California wine grape prices set to remain high

California wine grape prices set to remain high

Prices for California wine grapes hit record highs in 2011 following a smaller harvest, adding to commodity cost pressure on wine firms, new figures show.

The average price for a tonne of California wine grapes reached US$634 last year, according to figures released this week by the US Department of Agriculture (USDA). The state accounts for around 90% of US wine production in volume terms.

The price of red wine grapes rose by an average 12% versus 2010, to hit $703 per tonne, the highest in published records dating back to 1988, the USDA said. White wine grape prices increased by an average 8% to $541 per tonne, the highest level since 1997.

A drop in supply was the main cause of last year's price increases. California's total wine grape crush fell by 7% to 3.34m tonnes, the lowest total since 2008.

The USDA's figures come amid a general tightening of supply and demand in the world's wine market. "Global inventories are at their lowest point in over a decade, with supplies slightly exceeding demand," said Rabobank in a report released yesterday. "The reduction of global surpluses will almost certainly result in continued strength in pricing for wine grape growers in many regions of the world." 

To view the full USDA figures, click here.