A Crushing Crush Report

Wine guy
Source: Shutterstock

California wineries crushed fewer grapes in 2020 than any year since 2006, according to the preliminary crush report released by USDA last week. The value of wine grape production in the state declined by 29% from 2019, with especially large declines in the premium regions of Napa and Sonoma.

The quantity of grapes crushed in the state in 2020 was down 14% from 2019 and 21% from its high in 2018. Red wine varieties declined more than white (16% vs 10%). Crushing of table and raisin grape varieties continued a long decline that has coincided with increased specialization.

California Grape Crush
Source: CA Grape Crush Report and R Code linked at end of article

 

California wine production is very diverse in value. Napa and Sonoma counties produce 10% of the state's wine grapes, but make up 40% the value of production. In contrast, Fresno and Madera counties produce 30% of the state's grapes by quantity, but only 10% of the production value. Put differently, Napa and Sonoma wine grapes are worth 12 times as much per ton as their Central Valley counterparts. This price premium has grown over time, as explained in this Ag Data News article

In 2020, quantities declined everywhere except the Solano District. The largest percent declines occurred in the Napa and Sonoma regions and in Southern California, which produces very little wine.  The Napa crush was 39% below 2019 and Sonoma was down 36%.

Grape Crush Production Declines
Source: CA Grape Crush Report and R Code linked at end of article

 

The quantity declines were exacerbated by price declines.  Overall, prices were down 17% from 2019.  Red wine grapes experienced a large decline of 23%, whereas white wine grapes declined by a more moderate 6%. This change closed the gap between red and white wine grapes, which had expanded significantly in 2012.

Wine Crush Prices
Source: CA Grape Crush Report and R Code linked at end of article

 

Price declines occurred differentially across the state with the largest declines occurring in the premium wine regions. Grower returns per ton were down 21% in Napa and 15% in Sonoma. Prices were up moderately in the bulk wine regions of the central San Joaquin Valley and up significantly in the southern San Joaquin Valley region, which encompasses almost all the table rape varieties crushed. 

Grape Crush Return Declines
Source: CA Grape Crush Report and R Code linked at end of article

 

Putting the 17% state average price decline together with the 14% quantity decline implies a 29% decline in the value of production in the state. In the Napa region, the value of production dropped by a massive 52%, whereas the bulk-wine value of production in the Fresno region dropped by just 2%.

Prices (grower returns per ton) are only available for grapes that are sold, rather than crushed on a growers own account. It is possible that growers who crush their own grapes experienced different value-of-production effects than implied by these price declines. This means the multiplying price by quantity would not give us exactly the decline in value of production, especially if growers changed the percent of their grapes they sell.  However, the percent of grapes sold changed little from year to year, especially in Napa (region 4) and Sonoma (region 3), which suggests that these estimated declines in production value are not biased by changes in selling behavior.

Wine grape sales
Source: CA Grape Crush Report and R Code linked at end of article

 

This outcome reflects a combination of events in 2020. The COVID-19 pandemic reduced premium-wine sales in restaurants and tasting rooms, early-season heat reduced yields, August wildfires damaged vineyards and tainted grapes with the taste of smoke, and a lingering over-supply of high-end grapes reduced demand for more. 

I wrote in a previous Ag Data News article that the smoke taint is likely not a major factor, although industry commentators have cited it as significant. I could speculate that the decline in restaurant and tasting-room sales explains a substantial proportion of the decline, but at this point I don't have data to quantify the effect of each factor. 

 

I generated the figures and maps in this article using this R code

 

Postscript: California wine is priced separately by district, rather than county, so my maps above aren't exactly correct.  Most, but not all, district boundaries follow county boundaries. Because I do not have the grape pricing district boundaries, I placed all of Tulare and Kings counties in District 14, all of San Joaquin and Sacramento counties in District 11, and all of Yolo County in District 17. Here is the correct district map.

California Wine Pricing Districts
Source: CA Grape Crush Report