California wine grapes savor great 2013 finish

The Modesto BeeFebruary 14, 2014 

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Demand has been especially strong for wines priced $10 to $15, a key market for northern San Joaquin Valley wineries. The large Modesto-area wineries do most of their volume on lower-priced Valley grapes.

MODESTO BEE FILE — MODESTO BEE FILE

MODESTO — Here is something to savor amid all the grim news about drought: The state's wine grape growers had a record harvest last year, a boon for consumers and for one of the Modesto area's top industries.

The crop came in at 4.23 million tons, the California Department of Food and Agriculture reported this week. It was up 5% from the 4.02 million tons in 2012, which also was a record.

The back-to-back bumper crops mean plenty of affordable bottles on the shelves, though probably not the extreme bargains that emerged in a grape glut about a decade ago.

"Consumers are in a great position because of the amount of wine that is coming out of California," said Erica Moyer of Riverbank, a grape and wine broker for Turrentine Brokerage in Novato, Marin County.

She said demand has been especially strong for wines priced from $10 to $15, a key market for wineries in the northern San Joaquin Valley, including the world's largest producer, E.&J. Gallo Winery in Modesto and the Livingston area.

The Wine Group, whose holdings include a large winery near Ripon, is a major player, as are Bronco Wine Co., south of Ceres, and DFV Family Wines, formerly Delicato, near Manteca.

The companies employ several thousand people and create more spinoff jobs for truckers, equipment dealers, retailers, restaurants and other businesses.

Bronco, the largest vineyard owner in California, joined in the statewide boom last year. "We had a good-quality harvest, and heavier than expected," said Fred Franzia, chief executive officer, in an emailed statement.

Bronco, like the other big producers, markets wine under numerous labels. Its most famous is Charles Shaw, which debuted at Trader Joe's stores in 2002 at $1.99 and quickly became known as Two Buck Chuck. It finally rose to $2.49 last year.

Other wineries came out with their own versions of $2 wines. They resulted from a glut of California grapes that had some growers tearing out vineyards in favor of more profitable crops.

The grape supply sagged in the years that followed, prompting fears of a shortage just as demand was recovering from the nation's severe recession. Growers responded by expanding vineyard acreage, and with the help of generally good weather, the crop has flourished the past two years.

"After short crops in 2010 and 2011, growers delivered two remarkable vintages, with record-sized harvests and exceptional quality," said Heidi Scheid, chairwoman of the California Association of Winegrape Growers, in a news release. Scheid, part of Scheid Vineyards in Monterey County, added that the industry "is well positioned to take advantage of the large crops, and I'm optimistic about our future."

The grower group noted that gross income hit $3.16 billion for last year's crop, a 48% jump over 2011 thanks to the combination of greater tonnage and higher per-ton prices.

California growers got an average of $746 per ton last year, according to the report, down from the record $773 in 2012 but much better than a decade ago. The Napa Valley once again had the highest average, at $3,691.

The large Modesto-area wineries do most of their volume on lower-priced grapes from the Valley, but also have operations in the premium coastal regions and take part in the global wine trade.

Moyer said wineries have increased their capacity and can handle the high volume. She also noted that they are reducing their wine imports, which can rise when the state crop falls short.

Silicon Valley Bank, which is based in Santa Clara and has many wine industry clients, noted the 2013 harvest in its annual report on the industry.

"News is good for the consumer: Demand is up, supply is in good shape and pricing is stable," author Ron McMillan said in a news release. He cautioned that high grape costs and flat retail prices could reduce winery profit margins.

He also noted that the consumption levels of baby boomer wine drinkers might not be matched by younger people.

"Consumers are in a great position because of the amount of wine that is coming out of California." — Erica Moyer, a grape and wine broker

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