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Allied sees good signs for grapes

It will be a no less daunting challenge for growers to market this year's California wine grapes than it has been for the past two years.

However, Allied Grape Growers President Nat DiBuduo told members of the 500-grower wine marketing cooperative at Allied's annual meetings in July that “significant” new vineyard plantings have halted, and bulk wine supplies are dwindling.

That is good news, but happy days are not yet here again for most grape growers and varieties. However, for some growers and specific varieties, particularly in California's central valley varieties, 2003 could be a tune-up time for striking up the band for the march to better days ahead and out of one of the deepest economic troughs the California wine industry has seen in decades.

Wine grape prices and markets are strengthening this year in California's interior valleys. However, for coastal regions the 2003 harvesttime outlook is stable at best to continued market price declines at the worst.

Wineries are interested in “interior” Zinfandel, French Colombard and Ruby Cabernet at “reasonable, not exciting prices.

“There also seems to be some cautious optimism in Chardonnay and floral varieties like Muscat Alexander, depending on how the crop finishes out,” DiBuduo says.

In Lodi, Pinot Gris, Sauvignon Blanc, Zinfandel and Petite Sirah are drawing winery interest.

Toughest conditions

Interior Cabernet Sauvignon and Rubired will face the “toughest marketing” conditions this year.

“Buyers just don't have much interest in interior Cabernet Sauvignon, given the availability of cheap coastal Cabernet and bulk wine,” DiBuduo said.

If there is a saving grace for the coastal wine grape market in 2003, it is that the crop looks lighter than 2002 for some varieties.

However, many contracts are expiring and some are not being renewed as new acreage continues to come into production. “This has put significant downward pressure on the spot market. There is currently little to no activity in the market,” said the Allied president.

However there has been “interest” in Merlot, high quality Cabernet Sauvignon, Petite Sirah, Riesling, Sauvignon Blanc and Pinot Gris. The variations in the Zinfandel crop set may get wineries interested in that red varietal as the season progresses, he added.

While the coastal Chardonnay crop “appears to be lower than normal,” DiBuduo said there is only marginal interest in California's most popular white varietal.

“There has been some interest in Riesling and Pinot Noir on the Central Coast, but Syrah is facing some challenges identifying itself,” he said.

Allied's chief wine grape marketer said mid to high-end wineries report softer demand for their wines in 2003 with inventories backing up. Those wineries have been cannibalized by super cheap, super values varietal wines like Charles “Two-Buck-Chuck” Shaw.

Growers who are deviating from maintaining high quality grapes to cut costs “will struggle” to find a home for their grapes, DiBuduo said.

Better days?

Marketing the 2003 California grape crop will be a challenge, he reiterated. “However, if we continue to see the growth in sales of California wines, both domestically and abroad, we will see better days.

“When and how soon are the questions,” he added.

When supplies are abundant like they are today in the wine industry, quality may find a home for grapes when mediocrity will not.

DiBuduo has been one of the most outspoken advocates of improving wine grape quality in the central valleys. However, he added that grower effort must be rewarded with better prices from vintners.

And, wineries seem to be acknowledging that with a different pricing mechanism in the central valley, according to DiBuduo.

While North and Central coast grapes are marketed on quality, SJV growers have historically been paid on “varietal pools.” However, DiBuduo said wineries are shifting away from that and paying different prices for the same varieties based on fruit quality and the winery marketing program grapes are earmarked for.

DiBuduo calls the quality issue a chicken and egg scenario. Growers rightfully ask what is the return on spending money for quality, said DiBuduo.

“We all know that grapes getting lower prices per ton do not encourage growers to spend more for quality, let alone survive,” said DiBuduo. “We are all in this together — vintner and grower.”

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