The weather across California was largely normal through April into early May, perhaps exhibiting a tendency to be slightly erratic, with warm spells of sunshine interspersed by cooler temperatures and some rain. Few if any issues were encountered in the vineyards; the frost risk has now all but passed without notable incident, some frost-prone areas perhaps experiencing limited damage. Budbreak and the early stages of flowering have occurred at a normal timing, perhaps up to three weeks ahead of the lateness seen last year. With some warm periods expected through May, the expectation is that the flowering stage will proceed quicker than last year, when it was greatly protracted by unseasonable coolness. It remains too early to read much into cluster count reports, which have been variable.
A second-consecutive helpfully wet winter means the growing season opens with good soil moisture levels and water reserves, with reservoirs and Sierra Nevada snowpack at or in excess of 100% of their averages. Looking ahead, much of California has an equal chance of experiencing slightly above or below average temperatures and rainfall, according to viticultural climatologist Gregory V. Jones in his May through July forecast.
With the 2024 grape market so slow, it is hard to imagine news from the vineyards stimulating increased grape interest unless Mother Nature stages a major intervention. The bulk market is only slightly more active than its grape counterpart and transactions are hardly making a dent in overall inventory levels. Suppliers of bulk wine and grapes are increasingly aligning their price expectations with those of buyers in order to help make a sale and are being proactive in listing with us what they have to offer. Over and above that, they are thinking strategically about their assets – how they manage them to reduce their running costs and improve margins, or whether to divest them altogether. As businesses increasingly seek to hold less inventory and move away from supply, we see vineyards and associated operations up for sale across the state, although, as on the bulk wine and grape markets, transactions appear few.
Meanwhile, buyers – knowing there is bulk wine and grape availability on most items as and when they need it – are increasingly proceeding on a just-in-time basis to avoid inaccurate sales projections and holding inventory for long. Some may consider taking on inventory but only at a significant price reduction, in order to make it worthwhile to them in terms of cost. This might help improve the pricequality ratio of the wine offering on retail shelves and, in turn, drive more volume sales – ultimately one of the two developments that needs to happen for the wine industry to return to equilibrium. The other, of course, is rationalization of supply, and we are seeing vine removals being undertaken across the state.
This month we welcome our friends from Saxco – the leading provider of rigid packaging solutions to the wine industry in North America – who will be providing us with monthly bulletins on market dynamics in packaging. Read on for their first update and – as ever – our detailed assessments of the bulk wine and grape markets. If you have any questions, don’t hesitate to get in touch via your Ciatti broker or info@ciatti.com.