California Ag TODAY: Wine Grape Demand Is Down

While wine grape harvest in the Central San Joaquin Valley is proceeding for another two weeks, local winery giants such as Constellation and The Wine Group are not buying any more grapes that are not contracted throughout California, noted Nat DiBuduo, President of the Fresno-based Allied Grape Growers.

“While the vast majority of wine grapes have been purchased at a good price, there have been a lot of bulk wine imports which are tying up tank space, so demand is losing strength,” DiBuduo said.

“The competition is not only your neighbors' fruit, but also the global market,” noted DiBuduo.

Even in the north coast, demand is weak because there is still wine in the tanks from last year’s big crop. Wineries there are fulfilling contracts, but it has been tough for some varieties such as Red Zinfandel and Merlot.

Furthermore, north coast wineries have not expanded their capacity to meet the growing wine demand.

“Because of these capacity issues, many wineries are turning away any grapes from vineyards with any virus issues,” noted DiBuduo. “Many old grape vines have plant viruses which may hurt production. Many old Zinfandels have had viruses for years and have always been purchased by wineries, but for some reason, several operations are turning away the grapes this year.”

Some grape varieties are not even being harvested because there is no demand.

Demand is still good for varieties such as Cabernet, White Zinfandel and Chardonnay, even though Chardonnay is still in excess for some wineries.

“Prices for many varietals are significant for tonnage that is in excess of the contract,” noted DiBuduo. “It’s very significant for some growers who are leaving grapes on the vine, hoping to get a buyer,” he added. “It’s all relative to what part of the state the grower is in and the varieties he is farming. There could be a winery that will buy the grapes at the right price for them.”

This volatile season is in part due to a low Thompson Seedless price from $225 to $300 per ton, with the average under $250. “Many growers decided not to go green this year and are holding out for a raisin price,” said DiBuduo. “Because of the unstableness of the season, I predict that there could be as much as 15,000 acres of Thompson pulled after this season. I know that the bulldozers are booked up.”