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January 26, 2024
A leading marketer is urging California growers to take out 50,000 of the state’s roughly 575,000 bearing acres of wine grapes, arguing a structural oversupply is stifling prices and often making it difficult to place uncontracted grapes on the spot market.
Jeff Bitter, president of the Fresno-based Allied Grape Growers, warned a wine conference audience this week that nearly 20,000 acres of newly planted grapes are coming online this year, which will add to the glut of fruit.
He recommended that 30,000 acres of older vines be razed in California’s interior regions, including the Central Valley, and another 20,000 acres be removed from the coast, including 5,000 combined in Napa and Sonoma counties. If realized, these removals would result in a net reduction of 30,000 bearing acres, he noted.
“We’re reacting to the reality of our situation,” Bitter said Jan. 24 during a state-of-the-industry presentation at the Unified Wine and Grape Symposium in Sacramento. “The reality is that waning demand and an average-plus-size crop have left us with an undesired inventory. We’re not making any money sitting on inventory.”
Bitter said growers have left grapes on the vine in three of the last five years, including in 2023, when California growers harvested 8 tons per acre and would have had a 4-million-ton crush if some grapes hadn’t been rejected because of mildew, rot or lack of maturity. The 2022 crush was about 3.5 million tons, according to the state Department of Food and Agriculture.
As it was, several factors indicated a large 2023 crop on the vines, Bitter said. For starters, the Winegrape Inspection Program inspected 10% more grapes during the 2023 crush than in 2022, and it was common for growers to reach or exceed their maximum contracted tons. Vineyards throughout the state had grapes left over, and in nine out of 10 instances, they were red grapes, he said.
“We’re right back to where we were in 2019,” before several years of crops diminished by wildfires and other factors masked the fact that the industry is “chronically out of balance,” Bitter said. “We can’t rely on short crops to bring balance.”
Bitter has consistently called for acreage reductions since growth in the U.S. wine market began to slow in the late 2010s. In 2020, he urged that about 30,000 acres be removed, above and beyond the older vineyards that are routinely removed and replaced with new ones. While some vineyards were retired that year, growers didn’t meet the target, he said at this year’s conference.
“We need to pull out some more vines,” he said. “We’re not there yet.”
His admonishments come as changes in consumer attitudes, more competition among drink choices, oversized grape crops and increases in production costs in recent years have cast some clouds over an industry that had grown accustomed to sunny outlooks over the last few decades.
Danny Brager, owner of the Mission Viejo, Calif.-based Brager Beverage Alcohol Consulting, told the symposium audience that the industry’s challenges are fivefold:
Consumer demand for wine – and alcohol in general – is declining.
Wine remains underdeveloped among consumers of legal drinking age, many of whom are multicultural. Baby boomers and their preceding generation are still important, but will age out.
Social moderation is on the rise.
There is intense competition from other alcoholic, non-alcoholic and even cannabis-infused drinks.
Premiumization is still evident, but not as much as it was during the COVID-19 pandemic.
“The first thing I always say is, what is the consumer doing?” Brager said, adding that flavor, convenience, experience and wellness are important to younger consumers. “We need to meet consumers where they are, not where we want them to be.”
The 2½-hour state-of-the-industry talk by Brager, Bitter and other wine professionals accented the 30th annual symposium Jan. 23-25 at the SAFE Credit Union Convention Center, which organizers say was attended by more than 10,000 people. The conference included talks by numerous experts and a trade show with more than 650 vendors and service providers.
In California, growers are still planting vineyards at a brisk pace. Last year, enough vines were sold by nurseries to plant 19,000 new acres, and plantings of red varieties grew again, Bitter said.
“Quite honestly, we don’t need more red grapes,” he said, adding that removals should occur across varieties. “This is everything, really. We’re not going to just take out one or two varieties and set everything right.”
The industry is planting at the right pace but not removing enough, he said. It’ll likely take several years of pullouts to put supply and demand back into balance, he said.
“The pain doesn’t go away,” he said, “until grapes go away.”
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