Grape glut gone, gone, gone …

Miguel Alvarado, Head Foreman for Besson Vineyards, uses grafing tape to hold two mourvedre buds onto a 25 year old marsanne vine as part of the grafting process.

From drought to mold, unseasonably cool temperatures to hungry nematodes, winemakers take their occupational wildcards in stride.

It’s all part of viticulture’s chronic “cycle” – a perennial “roller coaster” dictated by Mother Nature, consumer demands and industry trends.

With U.S. volume wine sales rising for the 18th consecutive year according to the Wine Institute, an advocacy and public policy association for California wine, consumer thirst is showing no signs of becoming parched. Wine sales will grow 7 to 11 percent this year, as calculated by the Silicon Valley Bank’s Annual State of the Wine Industry Report.

But the grape supply is going – going – gone.

Almost three years of an oversupply of wine and a decade of declining grape prices, followed by small harvests in the last two years and the absence of new plantings, has culminated to a 12 and 8 percent spike in the price for red and white grapes from 2010 to 2011, Wine Spectator magazine reports.

For winemakers who purchase all, or a portion of their fruit from other growers, a “looming grape shortage” in California could lead to a per-bottle price increase beginning this year, according to the Annual State of the Wine Industry Report.

For vineyard owners who focus solely on growing grapes for sale, it’s a good time to be in business as they will “finally start to see recovery,” the report states.

“When there’s more of a demand, there’s more of a market for us,” said George Besson Jr., who sells to winemakers including Sarah’s Vineyard in Gilroy and the Calera Wine Company in Hollister.

Besson – whose family first planted old vine Zinfandel in 1922 on Hecker Pass – expects to harvest in the fall more than 100 tons of fruit from his two Hecker Pass vineyards.

Given the “roller coaster”-like ups and downs of the wine industry, growers like Besson appreciate long-term contracts from winemakers looking to lock-in their grape supply for several years down the road.

As for the rest of South County’s nearly 20 wineries, many keep the cards in their own hands by growing their own estate fruit.

Some are feeling the squeeze, however.

“At the start of this year, all of the sudden everybody realized, “(Crap), we’re out of grapes. And I’m talking not just here – but the whole industry basically had a huge muscle spasm,” observed owner and winemaker Tim Slater of Sarah’s Vineyard on Hecker Pass Highway west of Gilroy. “American wine consumption caught up, and surpassed the glut of grapes that was actually available in the market.”

For a cluster of producers including Slater – who buys about 35 percent of his fruit from Central Coast growers – the rising cost of Chardonnay and Pinot noir grapes purchased from the Santa Cruz mountains could result in higher retail prices down the road for certain labels.

Slater says the per-ton price of Pinot noir grapes have gone up “appreciably” from $3,200 last year to $3,600 – and “it’s not going to go down.”

Whereas a “little guy” like Slater can normally make a phone call in April and pick up a couple hundred of grapevines with no problem, “I had to scrounge,” he recalled. “All of the nurseries were sold out. I couldn’t even place an order….I really had to scrape and scratch and plead for what normal, large wineries would consider insignificant.”

George Guglielmo of Guglielmo Vineyards in Morgan Hill encountered similar markups.

The industry veteran – who remembers when his family’s winery was selling Burgundy for 70 cents a bottle in 1970 – says the bulk price of Merlot and Cabernet Sauvignon “skyrocketed from two years ago” and “doubled in some cases.”

“Two years ago, you could have bought Cab for $800 a ton in the Central Coast area because there was no big supply situation or problem,” he said. “It’s jumped up to $1,600 a ton. It’s a commodity.”

While the price of bulk juice crawls upward, larger operations such as Guglielmo (which produces 150,000 cases of wine a year) will have to “bite the bullet” and hopefully find ways to “cut some corners here and there in terms of supplies,” said George.

He certainly isn’t willing to sacrifice quality and integrity “on what we put in the bottle,” which could possibly result in “higher prices down the line.”

The grape scarcity is also affecting the custom bottling services Guglielmo Winery performs for outside winemakers.

A year-and-a-half ago, George was bottling wine 10 days out of the month for outside clients.

Now, he’s down to two days a month.

For some winemakers, “there’s just no product out there to put in the bottle,” said George. “Some of the major players in this game that have always have had a substantial amount of wine to sell … now it’s not there.”

John Aver of Gilroy’s Aver Family Vineyards, which grows most of its own grapes but sources a few varietals such as Viognier, Chardonnay and Mourvèdre, notices that it’s “getting harder and harder to find quality grapes.”

For Aver, purchasing certain fruit from outside growers hasn’t necessarily gotten more expensive – but the hunt is more challenging. Many growers prioritize and “reward” their longtime buyers before catering to relatively newer winemakers, Aver said.

“Being on the small side and new, I’m definitely experiencing some of that,” he admitted.

On the flipside, business is promising for those who anticipate ending up with extra grapes in the fall.

Cheryl Durzy of Clos LaChance Winery off Watsonville Road said her family’s winery upped the price of its bulk juice for sale.

“It’s a good time. We’re a lot better now than we were last year,” said Durzy, who estimates Clos LaChance will sell 15,000 gallons of bulk juice this year. “All of the excess inventory in the market is being sucked up.”

Even smaller estate operations such as Lightheart Cellars in San Martin might have a little extra to sell come harvest. After expanding from three to 13 farmed acres, owner/winemaker Sheldon Haynie expects to be in the “happy position” of harvesting four to five acres of excess grapes.

“I think the guys who are bigger – if they don’t have something lined up by now … somebody looking for grapes during harvest is going to be in trouble,” he said.

Over at Pietra Santa, a Hollister winery with one of two vineyards that is 100 percent under contract, Marketing Director Jayme Nunn has noticed Chardonnay prices – which were “down significantly” – are going back up.

“So that’s good for me,” she said.

It’s a similar scenario for Besson.

In a recent visit to one of his picturesque properties tucked amid folding hills just east of Bonfante Nursery, Besson’s foreman was busy grafting Mourvèdre vines over 25-year-old Marsanne plants. The fruit is under a five-year contract with a Santa Cruz label called Birichino.

“It’s a good thing for us,” agreed Besson. “That’s really encouraging.”

He exercises a cautious optimism, however.

Echoing other growers who interpret their job with descriptors like “cycle,” “sharp pendulum swings,” “always playing catch-up” or “the cycle of optimism and despair in planting,” Besson says that even when things seem “hunky dory,” each season presents new challenges and surprises.  

“Every year is something different,” chuckled Besson, rattling off nuisances like gophers or mold or rabbits or bad weather. “It goes in cycles.”

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