September 2002
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Don't get skewered by the horn of plenty The oversupply problem in California is rearing its ugly head. This is the inevitable result of massive plantings to satisfy the previous undersupply of quality red grapes and the ludicrous prices people have been paying for trophy wine. We thought it worth reproducing this article by Tim Moran on Modbee.com in full. Interesting to note that relationships (between growers and wineries) and quality are the catch words here. Also interesting that wineries only recently started planting their own vines (because of high demand and shortages of quality grapes) and now can't sell enough wine now to use them up, and that they are finding the market price of grapes lower than the cost of growing their own. The Californian industry is highly segmented and sophisticated but it shows that, as in all businesses that have a long lead time for the product, it is easy to get caught long in a falling market. We believe that you should be in control of the product along as much of the process as possible. Vertical integration is what they call it. It's common sense, grapes have a very short shelf life but bottled wine a very long one. You can get badly stung if you have to beg the market to take your grapes. If you have a bottle of wine to sell you can deal direct with the end user (if you want) and try to influence the price you get for it. If you have some cash reserves in a poor market you can at least increase your inventory and wait for the good times to come back. In fact a bottle of wine is one of the few consumables that generally increases in value the older it gets! "Grape surplus roils industry" NAPA -- The current oversupply of grapes and wine is causing "a tidal wave" of contract renegotiations between growers and wineries, said John Mackie, an industry attorney. The problem stems from a dramatic surplus of grapes, coupled with flat or even diminishing demand for some wines, Mackie said Tuesday at the Wine Industry Financial Symposium. Some industry representatives are optimistic oversupply problems will be resolved in two or three years. But Mackie, the moderator of a panel discussion on restructuring grape contracts, cited predictions that 75,000 tons of grapes from this year's harvest may be dropped in the fields or left unwanted in the market. Worse, 20 percent of the state's vineyards are new and not yet bearing fruit, he said. "Many wineries are finding they can't handle the grapes they contracted for, and they are looking for ways to get out of the contracts," Mackie said. The key for both growers and wineries as they approach a renegotiation, panelists agreed, was maintaining relationships and looking for quality. "Quality standards are important to all of us," said Glenn Proctor, vice president of wine growing for Diageo Chateau & Estates. "It puts you in a better place. The higher quality we get, the more programs (brand levels) we can use it in," Proctor said. "If a $50-a-bottle brand isn't moving, we can use higher quality grapes in a lower brand -- but not vice versa." Brian Clements, a broker with Turrentine Wine Brokerage and a buyer for E.&J. Gallo Winery for 10 years, added: "Relationships are very important in producing a high quality product. Relationships and grape quality usually determine the terms for a winery and vineyard to work together." Mark Couchman, president of Silverado Premium Properties, said growers should come to the negotiating table knowing where their grapes are going, what brands the winery uses them in, the price points and sales. He cautioned against signing contracts for terms that are too long at prices that are too rigid. "The situation is very different than it was three years ago. The situation could be very different three years from now," Couchman said. Both sides need to figure out a solution that allows each to make money, the panelists said. In exchange for lower grape prices, growers might negotiate a longer contract to gain security, or get the winery to agree to take a different varietal grape from another vineyard. The winery also might agree to maintain prices and take fewer grapes. "You need to give up something to get something," Proctor said. "Make sure you are offering something the other side needs. Maintain a dialog and be realistic -- the market has drastically changed." Some of the oversupply problem happened because grape prices rose so quickly in the past decade, and shortages caused wineries to plant their own vineyards, noted Barry Bedwell, the general manager at Joseph W. Ciatti Co., a wine and grape brokerage. With the oversupply, he said wineries are now competing with growers to sell grapes. Wineries also are finding that they can buy grapes on the market more cheaply than they can grow them, said Clements of Turrentine. "We became too profitable, and it got out of whack," Bedwell said. "Now we are paying the consequences." September 19, 2002 Posted: 05:44:00 AM PDT By TIM MORAN, BEE STAFF WRITER. California may be awash with grapes but is in seriously short supply of housing for seasonal workers. South Africa is not alone in its social problems among low paid agricultural staff, and it is ironic that some of SA's greatest critics just have to look in their own back yard for examples of these. At harvest time in one county, Napa Valley, there are about 4000 itinerant workers. According to a study by UC Davis there are just 250 beds available to them. Labourers