So Many Grapes! We Have a Surplus

So Many Grapes! We Have a Surplus

Can there ever be too much of a good thing? In the case of wine grapes, probably not, but having supply catch up with demand has some unexpected results!

New VineyardIn any complicated business, matching supply and demand is not easy. This is particularly true in the wine business, matching grape supply with wine demand. It takes about five years for a vineyard to transform a bare plot of  land to a productive field of wine grapes. A lot of time and especially money goes into clearing the land, planting the vines, and tending the vineyard as it slowly grows to the maturity needed for making fine wine. During that time, variations in demand from wine drinkers can dramatically affect the volume of grapes needed by the wineries to make the wine that will still take months or years to reach our wine fridge. Sometimes things don’t work out quite as planned.

Wine supply and demandSince the mid-90s, demand for wine has been growing steadily. This resulted in a real shortage of top quality wine grapes. Scarcity drove up grape prices and encouraged vineyard owners to buy more land and plant more vines. Everything was expanding nicely, year after year. It was a golden age for vineyard owners! That is, until about 2015, when the growth started to slow. Some experts blame the growing appreciation for craft breweries or boutique distilleries, or just a change in people’s palates. But for whatever reason, the annual uptick in sales just didn’t happen as it had in the past. It was an entirely new environment in the wine industry. But this situation is not all bad, at least for those of us further down the supply chain.

Davies Crush PadAs wine sales remain flat or only slightly increased across the industry, wineries are continuing to do well, as long as they have not overextended themselves, thinking that their growth would know no bounds. The bigger impact is on the vineyard owners who are seeing their new vineyards come to maturity without a matching increase in buying from the winemakers. All the years of care and expensive nurturing led to a vineyard’s culmination was not met by the excitement and bidding war that earlier vineyards had enjoyed. What had been something of a seller’s market for wine grapes shifted to a more level playing field. The golden age for vineyard owners was tarnishing a bit.

The results of this shift can be very positive for the wine drinking community. As grape supply and demand become better matched, winemakers can afford to buy higher quality fruit without increasing their cost. Less expensive wines can now contain fruit that only a few years ago could only be afforded in premium wine programs. This will mean that all of us wine lovers can look forward to even better wine at great price points! Cheers to that!

About the Author: John grills a mean steak and is always in the market for another wine fridge. Believes that if a winery has more than 10 employees, it's probably too big. Buys wine faster than he drinks it, but who cares?

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