North Coast grape crop reaches record $2 billion in value with 2018 harvest

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North Coast wine grape growers hauled in a record $2 billion crop during the 2018 harvest as prices and yields climbed to unprecedented levels, continuing the steady growth the local wine industry has experienced since the Great Recession that began in late 2007, according to the annual California grape harvest report released Wednesday.

Farmworkers picked an all-time high 588,864 tons of grapes — a 26% increase from 2017 — from vineyards in Sonoma, Napa, Mendocino and Lake counties during harvest, which started in August and ended in November.

The average price of grapes from the four-county region also set a record of $3,427 per ton, a 0.4% increase from the previous year, according to the report from the U.S. Department of Agriculture.

The wine grape market was driven again by price increases in the premium vineyards of Napa and Sonoma counties, which both have seen strong pricing growth over the past eight years. The average price per ton in Napa County was $5,571 per ton last year, while Sonoma County reached $2,818 per ton.

“We had a very bountiful crop in Napa and Sonoma especially,” said Glenn Proctor, a partner at Ciatti Co., a Novato-based grape and wine broker.

The most expensive grape variety, cabernet sauvignon from Napa County, increased 5% to $7,854 per ton, which isn’t surprising given its continued popularity among wine drinkers in the premium and luxury market. But the yield was up 34% from 2017 to an overall total of 89,097 tons. That roughly equals about 1.5 million cases that were produced last year compared to 2017 for the varietal, said Brain Clements, vice president at Turrentine Brokerage in San Rafael.

That surplus will bring additional pressure on the sales and marketing teams at local wineries to find ways to ship the additional wine in the midst of flattening sales in the overall wine market. Wine shipments in the United States increased 1.2% last year.

“You have additional cases to sell that you weren’t thinking to sell,” said Clements, who added some wineries may opt to form a new brand or others may seek to offload it to the bulk market. “It’s going to be a challenge.”

In Sonoma County, chardonnay had a 45% increase in yield with 88,312 tons picked. Its price jumped 2% to $2,356 per ton. The most expensive grape variety in the county — pinot noir — had a yield of 58,005 tons, which was up 34% from 2017, and a 32% increase over its five-year average, Clements said. But the price for pinot noir decreased by 2% from 2017 — to $3,795 per ton — because many growers offered large discounts on their surplus grapes that were not under contract, which averages about 10% to 15% in a typical year.

“If they (wineries) smell opportunity, they are going to jump all over them,” Clements said.

That’s what happened at Martin Ray Winery in Santa Rosa, which bought and installed four tanks in the middle of last year’s harvest to handle the excess capacity, said Bill Batchelor, chief operations officer. The 135-year-old winery had the extra space for the tanks, and Quality Stainless in Windsor had the products at the right size to fit inside its building.

“It was an impulse buy out of necessity,” said Batchelor, who scooped up a lot of excess pinot noir. The Martin Ray brand produces about 25,000 cases annually. “This gave us the ability to take in another 250 tons and accommodate the unexpectedly large yields and continue crushing.”

One notable drop was in Lake County, which had a 3% decrease in yield from 2017 with 46,426 tons of grapes. Analysts said the reason was likely because of concerns over smoke taint from the Mendocino Complex wildfires. Some growers said that large wine companies such as Treasury Wine Estates and Constellation Brands Inc. rejected fruit citing the smoke damage.

“It’s a reflection of it either it didn’t get picked or was left on the vine,” Proctor said.

The big overall crop in the North Coast likely will have some growers on edge as they renegotiate their contracts with wineries, which are faced with excess supply as well as a tightening consumer market, analysts said. They are likely to encounter wineries that will be reticent at any attempt to raise prices.

“They better be prepared to negotiate on today’s market, not what the market was like three years ago,” Proctor said.

But harvests are unpredictable and yields can vary because of weather and other conditions, said Karissa Kruse, executive director for the Sonoma County Winegrowers, the trade group that represents county growers. In 2017, a major Labor Day weekend heat spike rushed harvest for some Burgundian-style varietals and the October wildfires forced some growers to let some fruit rot on the vine.

“One swift kick from Mother Nature could send the 2019 vintage in a different direction,” Kruse said. Her group was previously known as the Sonoma Winegrape Commission.

She said that 2013 vintage, which was the previous largest harvest in the North Coast, was able to find room in the marketplace despite similar concerns.

“It’s not like we haven’t seen a similar number before,” Kruse said.

Her organization receives money from assessments placed on county growers on the total number of grapes they sell. It received $1.9 million from the 2017 harvest from such assessments. The trade group expects its take will be at least $200,000 more for the 2018 harvest, she said.

You can reach Staff Writer Bill Swindell at 521-5223 or bill.swindell@pressdemocrat.com.

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