Buyers supplying the off-premise thus need to source more wine. There is also activity from buyers capturing their normal volumes a little later than normal as the bulk market had been slow until the turn of this year, and others moving in to obtain older vintage wines as sellers seek to make take space ahead of the coming harvest. In addition, those suppliers of well-placed off-trade brands have taken bulk wine off the market to use internally.
As a result, California’s bulk wine inventory is declining – with specific qualities of specific wines harder to find – but remains significant. Prices continue to be significantly lower than sellers would expect, and where there is activity on Coastal wines it is at California appellation prices.
There is grape activity in the Central Valley, albeit limited and at prices significantly below seller expectations. As on bulk wine, grape buyers know there is the opportunity to move into the Coastal appellations to source grapes at pricing that, in the past, growers there would likely not have accepted. Exacerbating the slow grape market, some wineries that were buyers of grapes just months ago have – due to COVID-19 – subsequently revised down their sales estimates and are now putting the same grapes back on the market. It will be another tough year for growers: with such a large amount of uncontracted fruit now growing on the vine, many must consider whether or not to take the risk and crush it into wine themselves.
Needless to say, there are opportunities for international buyers seeking high-quality Coastal appellation wines or grapes, and there continues to be opportunities in the Central Valley, although the activity outlined above has perhaps firmed-up the bottom prices on specific bulk wines a little.
Looking ahead, weather conditions have been normal and vineyards look in good shape. Some spotty rains and frost during bloom may have inhibited things a little but – overall – estimates are for a 2020 harvest average in size or slightly below average.
The increase in wine sales at US retailers has assisted Italian wines, which are currently exempt from the import tariffs the US has levied on wine imports from many European countries – including France – since October. The US government is currently consulting on expanding these tariffs as negotiations with the EU over aircraft subsidies have not produced an agreement.
California can offer international buyers very good quality wines on multi-year deals at pricing lower than it has been for many years – including wine from some premium Coastal appellations. The same applies on grapes. With the 2020 harvest imminent and bulk inventory still high, there are currently some good opportunities on bulk wine in the Coast and in the Valley, especially older vintage. And with the 2020 crop looking average- sized, or only slightly below, and a large amount of fruit still uncontracted across the state, there are opportunities to capture some very good quality vineyards on long-term grape contracts.