California produces bumper 05 but growers positive on prices

  • Tuesday 14 February 2006

California’s 2005 harvest was over a third larger than 2004, but growers are confident prices will not fall.

California crushed a record 4.32m ton of grapes in the 2005 harvest, 35% more than the 3.6m crushed in 2004, according to figures just released.

Despite the bumper crop effectively giving California another 67m cases to sell, most growers are confident that grape prices will not fall too far. They say quality is excellent – on a par with 1997 – and there are positive consumer trends in the domestic and export markets.

But there is some reason to believe prices will fall. They have spent the last two years recovering from severe dips in 2001 and 2002. The quantities of wine on offer could also lead to cheaper bottle prices being passed onto consumers, brokers said.

Karen Ross, president of the California Association of Wine Grape Growers, said the harvest would not create a glut as planting over the last five years had been minimal. It is a 'one-year situation,' she said, which would be 'good for the consumer because it may create some tightness in pricing.'

However, the figures show a 1.8% increase in grape prices for 2005, with the highly fashionable Pinot Noir up 7.5% – while out-of-favour Merlot has plummeted by nearly 9%.

Robert Sobon of the Shenandoah Vineyard in the Central Valley said that he has no intention to lower prices. ‘We had slightly lesser amounts in the last few years, but just a little more than usual of Cabernet, so this increase will merely help us keep up with demand,’ he told decanter.com.

Nick Frey of the Sonoma County Grape Growers Association said Merlot was one variety that would suffer from the large crop. ‘Merlot remained weak in 2005 and it was a huge crop. It remains in oversupply and grape prices will be weak.’

Steve Fredricks of Turrentine Brokerage said one effect of the harvest would be a likely dampening of the contract growing market in 2006. He added that the higher Chardonnay harvest was purely down to vintage conditions, rather than new plantings.

Frey pointed out that smaller harvests in 2003 and 2004 had brought inventories back into balance. ‘The large crop may slow the turnaround, but some varieties are still in good demand, like Chardonnay and Pinot Noir,’ he said.

‘The large crop was excellent quality. We expect a very good vintage, much like 1997. Having a good supply of high-quality wine to sell into a growing market is a good thing. It also appears bud fruitfulness is low, so low cluster counts for 2006 will likely lead to a smaller harvest. Bottom line: the glass is half-full even after a large harvest.’

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