April brought some welcome rainfall to California’s Coastal growing areas: Up to five inches fell in some locations but, in most, rainfall was sufficient enough to get things looking nice and green but not enough to meaningfully replenish water reserves. Indeed, we are hearing that water usage curtailments in some Coastal areas will start in May, and allocations for the federal Central Valley water management project could be at 0%. 

Given the ongoing drought conditions, tentative early expectations are for a 2022 crop shorter than average, though we have been seeing – and receiving reports of – healthy-looking vineyards with good cluster counts and sizes. The picture will be a lot clearer in June once veraison is underway. The Central Coast and Central Valley are slightly behind last year in terms of degree day accumulation, a reflection of the forecasted cooler-than-normal spring. 

The early morning hours of April 12th brought a frost episode that had a patchy, localized impact on vineyards across the state, but was more concerted in areas of the Delta, including in parts of northern Lodi, Clarksburg, and Dunnigan Hills. Vineyards situated in the Sierra foothills were also concertedly affected. The impact will have been felt most on the white varietals which were the most advanced; areas such as Clarksburg produce a lot of white grapes and Pinot Noir. While the frost incident is unlikely to significantly reduce this year’s total state crush size, some vineyards in the Northern Interior have been severely impacted and, in turn, the individual wine programs that heavily rely on grapes specifically from this region. Some buyers have consequently acted quickly to replace lost tonnages by sourcing additional grapes or 2022 bulk wines, while others may still be exploring options. Parts of Oregon were visited by the same frost episode, leading to some inquiries from there into the possibility of replacement grapes or wines from California. 

As you will read in this month’s report, beyond this activity uptick driven by the frost, the grape and bulk wine markets are proceeding steadily: Outside of specific appellations and varieties, the markets are in a settled state, pervaded by buyer wariness while the upcoming crop potential and consumer sales are assessed. The crop potential should become clearer during berry-sizing in June, but sales trends might remain foggy for longer, as post-pandemic demand mingles with a dawning economic realism as annual inflation passes 8.5%. We are in for a period of what Beverage Alcohol industry analyst Danny Brager has called “messier” data, due to all the COVID-related channel shifting, and the comparisons versus prior years since COVID. NielsenIQ scan data shows wine’s US off-premise dollar sales were up 4% in the first three months of 2022 versus the first three months of the last ‘normal’ year, 2019, but this was down from 14% growth in Q1 2021. The first quarter of 2022 saw Sauvignon Blanc (+13% versus 2019) and sparkling (+22% versus 2019) especially help to offset some flat sales (Chardonnay, Pinot Grigio) or declines (namely Merlot, -15%) versus 2019. 

Uncertain crop, rising costs, messy sales data. The market is currently challenging to navigate, but the Ciatti team stands ready to draw on its decades of experience to help you do so – don’t hesitate to get in touch. In the meantime, read on for more on the bulk wine and grape markets, and stay safe.

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Grape Market Bulk Wine