sleep along the riverbank, under bridges, in vineyards, in packed garages and in parked cars. It has been this way for years in the Napa Valley, where migrants, almost all of them Mexican, arrive each year to work the vineyards, finding plenty of jobs but few roofs or beds. Many of the cheap dorms they used to find shelter in have been turned into luxury hotels and private homes as the area has been flooded with money and tourists. The median price for a home in California was US$250,000 in 2001 and is much higher in the fashionable wine areas where long-sacrosanct zoning restrictions against development on agricultural land have prevented an adequate supply of residential buildings. In Napa no hotel or tourist orientated winery wants a workers' dorm nearby and there is no financial incentive to provide low cost accommodation. The minimum wage for workers is US$6.25 per hour and grape pickers can earn up to US$100 for a day's work, but they would still have to be earning over US$20 per hour to afford even the cheapest room were it to be available. There are initiatives to address this. One rather typically Californian solution is the establishment of a 10 unit yurt village. Yurts are 4 room tents based on the nomadic Mongolian design, which we are sure is appreciated by the tired Mexican as he flops onto his mattress after a day of hard labour. The funny thing is that they are actually US$13,000 each to buy. Those Mongolian sales folks must be laughing all the way to the bank! As for SA there are many initiatives small and large going on in the wine industry aimed at improving conditions and creating a more representative management/ownership structure. These are extensively listed on the Wines of South Africa site http://www.wosa.co.za/transformation_page1.asp Many of these are sponsored by government or large corporations but many are local self developed projects. The more of these small projects that start the better chance there is of the whole "change" initiative becoming established with a solid commercial base and integrated in the industry. This excellent 4 page site is worth reading in detail and should be commended to anyone who says that nothing is being done to improve on the past.Maybe encouraged by these efforts a big supermarket chain has just announced a major investment in SA. J Sainsbury Plc, Britain's No. 2 grocery chain, will open a specialist wine handling centre in Cape Town this month to handle about 10,000 cases of South African wine per week. The idea is to revamp its wine-distribution network to halve the time taken for wine to be shipped to five weeks from ten. Other centres will be created in Australia, New Zealand and South America. Sainsbury sells more than 3 million bottles of wine per week to thirsty Brits. The thirsty Brits of TMV were at last seeing the tantalizing first glimpse of the future. Budding started in the Syrah block on 12th Sep (week 37) and started a week later in the Cabernet. Things were getting exciting. We felt as if this was the beginning of the rest of our lives. Those buds hold our hopes and the investment of our thought, time and resources put in since we first set foot in SA in 1998. We left the final pruning of the 2 year-old vines as late as we could. This was to ensure as even a budding as possible. Those vines that did bud slightly earlier gave us an indication of when to prune, and when we pruned back, the evenness was enhanced. We've pruned to one bud per bearing position on the Cab and Syrah - and this is for a couple of reasons. Firstly, they will be very fertile - fertile buds (grape bearing) are those that are on one year-old wood that is on two year-old wood. For this year on the older vines, the cordon arms will be just that. This means all the buds on the cordon arms will be fertile. The fertility is also very much enhanced by the fact that the buds were formed during the summer (unlike usual bearer buds that are formed during spring). The greater heat and light during this time lead to increased fertility in the buds. So, instead of 1 or 2 bunches per bud, we could expect 2 or 3. So, we can have a normal harvest with one bud per bearing position. Also, as the vines are young we don't want to stress them with too many bunches to ripen from veraison to ripeness - their root systems aren't properly formed, so it could be pretty damaging. The other reason for pruning to one bud is so that we keep the bearers as low down on the cordon wire as possible.
The weather was good in the second week of the month and by the 18th Sep the 2000 Syrah was at about 5cm. The following week we had our first bit of spring rain. Nothing too serious, and the outlook was that it should be clear for a while. There was very little disease, with a small amount of erinose mite being the most obvious. Part of the cover crops near the dams had some rust, which won't pass on to the vines, but it gives us confirmation of where our disease pressure is going to come from. It had always looked like a suspect spot. We cut the cover crop in alternate rows. We hoped leaving half of it standing would provide natural competition for the vines and control vigour without causing stress. By the end of the month the buds were rapidly growing into shoots. In 8 to 10 weeks flowering will happen and then fruit set. By our reckoning harvest would be mid March next year. We had got through the first hurdle, a fairly even bud break, and we were on nature's conveyor belt heading for our first vintage.
