, and unparalleled demand from the Asian market has created a perfect storm that is forcing the price of grapes up (or at least resulting in growers positioning themselves for a windfall). The markets that we serve, U.S. and Canadian wineries outside of California and many of you in the home winemaking community, ride the waves created by the big players in the wine industry.

I put out that notice because unlike some previous years, we feel that the concern over rising prices is substantiated and we are positioning ourselves to make buying decisions that are more conservatively based upon what consumers express a need or desire to buy. I'm sure the follow-up question to that statement is going to be "Well, how much do you think grapes will cost?" At this point, I'm not able to say for certain. What I am able to say is that we are leveraging our long term relationships to ensure that we have the product you are looking for and are able to offer it as fairly as we can offer it. We know many of our customers depend upon this product to run their businesses and we take our responsibility to support them very seriously.

I know I've said this before, but as a company, we represent to savy growers (those who are familiar with market ups and downs, broken contracts, etc.) a very consistent and reliable market. We also get behind our growers to give them the credit they are due for doing a good job. This market does not give growers high rates of return, but we do offer consistent rates of return for the grapes they provide us AND we provide them with market exposure. It is this understanding that differentiates ourselves from the individual buyers who seek to buy from the open market. I'm sure that many open market buyers could attest that, e.g. last year they did not get what they requested - either being shorted or not delivered at all.

Where does the market go? Does it just continue upward? I honestly don't think so. However the lining isn't all silver...

As little as two years ago, there was an abundance of high-end wine in the marketplace that was essentially being liquidated. In other words, wine existed at a price too high for consumers to be willing to purchase it. This is important to keep in mind. As the cost of grapes goes up across the board, the price for wine must rise (or wineries need to get "creative") and presumably it will once again hit that resistance, at least here in the US. The result to the commercial wine market in the US will likely be what we've seen in other countries where the best wines get exported and the lesser wines stay behind to satisfy a consumer base that will need to lower its expectations. That is why the lining isn't all silver. In Asia, there is a willingness to buy and growth is incredible. The asian market is pulling from all major wine producing areas, and even though the US isn't the top supplier to asia, there is still an impact.

So, here in the US, I do see a ceiling and of course as vineyards come online in response to wineries demanding more grapes, we will see some relief. I also expect that history will repeat itself and wineries will cut contracts at some point leaving grapes to once again rot on the vine. For the good grower, M&M Wine Grape Co. is a different kind of partner.

I think that overall, US domestic wineries, which are growing in number and represent a significant economic impact, are staring down the barrel of a real problem. That is, sharing the pie of available wine grape products with a global market that is well monetized and willing to pay a premium.

- Nick

[cnorth3]

Great post, Nick, Thanks!