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Correction added February 16, 2012:
The story below stated that Sonoma County would have 318,000 fewer cases of wine to sell. That figure referred to cabernet sauvignon only, not other varietals. There could be more than 1 million fewer cases of Sonoma County wine on the market for 2011.
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The value of the North Coast grape crop fell 8 percent to $869 million in 2011, the second year of declines after uncooperative weather took a toll on the region's valued crop.
Overall, the North Coast harvest shrank 12 percent last year, with a total of 378,128 tons of grapes crushed in Sonoma, Napa, Mendocino and Lake counties.
Grape prices rose across the board as shortages were met with growing demand, putting increased pressure on wineries to find cost savings or consider raising prices for consumers.
Despite the drop in revenue, growers were optimistic about the future, with prices on the upswing and increased interest in their fruit.
"It's the first time in years that we've had demand for fruit," said Jim Murphy, owner of Murphy Vineyards in Alexander Valley. "At least it's better than what we've had in the last couple of years."
The preliminary report was released Friday by the California office of the U.S. Department of Agriculture.
The size of the Sonoma County grape crop tumbled 17 percent below normal in 2011, a deep dip, but far less painful than many growers had feared. Many growers had been concerned the county's crop was as much as 30 percent below normal, a scenario that could have triggered declaration of a federal disaster area.
"We have more than I thought," said Nick Frey, president of the Sonoma County Winegrape Commission. "It was a rough year, but obviously it wasn't as bad as some had feared."
Sonoma County crushed 166,070 tons in 2011, a 13 percent drop from 2010, another year with low yields. Sauvignon blanc, which was particularly vulnerable to early rains, was the hardest hit, falling 30 percent year over year. Chardonnay, the county's largest grape crop by acreage, fell 20 percent. Zinfandel, on the other hand, grew 20 percent in tonnage, due in part to a disastrous year for zinfandel in 2010.
Yields in Napa and Mendocino counties also dropped 13 percent last year, with Napa crushing 121,136 tons and Mendocino crushing 57,125 tons.
But in Lake County, the crush grew 5 percent to 33,795 tons in 2011.
"The biggest concern as an industry is there's this projected shortfall coming into the future," said Don Wallace, president of Dry Creek Vineyard. "There's not enough planted acres to meet the growing demand."
Based on the report, Sonoma County will have about 318,000 fewer cases of wine to sell from the 2011 vintage than the previous year, said Brian Clements, vice president of Turrentine Wine Brokerage. The shortage will be felt by wineries and drinkers.
"It's at a time where we're all inventory challenged," Clements said. "It puts a lot of pressure on wineries that have been financially challenged in the past ... I think that ultimately consumers are going to see some price increases down the road."
Grape prices rose throughout the North Coast, especially in Mendocino County where the average price climbed 10 percent to $1,234 per ton in 2011. Prices in Lake County increased 8 percent to $1,197. In Napa County, prices grew 5 percent to $3,407, the highest in the state.
The average price for grapes in Sonoma County climbed to $2,081 per ton in 2011, up 3 percent from the previous year.
"They (growers) really needed some price increases to get back to profitability," Frey said.
To deal with the price increases, wineries could purchase grapes from less expensive regions like Lake County or the Central Valley, or look outside U.S. borders to replenish inventory.
"We continue to see wineries that are cautious about their belief that they can take price increases," said Glenn Proctor, partner at Ciatti Company, a San Rafael grape brokerage firm. "If it gets too expensive in Sonoma, do I raise my bottle price? Or do I take my sourcing (away from the North Coast) to a California appellation?"
Merlot prices rose the most in Sonoma County, nearly 9 percent based on estimates by Ciatti Co., in part because the grapes are used to blend into cabernet sauvignon, a wine which is growing in demand faster than the grape supply.
The recession led many wineries to offer cases of wine at discounted prices, a trend that is diminishing as demand for wine rebounds. Next, wineries may be inclined to raise their retail prices.
"I think they're going to have to take that next step, and I think a lot of them are concerned about how consumers are going to react to that price increase," Proctor said.
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