By Barbara Barrielle
As the president of Allied Grape Growers, a cooperative of over 450 grape growers in California, Jeff Bitter has had a challenging year….like much of the wine producing community.
Bitter and his staff of eleven throughout the state represent growers with vineyards anywhere from a couple acres of grapes to thousands. They match these grape growers with buyers and, in effect, become a third party to the transaction.
One would have to be under a rock to miss what happened in Napa and Sonoma and many other growing regions this year. Early wildfires brought significant smoke into wine regions and much fruit was still on the vine. Bitter’s first Bold Prediction is that the crush across the state will be 10-15% lower than an average year, and the lightest crop we have seen since 2011. The crush tonnage will come in at about 335 million tons, or 10-15% of what we have been seeing on average for the past ten years.
There was a lighter crop load across the state and then the scores of rejections from buyers because of smoke issues vastly complicated the crush. Much fruit just stayed on the vine and it is estimated that 240-325.000 tons were rejected or refused because of smoke exposure. Bitter’s 2021 yield estimate is 4.1 million tons.
Of the roughly 450 growers in the Grape Growers Alliance, about 125-150 are in the North Coast, 75 in Lodi and the rest in the Central Valley. The North Coast was heavily affected by smoke and there was some damage in Lodi and in pockets of the Central Valley.
His second and even Bolder Prediction is that coastal wine growing regions will not recover until 2023 or 2024, and we are just about to enter 2021. Usually these would be higher-priced premium wines and a confluence of market trends, including Covid-19, have negatively affected the short term demand but Bitter says the long-term looks healthier and holistic. A short crop and a short market will be correcting and continuing the removal of some struggling growing acreage is also positive.
“We are out of balance and long on inventory coming into 2021,” says Bitter. “The demand is trending down. Consumers are buying from grocery stores, especially during the pandemic, and are not buying higher end wines in general. The question is at what price point the shift will happen. Inventory is continuing to back up for coastal producers.”
Bitter continues, “it may be helpful to remove diseased and economically challenged older vineyards that need hand harvesting and can not be harvested mechanically, which is less costly. Then, in order to justify replanting, we have to have an increase in consumption, especially of higher end wines.” Vineyards take several years to come into production so this is an economic decision for growers and producers and depends on both demand and their ability to support the investment waiting for long-term returns. This means that a multi-year approach puts the “normal” market range in the 2023-2024 range.
Although Bitter technically only works in California with grape growers, he imagines the same pattern of behavior is happening in Oregon and Washington.Other areas may be more dependent on local support or are fully direct-to-consumer and will not experience the downturn both in production and sales. As we have seen in California, strong DTC has become crucial as on-premise wine sales have dropped significantly because restaurants have been forced to close or limit capacity.
The Grape Growers Alliance is affected as well since the organization’s income depends on proceeds from sales contracts, so, as growers are suffering, the organizations that support them do, too. The Grape Growers Alliance supports the growers with regional meetings and guidance and this has been an understandably strange year.
“You find out who your friends and enemies are in a season like 2020,” says Bitter. “Some grape refusals were fair and others experienced wineries prematurely rejecting fruit.”
Many growers and buyers entered into post-harvest agreements where the risk still stands with the grower but the grapes were picked and accepted by the winery. After testing, if the fruit is clean then the grower receives full price and the contract is clear. Other agreements were challenged and there are sure to be lawsuits continuing into the near future.
The long-term future bodes well with a cycle of coastal fruit coming into maturity in the 2023-2024 period, low producing vineyards that don’t produce enough to command the price per ton necessary to maintain them being removed from inventory, diseased vineyards being replanted given the market needs and the resilience of the economy and demand for wine clawing its way back to the levels of a few years ago.
This year has been one of frustration, learning and relearning, invention, sadness, financial difficulties and disbelief but the future with a vaccine, fewer wildfires and creativity will buoy the wine industry as it rebounds. Like any form of agriculture, it is hard to predict the future but worth it to make some Bold Predictions in hopes of managing expectations.
Read more Bold Predictions from industry experts.