Despite recession-driven pressure on grape prices, a near-record crush in 2009 pushed the value of last fall’s prized Napa Valley harvest to $482 million.
The 22 percent hike in crop value over 2008 is attributed to a like increase in harvest tonnage and grape prices holding their own, according to the Preliminary 2009 Grape Crop Report released Wednesday by the California Department of Food and Agriculture.
The annual assessment of the previous year’s grape crop didn’t set off any alarms in wine country.
“It’s basically showing a recovery from 2008 when we had a crop that was way, way down,” declared industry analyst George Schofield of George Schofield & Associates. The crush in 2008 fell just below 116,000 tons, the smallest harvest of the decade.
A telling aspect of the state report shows “prices were generally flat,” Schofield noted. Schofield pointed out that a substantial portion of the local grape crop is under long-term contract to area vintners. Those prices are locked in by contract and are not reflected on the spot market, or market for uncommitted grapes.
He said the steady prices in 2008 and 2009 reflected “generally weak demand, a lackluster economy” and little concern about inventory. The size of last fall’s harvest might exert downward pressure on 2010 prices, he added.
“While I think the large crop caught people off guard, the fact that the crop was so low (in 2008) is reflected in this year’s prices. This year’s crop will then be reflected in prices next year,” he said.
Merlot registered the largest price drop per ton last fall — a little more than 5 percent — reflecting softness in the spot market, noted Sue Brewster, who works with Schofield in putting together an analysis of the annual report. Though the average price for a ton of merlot was $2,622, in a substantial number of sales on the spot market buyers paid $500 and less for homeless fruit.
While wine sales have been down, the impact of this year’s large crop won’t be felt immediately, said Vic Motto, CEO of the wine investment bank, Global Wine Partners.
“That wine won’t hit the market until after the recession is behind us,” he said. “By that time, we may be booming again. (A recession) is never permanent. The wine we’re making today will be sold tomorrow — we’ll see what tomorrow brings.”
Motto isn’t concerned that last year’s harvest was substantial, even in a time of lagging sales. “In terms of inventory, we didn’t have a large quantity of grapes (from a previous harvest),” he said.
“There’s a bit of softness in wine prices. But the economics of the wine business are still much better than most industries.”
Grape tonnage bounces back
The 2009 grape harvest weighed in at 141,621 tons, up 22 percent from a decade low of 115,889 tons in 2008.
Cabernet sauvignon production rose to 55,002 tons, an increase of 26 percent over 2008. Pricewise, cabernet dropped $21 a ton to $4,759. “One grape, cabernet sauvignon, accounts for more than half of total crop value,” Schofield pointed out. “Cabernet sauvignon alone is valued at $262 million, or 55 percent of the total.”
The early maturing Burgundy varieties of chardonnay and pinot noir registered significant tonnage increases as well — 27,070 (up 19 percent) and 8,691 (up 12 percent), respectively. The price for a ton of chardonnay grapes dropped $79 to $2,321, while the price for pinot noir was down $18, to $2,570 per ton.
Last fall’s merlot crop was 17,878 tons, a 20 percent hike over the previous harvest. The price for merlot dropped slightly more than 5 percent to $2,570 a ton.
“Sauvignon blanc production in 2009 reached a new record of 12,370 tons, exceeding the previous high mark of 12,128 tons in the year 2005,” added Brewster. Tonnage was up by 21 percent. It, too, followed the price pattern established for other varieties, dropping $27 a ton in 2009 to $1,879.
Additional tonnage and average prices for other Napa Valley grapes in 2009 include: pinot gris (860 tons, $1,816), semillon (718 tons, $2,791), viognier (333 tons, $2,748), riesling (545 tons, $2,359), cabernet franc (3,487 tons, $5,176), malbec (750 tons, $4,616), petite sirah (2,515 tons, $3,134), syrah (2,852 tons, $3,107) and zinfandel (3,914 tons, $2,772).
The highest price paid for a ton of grapes here last year was for the inky Bordeaux variety, petit verdot — $5,409. The growers of this particular varietal — there were 1,943 tons crushed — were also affected by the economic slump, as the average price dropped $219 a ton last year.
Sonoma and statewide
The grape crop in neighboring Sonoma County was also huge last fall — a 25 percent increase over 2008 to 211,746 tons. Value jumped up nearly 22 percent to $462 million.
Cabernet sauvignon tonnage in Sonoma bounced back to 40,941, an increase of 28 percent, while chardonnay tonnage was up by 36 percent to a record 72,916, about two-and-a-half times the size of Napa’s chardonnay crush.
Grape prices, on average, declined slightly in Sonoma County as well. A ton of chardonnay sold for $1,977 — down $39 — and a ton of cabernet went for $2,270 — a drop of $41 — about half the going rate for Napa Valley cabernet sauvignon.
Statewide, the 2009 harvest saw a total of 4,089,160 tons crushed, up 11 percent from 3,673,858 tons in 2008. This is but the second time in the past decade that California’s crush has exceeded 4 million tons.
In 2009, chardonnay accounted for the largest percentage of harvest volume at 17.8 percent. Zinfandel was second at 10.9 percent.
The average price paid for a ton of grapes in California last year was $571, an increase of 4 percent over 2008. A bigger crush of higher priced grapes accounted for the increase, the state report shows.
Grapes grown in Napa received the highest average price per ton last year — $3,400.85, down less than 1 percent from 2008. Sonoma County growers received the second highest return of $2,180.28, down 3 percent from the previous harvest.
“The overall inventory position of the industry is much better today than it was after the record harvest of 2005,” advised Bill Turrentine, president of industry-leading grape broker, Turrentine Brokerage. “Though everyone is dealing with the current economy, the long-term challenge will be to prepare for the growing purchases of wine by millennial consumers and the eventual economic recovery.”
In what Turrentine calls “great news for consumers, pinot grigio, an Italian varietal that does exceptionally well in California, had a record crop in 2009. Pinot grigio increased by 61 percent, equal to over 45 million bottles of finished wine.”