California Wine Growers on a Tightrope? Annual Survey Results In

Estimated California wine grape acreage chart for 2021

California has had an oversupply of wine grapes for the past several years, as bearing acreage began to exceed the target range in 2016.

Wine grape growers, like most fruit growers, are fiercely independent. Just ask Jeff Bitter. For the past several years, the president of  Allied Grape Growers has tried to get the message across that the industry has to deal with an oversupply of wine grapes that drives down prices. He went so far as to display a memorable image to get his message across at the January 2020 Unified Wine & Grape Symposium: “Pull Out Some Vines.”

The growers in attendance may have heard him loud and clear, but apparently most of the state’s 5,900 wine grape growers did not. Or if they did, they haven’t acted on his advice. Allied Grape Growers recently issued its annual grapevine nursery survey, in which all the major nurseries, representing about 95% of the state’s plantings, participate. Bitter says they produce the survey and make it available at no charge to enable growers to make better decisions. But are growers listening?

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“We’ve been surprised, for the last three years, to see vineyards still being developed at or above the rate of attrition (i.e., the rate at which vineyards naturally age into a nonproductive state and are removed),” Bitter says. “Considering the known oversupply and the related challenges experienced in the wine grape market since 2018, one might assume a significant slowdown in planting would occur. It really hasn’t. The trend is down, but it isn’t down significantly overall.”

California growers produce about 80% of all U.S. wine, making the state the world’s fourth-leading wine producer with 242 million cases in 2019. But that’s too much, as was evidenced by the fact that a lot of grapes were left on the vine unpicked at the end of the 2019 season. Industry experts like Bitter believe the industry will be in balance when the state’s wine grape acreage stands at about 550,000 bearing acres.

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The state’s growers farmed 593,000 acres at the peak in 2018, but Bitter says they need to get in the sweet spot of between 540,000 and 560,000. They got about halfway to that upper level last year with a net loss of 15,000 acres, and going into this year they stand at 578,000 bearing acres. But the nursery survey shows there are still 56,000 nonbearing acres that will start producing over the next three years. “There’s plenty of acreage in the pipeline,” he says, “and that’s why we need to see vineyard pull-outs to balance against those new acres coming in.”

Grape market battle cry emoji

Allied Grape Growers President Jeff Bitter said his three teenage daughters helped him create this emoji of him, just in time to spread the message at the State of the Industry presentation last year.

REGIONAL DIFFERENCES

Coastal growers have largely been culprits, planting far more acres than they’ve been pulling for the past decade. The survey revealed that last year was an exception, as they planted 6,500 acres, but pulled 20,000. But that’s the exception, and the fact that the state’s horrendous wildfires affected coastal growers far more than those in the interior certainly had an effect.

Growers in the interior — the state’s Central Valley — produce the bulk of the state’s crop, and they have faced more headwinds in recent years because the generally lower-priced grapes aren’t in as much demand as those on the coast destined for more premium wines. They apparently have listened to Bitter, as over the last few years they have been planting at the attrition rate, which he pegs at 3%, assuming an optimistic vineyard life of 33 years.

While there were differences seen in the nursery survey between regions, there was little change in the varieties that were being planted.

“We just keep doing the same thing we’ve been doing the last five years,” Bitter says. “Why? The consumer isn’t changing. They’ve been buying Cab (‘Cabernet Sauvignon’), ‘Chardonnay’, and ‘Pinot (Noir’), so that’s what’s being planted.”

As for numbers, the nursery survey shows that of the 15.2 million wine grapevines sold for California planting in 2020, ‘Cabernet Sauvignon’ and ‘Chardonnay’ tied for the top variety, each with 23.5% of the total. ‘Pinot Noir’ claimed third with 16.2%, and the only other variety to exceed 5% was ‘Sauvignon Blanc’ at 5.4%.

CRYSTAL BALL TIME

Looking forward, Bitter says the industry needs to focus on increasing shipments, especially exports. U.S. wine export revenue was $1.36 billion in 2019, with 95% of that coming from California.

“What I hope to see is that as an industry we can grow wine shipments,” Bitter says. “I’d love to see us growing into our pants, then the call to reduce 15,000 acres isn’t going to be there. The short crop in 2020 just gave us a breather.”

Bitter says the call for pullouts is predicated on shipments not growing, and no one knows if they will grow or not. Domestic wine consumption is flat — and has been for the last several years — and that’s such a thorny problem, Bitter believes exports represent the biggest opportunity, especially China’s 1.4 billion people.

“We haven’t had the opportunity to grow China as a market because of tariffs and generally rocky relations,” he says. “So the Australians got that market. We didn’t lose it because we didn’t have it to start with, but it sure would be nice.”

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