NAPA — The wine grape market has shifted so quickly and dramatically that wine industry veterans are calling it a game change.
A looming grape shortage and growing demand for California wines have driven grape prices higher, with some grape prices doubling in the span of a year. And wineries that were hit hard by the recession are exploring alternative ways to maintain lower prices for consumers, even while their production costs are rising.
These changing dynamics were recurring themes at the 2012 Vineyard Economics Seminar in Napa on Tuesday, which drew hundreds of winery executives, brokers, grape growers and bankers.
Tensions are growing between grape growers, who are demanding high prices for their crop, and wineries, which are hesitant to impose sticker shock on consumers who are still holding on to their dollars.
“The market's been changing so quickly, to say we know what's going on would be an untruth,” said Glenn Proctor, partner at Ciatti Co., a San Rafael grape brokerage. “Right when you think you know what's going on, it changes.”
Contracts are shifting to long-term agreements with higher prices, pleasing growers. Growers and wineries are trying to replant vineyards but dealing with limited nursery supplies, pleasing neither. And wineries are looking to less expensive regions to buy their grapes.
“I am a woman standing before you who is cabernet sauvignon-hungry,” said Lise Asimont, director of grower relations at Francis Ford Coppola Winery.
Currently, the Geyserville winery is not buying grapes from Napa County, she said. Sonoma County prices also are high, and the asking price for Sonoma County cabernet sauvignon has increased 50 percent in the past year, Asimont said.
“We change appellations when there is profound change in the market,” Asimont said. “We found ourselves needing to go into other appellations, these areas that were previously undervalued regions.”