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Review of the Final Crush Report

For some of us in the wine business, the release of the Crush Report is one of the most exciting events of the year. It means that the time has come to browse, analyze, cut up, re-arrange and make sense of winegrape prices to look for trends, find opportunities and verify or improve our own pricing models. For the vast majority of the wine industry, however, it just means that they can take a look and see how prices have moved for grapes they actually deal with. Still, I think it’s important for everyone in this business to keep an eye on the bigger trends. I am going to go through some of my most basic, digestible findings in the Grape Crush Report for the 2014 growing season. So, let’s go ahead and dive right in.

Overall Growth

Statewide prices for white wine fell by just under 4 ½% on average, while reds saw an increase of just over 4 ½% for a total increase of over half of a percentage point. According to the US Department of Labor, this is actually less than the rate of inflation, which was 0.8% for 2014. With yields down across the board from a monster harvest in 2013, total revenue was also down almost 8%, though growers in coastal regions should have made healthy profits for a third year running.

2014 Crush Report

Shooting Stars and Fallen Angels

The crush report lists a plethora of grape varieties, but then groups the least common into “Other Whites” and “Other Reds.” The greatest price increase was for the 27.6 tons of “Other Whites” grown in District 8 (San Luis Obispo, Santa Barbara and Ventura Counties.) What these grapes are or who is growing them I haven’t a clue, but their price skyrocketed from less than $400 to $1800, an increase of 417%! In fact, even though prices for whites fell overall, the “Other White” category saw an average increase of 26% statewide. At the same time, statewide yields for these nameless whites increased by over 7% to 5,745 tons (0.3% of all white wine grapes in California.) I am intensely curious to know who is growing these, where they’re being grown and what mini-fads are driving this increased demand.

Speaking of odd whites performing well on price, Gray Riesling (a.k.a. Trousseau Gris) was the best performer on a statewide basis, increasing by 59%, though this was due to its yields dropping from approximately 100 tons to 20 tons. These grapes were grown on the Fanucchi Wood Road Vineyard in the Russian River Valley and sold at over $2,000 a ton. Without eliminating the cheaper Gray Riesling plantings, the increase would have only been 5%, so don’t rush out to plant any.

The worst-performer was Cabernet Sauvignon grown in District 15 (Los Angeles and San Bernardino Counties.) Prices for these 52.6 tons of grapes fell by over 60%. This is a curious thing, since Cabernet Sauvignon’s statewide prices grew over 6% and District 15 saw average winegrape prices shoot up more than in any other district. Statewide, Ciliegiolo, a relative of Sangiovese, did worst, falling over 51%. Except for a couple tons coming out of somewhere in Sonomarin, all 100 and some tons of Ciliegolo are grown in District 12 (northern San Joaquin Valley.) The chart below shows the top three price increases statewide for reds and whites.

Top 3 Red Increases: Top 3 White Increases:
Tinta Madeira 124.45% Gray Riesling 58.71%
Pfeffer Cabernet 77.44% Other White 26.43%
Trousseau 52.68% Fiano 22.37%

Only 9 tons of Pfeffer Cabernet were produced, less than 40 tons of Fiano and less than 80 tons of Trousseau (a relative of Gray Riesling, by the way.) More interesting is that Tinta Madeira prices have much more than doubled. Tinta Madeira yields have been close to steady at around 150 tons, so price rises are real (as opposed to the removal of vines that are pulling down average prices.) More importantly, traditional Port varieties saw double digit increases almost across the board. Something seems to be driving increased demand for these varieties, indicating a possible opportunity.

OK, But What Is Going On With Grapes I’ve Actually Heard Of?

Alright, alright, I know we haven’t talked about really commercially important grapes so far but, quite frankly, they have not shifted as much or in surprising ways. Who didn’t guess that Napa cab prices would increase? And if it is relevant to you, I’m sure you’ve already learned that Chardonnay price fell by under 1% and Sauvignon Blanc rose by 3 ½%. So, let’s keep turning over rocks for real opportunities. I promise, though they’ll be bigger rocks than Gray Riesling and Pfeffer Carbernet.

