By Paul Vigna
John Duarte runs the largest permanent crops nursery in the country and has seen his share of ups and downs since his family opened its namesake business in California’s Central Valley in 1989. Right now, he admits, the demand for stock has dropped as the wine grape market tries to work through an overabundance of supply and shifting demands.
“Grapevine nurseries are always a derivative of the wine grape market, and when it has a cold we have a flu,” he said, “and then when things get exciting for growers again, they really get rolling.”
While there are a few exceptions, the numbers across California and north into Washington show fewer new vines going into the ground the past few years in addition to a decrease in replantings, and the ongoing pandemic and all of its repercussions – plus threats from pest and disease – figure to skew those trends even more.
Allied Grape Growers produces an annual state of the industry slideshow for the Unified Wine and Grape Symposium every January. Among its conclusions were that California in 2019 had 30,000 more bearing acres than it needed, leading to at least 100,000 tons of grapes left hanging after harvest.
Jeff Bitter, the president of Allied Grape Growers, said that even before the pandemic “we were heading into a year of some fairly significant decrease in bearing acreage because of pullouts.”
But COVID-19 has tweaked that, taking what had been a rising interest in more expensive wines and causing a sudden shift, with consumers nationally unable to visit tasting rooms and restaurants or attend parties or conferences. Rather, they are drinking at home, buying bottles for $10 rather than $40.
So the market forces “have flipped 180 degrees and everyone Is trying to readjust,” Bitter said, and vineyards from the lower-priced production area that might have been pulled have a better chance of being left to produce. “I think the industry all of a sudden is faced with this dynamic where we’re going to have to readjust our thought process and take a hard look at our acreage and make sure we don’t go too far one way in regard to removals on the lower end of the market.”
It was only several years ago that new developments of vines were strong, especially in the San Joaquin Valley, Central Coast and to a lesser extent the North Coast, according to Wonderful Nurseries VP of Sales Dustin Hooper. Wonderful Nurseries is the largest grapevine nursery in North America but also sells almond, pistachio and pomegranate trees. It’s located near Bakersfield. But those are “started to pare down,” Hooper said, while redevelopments have picked up a bit, “changing over varieties that have a better market or changing out old stuff that probably should have been changed out a while back.” That’s led to an “uptick” in graft-overs, Hooper said.
But the pandemic likely will cause some changes, particularly with larger companies that could see more value in redeveloping acreage in the San Joaquin Valley and Lodi and pushing any changes in Napa to the back burner until interest in the higher-end wines returns.
“People are waiting to see the COVID impact.” he said, waiting to decide when they are comfortable. “Some people are comfortable right now and some need a little more data.”
The current dynamic isn’t an issue exclusive to California, based on what vineyard manager Dick Boushey has seen in Washington’s Yakima Valley. There, he manages 11 properties, home to predominantly Bordeaux grape varieties.
While he hasn’t planted anything new the past few years, they have grafted over or top-worked existing blocks to other varieties or clones of the same variety, changes that react “to the needs of the wineries,” he said.
Oversupply remains a big problem there with popular grapes such as Cabernet Sauvignon, Merlot, Chardonnay and Riesling. “There has been tremendous growth the last five years mainly in Cabernet Sauvignon plantings. The market has not been able to absorb this new production,” he said, adding that the emergence of Phylloxera in older vines is forcing more attention on what’s planted in the future.
California’s mix of grapes hasn’t changed much the past decade. Allied’s 2020 nursery survey showed that Cabernet Sauvignon accounted for 27.1 percent of the plantings, followed by Chardonnay (22.4%) and Pinot Noir (14.8%). Sauvignon Blanc (7.1%) has seen more interest the past several years.
Said Wonderful Nursery’s Hooper, “If you take Cab, Chard and Pinot, you’re probably 75 percent there on what’s being planted year in and year out [across California].”
Duarte noted the last big planting boom ran from 1995 to 2001, and that 20-plus years later that has left the industry with a “very large inventory of old vineyards that need to be torn out or replanted.” That hasn’t been happening, he said, meaning when the demand increases again there’s going to be shortage of high-quality fruit.
He said his nursery’s success in grapevine sales recently has been in Ubervines, which account for “over half our grafting now and probably two-thirds of our revenue. If we hadn’t [moved to] the larger format vines, our grapevine revenue would be way down.”
That revenue has been supplemented by other products. “In the South Valley, south of Lodi and down through Bakersfield, you see almost no new grape vineyards going in,” he said. “Many of them are coming out and going into almonds and pistachios. And if you get from Modesto north, up through Lodi, there’s a lot of vineyards coming out and going back into almonds or walnuts.”
Eventually, Duarte said, the cycle will switch, creating the need for a “lot of catch up” that will challenge suppliers to make sure their plants are clean.
“The disease and exotic pest issues we’re seeing today are to me unprecedented,” he said. “We’ve always had challenges … but we’ve always had answers to our challenges. For these, we probably will find answers or at least best practices, but will we be able to grow economically and be globally competitive with these pest pressures upon us? And which segments will we have to give up and which segments are going to remain profitable are questions we’re starting to ask.”