California’s bulk wine and grape markets continue to be active but feel a little less active than in January and February as buyers assess their casegood sales and wait to gain a better idea of the 2021 crop potential.
Nielsen numbers for March suggest wine’s off-premise dollar sales are continuing robustly, perhaps not in growth versus the surges we saw this time last year when COVID-19 first hit and Stay in Place orders were rolling out, but still in double-digit growth versus the equivalent period of 2019. For instance, in the week ending March 27th, wine’s dollar sales were down 7.4% versus the equivalent week of 2020 but up a significant 21.1% versus that week in 2019. All segments at $15 and above are in growth, as consumers take advantage of what they see as attractive discounts on quality wines – often on-premise wines that have been diverted into grocery stores. Segments below $15, however, are in decline.
Continuing the same story as previous months, March brought lower than average precipitation levels to California and the 30 to 90-day forecast suggests this winter’s rainfall shortfall will not be recouped. Sierra Nevada snowpack levels were at 59% of normal at the start of April and water levels in some lakes and reservoirs in the Coast are very low for the time of year, particularly in the North Coast where Lake Sonoma and Lake Mendocino are only at 63% and 45% of their respective capacities. Growers are understandably nervous about what impact this will have on water supplies later in the season but the more immediate concern, with moisture levels so low, is frost, the risk of which still has another 2-3 weeks left to run. Growers must carefully consider if and how much they protect against frost versus conserving their water for later. In Lodi and other areas, drip irrigation has been deployed intermittently since January to top-up baseline moisture.
In terms of vineyard development, the Coastal situation will be more discernible next month. Bud-break has been underway in the Central Valley for a month or so and cluster counts will be clearer by May. By and large, Valley growers have forward-contracted their grapes confidently – encouraged by robust demand – and some have pruned for a big crop; the vine development that Valley growers have seen on Chardonnay, a little ahead of the other varietals, has not dispelled this confidence. It ought to be reiterated, however, that it is still very early days and the frost risk remains with us for a little longer.
In summary, the year feels like being at a hinge point. Will we get to May without any serious frost events? And beyond that, will the mass vaccine rollout in the US see an irreversible return to some normality as the year wears on, or are there further twists and turns in the road to come? And how will consumer wine drinking patterns react? For the very latest insights don’t hesitate to get in touch with us and, in the meantime, read on for more on the bulk wine and grape markets. Stay safe.