Interest in Italian red winegrapes grown in premium appellations seems to be increasing. Charbono’s 330 tons saw prices shoot up over 50%, despite a significant increase in yield; Sangiovese’s 7500 tons rose by nearly 10% and the 300 or so tons of Dolcetto by over 6%. Nebbiolo was flat. Barbera, by far the highest-production Italian variety fell by almost 9%, but this was due to the massive amounts that are grown in the Madera-Fresno area, where all grape prices fell. When looking outside of this San Joaquin Valley production, the market is small enough that one mid-sized brand – 10,000 cases or so – could be causing all of this upward movement. This could also be a symptom of increased demand in small-production Italian varieties from direct-to-consumer channels.

Two reds I’ve been following are Grenache and Cabernet Franc. Grenache I’ve been following ever since Wine Business Monthly crowned it as the next big thing last September. I’ve loved Cabernet Franc for quite some time and I’m hearing from tasting rooms and wine shops that it’s moving briskly and customers are asking for it more and more. Grenache barely outpaced inflation at just over 1%, despite a 20% or so fall in yields. Cab Franc’s yields fell more moderately, but prices rose almost 12%. If I was budding over a small block of Merlot right now and I already had a good bit of Cabernet Sauvignon, I think I might put in Cab Franc. I’ve always found it easy to grow and it would make a good hedge, in case Cabernet Sauvignon ever got de-throned the way Merlot did after Sideways.

So, which red varieties have been hurting? Basically, anything in the San Joaquin Valley. Rubired and Ruby Cabernet both saw significant price drops of 7% and 16% respectively. Zinfandel’s statewide price was brought down by the falling prices in the SJV, even though coastal regions have seen strong price increases.

Though whites did poorly in general, prices for Semillon increased by over 14%, despite higher yields this year than last. Though increases in Napa, where most California Semillon is grown, were more moderate, less important areas saw significant increases, with District 8 leading the way with more than a 50% price jump. Other whites to follow include the nearly 1200 tons of Roussanne that saw a 12% increase in price and the 1500 tons of Pinot Blanc that rose 7.5%. Those that fell were, as with the reds, those that are predominantly grown in the San Joaquin Valley, like French Colombard and Muscat varieties. That’s all I’ve got for trends in different varieties. Let’s summarize shifts by district next.

Price Changes by District

Most coastal regions saw healthy price rises, with Napa leading the way at over 10%, followed closely by District 8 at 9%. Inland regions did worse with the San Joaquin Valley taking a beating. District 14 (southern SJV) saw average prices drop by 20%, while District 13 (Fresno-Madera area) saw a drop of 10%. Average prices were $315 and $313 per ton, respectively. Brutal. The chart below shows the price change in each district.

1 2 3 4 5 6 7 8 9
3.26% 6.81% 3.11% 10.46% -0.43% 2.63% 2.30% 9.16% -5.09%
10 11 12 13 14 15 16 17
2.37% -2.63% -7.48% -12.62% -22.86% 43.41% 7.15% -2.69%

A Few Minor Notes on the Crush Report

Just a few extra thoughts:

  • The Crush Report for 2014 indicates that Albarino prices in 2013 were $1140.53. This is a mistake. The real figure is $1132.14. I’ve notified them, but, as of the writing of this article, they are yet to make the correction.
  • Of the four core counties of the North Coast, Napa is the only to produce any table grapes. Lake, Mendocino and Sonoma Counties did not record a single ton of table grape production. Someone (or someones) somewhere in Napa, however, produced 5 tons of table grapes last year.
  • Early Burgundy and Sylvaner vanished from the California market in 2014. Production dropped down to zero. I wonder if they’ll take them out of the spreadsheet now.

Well, I hope that was interesting and or helpful to you. I’m assuming it is, if you’re reading this line. Stay tuned and I’ll be breaking down trends in more detail by geography. Cheers!

Gabriel Froymovich Expert Editorial
by Gabriel Froymovich, Vineyard Financial Associates

Gabriel Froymovich provides business and financial consulting to the wine industry. He is an industry leader in grape price forecasting, sub-appellation price estimates, competitive and market analysis and AVA valuation services. Learn more at www.VineyardFinancialAssociates.com.

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