Wine prices continue to strengthen

An economic report released Thursday provided some good news for grape growers still recovering from a rain-soaked spring.

Global wine prices, including local markets on the North Coast, are continuing to strengthen as the economy recovers and consumers sip their way through the surplus of wine, according to the Rabobank Wine Quarterly report.

"There is an improving picture," said Stephen Rannekleiv, a co-author of the report. "Things seem to be getting slowly better."

The global surplus of wine, which began to build up during the recession as people cut back on luxury goods, is finally starting to shrink and inch toward a balanced market.

In short, consumers are drinking about as much wine as vintners are making.

The result has been a firming of wine prices, which after a two-year decline are no longer falling, but are instead starting to slowly increase.

"There has been increasing demand for wine in most major production areas of the world," said Glenn Proctor, a Santa Rosa grape broker with Ciatti Company.

The recovery can perhaps best be seen in the bulk wine market, where companies buy and sell wine by the gallon and prices have been steadily increasing since last year.

"The California market has been strong, especially in Napa," Proctor said. "The Sonoma County market has lagged behind, but has begun to pick up in the last few weeks."

This bodes well for grape growers since bulk prices can often indicate the willingness of winemakers to pay higher prices for grapes come harvest.

However, despite Thursday's upbeat report for growers, it still remains to be seen if consumers are willing to start paying higher prices after more than two years of steep discounts.

"So far, we haven't seen consumers willing to do that," Proctor said.

The California market has also benefited from the complex currency markets. The weak U.S. dollar has made imported wines more expensive - and thus less competitive against the homegrown juice, Rannekleiv said.

Still, wine imports into the United States grew by 12 percent during the first three months of this year, according to the report.

Last year, exports from domestic wine producers dropped by 3 percent. Still, U.S. wine companies actually made more money sending their juice overseas in part because of the weak dollar. Revenues from U.S. exports increased 43 percent, according to the quarterly report.