Wines & Vines

September 2016 Finance Issue

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42 WINES&VINES September 2016 GRAPEGROWING A llied Grape Growers president Nat DiBuduo believes that the 2016 crop "seems to be getting smaller," to the tune of 4 million tons expected in California. Speaking at the 64th annual meeting of the Allied Grape Growers in July, DiBuduo told the audience that while Allied Grape Growers is still compiling estimates, it appears total ton- nage in California will be about 4 million tons. This is below "average" after a number of big years (excepting the short harvest of 2015), but it's not clear what average is with new plantings producing higher yields. Allied Grape Growers held events in the California cities of Fresno and Santa Rosa to accommodate the group's members in both regions. Wines & Vines attended the meeting in Santa Rosa (in the North Coast), where Al- lied Grape Growers had roughly 1,500 acres under contract in 2010 and represents more than 2,500 acres today. Unlike the 2015 meeting, this gathering was mostly upbeat. "Some years I would rather be having a tooth pulled than face you with the news," said president and CEO Nat DiBuduo. "Last year was one of those years." Fortunately, things are going well for the grape marketing cooperative, which has nearly 500 members including 125 member-growers in the North Coast, 50 in Lodi/Clarksburg and Contra Costa County and 300 in California's interior valleys. Allied Grape Growers has members across the state, from southern Kern County up to Clear Lake in Lake County. So far this year, grapes have been contracted from $275 per ton to $7,500 per ton or higher, depending on location and variety, DiBuduo said. He dis- closed that the co-op's revenue for 2015 was more than $70 million. In Lodi, the co-op has experienced more than 37% growth in wine grapes since 2010. There were fewer growers at the co-op's Cen- tral San Joaquin Valley meeting; many pulled out their Thompson Seedless vines or sold their ranches, but wine grape acreage has still grown 50%. DiBuduo admitted he received a lot of criti- cism at the Unified Wine & Grape Symposium in Sacramento, Calif., this January, when he suggested growers needed to pull out more wine grape acres. "No wine grape grower should be provid- ing grapes below their cost of production. You are in the business to survive and thrive. So if I can save any grower from going bankrupt by suggesting alternatives or getting better pricing, I will." He summarized the overall market for Cali- fornia wine grapes: "North Coast is the shining star in this in- dustry. The current demand is outpacing the supply. There are strong prices and terms. Some wineries are offering planting contracts for the first time in years." C e n t r a l C o a s t p r i c e s a p p e a r t o b e strengthening. The supply is limited there. "We see some contracts for Pinot Noir and Chardonnay." DiBuduo said that, while it's early in the season, Lodi growers are enjoying strong sales, and most grapes are finding homes. There is a limited supply available of red Zinfandel and some other varieties. In the central San Joaquin Valley, however, some varieties like Muscat, Ruby Cabernet and white Zinfandel continue to be challenged. "We have plenty of those for sale," he said. "The good news is that in August of last year, we had over 20% left to sell. This year we have less than 10% left." A push for 'premiumization' One of DiBuduo's key messages was that grow- ers must continue to increase the quality of their fruit. "The key word we've seen over the past few years was 'sustainability,'" he noted. "Now there is a new one: 'premiumization.' That is the new term in all grape sales in California, regardless of whether we're talking about Napa and Sonoma or the Central San Joaquin Valley. In short, it means 'quality.' It affects your crop sales and your income." He observed that over the years, Napa has proven that quality and branding gets higher prices. "This has been spreading to the North Coast the past few years, but especially this ASHLEY URDANG/GLORIA FERRER California Crop Forecast: 4 Million Tons Allied Grape Growers president says tonnage will be up from 2015, shy of 2012-13 highs By Paul Franson

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