Grape Shortage Presses California Wine Industry

Pricey grapes put squeeze on West Coast wineries

Wikimedia/David Blaikie

California winemakers are starting to know what it feels like to be a grape, as a shortage of the fruit is putting a squeeze on the area’s wine industry.

According to the Wall Street Journal, California grape prices were in decline for a decade after expansion in the 90s flooded the market. With an excess of grapes leading to lowered prices, many growers have held off on planting or switched to other crops that promised higher returns. But now demand for wine has grown, and grape prices have soared. Cabernet red grapes have doubled in cost in the past year.

"Right now, I don't have enough grapes of any variety in any part of the state,'' Nat DiBuduo, president of Allied Grape Growers, said to the WSJ. DiBuduo says the prices for Thompson seedless red grapes have about quadrupled since 2001.

Grape vines obviously take time to grow, so any correction can’t happen quickly. For wine drinkers, the end result is that we might all be drinking more imported wine for a while. Imported wines hold a 30-percent share of the U.S. market, with most of those coming from Italy and Australia.

Bulk wine buyer Don Sebastiani & Sons, which has a bottling facility in Napa, said currently grapes from outside California account for less than 10 percent of its grapes, but to keep its sticker prices low, half the grapes might be from Chile in 2013. Its best-selling wines are below $8.

CEO Donny Sebastiani said he’s more comfortable keeping the price point where it is and changing the grape source than keeping the California grapes and raising prices.