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Grape prices seen moving up

California grapegrowers, generally speaking, have been navigating in a tough climate for the last few years, with low spot market prices for grapes and lackluster demand. Through the first few months of 2008, however, California prices have been firming up a bit, especially in Lodi and the Central Valley.

“The climate for growers is much better than it was a few months ago, and there definitely seems to be more interest in purchasing grapes this year,” Stuart Spencer of the Lodi Woodbridge Winegrape Commission said. “We’re seeing a significant improvement in pricing.”

At deadline, spot market grape prices had risen $100 to $200 a tonne in much of the Central Valley, compared to the record low prices in 2007.

“Some exciting things are going on statewide,” Nat DiBuduo of Allied Grapegrowers said. “A number of wineries are out on the hunt looking at varieties from high-end Cabernet Sauvignon to Chardonnay and Riesling. I have inquiries into Merlot, and it’s all at price points. We sold some North Coast Cabernet today at US$4,500 a tonne. I’m optimistic that prices and interest all look significantly better than last year, statewide.”

In some instances, Chardonnay in Lodi that went for US$300 to US$350 a tonne last fall is at US$500 and going up. A small group of large winery buyers that source from the Central Valley have made broad offers at US$500. Cabernet Sauvignon that sold in Lodi for US$200 last year, a rock bottom surplus price, is now at US$450, and even Merlot is at US$400.

“What’s amazing is I’ve been talking to growers, and in a lot of people’s opinion, at least in Napa and Sonoma, it’s the earliest we’ve seen the season (for buying grapes) since 1996,” a partner with Turrentine Brokerage, Brain Clements said.

“I believe Napa County’s spot market is 80% sold out of Cabernet already. Merlot is probably 50–60% depleted in Napa. In Sonoma we have more buyers than sellers for Chardonnay and Pinot Noir. There’s beginning to be interest in Mendocino for Chardonnay.”

Between 1998 and September 2007, 125,000 acres of vineyards were pulled out in California’s Central Valley, data from burn permits has shown. DiBuduo estimated that an additional 10,000 acres have likely already been removed just since last year.

American Wine Business Monthly May 2008

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