Sonoma County grape growers with fast-ripening crops face prospect of low bids - or no bids - as wine industry struggles

Sonoma Valley grape grower Ned Hill?s chardonnay is ripening beautifully, sweetened by warm, sunny days and kept crisp by cool, foggy nights.

But with the start of the annual North Coast grape harvest just days away, Hill still hasn?t found a winery to buy a large chunk of his precious crop, even at prices 30 percent below what it fetched last year.

?Just when we were finally getting to feel pretty good about having our crop sold at prices that were fair, now we?re back to square one,? Hill said. ?It?s very disappointing.?

High-end wineries across the North Coast face growing inventories of unsold wine as cost-conscious consumers have lost their taste for wines above $20. Tight on cash and unsure when demand will return, many wineries so far this year are buying only the bare minimum of grapes they need.

?This is going to be a market where they wait until they see the whites of their eyes,? said broker Glenn Proctor of San Rafael-based Ciatti Co. ?They?re only going to buy it if they really, really need it.?

One factor driving prices so low is that wineries have entered the market as sellers, instead of buyers, further increasing supply.

That?s squeezing a lot of growers who?ve invested heavily in crops that are nearly ready to be picked but still don?t have a home.

While most of Sonoma County?s 61,000 acres of vineyards are pre-sold under contracts to wineries, up to 20 percent of the crop typically sells on the open market in the months before harvest.

But early this year, after seeing wine sales slide sharply as the financial crisis deepened in the fall, wineries offered dramatically lower prices for grapes, said Brian Clements, a partner with Novato-based Turrentine Brokerage.

Instead of the $3,500 or more a ton they paid for Napa cabernet sauvignon the previous year, wineries were suddenly offering $2,500. Sonoma pinot noir that had fetched $2,800 to $3,000 a ton might today remain unsold at $1,700 a ton, he said.

?That?s the new price, to the chagrin of many growers,? Clements said. ?It?s a big plunge.?

Many are hoping that that some of the big buyers ? E&J Gallo, Fosters and Constellation Brands ? will recognize the great bargains and swoop in soon.

?They are just licking their chops in a year like this,? said Hill. ?They are going to come across a lot of great fruit at ridiculous prices.?

But others worry the buyers may not show up at all.

?I think a lot of people would welcome a bottom feeder, but right now I?m concerned that nobody?s going to want to come in and be a bottom feeder,? said Pete Seghesio, president of Healdsburg zinfandel specialist Seghesio Family Vineyards.

If the crop starts coming in larger than expected, as Seghesio predicts, then growers who don?t have a contract will be left high and dry. Spring rains, a cooler than normal growing season and three weeks of regular fog have all caused the grape clusters on his zinfandel vines to swell up like Seghesio hasn?t seen since the bumper crop of 2005.

If anything approaching that size crop hits this year, growers won?t have many options, Seghesio said.

?I think this could be the first year since the early ?90s that we could see fruit left on the vine,? he said.

That would be a surprising reversal from last year, when grape prices in Sonoma County soared to their all-time highs, hitting $2,235 a ton, surpassing the 2001 height of $2,158.

But not everyone is convinced the crop will come in that big. Clements and Proctor say the crop is looking smaller than early predictions, though still larger than last year?s anemic crop.

Nick Frey, president of the Sonoma County Winegrape Commission, thinks this year?s crop will be average, around 200,000 tons. That would represent an 18 percent increase over last year, a growing season that saw significant frost damage, a drought and freakish heat spikes.

Thus, all eyes will be on the first grapes of the season, which are expected to be harvested Monday in Glen Ellen at Hunter Vineyards. Gloria Ferrer winemaker Bob Iantosca said he expects workers to start picking pinot noir at 3 a.m.

For those growers without contracts, the anxiety only deepens as harvest approaches.

This time last year, all 300 acres of Hill?s Sonoma Valley vineyards were under contract, meaning he just had to worry about delivering the goods. This year, Hill has 60 acres of fruit worth hundreds of thousands of dollars that?s going nowhere.

But even some of the wineries he has contracts with now say they can?t take all the fruit. In one case, Hill had a contract for an established Sonoma winery to buy 25 tons, but the winery now says it can handle only 15 tons.

?Even contracts aren?t worth the paper they?re written on if there?s no money behind them,? Hill said.

Attorney and grape grower Simon Inman said he hasn?t heard of many grape contract disputes so far, but it may well happen. Contracts really don?t give growers as much protection as they might think.

?If the winery says, ?I?m not going to take the fruit,? you can?t force them to take it. It?s not as if you can just turn up on their doorstep and dump it in their bins,? Inman said.

You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@pressdemocrat.com.