California’s 2021 harvest is effectively complete, with the final areas of the Central Coast due to finish picking in recent days. The Central Coast experienced lower than normal temperatures throughout much of the growing season and consequently picked well behind the rest of the state – a cool and overcast October meant development of sugars dragged on in some areas.
Yields varied, but in general the Central Coast crop looks to have come in average sized – up on last year and perhaps slightly up on 2019, performing better versus the average than the North Coast and Interior. The North Coast’s harvest was early and compacted, with volumes lighter than average to varying extents depending on area – Mendocino and Lake counties appear to have suffered larger shortfalls than Napa and Sonoma. Volumes in Lodi and the northern Interior ticked up on the later varieties – such as Cabernet – to help offset a lightness on the early ones, so that the total crop for this area ended up being approximately average in size. The southern Interior’s crop was early and light – this was mainly due to winter damage, though we believe vine removals in recent years are serving to lower the ceiling of potential production.
Most areas experienced resource challenges – trucking and labor shortages, increased input costs – but smoke at least was not an issue this year. The state’s August forecast of a total state crop of 3.6 million tons still rings true: We estimate 3.6-3.7 million tons.
As mentioned above, October was cooler and wetter than normal, with a storm track bringing record rainfall and flash flooding to some areas towards the end of the month. The flash nature of the precipitation means drought conditions remain, albeit slightly alleviated. The La Niña effect is still projected to cause dryness November through January, with the northern half of the state experiencing average precipitation levels and the southern half experiencing below average.
The bulk market continues to be muted while assessment of the 2021 vintage continues, OND sales are watched keenly and sales projections for the beginning of 2022 start to be formulated. The decline in the state’s overall inventory size versus recent years, especially in the Interior, has increased prices on the indemand California appellation, further limiting buying activity. Inventory sits disproportionately in the Coast, with 2020 Coastal carryover affected by smoke exposure perceptions and pricing on 2021 wines potentially too high to supply the current California appellation sweet spot. The growth of the ‘premium California’ appellation may offer opportunities for Coastal wines to act as supply, but the bulk pricing will still need to be at levels many Coastal suppliers will find uncomfortable.
With upward price pressure on all inputs, we are seeing some wineries increase retail prices on their brands in order to maintain margin. This is likely to be one of the ongoing stories of 2022: How will consumers – already feeling inflationary pressure – react to noticeably higher wine prices on the retail shelf? It is inevitable that some sales projections will be adjusted downward and, in turn, some extra supply may pop up on the bulk market. In the meantime, whether you’re a buyer or a seller we are here to help you navigate the twists and turns of the postpandemic environment and beyond: Don’t hesitate to get in touch if you need our assistance, and stay safe.