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The Sonoma County grape crush fell 10.7 percent last year, a significant blow to the local economy but far less than the 20 percent drop many had predicted.

Still, the combination of falling grape prices and a smaller harvest in 2010 cost Sonoma County growers $88.4 million last year, according to a preliminary government report released Thursday.

"That has a ripple effect through our economy," said Nick Frey, president of the Sonoma County Winegrape Commission. "It will be felt by local suppliers, lenders and others servicing the grape industry."

The value of the North Coast grape crop fell to $902.7 million last year, down from $1.05 billion in 2009. Sonoma County growers suffered the biggest hit, receiving $370.5 million for their fruit last year, down from $458.9 million in 2009.

Yet many had expected a more dire report.

"Everyone thought the crop was going to be even smaller this year," said Brian Clements, a partner at Turrentine Brokerage, a Novato grape brokerage firm. "This report surprised a lot of us."

A cooler than normal summer last year stunted growth through much of the season in Sonoma County, and then a sudden heat wave in August fried the under-developed grapes.

"It was like the grapes had been put in an oven," said Brandon Lapides, winemaker at Armida Winery in Dry Creek. "I'd never seen anything like it."

Armida Winery crushed 70 percent fewer grapes last year after the heat wave destroyed most of its crop, Lapides said.

Overall, the county's zinfandel harvest dropped 31 percent — making it the hardest hit of the county's major varietals and costing growers $10.9 million.

But while some areas and varietals such as zinfandel in Dry Creek were decimated, other areas and varietals were unscathed from the calamitous weather.

"Last year you might have done just fine as a grape grower," said Steve Hill, general manager of Durell Vineyard in Sonoma. "Or you might have had a disaster."

In total, wine producers crushed 189,897 tons of Sonoma County grapes in 2010, down from 212,674 tons the previous year.

But 2009 was a larger than normal harvest. The average harvest is about 200,000 tons, and so 2010 was only about 5 percent below normal, Frey said.

The bigger concern for North Coast growers is that grape prices continued to decline last year as wineries cut back on production, and instead focused on reducing stockpiles of wine in the face of reduced consumer demand.

The lower demand for high-end wine, a result of the recession, sent grape prices tumbling.

Sonoma County grape growers received 9.6 percent less for a ton of grapes on average in 2010, according to the report published by the California Department of Food and Agriculture.

Growers received $1,951 per ton on average last year, compared to $2,157 in 2009, according to data that looks at grapes sold to non-affiliated wineries.

"It's the lowest price of the decade," Clements said. "It's tough on growers."

Statewide, the industry crushed 3.58 million tons of wine grapes, making it the third-largest crush in state history and down only 3 percent from last year.

Grape growers in the southern Central Valley accounted for the unexpectedly large harvest, making up for the declines in coastal regions hit by the cooler summer and August heat wave.

Red wine accounted for the largest share of all grapes crushed, totalling 2.04 million tons statewide, down 1 percent from 2009. The 2010 white wine crush totaled 1.53 million tons, down 6 percent from 2009.

Statewide winegrape prices dropped 6.6 percent. The combination of lower prices and a smaller harvest cost growers about $217 million statewide, where revenues dropped 9.6 percent to $2.03 billion.

Grapes produced in Napa County continue to command the highest prices in the state, averaging $3,068 per ton, down 6.6 percent from 2009. Napa County crushed 138,380 tons, down 3.1 percent from 2009. As a result of the decline in prices and size, the value of Napa's grape crop fell to $424.5 million, down from $468.7 million in 2009.

Sonoma County growers received the second-highest average price in the state.

Seventy percent of the county's grape production was concentrated in three varietals: chardonnay, which yielded 65,566 tons; cabernet sauvignon, 37,574 tons; and pinot noir, 29,699 tons.

Prices in Mendocino County plummeted 17.1 percent on average, to $1,092 a ton. The steep price drop was the result of a soft market and an unexpectedly large crop of 65,719 tons — up 10 percent compared to 2009, said Glenn Proctor, a partner at San Rafael grape brokerage Ciatti Co.

Overall, Mendocino growers received $71.8 million for their fruit last year, down from $78.5 million in 2009.

Between 35 percent to 50 percent of Mendocino County grape growers lost money in 2010, and perhaps between 20 percent to 25 percent of those in Sonoma County had losses too, Proctor estimated.

Those widespread losses have some growers wondering if they should farm this year.

"We've got guys from Mendocino calling me and asking if they should even prune their vineyards," Proctor said. "We ask them how much risk they can take."

In Lake County, prices fell 8.8 percent, on average, to $1,129 a ton. Growers harvested 31,784 tons, virtually unchanged from 2009. As a result, the value of the crop slid to $35.9 million, down from $39.2 million in 2009.

Proctor and others think the market has hit bottom, and will begin slowly improving in 2011. Most growers should be able to at least break even this year, given that grape prices should rebound slightly, Proctor said.

"The economy is stabilizing. It's painstakingly slow, but it's getting better," he said.

Unlike previous downturns in the wine industry that were driven by an oversupply of grapes, this one is not the result of having too many acres planted with vineyards, according to brokers such as Proctor and Clements.

"This is simply the result of the overall economy," Clements said. "So the biggest question now is when will the economy return?"

When the economy bounces back, many wineries might discover there is a shortage of wine, Proctor and Clements said.

If grape prices do improve this year, and wineries return to their normal practice of signing multi-year purchase agreements with growers, then the real estate market for wineries and vineyards will improve too, said Joe Ciatti, a partner in the winery brokerage firm Zepponi & Co.

"If you have another similarly-sized crop this year in Sonoma County, then for sure in 2012 you'd see contracts coming in," Ciatti said. "Vineyards without contracts are almost impossible to sell."

Most growers are already hoping to forget the dismal 2010 harvest. But Proctor had a final suggestion to help them get over it.

"Just look at last year as a tax break year," he said.

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