North Coast vintners slow the brisk grape buying activity to gauge 2023 crop size

The North Coast’s grapevines are just starting to wake up from a longer, colder, wetter winter than they’ve experienced in past three drought years.

And that dry spell brought out buyers of 2023 season fruit even as fruit for last year’s vintage had barely arrived at wineries, according to local growers and grape brokers. But amid multi-year deal-making to lock in supply and price for sometimes scarce in-demand varieties, growers face mounting farming-cost inflation that is prompting some renegotiations of purchase contracts.

Last year during the third straight drier-than-normal winter, buds for new chardonnay grape vine leaves started emerging — a growth stage called bud break — in the latter half of February at one of the ranches in Sonoma County’s Dry Creek Valley managed by Duff Bevill’s Healdsburg-based viticulture company.

This year if a warming trend continues, bud break is expected at that vineyard early this month, and leaves have already appeared on another Dry Creek Valley property Bevill Vineyard Management farms.

“It’s the first of April, and you’d expect to have bud break by now,” said Bevill, whose company farms hundreds of acres in five Sonoma County appellations.

Bevill said the colder weather this winter plus the rain storms have not only filled up private and public reservoirs in the region but also filled the ground with cold moisture that has kept the vines dormant longer.

One of the worries about vine activity earlier in the season is that vine shoots and later flowers necessary for determining the crop size could be damaged by frost events in spring.

If the days get warmer and drier, estimates are for the bloom stage of vine seasonal growth could arrive in mid- to late May. Wind and rain can disrupt vine flower self-pollination during bloom, and that can result in a smaller “set” for the crop, or fewer grape clusters that will form per shoot.

After the wildfire-shortened 2020 harvest came smaller-than-average North Coast wine grape crops in 2021 and last year. But while wineries are out looking for certain North Coast grapes and excess wine in earnest — Napa Valley cabernet sauvignon, Sonoma County chardonnay and sauvignon blanc from throughout the region — the market overall has cooled down even as the days are getting warmer.

“There is good activity on the bulk (wine) and grape side, but we see reluctance of buyers until they see the crop size,” said Glenn Proctor, partner of San Rafael-based grape and wine brokerage Ciatti Co. “Some larger buyers have been sitting out on grape purchases in recent months. Even where we have demand, there are too many questions about the economy and banking.”

The North Coast wine grape market now appears to be more heavily influenced by whether vintners can get the fruit supply they’ve been short on in recent harvests than on feeding consumer demand, according to Brian Clements and Christian Klier of Novato-based Turrentine Brokerage.

“We're right on the right on the edge here of buying activity or a buying slowdown,” Clements said.

But complicating the North Coast wine grape market now are grape prices, especially in certain Napa Valley areas, and in spiraling costs for growers, the brokers said.

For example, Napa County’s weighted-average price for the 2022 harvest crested $9,000 a ton for the first time, according to the U.S. Department of Agriculture’s annual California Grape Crush Report, released in early February.

Now, $9,000 has become the starting point for pricing negotiations for Napa Valley floor fruit, with some hillside fruit going for $15,000 to $20,000 a ton according to Klier.

And in that environment, farming expenses — not counting land costs — have been escalating at up to three times the normal rate, Klier said. The typical annual increase in costs is $500–$800 an acre, and last year it went up $2,000–$3,000 an acre.

Bevill said labor has been a key driver of his company’s farming costs going up 15%–20% annually in the past five years, compounding to result in about 50% higher costs than before. Labor now accounts for over half of the company’s farming costs.

“When you have those increases on 60% of costs, it eats up profit quickly,” Bevill said.

Jeff Quackenbush covers wine, construction and real estate. Before coming to the Business Journal in 1999, he wrote for Bay City News Service in San Francisco. Reach him at jquackenbush@busjrnl.com or 707-521-4256.