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Friday, April 7, 2017

Premium Wine vs Value Wine

  In the last five years the California wine grape market has increased a half-billion dollars to three billion total. There are two distinct wine grower groups. You could call them the haves and the have nots.

  Through the coastal areas from Mendocino County down to Santa Barbara are the high-end vineyards making most of the state's premium wines. As the economy hums along so do these vineyards and wineries. Napa and Sonoma Counties have fared especially well. Just look at Napa Cabernet Sauvignon, the most valuable grape crop in the state. Its worth has nearly doubled in the last five years.

  The other side of the wine grape industry is in the San Joaquin Valley. The vast majority of the state's grapes are grown here--in volume, but not in value. This is where the inexpensive under $10 wines come from. There is competition from imports in this market and California isn't doing nearly as well here. Values have remained flat in the Central Valley while profits have increased in the premium market.

  Where crop prices are increasing in the San Joaquin Valley is in nut crops and the marginal vineyard land is often converted to walnuts, almonds or pistachios.

The numbers here are from the Outlook 2017 Agribusiness Conference