Industrial Packaging for Critical Contents

Drum It Up! Steel Drum Industry News, Trends, and Issues

Archive for June, 2017

Rising Napa Grape Prices are a Concern

June 13th, 2017 by Dean Ricker

Filed under: Skolnik Newsletter, Wine

In the latest issue of Wines and Vines we learn that prices for Napa County Cabernet Sauvignon have always been exceptional when compared to prices paid for wine grapes from other regions of California and for other varieties, but they are getting so high it’s of some concern to industry experts. “Any land that’s in Napa Valley, in the watershed of the Napa River, that can be planted to Cabernet and produce a good crop of Cabernet is being planted today, and they can make a call and sell the fruit for $5,000, $6,000 $7,000,” said Tony Correia, president of the real estate appraisal and consultancy firm The Correia Co. Correia was speaking at the 22nd annual Vineyard Economics Seminar held May 24 in Napa. During his presentation, Correia showed a photo of a sign posted in a Rutherford, Calif., vineyard touting 20 tons of Cabernet grapes for sale. Such a scene would be unimaginable in today’s tight market for Napa Cabernet, but Correia was pointing out that it wasn’t that long ago when the market for high-end wine had shrunk due to the 2008 recession. Since 2010, however, the price graph for Napa Cabernet has been almost straight up, as consumer demand for premium wines has rebounded in a major way. The average price per ton for Napa Cabernet was $2,000 in 1995, and it was nearly $7,000 by 2016. The average dropped from $5,000 to $4,000 between 2009 and 2010 but bounced back by 2011. Nat DiBuduo, president of the Allied Grape Growers (AGG) also said the market for luxury grapes is particularly strong and even rhetorically asked about a bubble, pondering, “How high is too high?” before quickly adding, “I shouldn’t be saying that.” DiBuduo’s interest is in seeing AGG’s members receive good prices, but he admitted to some concern about sustaining such a market at the highest price points. He also mentioned there has been “great” Sauvignon Blanc in Napa County ripped out for Cabernet Sauvignon and expressed a concern that some appellations might be in jeopardy of becoming mono-varietal. “I haven’t seen prices like this in my 17 years,” he said. “There’s got to be a point here where we have to have balance for both the winery and the grower.” DiBuduo said AGG is projecting California’s 2017 harvest to come in around 4.2 million tons, and the group believes the state’s wine grape yields will stay around that level into 2019. He said the overall market is balanced, but in the long term wine consumption is poised to outpace vineyard development. California added about 15,000 acres of vines in 2017, and the development is almost exclusively in coastal regions, Lodi or the Delta. “I don’t know of any grapes being planted in the San Joaquin Valley anymore,” DiBuduo said. “In fact, you’re seeing the complete opposite in that grapes are being pulled out of the San Joaquin Valley.” Based on burn permit data, growers have removed nearly 25,000 acres of wine grape vineyards since 2015 and will pull another 10,000 acres by the 2017 harvest. Most of the vineyards in California support the production of wines priced at more than $10 per bottle, and that number is growing, while the acreage supporting wines priced less than $7 is shrinking. Allied projects that by 2019, acres supporting higher priced wines will increase by 10% to 262,933, while vineyards for lower priced wines will decline by 7% to 182,212 acres.