March on California’s bulk wine and grape markets continued where February left off, with transaction levels limited on most items amid a patchy case-good sales picture and a disconnect between buyer and seller price expectations. With another 4-6 weeks still to go before the frost risk passes in the vineyards, many a buyer and seller feel they can hold off from making decisions until May or beyond.
Whether a frosty few weeks would necessarily precipitate a great deal of fresh buying activity – when two previous crops of 3.63 and 3.34 million tons have failed to do so – is another matter. With US consumer confidence indexes showing real pessimism (sometimes at recession-like levels), and recent banking failures, and expectations of a continuation of the long-term stagnation in overall wine sales (in the US as in all mature markets), it remains hard to foresee highly active grape or bulk wine buying across the board in the near future. There will always be specific premium appellations that continue to command demand and high pricing regardless of the wider picture, but most other items do not have that luxury.
Given all the challenges, we continue to see the wine and grape markets shrinking overall in California. Bulk prices currently remain largely stable, but many suppliers are being proactive in making samples available and some are potentially negotiable on price should what they view as a fair offer be made, perhaps indicative of a recognition that bulk buyers – just like shoppers in grocery stores right now – are doubly focused on buying smart.
March into early April continued to be wetter than normal in California, as the state experiences a number of what meteorologists have been calling “atmospheric rivers”. Sierra Nevada snowpack levels were at 237% of normal as of April 1st and state-wide reservoir levels are high, leading to the elimination of over 50 of the state’s 81 drought emergency provisions and the State Water Project permitting 75% of requested amounts, up from 35% in February.
This high level of precipitation – together with some cloudiness and cooler temperatures – has delayed vine development by at least a week, so too farmwork, the ground being saturated in many areas. When more spring-like weather does arrive, the replenished groundwater reserves are likely to spur vigorous vegetative growth requiring extra management. The wetness has so far protected the vines from spring frost, but must eventually ease, meaning the height of the frost risk is still to come.
With economic turbulence and a lack of forward visibility, it can be difficult doing business right now. We hope our monthly reports are helping readers form a clearer, more accurate picture of the market reality, and the Ciatti team stands ready to help buyers and sellers navigate the twists and turns: Don’t hesitate to get in touch with us direct. In the meantime, read on for our latest analysis.