Most consumers are well aware of how impacted they are by inflation -- and each industry that has to explain why its prices have gone up has a slightly different explanation.
Whether it’s supply chain issues, trucking problems, delays at sea, raw material shortages or labor issues, none are the only reasons. Several explanations apply to each industry.
What’s most obvious, of course, are gasoline price rises, which impact almost everyone; petrol is one of the vital essentials to our normal life activities.
And as wine is an optional luxury for most people, seeing prices climb for our favorite vinous products may be hard to accept, but price increases don’t represent a life-and-death situation.
And so, it was interesting last month when the California Department of Food and Agriculture (CDFA) released its preliminary grape crush report. One result of that report was seeing how high prices for wine grapes have moved upward as a result of several factors that most industry observers could see coming. Devastating fires, pandemic-induced labor shortages and Mother Nature’s usual persnickety-ness over the last four years all created difficult situations for both wineries and grape growers.
This will have the effect of causing them all to face the reality that no one will make as much money in 2022 as they did in the last few years. And next year won’t be a picnic either.
Disparity between wine prices and grape prices was subject to strange economic analytics after the pandemic-imposed restrictions forced wine salespeople to adapt to new models and new strategies and to face new realities.
As a result, some wineries actually saw revenues increase in 2021 over normal periods, partly due to creative direct-to-consumer sales strategies.
However, prices for wine grapes continued to rise, according to the CDFA crush report, and the sales forecast for the next two years is about as clear as your bathroom mirror after a hot shower.
For one example, if you thought Napa Valley cabernet sauvignon was expensive before this, what’s ahead may be shocking.
In 2021, the average price for a ton of wine grapes in Napa was almost 33% higher than the year before, to $6,091! The average ton of grapes yields abut 150 gallons of juice, or roughly 70 cases of wine.
More than half of the grapes in Napa are cabernet. But regardless of variety, we can use an old formula to see what’s ahead for retail pricing.
Traditionally, the price of a bottle of wine is linked to its grape price by a simple formula. The shelf price roughly equates to 1% of the grape price. In this case, the average bottle of Napa Valley wine should be about $61.
Offsetting that, to a small degree, is that growers almost universally said the crop quality was exceptional.
By contrast, even though Sonoma County grape prices rose 10% over the prior year, the average price of a ton of grapes translates to an average bottle price of about $26.
And most local wine lovers suggest that Sonoma County produces some exceptionally high-quality wines. And Sonoma has more wine to sell than does Napa. Sonoma’s vineyard plantings exceed Napa’s 45,000 acres of vines by an additional 15,000 acres.
What also was interesting in the report was that the one area of California that seemed to be spared enormous price increases was Santa Barbara County. In 2021, Santa Barbara grape growers reported an increase of 6% in the volume of fruit they received, and the average price was down 11%.
It is for that reason that we selected the following wine for its astoundingly good value.
Wine of the Week: 2019 Huntington Pinot Noir, Santa Barbara County ($26) -- Pali Wine Co.’s Huntington brand of pinot is a blend from several vineyards in the prestigious Santa Rita Hills appellation. This wine reminded me of one that probably could sell for about twice as much, based on its remarkable quality. It has a trace of the distinctive central coast dried herbs, is more reflective of its fruit than of any production values, such as oak, and will probably improve for several years. It has often been seen for around $23, and at that price is an absolute steal.
