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Grapes


APPREHENSION ABOUNDS IN U.S. WINE INDUSTRYAPPREHENSION ABOUNDS IN U.S. WINE
INDUSTRY

Grape buyers, sellers wary amid ‘aggressive’ plantings, industry leader says.

Tim Hearden

January 26, 2023

3 Min Read
Grape buyers, sellers wary amid ‘aggressive’ plantings, industry leader says.Tim
Hearden


As the waning pandemic has given way to a sense of normalcy throughout society,
feelings of apprehension still abound in the U.S. wine industry as economic
storm clouds loom, an industry leader observes.

Rising interest rates, increasing cost, a budding recession and waning consumer
confidence serve to continue what has been a roller-coaster ride for wine
producers since 2020, said Jeff Bitter, president of the Fresno, Calif.-based
Allied Grape Growers.

At the same time, “weather and peril” has fueled fears among California growers
that “maybe we can’t have a normal crop,” which in turn has led to new plantings
that are “a little aggressive,” said Bitter, a fourth-generation grape producer.



“As long as we have a limited supply, we’re in good shape,” he said. “But I
don’t think we’re going to always have a limited supply going forward.”

Bitter’s remarks capped a nearly three-hour “State of the Industry” presentation
by wine market experts Jan. 25 at the 29th Unified Wine and Grape Symposium in
Sacramento, Calif. The three-day conference at the SAFE Credit Union Convention
Center concludes today, Jan. 26.



Bitter joined Mike Veseth of the Wine Economist, Danny Brager of Brager Beverage
Alcohol Consulting, Glenn Proctor of Ciatti Brokerage Co., and Sonoma State
University’s Liz Thach in giving a comprehensive look at all aspects of the wine
industry, from what’s being planted to what’s selling.

Brager detailed the ongoing challenge of trying to market to younger consumers,
who are drinking less as a whole and are attracted to hard seltzers and other
competing drinks. The presentations follow a slew of media reports analyzing the
troubles facing the industry, including one headline that declared wine’s
“irrelevance” with younger people.



Bitter – who has made headlines himself in recent years by warning about an
oversupply of grapes – said Jan. 25 that he wished reports would tout how
California’s wine industry made it through the pandemic with “level shipments
and increased sales,” or that it maintains a low carbon footprint.

“It does kind of lead to apprehension going forward,” Bitter said of the recent
coverage.


UNCERTAINTIES REMAIN

Still, Bitter acknowledged the economic uncertainties facing California wine
producers, including competition from other regions. “This is a very high-cost
state to do business in,” he said. He also cited the “under-performance” of some
of the largest wineries, contributing to a “common theme” of “demand pessimism.”

He noted a rise in new plantings, particularly of Sauvignon Blanc, which has
nudged into the top three varietals in California. He said plantings are
outpacing pullouts. “We’re not in a position to add more acreage over time,” he
cautioned, noting that recent short crops have obscured the fact that “we are
still structurally into oversupply,” which shrinks margins.

Much of the growth has been in grapes for wine costing $11 to $25 a bottle, and
there are continuing opportunities to provide these lower-cost wines to
wineries, he said. But simultaneous growth in supply and demand can create
imbalances, making for unpredictable markets, he said.

Vineyard expansion continues to be mostly tied to private investment money and
wineries, but not independent growers, he said.

About 12,000 West Coast wine industry professionals attended this year’s
conference, nearly double last year’s attendance as COVID-19 precautions such as
masking and proof of vaccination or a negative test have been eased.

The symposium featured a trade show with a record 879 vendors, topping the 802
booths operated at the 2022 event.





ABOUT THE AUTHOR(S)

Tim Hearden

Western Farm Press


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