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March 2, 2014

GRAPE SENSE: News from the world’s wine regions can affect future prices

News from the world’s wine regions can affect even the average wine drinker. There is a lot going on, particularly in California, which can affect future wine prices.

The biggest news and fear from the west coast is the ongoing drought. The 2013 harvest was huge, but vineyard owners and managers are concerned about the future.

Northern California had a heavy five days of rain recently but it was not nearly enough to offset dry conditions. The extended rainfall certainly brought about some sighs of relief, but long-term weather predictions call for dryer than normal conditions until at least early summer.

Anyone in the Midwest knows what happens with agriculture when things dry up. There are smaller crops and less quality product. That is doubly true with fruit, or in this case grapes. No one is predicting a catastrophic 2014, particularly on the heels of a strong 2013 crop, but it bears following.

Each year the USDA’s National Agricultural Statistics Service provides a harvest report, which is always interesting reading. California’s 2013 crop was up 6 percent over the previous year. That means more than 4 million tons of wine grapes were harvested.

What’s the top grape in California? Well, most people would probably guess it’s Cabernet Sauvignon, but actually there is more Chardonnay being harvested each year. Chardonnay accounts for 16 percent of the harvest to Cabernet’s 11 percent. Zinfandel comes in at 10 percent of harvest followed by Merlot, Pinot Noir and Pinot Gris.

And to understand wine prices, or the price of any consumer good, you have to have an appreciation for raw material costs. Everyone learned that in basic economics, right? California is best known for its big, expensive Cabernet wines. Well, the average price for 1 ton of grapes in California was $706.29. But if you have Cabernet on those acres the average cost is $5,500 per ton.

So how much wine does that make? It depends on a lot of variables, obviously. But if we just take averages, you have to crush 600 to 800 grapes to make a bottle of wine. That could be anywhere from three to 10 clusters. It takes a little more than 30 pounds of grapes to make a case.

Do you have your calculator out yet? That means you can make approximately 750 bottles of wine from 1 ton of grapes. Now get your calculator out and you begin to see the differences in the cost of a bottle of wine from label to label. There are many other variables, but it all starts with raw materials.

Two other interesting stories center in Napa/Sonoma. There is quite the community battle under way in Sonoma over how many tasting rooms are too many. On three trips to Sonoma, I’ve noticed an increase around the charming town square during each visit. Some fear it’s chasing out small business, while winery owners and the wine industry contend all those tourists keep the town alive. That one will be interesting to follow.

The other is a much needed discussion about rebuilding Highway 29, the main street of wine country in Napa. The road looks like a Midwestern two-lane highway through the middle of all these multi-million dollar winery operations.

After a year-long study, a presentation has been made to local government officials to rebuild the famous 17-mile stretch with front roads, bicycle paths, sidewalks and more. Don’t look for Napa wine prices to go down in our lifetime. The cost for that local project is projected to be $349 million.

Howard Hewitt, Crawfordsville, writes about wine for 23 Midwestern Newspapers. Visit his wine blog at: www.howardhewitt.net.

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