Prices for Central Coast grapes are on the rise. That’s good news for vineyard owners. But with a small crop and higher costs due to challenging weather this season, profitability remains a key concern.
“A couple of years ago, it might not have been a bad thing to have a lighter crop to bring the market in balance,” said Matt Turrentine, who oversees the Central Coast for Novato-based Turrentine Brokerage. “But we’re in balance now, so a lighter crop is not doing anybody any favors.”
Cool weather, untimely rains and spring frosts set back ripening in San Luis Obispo County vineyards an average of about three weeks. At this rate, many farmers expect to be picking through the end of November, increasing the risk of rain damage to hanging fruit.
Wine grapes are the county’s top crop, valued at $173 million in 2010, according to the agricultural commissioner’s annual report.
This season’s unusual weather included a severe frost in early April that led the U.S. Department of Agriculture to declare the county a primary disaster area. Earlier-ripening varietals such as chardonnay and syrah suffered “shatter” that killed tender spring buds on many vines.
When that happens, recovering vines produce a second bud break and subsequent fruit, but maturation is delayed, and yields tend to be lower. Cooler-than-average temperatures over the summer helped make this year’s crop light and late.
The ag commissioner previously estimated grape losses due to the cold snap April 8-9 at more than 32 percent of harvest, or $47 million. The disaster declaration allows affected growers to apply for financial assistance.
Depending on location, individual vineyard managers expect their own tonnage to be between 20 and 50 percent down. But it’s too early to know exactly how far below average the local crop will be.
With most grapes still on the vine, the weather in coming weeks could greatly affect how many tons actually make it to presses. The best case scenario, said grower Doug Filipponi, would be warm, dry weather.
“The grape growers have been through a lot this year with freeze and three rains,” he said. His Atascadero firm, Filipponi & Thompson, manages 1,600 acres of vineyards between Santa Margarita and Shandon. “We really need good weather.”
Heavy rains would pose the biggest threat, especially moving into November.
Storms predicted for this weekend and the middle of next week could bring more lightning and thunder than moisture, said local weather expert John Lindsey. He also expects less rain this winter than usual based on the strength of the La Niña pattern — the flip side to the wetter El Niño scenario in which warmer ocean water flows up the West Coast from the equator.
Of course, for grape growers, timing and location are everything. And measures taken to protect fruit from weather damage add expenses for labor, equipment and chemicals.
“We spent all the money we can already in limiting rot,” said George Donati, general manager of Pacific Vineyard Co. His crews farm 2,200 acres in Edna Valley. “It was a very heavy disease year.”
With the statewide market already swinging back into supply-and-demand balance by the beginning of 2011, wineries were eager to sign deals earlier and at higher prices than in recent years.
“There are virtually no grapes available right now, and there haven’t been for a couple of months,” Turrentine said. “There are a lot of wineries that would have liked to find a lot more. I expect that will continue for a few years.”
But growers get paid per ton.
“It helps when your prices are up nominally, but the crops are down substantially,” said John Crossland, owner of Vineyard Professional Services in Templeton. “Our income’s down, and our expenses are up. It’s kind of ugly.”
With a short supply and few expectations for large new plantings anytime soon, most expect prices to continue creeping up over the next few years for wineries and their customers.
But some worry consumers used to deep discounts during the past few years of oversupply might not migrate back to higher price points. Wineries could face competition from less-expensive imported wines and other types of alcohol produced domestically.
“Looking at a $10 bottle of wine,” said Todd Azevedo, Central Coast broker for San Raphael-based Ciatti Co., “will we still find the same quality for the price?”