Grape Growers Expect to See Prices Soar in State
Grape prices in the San Joaquin Valley will be soaring this year, thanks to the forecast of a small crop and buyers from E&J; Gallo, the world’s largest wine producer, signing top-dollar contracts for grapes still on the vine.
“It’s true,” said Bill Allison, manager of the Fresno County Farm Bureau, a grass-roots organization of farm families and ranchers. “The price range (that Gallo offered) is between $120 and $125 a ton for any French Colombard and Chenin blanc that’s clean and not already contracted.”
Allison explained that some grapes have developed mildew because the growing season started three weeks early this year and temperatures have at times been lower than normal.
“It’s a serious, valley-wide problem,” he said. “They (growers) are going to clean off as many as they can, but they can’t get to all the bunches.”
The result, he said, will be that Gallo’s competitors for jug wine grapes, and grapes for wine coolers, are going to be paying more than they expected and growers may be getting the highest prices in five years.
Sharp Increase
In cold cash, the purchases mean that grape farmers who last year got a disastrous $85 a ton for the grapes will be getting between $120 to $125 a ton for the fruit.
The Gallo strategy is widely regarded as a move by Gallo Chairman Ernest Gallo, the undisputed final authority of the Modesto operation. He controls $35 million in advertising for more than 15 labels including jug and pop wines, vintage varietals, champagne and brandy.
One grower, who asked not to be identified, said Almaden offered $90 a ton for Thompson seedless grapes “and nobody budged.” Last year, Thompsons were selling for $35 a ton.
Allison noted also that there are 30,000 fewer acres in grapes this year in the valley, where 85% of the state’s wine is produced. These acres were growing wine grapes until low prices forced them into raisins. Finally, the vines were pruned and taken out of production.
Some smaller wineries have been willing to pay $100 a ton for Thompsons, a grape valued because it has no character of its own when fermented into wine, Allison said.
“The astute Gallos have gone through the . . . valley and swept up every grape they could get at 30% to 40% above what those guys got last year,” said an industry source who also asked not to be identified.
Confirmed Purchases
Other speculation was that Gallo Winery was merely ensuring the continued existence of the growers who supply its grapes. Gallo spokesman Dan Solomon confirmed that the purchases were made but declined to provide details. He said grape buying is under the direction of Julio Gallo, the company’s president.
Gallo, which produces 26% of the wine consumed in the United States, makes Bartles & Jaymes wine cooler. Sales for Bartles & Jaymes’ first year on the market topped 9.5 million cases, making it the chief competition for the popular California Cooler, which pioneered the citrus-flavored, carbonated wine drink less than five years ago.
Inexpensive white-wine grapes, such as Thompson seedless, are extensively used in coolers, which in 1985 tripled sales over the previous year with more than 52 million cases shipped worldwide. The coolers have also taken off like a rocket abroad, where shipments last year rose to 7.6 million cases from 900,000 cases in 1984.
