Monday, June 11, 2012

Winemaker-grower relations: the 8-point summary

Here's a quick 8-point summary of what we learned about current winemaker/grower relations by my turning anonymous comments back on last week.

A quick cautionary note: None of these observations, all from comments on a post asking for them, are universal. Just because some growers and some winemakers are doing something doesn't mean everyone is. And I'll say once again that without hard-working, underappreciated grape farmers, we wouldn't have great wines.

1) Grapes are definitely in short supply this year -- we knew that -- and some growers are taking advantage, demanding more money per ton and giving less control over yield, which might lead to lower quality grapes and lower quality wines. Some growers are even asking for more money despite signed contracts.

2) That said, many wineries have had an easy time cheaply filling bottles of mid-priced wine the last few years, buying declassified bulk wines from other wineries or ruthlessly underbidding on grapes that growers felt desperate to sell. Wineries that didn't plan ahead are suffering the most now.

3) Under-$20 private-label Napa Cabs and other such amazing values might disappear.

4) Pay attention to the region on labels, as many appellations might be downgraded. Wines that used to be Carneros might be Sonoma County. Wines that used to be Sonoma County might be North Coast. Wines that used to be Central Coast might be California, without any price decrease.

5) Wineries do not feel as confident in their ability to raise prices as growers do, so margins might be tighter unless/until the economy improves. But some single-vineyard wines will simply have to rise in price because of higher grape costs.

6) Relationships matter. Winemakers and growers who have spent years working hand in hand are mostly still getting along great. Where cutthroat economics are coming in is generally in the spot-buying or bulk markets; in other words, grapes for wines that don't have the vineyard name on the label.

7) This was news to me: Per-acre contracts seem to make the most sense for both sides because the grower gets a guaranteed amount, and the winery gets control over yield and how the grapes are farmed. But they are more rare than they should be because growers and winemakers have a hard time agreeing on how many grapes should be harvested from a given acre. Maybe they should do what most baseball players do before arbitration and split the difference.

8) If there was one comment I got more than anything else, it was "what goes around comes around." Some winemakers now being pressured by growers are looking forward to the next big crop. There could be payback.

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Robert C said...

In regards to point 7, it is hard to get growers to do what you want, when you want it and how you want it and if you are dropping fruit the price per ton goes up so some wineries tend to shy away from the price per acre.

Anonymous said...

Regarding #8: To growers this IS the payback. The market has been in winemakers favor for the past 10 years. Many growers I know (inland) have barely made a profit - many leaving crops unpicked year after year - and now wineries want payback?

W. Blake Gray said...

Anon: Missed you last week, but better late than never. One thing I didn't add here, but is worth discussing with your friends and colleagues, is that winemakers have always done a better job of media outreach than growers. I like to think I'm an exception -- I find vineyards more interesting than tanks -- but even I spend more time talking with winemakers than growers. Not sure how much this affects your bottom line, but it is food for thought.