Wine inventories are running low, the grapes vintners crush to make the wine are in short supply, and the problem is not going to get easier any time soon.
Just how wineries and growers will find the supply they need to keep up with growing demand for California wines was a refrain Wednesday at the annual Wine Industry Conference hosted by the North Bay Business Journal. The Santa Rosa conference attracted hundreds of wine industry executives.
The only way out of the problem, wine veterans said, is to plant more grapes. And in Sonoma County, where there's little acreage available to plant new vineyards, it will be important to replant vineyards whose productivity has dwindled.
Jackson Family Wines is tackling the problem by purchasing vineyards, and is seeking both planted and unplanted properties, said Rick Tigner, president of the Santa Rosa wine company.
"A year and a half ago we had excess surplus ... and today we are thinking to ourselves, &‘holy moly, we are going to run out of stock,'" Tigner said. "We are currently actively buying properties. ... We're buying some more in Sonoma County."
Smaller wineries and negociant brands that rely on outside growers for their grapes could be at risk.
"If you're not a large winery and you're trying to grow, you're going to have to think very seriously about how you're going to put together your forward supply," said Mark Couchman, president of Silverado Premium Properties, which manages more than 5,000 acres of vineyards. "Build relationships with your growers and with your wineries that you feel can last, and can last through these cycles."
But with many of this year's grapes already contracted to wineries, and a lag time for new vineyards to produce a substantial crop, there simply may not be enough grapes to go around.
"I think there's probably a number of labels out there that will just disappear," said Jeff O'Neill, CEO of O'Neill Vintners and Distillers, a beverage industry outsourcing and custom crush firm.
California has about 500,000 acres of wine grapes planted, but it needs another 50,000 to 100,000 acres, said Joe Ciatti, partner at Zepponi & Co., a winery brokerage. The state saw large varietal grape plantings in the 1970s, driven largely by tax incentives, and again in the early 1990s, he said.
But in the past few years, with grape prices low, there haven't been the right incentives for growers to plant vineyards, said Bill Pauli, longtime Mendocino grape grower and chairman of the California Association of Winegrape Growers.
"We have a lot of vineyards on the North Coast that are 10 or 20 years old ... and that production is declining," Pauli said. "So we have to replant those vineyards."
Elsewhere in the state, price pressures forced some grape growers to turn to more profitable crops like nuts, said Nat DiBuduo, president of Allied Grape Growers. Couchman agreed, and said a reluctance from wineries to accept grapes harvested by machines contributed to growers' pains.
"I can plant almond trees all over the Central Valley, and get good returns today," Couchman said. "We've got to get real on this."