But higher prices offset any concerns
February 19, 2012 12:00 AM
California winegrape production declined last year, the crop hampered by unusually cool weather and rain, but growers statewide and in the Lodi area saw the drop more than offset by higher prices.
Industry experts said years of virtually no expansion of vineyard acreage, combined with steadily growing U.S. wine consumption, have set wine and grape prices on the upswing.
Lodi grower Rodney Schatz said winery representatives are clamoring for fruit, actively wooing farmers willing to put their vines under contract.
"I think if you're a grower in Lodi, you won't even have to buy lunch the rest of the year," he said. "That's how strong it is right now."
California farm officials reported Feb. 10 that 3.87 million tons of fruit were crushed for wine and other products last fall, down 3 percent from 3.99 million tons in 2010. But 2011 prices jumped to a record average $598 per ton, 8 percent up from the year before.
In the Lodi crush district, which includes San Joaquin County north of Highway 4 and a portion of southern Sacramento County, the swings were even more dramatic.
Average 2011 prices leapt more than 20 percent to an average $564 a ton, compared with nearly $469 a ton the year before. Grape production last fall was 575,000 tons, down nearly 6 percent from 608,000 tons in 2010.
Stuart Spencer, program director of the Lodi-Woodbridge Winegrape Commission, said the winegrape market is on a new vector.
"The supply-demand situation has really swung around to a short situation," he said.
That change stems from some long-term trends. First, because of weak prices California grape growers have reduced acreage over the past 10 years and planted virtually no new vineyards in recent years.
Plus, wine consumption is on the upswing.
"Even with the recession of the last few years, we've continued to see growth in California wine shipments," Spencer said.
For the Lodi area, the higher prices translated to better returns despite the light crop.
The total value of district grapes crushed topped $324 million in 2011, nearly $40 million more than the year before.
Zinfandel, the area's leading grape varietal, exemplified the change.
Its price per ton averaged more than $626 last fall, up 40 percent from the 2010 average of nearly $448 a ton.
But production of zinfandel was also off sharply, down 25 percent to 111,000 tons.
That meant the Lodi district, which typically leads the state in zinfandel production, ceded that honor to a south San Joaquin Valley area that includes Madera, Fresno and a portion of Tulare and Kings counties.
Spencer said he was surprised by the small zinfandel crop.
Schatz said weather, as well as a dramatic shift in growing practices, contributed to that drop.
Zinfandel vineyards cultivated for white zinfandel produce more fruit per acre than those grown for red wine, which requires riper, more flavorful fruit.
A surge in demand for red zin, both as a varietal wine, such as old-vine zinfandel, and for use in increasingly popular sweet red blends, changed area farm practices, he said.
"My guess is, you probably saw all the zinfandel in Lodi, that portion being produced for white zin, (go) to red zin overnight," Schatz said. "Last year about this time, you saw some serious buyers come in and get all the red zin they could get."
It was those south Valley vineyards that served the demand for white zinfandel production.
A relatively weak U.S. dollar, which makes imported wine relatively more costly and domestic vintages more affordable, is also helping boost demand for California grapes and wine.
"We look really good in our own backyard in selling bottled product," Schatz said.
It's also helped raise exports as well.
The Wine Institute reported last week U.S. wine exports, 90 percent from California, reached a new record of $1.39 billion in winery revenues in 2011, up nearly 22 percent from the year before. Volume shipments rose 6 percent to 455.7 million liters or 50.6 million 9-liter cases.
Richard Ripken, a Lodi grape grower and the owner of Ripken Vineyards and Winery, said farmers welcomed the shift in fortunes.
"The last six years, things haven't been all that great in terms of making money," he said. "Finally, this year, there's some buyer interest."
Wineries are offering growers long-term contracts to plant new vineyards and supply grapes.
"Every winery says they see opportunity now," Ripken said.
Last fall, as it became apparent the crop was coming in short, he said, "there was a scramble in Lodi for zinfandel and petite sirah."
Even as prices are providing better returns on production costs, the growers said it's still a bit short of covering the full capital costs, such as the value of the land and vineyard development.
"It could be one notch better," Ripken said.
"Yes, if we have the crop, a normal crop, it's getting close to sustaining and being profitable," Schatz said. "I think we'll see that in the next year or two."
Higher grape prices means wine will become more costly, although only a fraction of the cost of a bottle pays for the fruit.
Spencer said consumers will probably see fewer steep discounts or sales in the wine aisle.
At the same time, wine is a global product, and foreign producers seek entry to the U.S. market, the world's largest in sales and volume.
"We live in a global marketplace, and our wineries are competing ... with wine and winegrowers from all over the world," Spencer said.
"That competitive process is going to keep wines prices in a very approachable range," he added.
Contact reporter Reed Fujii at (209) 546-8253 or rfujii@recordnet.com.
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