Wine grape harvest begins under economic cloud

[August 14, 2009]  ST. HELENA, Calif. (AP) -- The chilly economic climate is casting a shadow over this year's wine harvest, with some predicting expensive grapes will be a tough sell in a market that has developed a parsimonious palate.

"There's a lot of people that have been flourishing in the past that are tightening their belts right now," said Brian Clements, senior partner at Novato-based Turrentine Brokerage, which handles sales of grapes and wine.

Demand for wine in the United States has risen slightly despite the recession, but consumers are trading down to cheaper bottles.

That is good news for the Central Valley, backbone of the California industry, which produces the cheaper grapes that go into these wines.

"We've had probably as strong a demand for our grapes this year as we've had any time in the last 10 years. That's a good thing," said Steve Schafer, a Central Valley grower and founder of the San Joaquin Wine Co. in Madera.

On the North Coast, which includes the high-profile Napa and Sonoma wine countries, many growers have long-term contracts with wineries, buffering them from recession. There have been some cases of wineries breaking contracts or trying to negotiate lower prices, but that is not typical, Clements said.

Where the economy is having a big impact is the spot market -- sales of grapes not committed to contract.

Prices on the spot marker for premium grapes -- for example, highly prized Napa cabernet sauvignon -- have dropped about 30 percent since December, Clements said.

Most years about this time wineries are hustling to get those extra grapes, particularly in a year like this one where the crop is expected to be average or even slightly below.

But this year nothing is happening.

"Right now, nobody is making any commitment to buy fruit," said Eric Titus, general manager of Titus Vineyards in the Napa Valley. "They're waiting to see who's going to blink first."

Glenn Proctor of the San Rafael-based Ciatti Company wine grape brokerage calls it "definitely a `get-by' year. Get your grapes sold. Get paid."

California represents the bulk of the nation's wine grape supply, producing more than 90 percent of domestic wine. But the same price pinch is being felt in other wine regions such as Oregon and Washington, Proctor said.

"We're getting calls now from people with pinot grigio (a white wine growing in popularity) in Oregon that are saying, 'Hey I was selling this to this guy for the last three years -- they're not buying it.'"

In New York state, third in wine production behind California and Washington state, the same price pressures exist, said Jim Bedient, a board member of the New York State Wine Grape Growers.

"This is the year, with the economy and the uncertainty, that they're all going to say, `We're just purchasing what we're needing,'" he said.

Titus sees the situation from both sides, selling about 15 percent of grapes to other wineries and making wine out of the rest. This year, two regular contracts dried up and they found a substitute for only one. Titus is considering turning any surplus grapes into wine, possibly a lower-priced offering, rather than trying to sell it at fire sale prices.

Economic storms may be battering the market, but weather conditions have been quite favorable. In Napa, consistent, slightly cool temperatures produced a gentle growing season.

With picking expected to start in a week or so -- white varieties go first, then reds -- the vines at Titus Vineyard stretched bright emerald beneath a blazing blue sky, clusters of grapes, green and purple, stirring in a slight breeze.

"This year is definitely a good quality year," Titus said.

The big question for premium winemakers is whether consumers will come back to the pricey bottles.

Jon Ruel, director of viticulture and winemaking at Trefethen Family Vineyards in the Napa Valley, says sales have been holding up so far. Wines priced near $20 are moving as are the top-of-the line $200 bottles that are produced in small quantities and always had a demand that outstripped supply.

Meanwhile, his $50 cabernet sauvignon -- a trouble spot for some wineries -- is still selling, which Ruel speculates stems from people trading down from other, $100 cabs.

He is optimistic that the increase in wine consumption will eventually translate into an increase in fine wine sales.

"As the economy turns around, we have more people drinking more wine," Ruel said. "We, frankly, couldn't ask for more."

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On the Net:

http://www.turrentinebrokerage.com/

http://www.ciatti.com/

http://www.titusvineyards.com/

[Associated Press; By MICHELLE LOCKE]

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