As far as planning for next year was concerned we had to start thinking about equipment and barrels. We still had the choice of constructing the concrete tanks now, but we decided to put it off until next winter after our first harvest. The reason was to keep our options open as long as possible. We really had no idea what the grapes would be like, what yield we would get, what concentration etc etc. Apart from the frightening finality of it all we wanted to be as flexible and hands on as possible with the first harvest. It would after all be the smallest we would ever have and would be perfectly manageable in a low tech set up. As J-C put it we would do a "garage" harvest. He was very excited and thought it absolutely right for a first crush. It also means we can take our time and get the cellar really right when we put it together next winter. Smallish fermentation vessels will probably be the best option in 2003. Pigeage will be easy and thorough. Small vessels will almost require no cooling, as their size means they'll loose quite a lot of heat to the atmosphere. Though there are many possibilities, the vessels we have in mind are standard 400kg harvest bins. They are used in some of the most professional cellars for smaller batches of wine with good success. We could also buy some old tanks and chop them in half, or use wooden barrels, or try many other things. We like the bins however, as they are mobile (even when full), so can be moved around the cellar - to/from the crusher and sorting table, or press. The only potential problem is higher volatile acids due to greater oxygen exposure of smaller vessels, but we should be able to limit this by only fermenting healthy grapes, the double triage system, good hygiene, and applying a bit of sulphur at the right time. With such small vessels, we could easily operate with a smallish hand-operated basket press. No final decisions were needed on the actual equipment, but we would have to order it before the end of next month to guarantee delivery. The other major factor was the barrels. We would have to wait until we saw how the vines were developing to get an accurate picture but even for this small harvest we were looking at around 150 barrels. At current prices that would be over R500,000 but you can't make great red wine without them. The big decision for us was not whether but which ones. No final decisions but we put quite a bit of thought into our actual barrel program. We do not want a wine with an "in your face" heavily oaked approach. We can achieve something classy and elegant. We had a look at the Cab and Syrah in the barrel from last year and although it is obviously difficult to make predictions based on such small amounts of wine, it is looking very classy and nicely concentrated. If we look at the vineyards we can expect to harvest roughly 25 tons off the Cab and Syrah at the bottom, and about 20 tons from all the younger vines together (this is based on taking 2 bunches per vine). So that's about 45 tons. Hoping that the quality will be good, we will be able to press reasonably aggressively and yield about 750 l/ton. This gives us 33750 litres of wine. In terms of barrel size, we feel we should keep things simple this harvest and opt for normal 225l Bordeaux type barrels. If we find the Syrah has a more spicy character, as in the northern Rhone, we could consider 228l Burgundy barrels. Though last year's Syrah has a good spice component, we can only be certain in which direction to go after the 2003 harvest. We can also look at a couple of 500l barrels for the Mourvedre in future as it generally takes less wood. For now we can simply use older barrels for this purpose. Given that we do not want to have monster oak extracts dominating the wine, we feel we should opt for a fair amount of older barrels. Although great wine will easily take serious amounts of new wood, we do not know how our vineyards are going to perform yet. We'd rather be less heavy handed, and let the fruit do the talking until we are sure which blocks perform in which ways. So opting for 40% new barrels, and purchasing the rest as 2nd/3rd fill from reputable wineries who we can trust is probably the sensible course. We will purchase a serious barrel washer, which will cost about the same as 3 new barrels. This will help us properly clean the purchased barrels, as well as maintain the hygiene of our own. We could decide to go for a couple of specific coopers for specific reasons - like choosing Hermitage as they specialize in Syrah barrels, or Vicard to bring a tight tannin and persistence on the finish to our wine. However the wines risk becoming one dimensional. A variety of coopers will bring complexity to the product. Some, like Hermitage we will only use for Syrah, and others like Boutes and Sylvain are more versatile. This is the prospective list: Boutes, Taransaud, Demptos, Sylvain, Seguin Moreau, Saury, Vicard, and Hermitage. 7 or 8 barrels from each cooper gives us 60 or 40% new barrels. The oak will be all French, and tight/fine grain. Specifying the grain is far more important than the forest, as they don't really exist any more - plus, the quality of wood within forests vary greatly. As for the toasting levels, we would also like to get a bit of variety there, with mostly medium toasting, and some medium plus toasting. If we find that certain batches are more concentrated after fermentation, we will give them more new wood. The thinner wines will then go into older wood. Although we will find that some barrels go better with certain blocks, we hope to maintain this diversity in our barrel selection in the future. It all leads to a far more balanced and interesting wine. That is the idea anyway. Following hard on the heels of the Tulbagh Farmers Ball was the Tulbagh Agricultural Show. This was the moment that Miss Tulbagh had to start earning her keep by sitting and looking beautiful, riding round in carriages and drinking wine.
And didn't she do a good job! All we can do now is pray that we were not struck down by disease or pests, trust in our soils and let the vines do their job. Copyright © 2000 Tulbagh Solutions. All rights reserved.
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