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published on March 24, 2016 - 7:20 PM
Written by The Business Journal Staff
Last year left a sour note for most Golden State grape growers.

But around the Valley, grape operations that centered around raisin or table grapes fared better than their wine grape-growing counterparts.

Several major market trends appear to be working against Valley grape growers: a shift by wine drinkers away from less expensive brands — like Trader Joe’s once-popular “Two Buck Chuck” varieties marketed at $1.99 a bottle by Charles Shaw Winery — and a move by countries like Turkey and China to grow more table grapes that eventually hit the market as raisins.

“Consumers are trading up and buying higher price point wines,” said Jeff Bitter, vice president of operations for Fresno-based Allied Grape Growers, a wine grape marketing cooperative.

Bitter said the majority of Valley wine grapes do not make their way into pricier vintages coming out of coastal and Northern California wineries.

“We’re going to have to look at changing the way we go about marketing wine grapes from the Central Valley,” said Bitter, who is also a grape grower himself. “People aren’t buying the cheap, large-format wines anymore.”

A number of growers have thrown in the towel and replaced their vineyards with nut crops. “We’re oversupplied right now,” Bitter said. “A lot of vineyards around the Central Valley are being pulled out.”

According to the latest report from the U.S. Department of Agriculture, the 2015 California grape crush totaled 3,867,710 tons — down 7 percent from the 2014 crush.  

Red wine varieties, which accounted for the largest share of all grapes crushed, were down 5 percent from 2014 while the 2015 white wine variety crush also dipped 5 percent year over year.  

Raisin grapes and table grapes, the two most common crops grown around the Valley, had very different outcomes in 2015: Raisin grapes were actually down 41 percent from the previous year’s crush while table grape production leaped 25 percent last year, based on the 2015 crush report. A main reason raisin grapes were down in last year’s crush, said Bitter, is the fact that raisins are not being used nearly as much in wine or juice and juice concentrates.

Thompson Seedless, the leading raisin grape variety crushed for 2015, made up 2 percent of the total crush. Thompson Seedless are used for wine, juice and raisins.

“Raisin prices have remained pretty stagnant because the supply has just kept hanging around,” Bitter said.

Turkey’s annual raisin production has increased dramatically in recent years but the country is forecast to put out a much smaller crop this year. China, on the other hand, expects to increase its raisin production as much as 15 percent in 2016.

“Supply and demand in the raisin business looks like it is finally starting to come into balance,” Bitter said. “There’s still room to have a downward adjustment on supply so that we have a price increase.”

Bitter added that current raisin prices “are not economically sustainable” for most growers. “I see more and more people getting out of the raisin business because the returns just aren’t going to be there.”

One of the biggest grape-related stories of 2015 came during the last week of December when Gerawan Farming announced it would close its extensive table-grape growing operation.

The move, which will result in about 2,500 job losses, will see the company remove all of its table grape vineyards between Kerman and Fresno.

Gerawan, the Valley’s largest tree fruit grower, will continue to grow wine grapes.

Although the company has been in a lengthy legal battle with the United Farmworkers Union — and approximately 2,400 of the 2,500 Gerawan table grape workers who are now out of a job are UFW members — an attorney representing the company said the decision “was not influenced” by the ongoing dispute with the UFW.

John Pandol of Delano-based Pandol Brothers Inc., a major grape and tree fruit grower-shipper, said Gerawan’s exit from the table grape market will likely not have a major impact on the industry.

“In the big scheme of things, one or two million fewer boxes of grapes doesn’t radically change the supply,” Pandol said. “No supplier is huge enough to do that.”

Gerawan may replace its table grape vineyards with nut crops, which are not nearly as labor-intensive to farm.

Meanwhile, those still farming grapes are hoping the industry’s fortunes — and their bottom lines — will improve in 2016.

Last year, according to the USDA, the average price of all grape varieties was $671.31, down 10 percent from 2014.  

Average prices for the 2015 crop by type were somewhat of a mixed bag — red wine grape prices were down 12 percent from 2014 and white wine grape prices were down 9 percent. But raisin grape prices increased 6 percent and table grapes prices were up 8 percent.
 
Industry experts say the wild card for this year’s Golden State grape-growing season could be El Nino-inspired weather patterns.

Table grapes begin to be harvested in late spring in the Coachella Valley, California’s southern-most growing region, before the harvest moves north to the San Joaquin Valley by mid-July.

While grapes need rain, heavy and prolonged showers are hard on any crop, and especially hard on table and raisin grapes, Bitter said. “If the product doesn’t look perfect, consumers aren’t going to buy them.”


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