Observations on the 2015 Preliminary Grape Crush Report

The wine grape crush declined from 3.9 million tons to 3.7 million tons (excluding raisin and table grapes), a 5% decline from last year. Generally, there were declines in coastal areas while the central valley had another strong harvest. Despite the decline in coastal areas, with the three preceding strong harvests, current forecasts do not predict any shortfalls of supply. As such, this harvest has brought supply back into balance with demand.

In analyzing the report, bw166 has identified two key metrics of interest for this harvest. The first concerns the concentration of winery owned/operated vineyards relative to open market purchases. On a statewide basis wineries owned or controlled 15.1% of all wine grapes crushed in 2015, down from 17.0% in the preceding harvest. This decline is mirrored in individual districts but of interest is the larger concentration of winery owned/operated vineyards in the coastal areas. For example, District 3’s (Sonoma) concentration was 34.5% in 2015 and District 4’s (Napa) was 40.9%. This dichotomy in concentration of vineyard ownership by wineries demonstrates that as coastal fruit gets more expensive, wineries are finding it more acceptable to control their grape sourcing and costs through outright ownership.

The second concerns the value and average price per ton for this year’s harvest. The total market value of all wine grapes crushed dropped to $2.88 billion from $3.43 billion, a 16.0% drop in value. This drop was driven both by quantity (3.70 million tons in 2015 from 3.89 million, a 4.9% decline) and market value per ton ($777.96 in 2015 from from $881.24, a 11.7% decline). The higher decline in market value per ton versus tons was caused by lower overall yields in the higher priced coastal areas. In other words, higher priced coastal areas represented a smaller share of overall tons in 2015 versus 2014, bringing the total value per ton down. In fact, prices within the coastal areas saw pricing increases. District 3 (Sonoma) saw average market value per ton increase to $2,465 from $2,343. District 4’s (Napa) increased to $4,417 from $4,071. District 7 (includes Monterey) was stable moving at $1,239. Lastly, District 8 (includes San Luis Obispo and Santa Barbara) saw market value per ton increase to $1,609 from $1,533.

The complete detail of the 2015 and 2014 harvests by district and key varietals can be downloaded from here.