Grapevine shortage squeezes wineries

In a row of greenhouses off Sonoma Highway, young grapevines are nestled in tiny pots stretching for what seems like miles.

And it is still not enough to meet demand from California's resurgent wine industry, which finds itself facing an unusual problem: a shortage of grapevines.

"The industry has never been like this since we've been in business," said Jay Jensen, CEO of Novavine, a Santa Rosa-based grapevine nursery that was founded in 1998.

The situation is hampering plans by North Coast wineries and growers to expand their vineyards and quench consumers' growing thirst for California wine.

Nurseries are largely sold out of vines to plant this year, and are running out of plants that will be available in 2013.

"It's a problem across the state," said Nick Frey, president of the Sonoma County Winegrape Commission. "People want to plant vineyards because the market is strong, and there just aren't vines to plant ... therefore it will delay any significant increase in vineyard acres."

The challenge is a welcome one in an industry that was hit hard by the recession, as wine drinkers traded down to cheaper options and wineries offered premium bottles at discounted prices. Planting vineyards, a costly enterprise, took a back seat as wineries and grape growers alike struggled to make ends meet.

"Last year there was nobody offering any contracts, so there was no planting being done to speak of," Frey said. "There just hasn't been demand since probably 2000 for planting new acres."

Now, demand for California wine is growing, and analysts say there aren't enough grapes to keep up with the pace.

"No one could predict when that demand would finally pick up," said Joe Ciatti, partner at Zepponi & Co., a winery brokerage firm. "Even in a tough economy, California wine grew at 5 or 6 percent in sales, and that was enough to put us over the edge."

Much of the planting is happening in the Central Valley. Demand for grapevines to be planted in the San Joaquin Valley doubled this year compared to last year, Jensen said, but in Sonoma County the demand grew by only about 20 percent.

"There's a huge demand for new grape vines, and most of that demand is being driven by the larger players in the (Central) Valley," he said. "Everyone started pulling the trigger in November and December, and all of the nurseries pretty much ran out of greenhouse space."

The result is that small local growers are having a harder time getting the vines they'd like to plant, as the titans have scooped up the inventory.

"The demand for grapevines is being driven by Central Valley, Central Coast and Lodi districts primarily, and probably 95 percent of all the grapevines produced in 2012 will be going to those districts," said Pete Opatz, vice president and senior viticulturist at Silverado Premium Properties. "It's put a big squeeze on locals trying to find grapevines, because in those other areas, they're really going to town."

Sonoma County had 59,660 acres of vineyards in 2010, down from a peak of 62,907 in 2009. Some vineyards have gone fallow, a normal part of the lifecycle, and there are about 3,000 acres that could be replanted to produce grapes, Frey said. But due to the limited supply, only a few hundred acres are likely to be planted, he said.

"The little bit of development we've done, we've had to compromise on the clone we picked," said Doug McIlroy, director of winegrowing at Rodney Strong Wine Estates. "If you're looking for a certain rootstock, you have to plan out pretty far in advance. Certainly 2013 is pretty much sold out."

Vintners make wine using a variety of sources. They can use grapes they've grown themselves, grapes they purchased from other growers, or "bulk wine," which is crushed and sold in large quantities. After two difficult harvests that generated low yields of grapes, and a reluctance to overproduce during the recession, inventories for all of those inputs are low.

"My heart goes out to a guy who has 30 acres, and he wants to replant five, and he has a specific rootstock that a winery wants," Opatz said.

Silverado Premium Properties is replanting about 160 acres in the North Coast, compared to 1,000 new acres of grapes it is planting in Monterey and San Luis Obispo counties.

The available grapes probably won't catch up with demand for another six to eight years, because it will take growers a year or two to procure the vines to plant. Then, the vines must grow for about five years before they reach their full production.

"It takes time," Ciatti said. "It doesn't mean that we're going to run out of wine totally. Prices will probably go up, and that could soften demand. ... But historically, that hasn't happened. We've pretty much had to plant to get out of it, because demand kept going."