Value of North Coast’s 2020 grape harvest cut in half by wildfires, pandemic

The value of the North Coast’s 2020 grape harvest plunged by almost half to $940 million, primarily because of fruit damaged by wildfires and left on the vines, according to federal agriculture data released Wednesday.

It marked the second consecutive season the region’s growers dealt with a shrinking crop worth less money, after the record 2018 harvest valued at $2 billion for 588,889 tons of grapes.

And in the past 30 years, only the 2015 and 1998 harvests resembled the dismal 2020 crop in terms of contracting grape tonnage and massive financial losses.

Last year’s crop was worth 47% less than the $1.7 billion harvest in 2019, according to a preliminary California harvest report by the U.S. Department of Agriculture.

More significantly, growers in this four-county region, where they produce the most prized grapes in the United States, sustained the first drop in prices wineries paid for their fruit since the 2010 harvest.

The average price paid for a ton of grapes picked in Sonoma, Napa, Mendocino and Lake counties last year declined by 21% to $2,765, from a record $3,516 in 2019. Collectively, the region’s growers lost a staggering $833 million in revenue in 2020.

Meanwhile, North Coast growers harvested 340,150 tons of wine grapes, a 33% decline from 2019. Most of the decline was in red grape varieties typically picked later in the harvest. They were more prone to smoke damage.

A smaller and less valuable harvest amid the pandemic was expected before the annual season — a Wine Country hallmark — kicked off. But after picking started in August, soon the Walbridge fire and then Glass fire disrupted picks. Fruit was scarred by smoke and the season ended early. This turned low expectations for the 2020 crop into nightmares for growers.

Many of them were badly hurt because wineries rejected their fruit, deeming it of poor quality due to smoke taint that would make their wines smell like an ashtray.

John Balletto, owner of Balletto Vineyards in Santa Rosa, said he incurred a 30% reduction in grape crop yields last year. He blamed smoke from the fires, as well as a heat wave around Labor Day.

“We had like five days of 115 degrees,” said Balletto, who besides growing grapes in the Russian River Valley has his own wine label.

Like most North Coast growers, Balletto has crop insurance to guard against catastrophic losses. However, the coverage comes in handy to help farmers survive to get into the next growing season, rather than make them financially whole.

“We have crop insurance on everything, but you have to remember it’s only at the 50% to 60% levels,” he said. “You are recouping anywhere from 40 to 50 cents on the dollar based on what your coverage levels are.”

Industry experts said the steep drop in the region’s 2020 crop yield, following a smaller 2019 harvest, should rebalance the grape marketplace that began last year with a severe glut of fruit. The previous four years were bumper crops, including the enormous 2018 harvest. An increasing number of Sonoma County growers were being informed a year ago that wineries were not renewing their multiyear contracts to buy grapes because of flattening U.S. wine sales.

The big question now in the industry is will consumer demand for wine pick up enough to lift soft wine sales, thereby boosting the need for grapes. In addition, it’s unclear when North Coast wineries will feel more bullish on sales projections, because they are still contending with severe limits on tasting room and restaurant revenue as pandemic-related public health restrictions remain in force.

“We have seen the market correct itself. But is that short-term or long-term and do we still have challenges that are still going to cause some issues?” said Glenn Proctor, a partner with Ciatti Co., a Novato grape and wine brokerage.

Proctor also grows grapes in the Dry Creek Valley, but was unable to pick any of them in 2020 because of smoke damage.

Balletto has noticed this winter there have been more wineries eager to sign grape contracts, noting “we haven’t seen this in three or four years, which is a positive sign.”

Still, last year featured significant price reductions and crop losses for local farmers, the likes of which the North Coast has not experienced at least as far back as 1990. For example, the most expensive grape, cabernet sauvignon from Napa County, declined by 21% to $6,186 a ton in 2020, from $7,866 a ton in 2019. Much of these grapes grown on expensive hillside vineyards did not get picked last year as fires encroached.

In Sonoma County, the trophy pinot noir grapes decreased by 20% in value to $3,125 a ton, from $3,911 a ton in 2019. This variety was set to be picked just as the Walbridge fire engulfed land west of Healdsburg last August, upending the harvest.

Serres Ranch in the Sonoma Valley had projected a 15% decrease in crop yield before last year’s grape harvest even began on its 130 vineyard acres. In the aftermath of the Glass fire, the ranch encountered wineries rejecting its fruit because of smoke taint, said Taylor Serres, an officer in her fifth generation family business.

She credited long-term grape contracts with wineries — most of which go back more than 10 years — as a pillar that brings stability to its operations.

Looking ahead, “I would say we are fortunate to have most of our fruit sold,” Serres said, of the 2021 contracts.

Industry analysts think the grape market will rebound this year, and that the 2020 prices represent a bottoming out of the market that had a good run in the region over the past decade — which made last year’s losses tough to swallow but not debilitating.

“I think 2020 was the floor and we are going to work our way up here,” said Mike Needham, a grape broker for Turrentine Brokerage in Novato, noting the last average price drop per ton of grapes was in the 2010 harvest when the average North Coast grower fetched $2,204 a ton.

Despite the bruising and battering the pandemic, 100-degree heat and wildfires delivered to growers last year, they are a resilient group encouraged by renewed interest from wineries in their 2021 grape harvest.

“At the end of the day, to be a farmer, you have to be an optimist,” said Karissa Kruse, executive director for the Sonoma County Winegrowers, the main local trade group for the sector.

You can reach Staff Writer Bill Swindell at 707-521-5233 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.