The California Department of Food and Agriculture’s preliminary 2020 crush figure, published February 10th, was in line with our pre-harvest estimate at 3,404,298 tons. This volume represents a 13% decline from 2019’s 3.91 million tons and is the lightest crop since 2011’s 3.34 million tons. The causes were Mother Nature’s lighter yields and – mainly in the Coast – smoke exposure issues that led to an unknown amount of the crop not getting picked.
Of the biggest varietals by tonnage, Chardonnay (-16.1% to 538,552 tons), Cabernet (-14.1% to 498,975 tons), Zinfandel (-14.7% to 297,726 tons) and Pinot Noir (-20.8% to 211,194 tons) all saw declines on 2019 to similar extents, with a smaller drop of -11.6% for Pinot Gris (to 218,326 tons) allowing it to overtake Pinor Noir as the fourth-biggest varietal. The state-wide average tonnage price came in at $680/ ton, down 18% from $831/ton in 2019 – something likely most attributable to the lack of a Coastal spot grape market in early 2020 and then discounted prices on a secondary Coastal grape market that emerged after the wildfires struck. The decline in the state’s average tonnage pricing on Cabernet (-30.4%) and Pinot Noir (-35.8%) were particularly significant. For a more complete breakdown of the preliminary harvest result, and more comment, see Ciatti’s press release here.
The lighter crop and concerns around smoke exposure created – in late summer and early fall – the second of last year’s two inflection points on the bulk market, following the spring surge in off-premise wine sales. Prices have since stabilized but, on the Coast on most varietals, at levels not seen for two years or so. The bulk market remains active and the month just passed was one of the busiest Januarys for many years, particularly in the Central Valley (where many suppliers are now out of their 2020 wines) but also in the Coast. It is getting harder to source premium older vintage wines but there remains availability, especially as wine continue to be diverted from on-trade channels into bulk instead, now that bulk inventory is an asset that can provide useful cashflow even for high-end producers. The active bulk market is leading to some discussions around longterm wine contracts and also – especially in the Valley – grape contracts, though of course forward visibility remains limited and most activity is tentative at this stage, not just because of the ongoing pandemic but in the knowledge an average plus 2021 harvest could change things.
Sierra Nevada snowpack levels are relatively good but winter rainfall levels across California have so far been significantly below normal. Portions of the state continue to experience long-term drought and the long-range forecast through until the end of April is for drier than average conditions. There is particular concern among growers in the southern Valley about this dryness and the effect it will have on federal water allocations should February through April not bring some replenishment of water reserves.
There is no denying that 2020 was a challenging year for all and those same challenges are still with us in early 2021. Whether you are a buyer or seller of grapes or bulk wine, don’t hesitate to get in touch with us so we can help you turn today’s challenges into tomorrow’s opportunities.