A smaller California 2011 winegrape crop has eliminated any surplus that was still on the market and sent the industry on the edge of a shortage.
As a result, Nat DiBuduo, president of Fresno, Calif.-based Allied Grape Growers, has recommended that growers begin planting winegrapes once again as long as they do it smartly and with a long-term winery contract.
"It looked like in 2011 we could have a good depletion based on California wine sales, and it looks like we're on the cusp of a shortage," says DiBuduo, who represents about 600 growers in the cooperative.
"The time for acreage expansion is here, and you probably never thought you'd hear me tell you that. Learn from our history. Let's look at it in moderation and plant it for value-priced wines and varieties that are appropriate for your region."
DiBuduo's comments came during the recent annual state-of-the-industry session at the Unified Wine and Grape Symposium in Sacramento, Calif.
The National Agricultural Statistics Service in October estimated the 2011 California winegrape crop to be 3.4 million tons.
DiBuduo says Allied puts it more at 3.25 million tons, down 10.4 percent from the 2010 crop and fairly close to the 2007 short crop.
He blames late rains, frosts in some production areas both during spring and at harvest, and rains at harvest for the reduced crop.
Steve Fredricks, president of Novato, Calif.-based Turrentine Brokerage, says bulk wine shipments also back DiBuduo's contentions.
When case wine sales are slow, wineries put more into bulk wine and vice versa.
Turrentine's latest figures show the lowest U.S. bulk wine inventory in 11 years, Fredricks says.
That also opens the door for lower-priced imports to supplant part of the shortage.
Faced with a price of $8 to $11 per gallon for Lodi wine, for example, some wineries may look toward Chilean wine at $5.50 to $6 per gallon, Fredricks says.
The tight supply also has sent bulk wine prices climbing.
Cabernet sauvignon, for example, is double what it was at the same time last year, Fredricks says.
Based on a 3 percent annual growth in wine sales, DiBuduo says California growers would need to harvest 3.61 million tons in 2012, 3.68 million tons in 2013 and 3.75 million tons in 2014.
That means 45,000 new bearing acres would have to come into production by 2014.
The anticipated shortage is part of a cycle the California wine industry has experienced about every 10 years. Only five years ago, the industry was in an oversupply situation, and winegrape growers—mostly in the Central Valley—removed 150,000 aces.