Decision-making on the sourcing of bulk wine and grapes continues to get more complex and difficult. April frosts in the Lodi/Delta, and in other regions of California to a lesser extent, added another challenging variable to the year. As of now, it appears the reduction in supply due to the frost affected Chardonnay and Pinot Noir in these regions the most. Time will provide a clearer picture of the 2022 crop size. In fact, recent crop projections are generally more positive than the initial forecasts after the frosts, but there is still uncertainty as to the extent of the damage. In the North Coast and other parts of California, the frost will likely have less of an impact.

Bulk markets have slowed, returning to a more typical seasonal pace following 18 months of heightened demand, but still remain active. The typical spring slowdown is due to wineries assessing crop size and projected sales trends to inventories. It is more complicated this year for a few reasons. The first variable is assessing the effects of the frost which, as noted above, is not easy. Some sellers of bulk Chardonnay and Pinot Noir pulled some wines back in-house or held to higher asking prices. Another reason for the slowdown is that wineries are still not clear on future sales trends. On one hand, consumers are dining out and travelling more—behaviors that are changing consumer buying patterns and could benefit brands with more of an on-premise placement. On the other hand, and perhaps the largest factor, some wineries may be scaling back sales forecasts as economic concerns of inflation, and a projected recession might slow recovery for discretionary spending for wine. Finally, all business decisions are influenced by inflation which is new to a lot of wine business leaders as the last prolonged macroeconomic inflationary period (inflation above 5%) was last experienced from 1968 to 1982.

For the above reasons, our advice on what to do in sourcing or selling bulk wine and grapes is even more individualized and targeted than usual.

Cabernet Sauvignon

Supply

• Bulk volumes of Cabernet Sauvignon have begun to trend downward from a peak of 4,000,000 gallons since mid-April—mostly due to a reduction of California Appellation lots.
• Volumes remain steadier for North and Central Coast Cabernet Sauvignon, and there is still a sizeable amount of 2020 North Coast supply available.
• Supply of Napa and Sonoma Cabernet Sauvignon actively for sale is tighter than it has been since 2016, and 2021 vintage gallons are particularly limited.
• If historical trends are an indicator for this year, bulk Cabernet Sauvignon gallons are likely to decline slowly through the end of June before a more rapid decrease in supply as harvest begins.

Demand

• The most actively traded wines are California Appellation/Lodi Cabernet Sauvignon, but buyers are looking for smaller volumes. Recent sales have been between $7 and $8 per gallon.
• While sales activity for Cabernet Sauvignon lots from the interior are the most active, the most in-demand region is Napa Valley, but limited bulk gallons available have slowed that market. Recent sales have been between $45 to $65 per gallon.
• Purchasing activity for Sonoma County Cabernet Sauvignon wines have slowed in recent weeks. Prices have increased with recent sales trending between $30 to $35 per gallon, which may be the cause of the slowdown.
• There has been increased interest for Paso Robles Cabernet Sauvignon wines, with recent sales between $13 to $18 per gallon. There is choice for lots, but not to the extent of the North Coast.
• In general, there is sustained soft demand for North Coast Cabernet Sauvignon lots.

Chardonnay

Supply

• There are currently just 1,200,000 gallons of 2021 vintage Chardonnay, which is just 1% of the total Chardonnay crush last year; most of these gallons are split between 2021 Central Coast and California Appellation.
• Supply is limited for Chardonnay throughout the North Coast, particularly for Napa Valley and Sonoma County, with 18,000 and 90,000 gallons available, respectively.

Demand

• Buyers have been most interested in Sonoma County wines, with recent prices between $23 to $28.
• There has been steady demand for California Appellation/Lodi/Delta Chardonnay between $6 and $8 throughout the year.
• Buyers did not enter the bulk market due to the frost, but supplies did go down as some sellers pulled wine off the market.

Pinot Noir

Supply

• Supply of Pinot Noir has come off the peak of 1.8 million gallons from late-April and has begun to decline for the year.
• Central Coast Pinot Noir remains in more of an excess position than other regions, and bulk gallons have held steady over the last two months.
• The volume of available Sonoma Pinot Noir has reduced quickly since late April, down over 70% to 80,000 gallons.

Demand

• Russian River Valley continues to hold the torch for Pinot Noir demand, with recent sales between $25 and $31 per gallon. Buyers are already letting us know that they want to see 2022 wines as soon as possible.
• There has been purchasing activity for the Monterey County regions of Arroyo Seco and Santa Lucia Highlands, with recent sales between $13 and $16 per gallon, but there are signs of a that market slowing.
• Demand has softened for California Appellation as retail sales have not dictated additional need for volume. Completed deals have been between $6.50 and $8.50 per gallon.
• Buyers did not come to the bulk market due to the frost events, but some sellers pulled supply off the market as they assessed their own supply.

Sauvignon Blanc

Supply

• Sauvignon Blanc continues to be tight in coastal regions, with lots becoming available intermittently. At the same time, due to the seasonality of the variety, supply currently exceeds demand for all regions outside of Napa Valley and Sonoma County.
• The larger quantities of California Appellation wines on the bulk market, fueled by growth in bearing acres, have raised the tonnage expectation each year for the past few years. The 2021 crop was another record in the Lodi/Delta region, with bulk supply still available.

Demand

• As gallons become available on the coast, programs in need of supply have placed upward pressure on price with recent sales between $25 to $29 per gallon for Napa Valley lots.
• The deals that have been done are primarily for California Appellation/Lodi Sauvignon Blanc due to availability, with recent deals between $6 to $10 per gallon.
• Seasonal demand is waning for Sauvignon Blanc, with wineries needing to place orders for dry goods and begin bottling. Buyers are looking ahead at vintage 2022.