crunch crunch

Tuesday, February 16, 2010

I’m not usually a numbers guy, but these grape report stats have me going.

The most recent revised numbers (I blogged the highlights yesterday) actually cover 2005 thru 2009. I also pulled up the previous report, which covered 2000 thru 2004. Here are some ’00 to ’09 comparisons.

[Apologies for the columnar dysfunction – this is as square as I can get it!]

Variety –––––––– ’00 vs. ’09 tonnage ––––– ‘00 vs. ’09 price per ton

Chardonnay ––––– 27,800 – 33,400 –––––– $ 818 – $ 857
Merlot –––––––––– 21,400 – 24,800 –––––– $ 1060 – $ 1088
Cab Sauvignon –– 13,000 – 27,600 ––––––– $ 1144 – $ 1276
Riesling –––––––– 10,100 – 32,100 ––––––– $ 590 – $ 781
Syrah ––––––––––– 2,200 – 10,000 –––––– $ 1343 – $ 1152

To me, these numbers provide a much more interesting picture of where things are going in this state. The first four were – and still are – the most widely-grown varietals in the state. Only syrah has made it into double digit tonnage alongside them. But despite the assertion that, according to 2009 figures, chardonnay is the growth leader, it’s clear that looking at the decade, the two leaders are only up about 20% (chardonnay) and 15% (merlot). Their average price per ton is virtually flat – and down if you factor in a decade’s worth of inflation for labor, fuel, replanting and other costs.

Now look at the other three. Cabernet sauvignon has more than doubled its acreage; riesling has more than tripled; and syrah has more than quadrupled. All three show healthier price growth than either chardonnay or merlot. Riesling is particularly strong – up 32 percent. The only top five grape to lose per ton value is syrah. This makes a lot of sense when you consider that it is four times more available, and the most difficult wine (of these five leaders) to sell.

Quite honestly, grape pricing remains a bit of a mystery to me. But what is not shown in these stats is average tonnage per acre, and therein lies the key to pricing. Along with scarcity, what will raise the price of a particular grape is how tightly it is cropped.

Among the many also-rans, the big growth spurts have been recorded by pinot gris (which wasn’t even a blip in 2000 and is up to 6300 tons in 2009); and malbec (also a blip, now just at 1000 tons). Oddly, cabernet franc is down – from 3300 tons to 2600 tons. And finally, the “official” total wine grape tonnage has gone from 90,000 to 156,000 over the decade. Although that is substantial, it hardly mirrors the actual growth in the number of wineries, or the massively increased production of the Ste. Michelle Wine Estates Group. How to account for all those (seemingly) missing grapes?

I welcome your thoughts.

12 comments:

Sean P. Sullivan said...

Paul, and you called me the king of the crunch! Great numbers. Very interesting trend over the last ten years in the growth of Cabernet, Syrah, and Riesling. While some might think Merlot flattening out is a 'Sideways effect', I think it has more to do with the fact that there is already a lot of it out there so it's harder for it to go up drastically.

I agree that grape pricing is mysterious. Would be interested to hear growers thoughts on this one.

Greg said...

Paul, great data. But I think much of that data is skewed by the big wineries in the state that have huge long term contracts and pull the official figures lower.

For high quality Cabernet from a top vineyard, a boutique winery can expect to pay $7500 - $10,000 an acre. Typical cropping levels would be between 2.5 - 3 tons an acre on average, obviously site/goal specific. So it would be more in the neighborhood of $2400 - $4000 an acre, depending on the crop load. Which is still far less than Napa.

PaulG said...

Greg, thanks for the clarification. Note that these stats are per ton, not per acre. So taking your $2400 - $4000 as the high end per ton spread in WA, contrast that to the numbers on Steve Heimoff's blog today, which report on 2009 Napa cab prices. He writes "most of the grapes went for between $6,000-$11,000 a ton. The official weighted average for Napa cabernet was only $4,743 per ton, but that average is skewed low by the cheap grapes, which will end up in inexpensive bottlings that have little impact on high-end cab." These numbers suggest that high end WA cab is still selling for one quarter to one third the price of high end Napa cab.

Scott said...

Paul – Is it your conclusion that the amount of wine grapes harvested in WA is too low relative to the volume of wine produced in WA? Is this what you mean by the missing grapes?

PaulG said...

Scott, not a conclusion, but a question for sure. The numbers don't seem to add up. That said, I don't have all the numbers, nor the time to add them up. Hence, a question, not a conclusion.

wineeconomist said...

I don't know if it is true, but I have seen several references to the one percent rule for grape prices. If the grapes sell for $1000 per ton, the wine has to sell for one percent of that -- $10 -- for the operation to make economic sense.

If this rule holds, then the relatively lower prices of Washington fruit are related to the relatively lower prices that Washington wines bring in the marketplace (compared with Napa etc).

I'd also be interested the comments of growers and others.

Plymale said...

Paul, could some of the missing grapes be Walla Walla AVA fruit from Oregon vineyards?

PaulG said...

Good question - I don't know how/who/if those semi-homeless grapes are tallied. Anyone in W2 want to enlighten me?

Anonymous said...

Caleb at buty Winery here. The grapes grown in the WWV appellation in the State of Oregon are not included in this WA State report. This report is based on WA state properties only, disclusive of the Columbia Gorge and WWV and Col Val appellations' Oregon located vineyards. The WWV Oregon side grown fruit, at maybe 1000 tons annual gross yield (300acres at 3.5 T/A) just doesnt influence the overall picture.
Really, I saw a quick # growth of over 50,000 tons in your above numbers of the dominant grapes in WA. That's nearly a 60% increase in yield since 2000s 80,000tons of these fruits. One ton = 60 cases generally, so that's 300,000 cases production growth minimum. Sounds like a lot to me.
It would be interesting to see a gross gallon sales report on Washington over the same period. I dont know where to get one of those.

PaulG said...

Caleb, these are very helpful numbers. We're on the right trail here. Yes, the "official" tonnage has increased roughly 60% in a decade. You connect that to an increase of 300,000 cases. Precept alone accounts for double that. I would have to bet that case production over the decade has increased considerably more than 300,000. If anyone can determine those numbers, please let me know.

Anonymous said...

an increase of 50,000 tons at 60 cases per ton is an increase of 3,000,000 cases...not 300,000

PaulG said...

Ooh, I should have caught that. You are quite right - it's 3 million more cases. That starts to make a little more sense.

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