It's been a long time since grape growers felt coveted like a hot commodity, but after two years of weather that pummeled the crop, wineries are pursuing them again.
Grape growers are suddenly like the popular girl on the cheerleading squad, while wineries are the pursuer, competing for their attention — and hoping they will agree to go steady for a while. And it's setting up a dynamic where some growers want to hold out and wait for the best offer.
"The wineries have pens in their hands, but I don't know that growers have yet," said Glenn Proctor, partner and grape broker at Ciatti Company. "People want to date me. So do I go back with the person I took to the prom last year? Or these five other people want to date me, should I talk to them?"
Many grape growers are being offered multi-year grape growing contracts from wineries seeking to buy their grapes, and some are being offered contracts to plant new vineyards, agreements that can last a decade.
The trend comes in sharp contrast to the past two years, when a faltering economy, lower grape prices and a relatively abundant crop meant that wineries could easily find quality grapes to buy when needed.
The impact on growers was painful. Some saw multi-year contracts cancelled. Others spent more growing and harvesting the grapes than they could recoup by selling them. Some left their grapes to rot on the vine, unable to find a buyer willing to pay them enough to harvest their fruit.
"We have moved from what I would call a pure buyer's market to a pure seller's market, in six months," said Brian Clements, vice president of Turrentine Wine Brokerage.
Back in 2007 and 2008, 90 to 95 percent of the grapes in Sonoma County were grown under a contract with a winery that committed to buy the grapes, and many of those were multi-year contracts, said Nick Frey, president of the Sonoma County Winegrape Commission. In 2009 and 2010, the grapes under contract dropped to about 80 percent.
"We've had a declining number of long-term contracts for the past six to seven years," Proctor said. "Wineries were unsure about what they needed in the future, and they were unsure about the price. You saw either contracts ending or (cancellation) notices being given to evergreen contracts."
But after a 2011 harvest where the crop yield was down 20 to 30 percent, wineries are eager to secure their supply.
"All our grapes are sold moving forward with a waiting list," said John Balletto, president of Balletto Vineyards and Winery west of Santa Rosa. "We're at a magical turning point. The shortage that's going to be upon us here, it's here now. Wineries were calling us in December to try to contract grapes in December, and I haven't seen that in seven years."
At the same time, the short supply of grapes has led to higher prices for growers. In some cases, prices offered in multi-year contracts are doubling or more than doubling, depending on the varietal and region, said Vernon Crowder, vice president and agricultural economist at Rabobank.
"It's changed very quickly," Crowder said. "You've got the big wine companies that are really beating up on each other to secure the varietals that they need for their wines. They're trying their best to retain their contracts."
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