Custom Crushers Get Creative To Help Growers Survive

Call it trickle down disaster: Recession-battered consumers have traded down and abandoned most anything over $20 per bottle. That left wholesalers, wineries and retailers stuck with inventory that left them no choice but to discount. And with only a few exceptions, the higher the price, the bigger the mark-down.

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PAIN TRICKLES DOWN TO THE VINEYARD

The pain has now trickled down to the vineyard. The results have made for broken promises and contracts, big winery bottom-feeders, the occasional honorable winery and some creative deals that are helping a few fortunate growers survive.

“There have been a lot of offers from larger wineries to come in, harvest the fruit and pay the grower up to $500 per ton,” said Mike Fisher, Chief Operating Officer of Global Wine Partners in St. Helena. “In many cases that’s the only alternative for the grower to make anything at all this year.”

Fisher pointed out that leaving fruit to rot on the vine is not good viticulture. But because it costs $200 to $250 per ton to harvest, low-ball offers save that expense as well as offering some cash flow no matter how small.

By comparison, the average 2008 price for Cabernet Sauvignon was $4,728 in Napa Valley and $2,311 in Sonoma County. Chardonnay average prices were $2,400 and $2,016 respectively.

KENDALL-JACKSON A MAJOR LOW-BALL PLAYER

None of the North Coast growers interviewed by Wine Industry Insight mentioned Gallo or Beringer, Kendall-Jackson was on most lips. Gallo has its own grape oversupply problem with its huge acreage of Chardonnay and Cabernet Sauvignon, especially in Sonoma County.

Beringer faces the same over-planting issues, especially on the Central Coast. Beringer’s parent company, Fosters of Australia, has been struggling with a global downturn for the past year and has been unloading assets — including vineyards.

“We had K-J offer us $350 a ton for Chardonnay,” said a major vineyard owner who also manages substantial acreage for other growers. “It was a take it on the spot offer. Accept it or say goodbye.”

None of the growers would speak on the record. As one vineyard owner said, “I don’t want my bank to know anything until I can figure out what I’m going to do.”

Nearly every grower said that wineries had walked away from contracts or forced them to negotiate a lower price.

“THE STRANGEST STORY I HAVE EVER HEARD”

“I’ve been dealing with a steady stream of bottom feeders and broken contracts,” said a major Sonoma County grower. “I even called Gallo, but they’re not returning calls. Then last week, I get a call from a winery we’ve been working with for almost a decade.

“It’s not a big surprise to me when my winery contact tells me, ‘We’ve got all the fruit we need this year. We won’t be needing yours.’ I swallow real hard, and then I hear the strangest story I’ve ever heard,” said the grower.

“My contact tells me that, ‘we’re going to honor our contract and pay you in full what we agreed.’ I was stunned. They felt they needed to do the right thing.”

Also In This Article:

The full text of the following sections is available to VIP Premium Subscribers).

• CREATIVE CUSTOM-CRUSH DEALS TO THE RESCUE

• SHARED RISK SYSTEM MAKES SENSE FOR BOTH GROWERS AND CRUSHERS

• MANY CUSTOM CRUSHERS ARE QUIET ABOUT THEIR PARTICIPATION

• CONTRACT TERMS VARY WITH VARIETAL, APPELLATION AND GROWER

• JUST ASK. ALL THEY CAN SAY IS “NO”

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