PARTNERS

By Vicky Boyd


Many growers who did not have winegrape contracts or didn’t want to accept extremely low prices left their crop unpicked thisseason, like this one near Farmington. Some industry leaders say it’s the most fruit they’ve seen left hanging in several years.
Photo by Vicky Boyd

A record 2018 winegrape crop, changing consumer tastes and trade issues have created a perfect storm that has pushed down prices, prompting some growers this season to leave fruit unpicked or pull out vineyards.

“It’s hard to say how much fruit was actually left out there, but definitely there does seem to be more than we’ve seen in the past few years,” said Stuart Spencer, Lodi Winegrape Commission executive director.

Aaron Lange, vineyard operations manager for LangeTwins Vineyards near Acampo, said they were able to sell the vast majority of their fruit with the exception of a small amount of zinfandel.

“Prices weren’t always the best, and we’re absolutely taking a very hard look at some of these older, underperforming vineyards,” he said. “We’ve already made some tough decisions on some of these vineyards.”

Bruce Fry, who grows grapes near Lodi, agreed, saying his season was equally challenging.

“It was one of the toughest since we started growing grapes in 1965,” said Fry, a San Joaquin Farm Bureau board member. “We’ve never experienced a situation like that. We had some uncontracted tonnage that we sold at very, very low discounted prices, but at least we were able to sell it, which was also good to get some money back to pay expenses.”

Law of supply and demand

Spencer blamed first and foremost an oversupply of winegrapes compared to demand.

“You’re seeing this in every region across California where grapes went unsold,” Spencer said. “Some of the growers weren’t willing to sell them at steeply discounted prices. Some of the growers met their contracted maximums and the winegrapes above that maximum were left unpicked.”

The state’s winegrape growers harvested a record 4.28 million tons in 2018, up 7.7% from 2017, according to the 2018 National Agricultural Statistics Service Grape Crush Report. In District 11, which includes San Joaquin County north of Highway 4 and parts of southern Sacramento County, growers harvested a record 850,686 tons. This surpassed the previous record set in 2013 by nearly 50,000 tons.

Growers statewide were expected to harvest an estimated 4.2 million tons in 2019, according to the August 2019 NASS crop report. If that comes to fruition, it would be 2% less than 2018 but higher than the 3.9-million-ton historical average.

In San Joaquin County, vineyard expansion that occurred five to seven years ago is coming into production, increasing overall grape supplies. In 2010, for example, San Joaquin County had 62,032 acres of winegrapes, according to the National Agricultural Statistics Service’s California Grape Acreage Report. In 2018, the last year for which figures are available, acreage stood at 73,239 acres.

And San Joaquin County isn’t alone in vineyard expansion. In 2010, the state had about 401,000 acres of winegrapes, according to NASS figures. By 2018, that figure had jumped to more than 479,700 acres.

“I think there has been a lot of cabernet and pinot noir that was planted in the ground, especially on the Central Coast, that was not contracted and was on speculation, and that hasn’t helped,” said Lange, a California Association of Winegrape Grower board member. He was quick to add he was talking in generalities and not pointing a finger at anyone specifically.

Between 2015 and 2018, prices for cabernet were attractive, prompting some growers to keep older vineyards. At the same time, newer vineyards with a heavy emphasis toward red blending varieties were coming online.

“With cabernet, the industry was being a little aggressive on planting and not pulling out cabernet that needed to be pulled, and the market softened dramatically,” Lange said. “We’re seeing more or less flat or very slow growth in consumption of wine. All of those things converged with the wine crop. It’s not like alfalfa or corn that are annual crops where you can make quick adjustments.”

Changing marketplace

Wine exports also were down about 20% in 2019, Spencer said. Although the bulk of California wines are sold domestically, export markets are still important, with Canada, Northern Europe and the United Kingdom being major buyers, Spencer said. A strong U.S. dollar in those countries made U.S. wines less competitively priced. Trade tariffs imposed by China also reduced U.S. wine exports to that country.

Adding to the concerns in 2019 was E. & J. Gallo Winery’s proposed $1.1 billion deal to purchase about 30 wine brands from Constellation Brands. The deal, originally announced in April 2019, is still undergoing Federal Trade Commission regulatory review.

“It’s created uncertainty in the marketplace and didn’t help the situation,” Spencer said.

Changing consumer demographics caused by millennials also has created concern.

“We’ve enjoyed 30 years of wine growth going back to the early ‘90s, and a lot of that has been driven by baby boomers,” Spencer said. As that generation grows older, they’re going out less and drinking less wine.

Millennials, those between 23 and 38 years old, are becoming a larger buying force. Whether they’ll favor wine – as their parents did – or are more partial to other alcoholic beverages, such as seltzers or spirits, remains a big unknown, he said.

Millennials are delaying marriage and buying houses, activities that favor spending a night at home or entertaining guests at home and drinking wine. Marketplace retraction is a natural reaction to oversupply, and Spencer said it isn’t necessarily negative.

“Looking at alternative crops is obviously a worthwhile thing if you aren’t getting a reasonable rate of return,” he said. “Growers doing that will help bring the market back into balance. The more diversified we are in Lodi, I think it’s in the long-term interest of the region, both from an economic standpoint and from a disease standpoint.”

Having large blocks of continuous vineyards has allowed grape diseases, such as the leafroll 3 virus vectored by the vine mealybug, to spread quickly, Spencer said. Breaking up those vineyards with other crops will enhance biological diversity and aid sustainability.

Disease pressure from leafroll race 3 and red blotch virus will definitely come into play as LangeTwins analyzes each vineyard’s performance this winter, Lange said.

Some vineyards that are removed and for which they have contracts will be replanted to winegrapes. Other vineyards that are pulled out may be planted to cover crops and left out of vines for a few years.

“At LangeTwins, we don’t farm trees. We don’t farm alternative crops,” he said. “It’s something we have considered but haven’t gone down that road yet.”

More mechanization

Based on a long-term business plan, Mohr-Fry Ranches had removed older vineyards in 2016, 2017 and 2018. But the family farming operation hadn’t planned to do major vineyard redevelopment in 2019, Fry said.

Instead, it has begun looking at increased mechanization to further reduce labor costs, he said. This past season, it bought a machine that, along with chemicals, removes suckers from the base of the vines.

This winter, they modified their prepruning machine to do a better job and reduce labor costs tied to pruning.

“Hopefully, the crews can go through faster,” Fry said. “We have a couple of blocks done and we’ll know, hopefully within the next few weeks, if we’ve made a difference.”

In some of the vineyards where the grapes go to higher-value programs or are head-trained old vine zin, some hand labor will still be used. ”But in our trellised vineyards, we’re trying to mechanize as much as we can,” he said.