SOURCE: Turrentine Brokerage

February 09, 2007 19:33 ET

Release of Wine Grape Crush Report Reveals Trends Impacting the Future of California Wine, Expert Explains

NOVATO, CA -- (MARKET WIRE) -- February 9, 2007 -- California produced 160,000,000 fewer bottles of Chardonnay in 2006 than in 2005. This decline in Chardonnay volume is one of the wine supply trends revealed in a report on the 2006 wine grape harvest released today by the California Department of Agriculture. Overall, the 2006 wine grape harvest dropped from the previous year by 17%, which is the equivalent of 518,000,000 standard 750 ml bottles of wine.

"The 2005 harvest pushed Chardonnay into oversupply but the market for wine in bulk is signaling a much reduced inventory after the 2006 harvest. Interest in Chardonnay is stronger than it has been in seven years." -- Steve Fredricks, Vice President, Turrentine Brokerage

Other key varietals also declined, including Cabernet Sauvignon, down 22% or 100,000,000 bottles.

"California -- and the world -- has had an oversupply of Cabernet Sauvignon. But sales of Cabernet are growing rapidly and 2006 harvest is down 17% from 2005. With this reduced supply, rapid growth should soon drink up the excess supply." --Steve Fredricks, Vice President, Turrentine Brokerage

Merlot fell 22% or 75,000,00 bottles. Sauvignon Blanc was down 6% or 6,000,000 bottles.

"Merlot is a supply conundrum for wineries and growers. The 2005 and 2006 harvests produced significant excesses of supply at the same time that the rate of sales growth flattened out. This caused inventories to swell and has depressed demand for 2007 Merlot grapes, even though the rate of sales growth has now increased. There is a real risk that substantial acres of Merlot will be removed because of a weak 2007 grape market. This could be a long-term solution to a short-term problem that could leave brands without the Merlot grapes they need by the time the 2008 or 2009 harvest rolls around." --Bill Turrentine, President, Turrentine Brokerage

The hottest varieties in the wine market, however, bucked the trend. Pinot Noir increased by 12% or 9,000,000 bottles. Pinot Grigio, a white wine clone of Pinot Noir, also increased, up 16% or 8,700,000 bottles.

"From the grower's perspective, we hit the market. We saw a record crop with 12% increase in tonnage and a 15% increase in price; however, the Pinot Noir was not nearly enough to meet current demand. We are possibly seeing a minor variety turn into a major variety." --Brian Clements, Partner, Turrentine Brokerage

For the most part, the wine business was glad to see a lighter crop on most varieties in 2006. The 2005 harvest had jumped a million tons above the 2004 crop and left the California wine business swimming in excess wines. But consumer demand for California wine is growing rapidly, especially for premium wines. Furthermore, the acreage of grapevines has just about leveled out after 11 years of steady increases. This means that California will not be able to produce ever larger crops which will give sales a chance to catch up with supply.

In spite of intense global competition, the supply of California wine is likely to tighten up over the next six or more years. It takes about three or four years from planting for a new vineyard to begin producing a full crop of wine grapes.

About Turrentine Brokerage

Turrentine Brokerage, California's largest wine grape brokerage firm, is available to provide comment and analysis on this report and its probable impact on growers, wineries and consumers.

Contact Information

  • Contact:

    Brian Clements
    (707) 495-8151
    Specialty - grapes from all of California, especially Napa, Sonoma,
    Mendocino & Lake Co.

    Steve Fredricks
    (415) 847-0603
    Specialty - grapes and bulk wine from all of California and around the
    world

    Bill Turrentine
    (415) 999-9490
    Specialty - grapes and bulk wine from all of California and economic
    analysis

    Erica Moyer
    (209) 988-7334
    Specialty - grapes from the San Joaquin and Sacramento Valleys and the
    Central Coast