Tuesday, August 20, 2013

US winegrape plantings not keeping up with demand, so should you jump in?

This article is pretty interesting:

The romantic notion is that it'd be fun to buy and run a winery, to grow your own grapes. Vineyard vistas. Bucolic splendor. A delightful "working retirement." Yes, that is extremely seductive, but like a lot of things, it's an idea which, in actual practice, requires a ton of work (way more than any reasonable human would expect) and throws up constant surprises, many of them negative (grape predators; unforeseen costs; regulatory hassles; difficulty to make good wine; how to sell your wine?, etc.). Many growers say it's a lifestyle you choose, not something you do for profit. For every winery that achieves cult status and can sell its wines at crazy high prices, there are several hundred that struggle to sell their wines at all. Most of them can get along, but a few fail.

Consistent with that backdrop, the US saw an excess of winegrape plantings in the 1990s, which squeezed grape and wine sellers' profits. There has been a dearth of plantings as a result, and so the US will be unable to meet its own rising wine demand. As a result, foreign winemakers are increasing their sales to US consumers. Unfortunately, there are many very good foreign wines that are sold in the US at prices so low that it adversely impacts the US winemakers' abilty to compete.

Over the years I think I've learned some of the reasons why foreign producers can price so low for their U.S. sales. Let's use the Farnese Montepulciano d'Abruzzo as an example--it's priced at $8 or $9 retail in the US, for a good Sangio-like wine, and that includes shipping it from Italy, and markups through our corrupt three-tier distribution system, so you can only imagine how low the price is that the winery receives. So how do they do it?:
a. Sometimes they get government subsidies (New Zealand);
b. Usually the land's been in the family for generations and there's no debt on land or equipment;
c. Usually the extended family members all work in the vineyard and winery, which depresses costs;
d. The "recipe" is locked in and the winemakers fully understand the range of vintage climate, winery situations, and can make quick and correct adjustments without having to defeat mystery;
e. Perhaps the European producers have had enough time to be better at shaving costs and finding synergies; and
f. Sometimes the family has done a good job of marshalling wealth over many generations, and thus can ride out economic downturns, even if it means several years of losses. 

So, might it be a good time to plant grapes in the US? Maybe. But make sure that you can find a market for your wines, at prices you can live with. And too many enthusiastic newbies to grapegrowing just dive in and make numerous mistakes. They plant whatever their neighbor is growing, or, worse, whatever they want to grow (despite the fact that it may not be suited to that climate or soil). They buy too much new equipment. They don't know how to keep young grapes alive. They don't know how to make good wine. They underestimate the costs. They haven't a clue how to market and sell. The best advice is to start a city or suburban vineyard and grow grapes and make wine that way, on a small basis, and learn that way.

Then, if you are confident you can avoid all those obstacles, and if you are ready for 10x the amount of work that you can possibly imagine, and if you've done all your homework and have enough knowledge in all the required areas (viticulture, winemaking, marketing, regulatory, project planning), then OK. Go for it!

Regarding which grapes to plant: Consider hybrid grapes (modern varieties). These are vinifera grapes crossed with American grapes. The result is earlier ripening and better disease resistance. Earlier ripening means less bird predation and (in the Pac NW) a better chance to get the fruit in before the rains return. Disease resistance means less spraying, or (here) no spraying, which saves a lot of time and money as well as being better on the environment. If you pick the right modern varieties for your site, you can make wine that is liked by your customers, and there are dozens of promising modern varieties available. The American grapes sometimes have flavor profiles that take getting used to, but with many of the modern varieties this is only a small step and the vinifera flavors predominate. Also, it is likely that there will be restrictions on spraying (in France and elsewhere, inorganic sprays have rendered vineyard soil completely poisoned and lifeless), and if that happens it will complicate the growing of vinifera. 

Compared to the CA vinifera described in the above article, hybrids are cheaper to grow, but is that enough of a difference to make U.S. winegrape plantings profitable enough? I'm not sure. I'm glad U.S. wine demand is rising but it's unfortunate that it's being met mostly through inexpensive foreign wines. Perhaps the "buy local" movement is a strong enough force that a local customer will pay, say, $12 for your wine instead of $8 for that Farnese Montepulciano.


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