SOURCE: Turrentine Brokerage

Turrentine Brokerage

February 10, 2009 19:44 ET

Trends Shaping the Future of California Wine Revealed in Grape Crush Report, Experts Explain

NOVATO, CA--(Marketwire - February 10, 2009) - Cabernet Sauvignon, the largest red wine variety, dropped a staggering 24% in 2008 compared to 2007 which is a decrease of 17 million gallons or almost 85 million bottles. The shortfall was most acute in the most desirable appellations such as Napa Valley, down nearly 27%, and Sonoma County, which was down nearly 24%.

          "Napa Valley Cabernet Sauvignon suffered a very substantial
     decrease from 2007. It was down nearly 27%, over 15,000 tons or over
     13 million bottles."
          -- Brian Clements, Senior Partner, Turrentine Brokerage

As predicted by The Turrentine Outlook and now confirmed by the Grape Crush Report, the 2008 grape crop, especially for red grapes, was down 9% from 2007. The decline in Coastal areas was especially pronounced. The crop in the Central Valley was mixed. Yields in the south valley were strong while yields in the Northern Interior were much lower than in 2007. In the meantime, despite the current economic conditions, wine sales continue to grow, especially at price points below $10 per bottle.

According to the Grape Crush Report, Merlot fell 26%, the equivalent of 13.4 million gallons or 66 million bottles of wine. The decrease for Merlot was driven both by a reduction in bearing acres and lower yields per acre.

          "Some wine critics are rough on Merlot, but American consumers
     love it because it is generally a softer red wine, flavorful and easy
     to drink. Sales have been growing and the 2008 statewide Merlot crop
     was the smallest since 1998, substantially because of a decrease in
     the Merlot acreage. This will balance inventories and set the stage
     for shortage which will likely develop over the next 12-24 months."
          -- Steve Fredricks, Managing Partner, Turrentine Brokerage

Pinot Noir, still the fastest growing red wine, bucked the trend of other red varieties. Pinot Noir was up 17% in 2008 compared to 2007. That reflects an increase of over 2.6 million gallons or over 13.1 million bottles of wine. However, the North Coast crop was down in most areas. The largest area, Sonoma County, decreased by 0.46%, 134 tons or 115,000 bottles despite a substantial increase in the number of acres.

          "Pinot Noir production in the Interior Regions of California,
     which increased by nearly 50%, almost 12,000 tons or 10.1 million
     bottles of wine, represents a major foray into a new area for growing
     Pinot Noir. This lower priced Pinot Noir coming on during challenging
     economic times will provide the wine to fuel the rapidly growing sales
     of value-priced Pinot Noir."
          -- Bill Turrentine, President, Turrentine Brokerage

White grapes did not suffer nearly as badly as red grapes. They were down just 2% statewide, driven by a strong performance of grapes used for generic white wines. Chardonnay in the Interior was down by 5.4%, 18,069 tons or 15.4 million bottles. Statewide, Sauvignon Blanc was down 13%, which equals over 2.4 million gallons or 12 million bottles of wine.

Fortunately, while the tonnage produced was down for many varieties, newly planted vineyards boosted production for Pinot Grigio which is the fastest growing white variety in the United States.

          "In good news for consumers, Pinot Grigio, an Italian varietal
     that does exceptionally well in California, experienced an increase
     in production again in 2008. Pinot Grigio increased by 14%, equal to
     over 1.8 million gallons or over 9 million bottles of finished wine."
          -- Bill Turrentine, President, Turrentine Brokerage

When we have entered past recessions, the wine business has been in a state of oversupply. As we face our current economic difficulties the situation is substantially different. Growing sales and a lack of new planting has drained excess supplies and inventories are in relative balance. Though everyone is dealing with the current economy, the long-term challenge will be to prepare for the growing purchases of wine by millennial consumers and the eventual economic recovery.

          "It is likely that the true impact of the short crop and the
     impending shortage likely to develop over the next 12 - 24 months are
     hidden by the concerns over the economy."
          -- Brian Clements, Senior Partner, Turrentine Brokerage

          "The strong price increases in the Interior represent a positive
     move towards economic sustainability for winegrape growers."
          -- Erica Moyer, Partner/Grape Broker, Turrentine Brokerage

Continuing strength in overall demand for wine, despite the uncertain economic climate, drove up average prices for all key varieties except Zinfandel. This increase was particularly strong in the Interior regions and on the Central Coast.

          "Prices across the state, those reported in the Grape Crush
     Report for Santa Barbara and San Luis Obispo Counties, increased
     substantially for Cabernet Sauvignon and Merlot. This represents
     a major shift from the painful excesses and declining prices of
     the last seven years."
          -- Matt Turrentine, Grape Broker, Turrentine Brokerage

About Turrentine Brokerage

Turrentine Brokerage, founded in 1973, specializes in the strategic sourcing of wine grapes and bulk wine from the major growing areas across the globe. Working with thousands of wineries worldwide, and with over 1,500 growers, this experienced team has negotiated transactions between buyers and sellers valued at more than $1 billion over the past decade.

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) 209-9463
    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

    Matt Turrentine
    (805) 312-1828
    specialty -- grapes from the Central Coast