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Expect Rock Bottom Wine Prices in 2020

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Too many grapes, too little demand

Just a few years ago, vineyards in Northern California were hustling to scare up enough usable grapes to appease their winery clients. But for the 2020 season, they’re dealing with the opposite problem: too many good grapes, and too efficient a process to pick them, which means a harvest so bountiful that wine prices could hit their lowest point in decades.

It isn’t a situation one might have expected in 2017, when wildfires in Sonoma County had a negative impact on grapes grown in the area. Longstanding vineyards like Bucklin’s Old Hill Ranch had their crops rejected by big wine brands, the SF Chronicle reported at the time, as thick smoke from the nearby blazes left chemical compounds guaiacol and 4-methylguaiacol on the fruit and their vines. Both chemicals are what makes things taste or smell smoky, which can be great when you’re talking hot sauce or barbecue.

The same is not always so for wine, vineyard owner Will Bucklin told the Chron, which is why wine empire Constellation (which owns ubiquitous brands like Ravenswood and Robert Mondavi) turned down his 2017 crop. Smoke taint remained a problem in 2018’s season, the North Bay Business Journal reported at the time, with crop after crop rejected after that year’s wave of North Bay fires. The same was true for wineries in Lake County, as a survey from the region’s Winegrape Commission estimated that area wineries lost $37.1 million in grapes that had to be dumped due to smoke taint.

Now growers are facing a new issue, the San Francisco Business Times reports. Speaking at the Unified Wine & Grape Symposium, a confab for the worldwide wine industry, Jeff Bitter of Fresno-based Allied Grape Growers says that California is “in a very difficult grape situation” — a sentiment echoed by several Napa and Sonoma-based growers at the event.

The difficulty isn’t too few grapes, however. It’s too many: According to Bitter, the issue has its roots in 2016, when NorCal vineyards started to add acreage by the thousand and planted loads of new vines. Meanwhile, growers continued to refine methods used to pick grapes, leading to more efficient harvests.

But in 2018, when those new vines started producing, something unexpected occurred: The demand for wine actually dropped. In their State of the Wine Industry report for 2018, Silicon Valley Bank admits that they expected a sales growth of 10 to 14 percent, but that the number was closer to 0.3 percent. By their 2019 report, SVB was predicting “roughly flat sales growth” for the year. In a January report, beverage industry tracker IWSR said that the the volume of wine consumption in the United States decreased 0.9 percent in 2019, the first time this number has dropped since 1994, something analysts attribute to “changing generational habits.”

For 2020, SVB says, wine consumers should expect “the best wine values in 20 years,” as grape and bulk wine prices drop to their lowest since 2015. Those price drops mean that grapes are literally rotting on NorCal vines, Bitter says, as there’s no reason to pick what can’t be sold for a reasonable price.

“This year there were more grapes left on the vine than I’ve ever seen in my lifetime,” Bitter tells the Business Times, saying that the only solution is to get rid of about 30,000 vineyard acres. Those extra 30,000 acres lead to — based on this season’s surplus — about 200,000 unnecessary tons of grapes. It’s an exces that will continue if growers don’t cut their acreage, Bitter says. “We’re going to be 200,000 tons long each year if we don’t make this correction,” he said, a number that could be even higher if the demand for wine continues its current downward slump.

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