GOOD NEWS FOR GROWERS & VINTNERS FROM 2012 ©

            The incoming reports point to last year as having been one of the most successful  vintages ever. From a business standpoint this has led to much optimism about the future and additional investment in both wineries and vineyards. There has also been an uptick in transactions of both real estate and winery brands. It has also seen upward movement in popular pricing as consumers seem to be willing to experiment with new brands and less well known varietals at a bit higher retail sticker. The "reluctance" ceiling for a daily quaff is now more in the $11 to $20 range than the previous $6 to $11.

Some thumbnails from the crush report show that; yield was up, total tonnage was 20% higher than 2011. Price per ton was 21% higher than last year. Growers and estate style winery operators translate this as; last year I grew 100 tons and got 120 in 2012 with an increase in price from $1K/ton to $1,210 for a total of $145,200 this year vs. $100K, a 45% bigger bottom line, than 2011.

Sounds good but causes some to recall 2005, the former record holder which started a cycle of juice glut that hurt pricing. But last year the demand resulted in California wineries importing nearly 600K gallons of bulk wine. Meanwhile demand continues to grow and in the segment mentioned above, meaning buyers increasingly seek the better growing areas rather than staying with brands that are supported by Central Valley plantings.

Both Cabernet and Chardonnay, already the mainstay grapes by demand, continue to sell at higher numbers of cases. Pinot Noir has not slowed, seeing a 45% growth in tonnage harvested while Malbec went from under 9K to more than 18K tons. Even that wasn't enough as sales also grew for the competitive Argentinean brands. Another red that is being planted in hotter regions is the Nero d' Avola (popular in Sicily) where its use in proprietary Italian labels has been successful for off-premise stores. The big surprise is the Muscat/Moscato segment seeing huge demand and requires South American and European import of juice to satisfy consumers. That despite the 15% increase in California tonnage (177K) crushed in 2012.

January is usually a soft month for retailers and on-premise traffic. Yet stores report a 7% dollar increase year-over-year and the direct to consumer efforts saw a 4% gain. I should point out the data is polled from large food and drug store purveyors and doesn't necessarily reflect smaller markets and the fine wine segment. Those stores, which don't exist in all states, reflect an 80% bias for domestic wines and 20% import sales. Again, in their pricing model, imported wine is not the value priced competition in the prized "fighting varietals" market as they once were. Well made inexpensive wines from California have closed the gap in the .750 and upper tier mags and boxes in terms of the price to quality relationship. The lowering in the value of the dollar has also helped our export sales and American wines are finding new markets, such as China.