California’s 2021 harvest was completed by Thanksgiving week when areas of the Central Coast, picking well behind the rest of the state, finally gathered in the last of their grapes. The state-wide estimate of 3.6-3.7 million tons – a second-successive below-average crop – still holds and we must now wait for the Californian Department of Agriculture’s preliminary grape crush report in February to provide a fuller picture.
The Central Coast escaped much of October’s rainfall and consequently some growers there were able to wait on ripening a little longer – though rot does not appear to have been an issue anywhere anyway. The significant rainfall that fell in many parts of California brought hope the state’s drought would start to subside, but very little precipitation has occurred since. In addition, the 90-day forecast for December through February indicates the La Niña influence bringing drier and warmer than average conditions to much of California, particularly central and southern areas. This raises a question mark over the crop size in 2022: For many growers, drought risk has replaced frost risk as the foremost fear and a potential factor in working out future grape pricing. Many growers suspect 2022 could bring a third lighter crop in succession, so they are holding off from taking deals now while they wait to see how the market develops.
We have seen bulk market activity pick up in the past 3-4 weeks, while activity on the grape market is underway earlier than we saw in the previous three years. Much of this is discussion rather than deals, with a price expectation disparity between buyers and sellers because of rising input costs, inflationary pressures, and differing readouts on the retail sales picture: Suppliers see a lower level of carryover inventory versus previous years and a sales spike at retail since COVID-19 first reached US shores; buyers see a rapidly diminishing on-premise spike and consumers possibly reacting unfavourably to higher shelf prices in 2022.
These polarised standpoints, together with a hesitancy regarding what 2022 may bring, pervades the marketplace and is, in general, a drag on dealmaking. A future hard to read makes for a market hard to read and – as ever – we at Ciatti are doing our best to discern where the opportunities are. Read on for more.
The uncertainty in the world currently, and on the bulk market within it, means it pays even more to be in dialogue with your broker so that we can help you navigate a route forward. Do reach out to us with your bulk wine samples and the 2022 grapes you will have for sale. Likewise, keep us up to date with your bulk wine or grape needs. In the meantime, as another eventful year draws to a close, all of us at Ciatti would like to wish you and yours a very Happy Holidays and a prosperous – and healthy – New Year.