North Coast grape prices set new records in 2016, hitting an average of almost $3,000 per ton, a reflection of the value that vintners put on the region’s premium fruit.
The average price of grapes from Sonoma, Napa, Mendocino and Lake counties last year rose to $2,955 per ton, up 5.8 percent from the previous year, according to preliminary figures issued Friday by the U.S. Department of Agriculture.
Prices hit new highs in all four counties last year. Napa County led the group, averaging $4,666 per ton, largely driven by its high-demand cabernet sauvignon. Sonoma County grapes averaged $2,585 per ton, followed by Lake County at $1,664 and Mendocino County at $1,532.
Expect prices to continue spiraling upward, said Glenn Proctor, a partner at Ciatti Co., a San Rafael grape brokerage.
“The market should generally continue to move along as it has the last couple of years,” Proctor said. “We don’t see any big trajectory changes, especially for the North Coast.”
Growers were paid $1.45 billion for their bounty, a figure that approached the region’s record $1.46 billion crop of 2014. The windfall stemmed from a combination of higher prices and a 22 percent increase in the size of the crop, which hit 490,832 tons as region’s vineyards rebounded from an unusually small harvest the previous year.
The good news for farmers is tempered somewhat by additional costs. The tight labor market has pushed wages for vineyard workers up and forced more wineries into mechanized harvesting, an additional one-time cost. Also, the industry faces additional regulations. Restrictions on overtime agricultural work mean hiring more workers, and rules on when pesticides can be sprayed mean workers must be paid a premium to work during off-hours such as weekends.
“There is still a lot of work on bridging the gap on the current increase in costs to implement regulations,” said Karissa Kruse, executive director of Sonoma County Winegrowers, the trade group that represents local growers.
Napa’s cabernet sauvignon remained the region’s most coveted varietal, costing an average of $6,943 per ton, an 11 percent increase. That record price adds to existing concern among some in the industry that Napa cab will ultimately price itself out of much of the market, as consumers balk at bottles priced higher than $50.
“At some point, it’s unsustainable,” said Brian Clements, vice president of Turrentine Brokerage, a wine wholesaler based in Novato.
Neighboring regions stand to benefit, especially those with well-regarded cabernet sauvignon grapes at lower prices. That would include Lake County at $2,331 per average ton and Sonoma County at $2,954.
Christian Ahlmann, of Six Sigma Ranch and Winery in Lower Lake, predicted more vintners will use their allowed percentage of Napa County grapes — 85 percent — to retain the “Napa Valley” label on their bottles and sourcing the rest of the fruit from elsewhere.
“I think there’ll be every bit of that 15 percent from Lake County to get the same quality,” Ahlmann said.
In Sonoma County, pinot noir was still the most expensive grape at $3,669 per average ton, a 4 percent increase.
Mike Sullivan, winemaker and co-owner of Benovia Winery in Santa Rosa, said he was pleased that Sonoma County yielded a near normal crop of 221,379 tons last year, up 18 percent from 2015.