All Posts Tagged: Crush Report
After high production levels for several years running, the USDA’s 2015 California Grape Crush Report showed that grape production decreased last year. In a disappointing turn for the premium wine segment, the varietals with the lowest yields in 2015 were the ones that were already in short supply – particularly North Coast Chardonnay and ultra premium Cabernet Sauvignon, historically one of the hottest tickets in the wine market.
Overall, 2015 provided an embarrassment of riches in what we didn’t need and a dearth of what we were hoping for. According to the Gomberg-Fredrikson Report, a respected source for information on monthly and annual shipments of leading California wineries and wine imports by country, consumption overall decreased in 2015, but consumption at the $25+ price points (generally from the North Coast) showed solid growth. Much of that growth is driven by Cabernet Sauvignon and ultra premium reds, which is exactly what we missed out on in the 2015 harvest.Challenges for the Central Valley
For those in the Central Valley, the story is a little different. Growers in the region – particularly in the southern parts of the valley – had a decent production year, but the economics of the wines produced by those grapes remain challenging. International competition at the price points of most Central Valley wines is very intense. It has become increasingly common to find good quality wines from South America, Australia, and southern Europe at lower costs. Perhaps as a result, we’ve seen some producers in the region decide that they can make more profit replacing grapes with other products (i.e., nuts).Drought and dramatic weather
While there’s no general consensus of the primary cause of 2015’s lower production numbers, we can certainly point to some likely possibilities. Most of California continued to experience extreme drought conditions throughout 2015, and rainfall totals across the state have been terribly low for years. Additionally, Mother Nature gave us some particularly odd weather in spring 2015, delivering both fluctuating hot and cold temperatures and hailstorms, which definitely had an impact on the fruit set.
Growers have also seen several vigorous years of production in a row, so 2015’s decreases might mean that the vines are simply taking a rest. If you consider these factors together, the lower numbers are unsurprising.The move to quality
What’s perhaps more surprising is the overall decrease (albeit small) in wine consumption in 2015 – the first decrease in 20 years. To me, this reduction feels more like a blip than a foreshadowing of troubled times ahead. For one thing, millennials have become a strong generational force in the wine market, consuming 42% of all wine drunk in the U.S. last year, according to Wine Spectator. We don’t anticipate their interest in wine going away any time soon.
We also anticipate continued growth in wine consumption at the higher price points, reflecting the U.S. consumer’s increasing focus on quality across the board. For example, although beer consumption is down overall, the craft beer segment is showing double-digit growth.
More and more people are paying attention to what they consume, where it comes from, and how it’s made. Handmade, high-quality products are a central focus in today’s market, and that holds especially true for what’s on the plate or in the glass.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Bank of the West.Read More ›