Grape growers in California finally have something to cheer about—grape prices are going up. But what do those higher prices mean for consumers? Winery owners are trying to cut costs so they can keep prices low at a time when drinkers still want value.
After nearly three years of sluggish sales and an oversupply of wine, vintners have cleared their cellars of older vintages and are looking to increase their grape purchases. But two small harvests and an absence of new plantings mean they are competing for a smaller amount of fruit.
In order to guarantee grape supplies at a set price, larger producers like E. & J. Gallo are actively signing long-term contracts with vineyard owners.
At the height of the recession, California’s wine industry faced an excess of wine. Sales of bottles priced at $20 and above slumped as consumers traded down to cheaper brands. Winery cellars backed up with unsold wines as restaurants and retailers tried to move existing inventory. Many winemakers had to change their tactics to stay afloat.
Vintners attributed the surplus of wine during the recession to slow sales, not an excess of grapes. “The reasons for these oversupplies have been primarily economic, not due to particularly bountiful harvests,” said Cameron Hughes, founder of the eponymous négociant, which purchases surplus juice from wineries and bottles it under its own labels.
I can confirm this shortage first-hand, as I’ve been speaking to numerous wineries in California over the past few months (mainly the smaller guys). From what they’ve been telling me, many wineries saw the downturn in the economy coming, and cut back their production to such a level that they’re actually running out of wine. If the larger wineries with all the cash are able to secure long-term contracts, there may indeed be a significant shortage for many smaller producers.
The solution, although I’m obviously not a winemaker and I hate playing Monday morning quarterback, is for the smaller wineries to think a little more outside the box. Consumers are willing more now than ever to experiment with more “off the wall” grape varietals. If a winery is faced with a grape shortage that they see potentially extending into the long-term, now is probably the perfect time to produce a wine(s) from lesser known grapes that are in lower demand. Just my 2 cents.