Californians face bumper challenge

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California enjoyed a record wine harvest in 2005 but, writes Richard Woodard, the fear of a wine glut has been allayed by booming sales at home and abroad and reports of a vintage not only of unprecedented size but of excellent quality.

As forecasts for the 2005 Californian vintage grew bigger and bigger in the months leading up to harvest, fears of surplus supply and falling prices also mounted, but the mood in California appears relatively upbeat in spite of the prospect of having to sell an awful lot of wine.

There are a number of reasons for the fairly optimistic outlook. First, Californian wine sales are booming both in the US and abroad, where the market is being buoyed by the weak dollar. Secondly, the harvest was not only huge but also apparently of excellent quality.

Nevertheless, the record crop comes at a delicate time for California with the region having only recently recovered from the recession years of 2001 and 2002, so concerns still remain.

Even with a booming market, any harvest which shows a 35% increase on its predecessor is bound to provide challenges for winery inventories. As one broker pointed out, the extra juice effectively gives California another 67m cases to sell.
But you wouldn't necessarily have guessed that as picking time approached. The State of California was originally predicting a large but manageable harvest of 2.95m tons. By mid-October, a total crop of 3.2m tons was being forecast, but official figures now released show that growers brought in 3.7m tons of wine grapes in 2005, a huge increase on the previous biggest harvest of 2000.

Concerns over surplus wine vary from variety to variety. Indeed, the increases in volumes of certain varieties have been welcomed. For example, Chardonnay, which saw a 41% increase from last year, remains in demand. And many wish there had been a larger increase in volumes of fashionable Pinot Noir, which saw a 34% rise. In fact, Pinot Noir yields remained relatively low and some areas, such as the Anderson Valley in Mendocino and coastal parts of Sonoma, reported lower crops in cooler growing conditions.

All the other major cultivars showed big increases in tonnage, with Cabernet Sauvignon up by 50%, Merlot by 45%, Syrah by 45%, Zinfandel by 39% and Sauvignon Blanc by 48%.

However, while healthy demand has kept Pinot Noir prices buoyant - official figures show a 7.5% increase from 2004 to 2005 - the same cannot be said for Merlot. Lambasted by wine anorak Miles in the hit film Sideways, it remains distinctly out of favour, with prices dipping by nearly 9%. Not the best time to be picking well over 400,000 tons of the stuff.

The broader picture regarding grape prices is so-so, with an overall rise of 1.8% over 2004. However, there is more concern over the effect of 2005's bumper harvest on the future, with most expecting the 2006 grape-buying market to cool for the time being.

But it could be worse. Both 2003 and 2004 were relatively small crops, with the improving market depleting inventories swollen by the recession of 2001 and 2002.

Nick Frey of the Sonoma County Grape Growers Association admits that 2005 may slow that turnaround, but he points out that new planting has all but stopped in recent years. With a constant supply base and a growing market, wine brokers are still predicting firmer prices in 2007 and 2008.

Before that, all thoughts will focus on the 2006 vintage. While California seems set to be able to cope with the record 2005 harvest, a further bumper crop in 2006 would not be welcome. But Frey says early indications point to a smaller crop this year. "Bud fruitfulness is low - thus low cluster counts for 2006 will likely lead to a smaller harvest," he explains. "Again, extra inventory from the 2005 harvest may help wineries sustain sales growth even if the 2006 crush is small."

There is one more crucial feature of 2005 to bear in mind: quality was uniformly excellent, and it's a lot easier to sell a good vintage than an indifferent one. At Kendall-Jackson, winemaster Randy Ullom predicts that 2005 will be Monterey's and Santa Barbara's "shining vintage", with exceptional ripeness. "I compare this vintage overall to 1997 in terms of quality and tonnage," Ullom said. "Furthermore, 2005 may actually surpass '97 in terms of quality."

Record vintages like 2005 will always cause concern, particularly until the nature of the next harvest is clear. But such a huge crop could have come at a much worse time for California - and one suspects that producers would have been far more worried by another small harvest.

Sectors: Wine

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