The leader of California’s seventh largest winery with 1 million 9-liter cases sold in 2019 says the industry faces both challenges and opportunities in the near future.
Keynote speaker Jeff O’Neill, founder of O’Neill Vintners & Distillers in Larkspur, Calif., spoke candidly during the recent Unified Wine and Grape Symposium in Sacramento about issues facing the wine part of the industry — things like consolidation and competition as well as consumer trend shifts.
“There’s a lot to do here,” he said, adding that while there were huge opportunities, the customer must be kept in mind with every move made.
His presentation title gave an indication of his feelings and asked, “Are we approaching Wine-Mageddon?”
“The grape glut is here,” he acknowledged. “We have 200,000 tons of extra grapes.”
Despite a flattening wine market, the current oversupply situation was of less concern to O’Neill than the industry learning how to talk to Millennial customers and building brand loyalty.
“Generational perspectives are changing and knowing consumers will be the key as wine demand is linked to the composition of the population,” O’Neill said.
“We’re being out-marketed by spirits and hard seltzer and we need to start listening, learning, and adapting, being receptive, patient, persistent, and flexible. We need to reclaim the table with the original natural beverage. We have 8,000 years of experience and we won’t be pushed by fruity, fizzy water.”
Too many acres
While admitting his crystal ball was still a bit cloudy, Allied Grape Growers president Jeff Bitter also spoke to the concept of having too much of a good thing, telling conference attendees, “We now have 590,000 bearing acres while we need to be closer to 560,000. It’s time to dig up those non-performing vines to bring us into balance.”
And that’s on top of what needs to be ripped out annually due to attrition. “We’re in a unique position now and it’s not a favorable one.”
Never one to mince words, he told his audience, “In 2016, the industry projected a capability of 4.25 tons. Given today’s wine shipment capacity, the industry is more comfortable at 4 million tons, or less, crushed.”
Emphasizing that “California is oversupplied by at least 30,000 acres of wine grapes,” his mantra was: Pull out some vines.
He described the mood of the attendees as “all over the board” depending on where they fell in the industry.
“Negociants, those who purchase grapes, bulk juice, or finished wine from other vineyards, see opportunity, so they’re charged up and ready to move forward,” he said. Growers and many wineries that are experiencing oversupply are in a competitive and changing marketplace which causes anxiety.”
Bitter did see a light at the end of the tunnel if industry course corrections are made.
“Depending on crop size, it’s unlikely we’ll see the same amount of grapes hanging on the vine again in 2020 as we did last year, but it is likely grapes will hang on the vine again in the future if significant acres are not removed,” he said. “Even in difficult times, there are always opportunities and the best will find those opportunities and make good use of them.”
Topic tracks at this month’s conference were expanded this year according to E. & J. Gallo Winery’s Keith Striegler who helped coordinate program development. New sessions focused on labor and mechanization issues as well along with sustainability, and environmental concerns. An expanded regulations program for both grape growing and winemaking was a popular addition, especially the session on implementation of the Sustainable Groundwater Management Act.
Over 700 vendors were on hand at Cal Expo Sacramento which will again host the show in 2021 [Jan. 12-14] before festivities return to the new Sacramento Convention Center in 2022.
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