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California grape prices rise

Californian grape prices are expected to rise significantly this year as demand continues to exceed supply, although talk of a crisis is overstated, say industry insiders.

California: ‘surge in demand’

A surge in demand for grapes and wine in Californian’s North Coast region has led many wineries to enter long-term contracts with growers, to ensure a stable supply of fruit for the next several years.

Grape prices have risen as much as 30% in some vineyards and appellations during the past six months, John Wilkinson, a member of the board of directors for Napa Valley Grapegrowers and owner of Wilkinson Family Vineyards, told Decanter.com.

‘It is not a crisis,’ Wilkinson said. ‘Replanting will increase and the future is extremely bright with demand expected to outstrip supply for the next few years.’

This re-balancing of grape supply and demand began after the relatively small 2010 harvest.

It was caused by the reluctance of growers to replant at a time when demand was rising, despite the financial crisis.

‘Prior to the recession, industry leaders had already warned of impending shortages in key varieties. The softening of demand during the recession masked this inherent shortage and growers were reluctant to make capital investments’, said Jon Ruel of Trefethen Family Vineyards.

Nick Filice, head of grower relations at Silver Oak Cellars in Napa said that the shortage was also starting to affect regions further afield.

‘I have spoken with my contacts in the Paso Robles/Central Coast area(s), and they have indicated that buying has been extremely active. We can expect planting activity to increase in some of these areas, considering grape nurseries are sold out after years of sluggish sales’, he told Decanter.com.

Napa Valley Grapegrowers said that per capita consumption of wine in the US had continued to climb over the last two years, although consumers had been trading down to wines at lower price points.

Recent Nielsen data however shows a large percentage increase in bottles costing US$20 being bought in 2011.

‘As consumers return to buying at higher price points, we see higher demand than ever at a time when supply has been flat or decreasing, especially considering a couple of light harvests’, Ruel said.

Written by James Lawrence

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