Feb 23, 2022

California grape tonnage increases seen in 2021 harvest

Johnnie White is anything but crushed by the news contained in the 2021 grape-crush report.

“It’s a grower’s market,” said White, a Napa County vineyard manager and member of the California Farm Bureau Board of Directors. “There’s lots of wineries looking for fruit. We’re looking to tie up long-term contracts at these great prices that we have right now. There’s a lot of buyers out there looking for fruit.”

The California Department of Food and Agriculture’s preliminary 2021 report shows a total statewide grape crush of nearly 3.86 million tons, up from 3.6 million tons in 2020. Winegrapes accounted for about 3.6 million tons, while table and raisin grapes made up the remainder.

The single most productive district in the state was District 13, composed of Madera, Fresno, Alpine, Mono and Inyo counties, along with Kings and Tulare counties north of Nevada Avenue. These vineyards accounted for 1.2 million tons of grapes crushed.

Napa County, which by itself comprises District 4, saw 117,701 tons of grapes crushed in 2021, according to the report.

“We didn’t have much of a crop in 2020 due to the fires,” White said. “We had a little bit better crop last year, but still not a great crop due to the drought. We’re at two real short years here in Napa for fruit. Wineries need fruit bad, and the prices are showing that.”

Mike Needham of Novato-based Turrentine Brokerage said white grapes in the valley were hard to find if a buyer didn’t already have them under contract.

“The white varieties, especially down in the southern valley, there was very little of those available on the spot market,” said Needham, a broker who works in the Central Valley. “Wineries were forced to look at other alternatives, and so they looked at Thompson seedless grapes,” which otherwise would have become raisins, he added. “Now they’re going for wine, and that’s an 85% increase off of a five-year average,” Needham said. “With the scarcity of the white wine varieties available, wineries were forced to look at other alternatives.”

Needham said he thinks this will continue into 2022, as a large number of multiyear contracts have been tendered over the past couple of years.

“The best growers are getting the wineries that are willing to forward contracts,” Needham said. “Say stuff is coming out of contract after 2022. The wineries say, ‘Hey, we like that grower. We like the quality of the fruit. We have one more year in the contract; let’s go ahead and forward contract on those deals and extend out the term.’ That way, those grapes aren’t going to come out of contract, and the winery can rely on that supply moving forward.”

Jeff Bitter, president of Allied Grape Growers in Fresno, said the 2021 total is in line with his projection, and noted that from 2016 to 2019, the crush exceeded 4 million tons.

“We came off of the 2019 crop with a terrible oversupply,” Bitter said. “Then we’ve had these two short crops, but our acreage base hasn’t changed significantly, and it hasn’t been reduced to the extent that we have been indicating that we should for longer-term industry balance. That’s almost like a secondary conversation at this point, because the current state of the market is that it’s in balance.”

Needham said two years of short crops and the pandemic have helped to clear out the inventory of bulk wine. His employer has 10 million gallons for sale in California now, down from 22 million a few years ago.

In 2020, “we were sitting on a lot of bulk wine available, and we were backed up in inventory,” Needham said. Then COVID sent everyone home and retail sales took off, he added.

“That really helped us clean up the bulk inventory that we saw from 2018, which was the record, the biggest crop that California ever saw, where wineries got more wine than they wanted or needed. It took a couple years to work down on that inventory,” he said.

Prices paid to grape growers rose in 2021, although that comes with a catch.

Napa County had the highest average grape price in the state at $6,090.55 per ton—a rise of 32.5% from 2020. District 3, composed of Sonoma and Marin counties, racked up the second-highest average in the state, at $2,671.57 per ton. By way of comparison, the statewide average price was $848.42 per ton, up 24.8% from 2020.

Bitter said there’s more to the price jump than meets the eye. The 2020 prices reflect adjustments resulting from widespread wildfire-induced smoke damage.

“The rest of the story is that average prices dipped significantly from ’19 to ’20, because ’20 was the year that we had a lot of smoke exposure and a lot of problems with grapes either being accepted or being accepted at full price,” Bitter said. “When that happens, that brings down the average, because you’ve got grapes being discounted in price. You’ve got relatively higher-price grapes in the coast that are not being harvested. Those tons don’t enter into the report, and those tons are generally tons that are above the average statewide price.”

Needham said smoke was “almost a nonfactor in 2021 compared to 2020, where it was a huge factor,” noting that he knew of only one smoke-related rejection in 2021, affecting an El Dorado County vineyard close to the Caldor Fire. “I have heard of no negative reports back on wine quality.”

The 2022 crop is facing a lot of unknowns, mainly drought and the specter of fire. Needham said the mood has changed since the rains of October and December.

“All the growers and the wineries, they would like to get some more rain and start the season with a full soil profile that way to try to maximize growth,” Needham said. “With the lack of water lately, I think that the perception of the size of the crop is diminished a little bit, I think, from where we were maybe two months ago.”

Needham added a caveat: “That’s all speculation at this point, because the buds haven’t even started to push.”

Bitter said he doesn’t see a lot of reason to believe 2022 will be above average, noting that the original 2021 forecast was for 4 million to 4.1 million tons.

“The reality was, there was a lot of stunted shoot growth from the dry winter,” Bitter said. “Then, of course, we had the very dry spring and hot summer. Those climactic factors ended up retarding the crop development. What looked good in the beginning ended up being light.”

A lingering issue for Bitter is whether growers will be able to cover their costs.

“In reality, grape prices are not increasing fast enough to keep up with the increases in the cost of production,” Bitter said. “They didn’t jump over a series of years, and it’s not keeping up with the cost of production.”

A wide variety of factors are contributing to growers’ expenses, including California’s higher minimum wage and new 40-hour workweek, as well as inflation driving up the prices of fertilizer, pesticides and fuel, Bitter said. “Anything that we’re putting in or around or on our vineyard is rising in cost,” he noted.

“We’ve pulled away from the situation we were in 2019, but there’s also lots of price sensitivity,” Bitter said. “The competition is fierce out there in the big world and on the shelf. Buyers are very cost conscious when it comes to what they’re paying for grapes. I continue to see a situation where their cost consciousness is coming up against the reality of rising costs for growers and their need to cover those costs with increased grape prices.”

– Kevin Hecteman, California Farm Bureau Federation