April 15, 2019. BY STUART SPENCER.
The 2018 Grape Crush Report was released last week, nearly two months later than normal due to the federal government shut down. The Lodi region (Crush District 11) saw a record harvest with 850,686 tons crushed, and an approximate crop value of $500 million. This surpassed the previous record harvest of 2013 by nearly 50,000 tons. And was a 14.4% increase from 2017. The average price for purchased grapes fell to $604.45 from $626.83 in 2017. The overall statewide crush was 4.28 million tons, a 7.7% increase from 2017, but slightly less than was projected.
Cabernet Sauvignon is now Lodi’s leading variety and saw 198,838 tons crushed, a 21.4% increase from 2017. In 2010 Lodi crushed 106,832 tons of Cabernet Sauvignon. The additional tonnage can be attributed to market demand over the past eight years driving new acreage and modern production systems capable of increased yields. Lodi’s other leading varieties also saw notable increase from 2017 with 127,000 tons of Chardonnay crushed, up 14.6%, and 135,000 tons of Zinfandel up 9.0%. The full California Winegrape Crush Report can be viewed here:
The Wine Market
Gomberg Fredrikson’s 2018 Annual Wine Industry Review was also published earlier this month. Estimated total wine shipments to the US market increased 1% to approximately 407 million cases. Total California wine shipments to all markets were up approximately 2% to 290 million cases. There are several key factors that will influence winegrape demand moving forward:
- Although the US wine market has nearly doubled over the past 25 years, we’re seeing slowing growth due to numerous demographic changes including an aging baby boomer population.
- The big question is to what extent the millennial generation will embrace wine. What will be the new products that bring new consumers to wine?
- The market continues to shift from value priced wines (below $11) to premium wines. The value end of the business is shrinking, but we don’t know if this trend will continue, especially if the economy weakens.
- The “Big Three Commercial Wineries” collectively saw total wine shipments decrease 5% in 2018. Their share of total wine shipments decreased as growth occurred with smaller wine companies.
- Wine and spirits continue to take market share away from beer, but the market continues to get more crowded with plenty of choices for consumers. And no one really knows what effect the continued legalization and normalization of cannabis will have on US wine consumption.
Clearly, there are challenges ahead, but opportunities do exist to differentiate your business. Efficiency, mechanization, and yield will drive a good portion of Lodi winegrape production, but the growing premium sector, above $11 bottle, continues to be a potential growth area for Lodi winegrapes and growers.
Featured image taken by Randy Caparoso.
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