Californian harvest predicted to be bigger than last year
California’s 2017 grape harvest is likely to be 7% larger than last year, at 3.95 million tons compared to 2016’s 3.7 million tons.
This is according to predictions by Silicon Valley Bank which reports that “overall supply is balanced with shortages of high quality pinot noir and cabernet, but excesses are evident in certain non-core varietals and for grapes destined for lower-priced wine.”
The dwindling supply of arable land suitable for higher-end wine production combined with good buyer interest will drive vineyard prices higher in premium regions, and Oregon and Washington vineyards will continue to receive high levels of interest from larger wine companies the report added.
In addition California’s central valley has some additional acreage to remove.
As for demand, SVB forecasts that wine-loving baby boomers on the brink of retirement will have less disposable income to spend on wine, and this is not automatically going to be replaced by cash- strapped millennials, whose default drink isn’t necessarily wine.
“While baby boomers will retain their dominance in wine consumption, their overall purchases will continue to decline,” confirmed author of the report Rob McMillan.
However, the millennial demographic are beginning to have an impact on the lower price range of premium sales, particularly in the $8 to $11.99 red blend category. In time they are likely to shift away from blends and towards single varietals as their disposable incomes increase.
Surpassing the baby boomers on the wine consumption front will be the Generation X cohort, who within four years will become the largest fine wine consumers in the US, predicts SVB.
And in turn, the millennial generation will overtake Generation X by 2026.
“The lowest price generic segment that appealed to the entry level consumers of the 1960’s has permanently lost its appeal,” said McMillan. “According to wine brokers…, producing countries are showing no interest in that segment today.”