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Archive for July, 2017

Good News for Lodi Vitners and Growers

July 11th, 2017 by Dean Ricker

Filed under: Skolnik Newsletter, Wine

In the most recent issue of Wines and Vines, we learned that vintners and growers heard a lot of good news during an industry symposium in Lodi, where speakers said the region’s wines are enjoying a better reputation for quality and are selling well at national grocery chains. Growers in the Lodi AVA and northern San Joaquin Valley, however, are still being paid less than what one might expect given how Lodi appellation wines are doing in the market. Those wines are commanding around $10 per bottle on average, and using the simple “times 100” rule of thumb for grape prices, one would assume the price wineries pay per ton for Lodi grapes is close to $1,000. But averages for state grape District 11 came in at $516 for Chardonnay, $683 for Cabernet Sauvignon and $735 per ton for Zinfandel in 2016, according to the California Grape Crush Report. Jeff Bittner, vice president of operations for Allied Grape Growers, said grape prices have stayed flat because of “anemic” sales growth of wines priced between $7 and $10 per bottle. And while wineries selling wines priced more than $10 have enjoyed robust growth (48.6 million cases in 2013 to an estimated 62 million in 2016) they also enjoyed a string of exceptionally large harvests. Bittner said that excess inventory now has flowed through the market, and there isn’t much opportunity for significant new plantings in the coastal regions. ‘Trickle down’ effect on grape sourcing Three or four years ago, large wineries could count on the southern San Joaquin Valley as a reliable source of cheap grapes on the spot market to fill any gaps for Chardonnay and red blend programs as well as other varietals. Today, many of those vineyards have been ripped out in favor of almonds, which show no sign of becoming less lucrative any time soon. “That’s going to open up more demand in the coast for Lodi,” Bittner said. “It’s kind of a trickle-down effect.” These changing conditions may mean that wineries will turn to Lodi to fill out their premium-priced wine programs or switch some brands to California-appellation wines, and growers could see their grapes fetching prices closer to what Lodi AVA wine prices suggest they should be. “Lodi is in a unique position to provide a reliable supply of grapes, including those for above $10-per-bottle wines,” he said. “We see buyers coming in to Lodi…looking to supplement programs. That’s starting to happen and I think it’s going to be a trend we see more and more of in the coming years.” Bittner offered his analysis of the market during the second annual Lodi Vineyard & Wine Economics Symposium, which is organized by the Wine Industry Symposium group. Wine Business Monthly, which is part of the Wine Communications Group along with Wines & Vines, is the owner of the symposium group.
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