Sea Change Coming To California Winegrape Landscape

California's coastal areas, foothills and the Lodi/Delta region are expected to add acreage over the next few years, while the San Joaquin Valley declines. (Source: Allied Grape Growers)

California’s coastal areas, foothills and the Lodi/Delta region are expected to add acreage over the next few years, while the San Joaquin Valley declines. (Source: Allied Grape Growers)

If you asked typical American wine consumers where most winegrapes in the U.S. are grown, they would almost certainly say California, as the state produces about 90% of the nation’s total.

And if you asked where in California most of those winegrapes are grown, they would likely cite the well-known counties of the North Coast, such as Napa, and to a lesser degree, Sonoma. But they would, of course, be wrong.

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As growers know, for many years the San Joaquin Valley (SJV) has been the backbone of the Golden State’s wine industry, producing oceans of mostly low-priced wines. Though as many growers also know, some of those winegrapes are shipped to the coast to “balance” higher- priced wines.

After all, to use one of those catchy appellations which attract consumers, the wine must only contain a minimum of 75% of grapes grown in that appellation. It doesn’t take a Nobel Prize-winning economist to figure out the advantages.

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For example, according to the state’s “2015 Crush Report,” a ton of grapes produced in Napa County received the highest average price, $4,336, which was up 6% from 2014. Meanwhile, the statewide average price for 2015 was $671 per ton, which was down 10% from 2014.

Pulling Out Vineyards
The declining prices for SJV grapes indicates there are just too many of them, notes Nat DiBuduo, President of Allied Grape Growers, the state’s largest grower cooperative with a total of about 600 growers. More precisely, he says there are too many of the older plantings of winegrapes that have largely fallen out of favor, such as ‘Carignan,’ ‘Barbera,’ and ‘French Colombard.’

DiBuduo, who serves on the Editorial Advisory Board for American Fruit Grower® and Western Fruit Grower® magazines, says growers have been responding by pulling out a lot of acreage of those older varieties. About 21,000 acres of winegrapes were pulled out of the state’s interior between the 2014 and 2015 harvests, triple the amount recorded in each of the five preceding years. And another 13,000 acres have been pulled since the 2015 harvest.

The pull-outs in the SJV have been underestimated by the state, as have the acres planted in other parts of the state, DiBuduo noted recently. The pull-outs, which were due in part to the state’s drought, aren’t exactly something he likes to trumpet. However, they are necessary to try and balance supply and demand, which definitely benefits growers, says DiBuduo.

“It’s more interesting to talk about huge crops during excess or short crops during a shortage,” he says, “but a short crop in a time of ample supply just makes for a boring production story of moving toward balance.”

Nat DiBuduo, President, Allied Grape Growers

Nat DiBuduo, President, Allied Grape Growers

DiBuduo notes that many of the vineyards being pulled out are not being replanted, at least not with grapes. Most are being planted with almonds, and on the saltier ground, pistachios.

But the vineyards that are being replanted with winegrapes are a vast improvement over the old vineyards. Not only did those old vineyards produce grapes that have largely fallen out of favor, but the vines were widely spaced and they were mostly flood-irrigated.

The new vineyards will be much more economically and environmentally sustainable. Newer clones that thrive in the SJV climate are going in the ground with denser spacing. Also, instead of being flood-irrigated, they will be going on drip.

Moving On Up
Part of the reason the older varieties that produced wines in the $3 to $5 per-bottle range have fallen out of favor has to do with the end of the recession, says DiBuduo. Many wine consumers now consider table wine or “every-day wine” to be in the $7 to $10 per-bottle range.

Another factor that has hurt sales of lower cost wines is the increasing popularity of craft beers, or micro-brews, and hard ciders, DiBuduo says.

“What we need going forward is to get those growers of under $7 wines, especially in the San Joaquin Valley, to work with wineries to produce wines that sell for more than $7,” he says. “We need to produce a better grape, and step up to the next price point. I think we’ve proven it can be done. Many will stay at $5 to $7, which is fine, but right now there are too many growers at that level.”

As wine has grown in popularity — particularly with Millennials, who just recently passed Baby Boomers in number — consumers have become more sophisticated. Instead of the “fruit-forward” flavors of the less expensive wines, which DiBuduo says will always have a market niche, many consumers are opting for more nuanced, sophisticated flavors.

That can be seen in sales of wines that cost $10 or more per-bottle, which have been doing much better and, since the recession has ended, are increasingly becoming mainstream. There’s no question that these higher price points hold the most promise for growth.

Because of that, much of the new growth in the next few years will be moving to the state’s coast, as well as the Lodi region and the foothills. As acreage increases in those areas, it will gradually decrease in the SJV, though the average cost of SJV grapes will go up.

In fact, those consumers who thought the coastal regions accounted for much of the state’s wine production may end up being right some day.

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