“I’ve called everybody,” Ivancovich said Tuesday. “I would give the grapes away and say you can pay me my money when you sell the wine.
The retail wine marketplace presents another challenge because revenue growth is only occurring on wines selling at more than $9 a bottle, said Jon Moramarco, a winery consultant with the firm bw 166. Most of the retail sales growth is coming from smaller wineries producing premium wines. ”
As he hustled around a flatbed trailer parked along the road earlier this week, Will Ivancovich was abuzz during the first day of grape picking for this year’s harvest at his Kenwood vineyard.
Clad in a white fedora hat and with an unlit cigar dangling from his mouth, the 71-year-old Ivancovich easily kept up with the workers decades younger. He was operating a forklift to delicately place bins of chardonnay grapes onto the trailer or zooming around in his all-terrain vehicle along the rural road to oversee the start of his 14th wine grape harvest.
“It’s wonderful. … I’m living a great life,” said Ivancovich, who grew up in the Santa Clara area with parents who emigrated from the former Yugoslavia.
This year’s picking is a tale of two harvests for many small growers like Ivancovich, who will ship 75 tons of grapes to Domaine Chandon in Yountville to be made into premium wine. Growing nearby at his vineyard, he has another 50 to 60 tons of grapes still on the vine — fruit that he can’t sell because of an oversupply affecting growers across the North Coast and statewide.
“I’ve called everybody,” Ivancovich said Tuesday. “I would give the grapes away and say you can pay me my money when you sell the wine.”
The plight of Ivancovich and other growers is the result of a combination of factors: last year’s record grape crop; the decline in retail wine sales; and uncertainty over the planned $1.7 billion deal between two of the nation’s biggest wine companies. E. & J. Gallo Winery is acquiring more than 30 budget wine and spirits brands plus six wineries from Constellation Brands Inc. Many of the smaller growers sell their grapes to Gallo or Constellation or both of them.
“This harvest will probably be the toughest harvest that North Coast growers have experienced since 2010,” said Jeff Bitter, president of the Allied Grape Growers of California, a grower-owned marketing association that represents about 150 farmers in the region.
Typically, 85% of the regional grape crop is sold to wineries under multiyear contracts. The remainder of the crop is available to bidders on the spot market. Many sales contracts between growers and wineries were not renewed this year, however. Also, a report last week by Novato wine and grape brokerage Ciatti Co. noted that the bulk wine market has a large reserve that wineries can avail themselves of rather than buying more grapes on the spot market.
“I’m getting calls from people asking if I have deals in my back pocket,” said Glenn Proctor, a partner at Ciatti, noting the 2019 North Coast harvest that started a month ago is roughly 15% complete. “My back pocket is kind of empty right now.”
Bumper crops in recent years are a big reason for that. In 2018, growers sold an all-time high 588,864 tons of grapes crushed across Sonoma, Napa, Mendocino and Lake counties, yielding more than $2 billion. The 2019 crop looks to be around historical averages if not above average, which will provide more fruit for the grape glut, according to brokers.
The retail wine marketplace presents another challenge because revenue growth is only occurring on wines selling at more than $9 a bottle, said Jon Moramarco, a winery consultant with the firm bw 166. Most of the retail sales growth is coming from smaller wineries producing premium wines.
“Most wineries are sitting on plenty of inventory,” Moramarco said.
Many growers also were hampered going into this year’s harvest by the delay in completion of the Gallo-Constellation deal. Gallo is the biggest wine producer in the nation with a 23% market share and Constellation Brands is the third-largest with 11%, but the latter is attempting to shrink its portfolio to focus on high-end wine production.
“Had we had some type of answer prior to harvest, both companies would have been able to make some decisions to bring a little more clarity to the marketplace,” Bitter said.
The challenging market has plenty of area growers uneasy about this year’s harvest, yet many are reluctant to talk publicly about it.
Mendocino County grower Mike Boer said this week he still doesn’t have buyers for about 60% of his grape crop, or 300 tons, from his Ukiah Valley vineyard.
Boer figures he could wait for another three weeks to find a buyer for his chardonnay grapes and likely into November to sell his cabernet sauvignon fruit before calling it a complete wipeout.
“This is the worst it has ever been,” Boer said. “I have a lot of good company in friends and neighbors.”
Ivancovich of Kenwood agreed, and said he has heard estimates of up to 2,000 tons that may not be picked this year in the county because of the oversupply of grapes. In 2018, Sonoma County growers picked 275,977 tons for an average of $2,818 per ton.
“I’m one of the lucky ones. I look at it as the glass is half full,” Ivancovich said, looking over grapes on the vine that have not been picked. “I got at least half of it sold.”
You can reach Staff Writer Bill Swindell at 707-521-5223 or email@example.com.