Demand for Significant Reduction of Vineyard Hectares in California

By | 6 February 2024

The California wine industry is currently dealing with an oversupply situation. This is largely due to changing consumer preferences, with younger consumers choosing to consume other beverages like RTDs, spirits, non-alcoholic drinks, or even cannabis. As a result, there is a significant risk of overproduction which could potentially lead to higher inventory turnover by 2024, suggests the most recent US wine report from Silicon Valley Bank (SVB).

Jeff Bitter, president of Allied Grape Growers, highlighted this issue at the Unified Wine & Grape Symposium in January. He encouraged grape growers to eliminate more than 12,000 hectares across California to deal with the ongoing issues of low demand in the wine market, a trend that is seen globally.

Bitter pointed out that ‘Nobody is making money sitting on inventory.’

This plea from Bitter, encouraging California growers to cut back on their plantings, is his second such appeal. His first appeal came post the 2019 harvest when the crop was not fully utilized and wine reservoirs were full of unsold product. On that occasion, Bitter mentioned, ‘I’ve been in this business for over two decades, and it’s rare for us to see these situations in the sector.’

His speech at the 2020 Unified Wine & Grape Symposium saw the removal of only 7,280ha.

In the four years that have passed since, the once rare images Bitter referred to are now increasingly witnessed. ‘In three of the past five years – namely 2019, 2020 and 2023, we have neglected harvesting grapes. For the past five years, we have been dealing with an oversupply issue. This indicates that we need to mellow down our yielding areas to balance supply and demand,’ Bitter said in an interview with Decanter.

This year, Bitter had a more specific goal, wanting to detail the type of market that was in surplus: ‘I am speaking directly to those who fall into these categories. For those who don’t, I am not addressing them. It is crucial to be specific about this, or else grape cultivators would assume that it’s the responsibility of someone else to lessen the production.’

At the Symposium, Bitter then went on to directly address Central Valley producers. He persuaded producers who are selling wine for less than $6 per bottle to eradicate 6,000ha altogether. This should be subdivided into 1,600ha of Zinfandel, 1,600ha each of Merlot and Cabernet Sauvignon, 1,600ha of Barbera, Carignan, Grenache and Ruby Cab, and 1,200ha for ‘generic white wines and floral wines’.

Producers in the Lodi and Delta interior regions have been urged to uproot 6,000ha of grapevines. This breakdown includes 2,400ha of Merlot and Cabernet Sauvignon, 1,600ha of Zinfandel, 1,600ha of low-yielding Chardonnay and Sauvignon Blanc, and 400ha of Malbec, Petite Sirah and miscellaneous red varieties. These vineyards typically sell bottles in the $6 to $11 price range.

Bruce Lundquist, co-founder and CEO of Rack & Riddle, responded to these suggestions by pointing out the cyclical nature of the wine industry, saying, ‘We’ve been in this situation before. While I agree there is an over-production of grapes, difficult times offer opportunities. It’s time to balance vineyard replanting with both terroir and consumer demand, as current acreage outstrips demand.’

According to an annual nursery survey, approximately 7,700 vineyard hectares were planted in 2023. Bitter urged wineries to consider removing older vines in the Coastal California regions in anticipation of these new vines reaching maturity in three years. This includes 2,000ha of Cabernet Sauvignon, 1,600ha of Pinot Noir from Monterey and Santa Barbara, 1,200ha of Syrah and old Merlot vines, 800ha of Chardonnay in Mendocino, Monterey and Santa Barbara, 400ha of Zinfandel from Mendocino and Paso Robles, and 400ha of various white grape varieties.

Bitter added that there are candidates for removal across the state, summarising, ‘We need to uproot more than what’s entering production in order to genuinely reduce bearing acreage.’

Consequently, the recommendation is to remove a total of 2,000 vineyard hectares – includes 800ha of Cabernet Sauvignon, 400ha of Zinfandel, and 400ha of older Pinot Noir vines – from the Sonoma wineries where new production growth isn’t expected to occur.

Some may suggest that a better solution would be to halt planting grapes without a contract or to cease planting completely, however, Bitter stresses that an immediate eradication of over 12,140ha is an urgent necessary action. ‘If we desire to aid ourselves presently, we need to act immediately,’ Bitter stated.

In the wake of an unproductive appeal in 2020, Bitter outlined his strategy to ensure more significant impact this time. Allied Grape Growers is a representation of approximately 500 growers across California. Bitter underlined the need for growers to understand their role in the removal list of acreage.’I’ll be naming the growers whose grapes fall into the aged-out, unproductive vineyard categories,’ added Bitter.

‘If there is no demand for the variety or the quality of what you’re producing, I will communicate that with you prior to you beginning your investment or farming for the 2024 grape season.’

Leave a Reply

Your email address will not be published. Required fields are marked *