ShareThisBy JIM DOWNING
Thursday, November 09, 2006
This year is shaping up as one that California wine fans will remember fondly _ but that some of the state's wine grape growers would rather forget.
Late spring rains, a summer heat wave and a warm and dry October are yielding an average-size but top-quality wine grape harvest that some are predicting will be among the best vintages of the last quarter-century.
But an ongoing glut from the massive 2005 crop, changes in the federal law that governs the blending of different vintages and the growing presence of imports in the U.S. wine market have pushed grape prices down for many varieties. In lower-value regions like Lodi, spot-market prices for merlot have dropped below $200 a ton, compared with an average of $482 a ton in 2005. Each ton of grapes yields between 150 gallons and 180 gallons of wine.
"We certainly are in a global wine market, and it's coming home to roost," said Brad Lange, co-owner of Lange Twins Wine Estates in Acampo, Calif.
The abundance of wine in the state probably won't influence prices for more expensive brands, but consumers can expect to see discounts on wines that sell for under $10 a bottle, said Robert Smiley, director of Wine Industry Programs at the University of California, Davis.
"The glut is more pronounced at the lower end of the market," he said. "That's where you're going to see downward price pressure."
For that, wine drinkers should chiefly thank the 2005 harvest, which, at 3.76 million tons, was the state's largest ever. Estimates put the 2006 harvest at 3 million tons. Storage vats around the state remain nearly full of 2005 wine, meaning that wineries can be selective about purchasing 2006 wine, said Steve Fredricks, vice president of Turrentine Brokerage, a wine brokerage firm based in Novato, Calif.
Wineries have been telling growers to postpone deliveries of new grapes, causing headaches and delays for growers, said Mark Chandler, executive director of the Lodi-Woodbridge Winegrape Commission.
In the Lodi, Calif. region, farmworkers now are bringing in the last of the grape harvest, two to three weeks after the typical end of the season.
Thursday morning, on a 100-acre vineyard farmed by Mohr-Fry Ranches, production manager Bruce Fry and a crew of six men harvested cabernet sauvignon grapes with an elephantine grape harvester. Lumbering along at 1.4 miles per hour, the 12-foot tall machine can shake 125 tons of grapes off the vine in a 10-hour day.
Fry said that his family's company sells most of its grapes on long-term contracts, and so it wasn't hurt seriously by the price drop on the spot market this year. He worries, though, that as major winemakers consolidate and globalize, they will continue to drive prices down. As the large wineries are absorbed by the handful of major corporate players in the industry, independent grape growers have fewer and more powerful potential customers for their crop, and thus less bargaining power, he said.
A new federal law governing how different vintages may be mixed also adds to the leverage that wineries have in price negotiations. Starting this year, wine labeled "2006" can contain as much as 15 percent wine from a previous year.
"It certainly gives all wineries more latitude" in managing their wine stocks, said Greg Livengood, president of the Joseph W. Ciatti Company, a wine brokerage based in San Rafael, Calif.
The rules give U.S. winemakers the same leeway as international rivals Australia and Chile, Livengood said.
In addition to deflating the prices that grape growers are getting this year, the big 2005 harvest also influenced the size of this year's crop, said Paul Dolan, chairman of the state Wine Institute as well as a grape grower and winemaker in Mendocino County, Calif.
"The fruiting buds are developed from the year before," Dolan said. After a heavy year like 2005, "they need a little catch-up time," he said.
