Winegrape growers endured many challenges in 2020

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By Vicky Boyd

San Joaquin County winegrape growers endured a wild ride during the 2020 season, marked by low yields, low prices, high expenses, smoky skies and a pandemic.

But because the Lodi region grows grapes for wines spanning a broad range of price points, it fared better than some of the other production regions that focused on narrower markets.

“We’re really in a good position in Lodi in the sense we can grow really high-end fruit to go into high-end labels and grow value wines as well,” said Clement area winegrape grower and San Joaquin Farm Bureau board member Brad Goehring. “So it seems like when the pendulum swings in the market place, Lodi fares a little better. When consumption shifts, Lodi can shift up or down so we’re kind of in the middle.”

With a large portion of the region’s fruit going into larger-scale wineries that sold into grocery stores and big box retailers, Lodi appeared to benefit from COVID-related stay-at-home orders, said Lodi Winegrape Commission Executive Director Stuart Spencer. Smaller-scale wineries that relied predominately on tasting room and restaurant sales were impacted significantly when the governor shut down indoor dining and gatherings.

Difficult 2020

Now the big question remains how the gradual relaxation of COVID rules governing restaurant dining and tasting rooms will affect wine sales in the different market sectors.

The National Agricultural Statistics released the 2020 California preliminary grape crush report recently that showed District 11 crushed 679,123 tons compared to 774,719 tons in 2019. The district encompasses San Joaquin County north of State Highway 4 and Sacramento County south of U.S. Highway 50 and east of Interstate 5.

In District 12, an area south of Highway 4 and including Stanislaus and Merced counties, 296,217 tons were crushed in 2020 compared to 311,252 tons in 2019.

While production in the Lodi area was down about 12% in 2020, Spencer said it wasn’t off as much as in some other areas. The reduced tonnage actually helped blunt some of the oversupply the winegrape industry has endured the past few years.

Goehring said his production was probably lower than the region’s average.

“They were off tremendously,” he said. “We had the lowest yields we’ve had in the last 10 to 11 years, and we had the lowest prices we’ve had in 10 to 11 years and the highest expenses.”

Production costs rise; vineyards removed

Goehring attributed much of the increased production costs to the $1 per-hour rise in minimum wages statewide as well as the lower threshold for overtime. Like many other grape growers, he said he’s looking at every way possible to mechanize.

“The future is mechanization, and some of us are getting more aggressive than others,” Goehring said. “We can’t hang our hats on a labor supply that may or may not exist but also is a very expensive labor supply.”

Long ago, he moved away from hand harvest crews to mechanical harvesting machines. More recently, Goehring began using mechanized pruning and mechanical suckering.

Spurred by depressed prices, county winegrape growers have removed a few thousand acres of underperforming vineyards during the past few years. In their place, many planted alternative permanent crops. With prices of many of those alternatives, such as almonds and walnuts, declining, some winegrape growers who removed vineyards recently have shifted back to replanting grapes, Spencer said. But vineyard removal hasn’t stopped.

“There was still a fair amount of vineyards that have been removed post-harvest,” he said.

Gray skies

Despite smoky skies caused by wildfires in August and September, most county winegrape growers escaped fruit damage from smoke taint. Spencer said he heard of a couple of growers who had fruit rejected by wineries because of smoke concerns, but they found other homes for it.

What the continuous gray skies did do was slow fruit maturation, Goehring said. He began harvesting his white varieties ahead of historic harvest dates and had them all picked when the wildfires broke out.

Harvest of red varieties typically follows whites a few days later. But in 2020, the smoke blocked the sun, reducing ultraviolet light and associated photosynthesis within the plant leaves.

With less energy being produced, sugar accumulation in the berries and fruit maturation was slowed, delaying his red harvest by 23 days, Goehring said. If it hadn’t been for the early start, he said the smoke-related delays could have pushed picking into October or November, when shorter daylight hours are not conducive to fruit ripening.

Lodi positioned well

While many other crush districts saw significant price decreases for the 2020 crop, Spencer said the average price paid to District 11 producers remained stagnant. As winemakers gauged what they need for specific programs since harvest, prices for many varieties have begun to inch up.

“I think the demand has shifted in the industry, and that has worked to the advantage of the Lodi grape growers relative to some of the other parts of the state,” he said.

Shortly after harvest when the smaller crop size became apparent, wineries scrambled to buy bulk wine to make up shortfalls. This reduced the surplus on the market, and prices responded, said Erica Moyer, a broker/partner with Turrentine Brokerage who serves the Lodi and interior regions.

“We’re down considerably,” she said of bulk wine supplies. “We’re half what we were in 2019 and 2020.”

In addition to tight supplies, an increase of off-premise wine sales at grocery stores and big box retailers during the pandemic helped shore up prices of value wines, considered those $6 to $15 per bottle. Much of the Lodi and Central Valley winegrape crop goes into those wines, which frequently carry the California appellation.

“2020 is history,” Moyer said. “We’re already renegotiating existing contracts to higher prices and extending those prices. Long term, we’re doing new deals at better prices and for longer terms.”

Whether the bull market for wine continues remains to be seen, she said. Both the seltzer and spirits categories also have seen increased sales during the pandemic, adding more competition.

“There’s still a concern about how big our sales are going to be once things open,” Moyer said. “How many restaurants are going to be around, and is their wine list going to be as robust?”