Exchange helps local growers

Tuesday, 10 August, 2004
Gabe Friedman, Napanews.com
Napa County is never light on grapes, but some vineyard owners have found the market dropping out from under them in recent times.

In the Napa Valley last year, where cabernet sauvignon is king, more than 1,500 tons sold for around $1,500 or less, according to the 2003 Grape Crush Report. The Napa Valley Grape Growers Association's recommended selling price for cabernet ranged from $3,700 to $4,500. Even today, finding a buyer who agrees to the right price is difficult for some growers. A glance at local classified advertisements this summer shows that at least a dozen growers are still looking to unload grapes.

In response, the Napa Valley Grape Growers Association has created a safety valve. In one its first moves since becoming independent of the more politically-minded Napa County Farm Bureau, the NVGGA created a grape exchange for this year's harvest.

The local grape market, while not quite the NASDAQ or the New York Stock Exchange, is in many ways a complicated nut to crack, according to Glenn Proctor, a broker who connects local growers with wineries. Proctor works for Joseph W. Ciatti Company, a San Francisco-based wine brokerage that has formed a partnership with the grape growers association. By putting growers and buyers in touch with a larger pool of interested parties, Proctor said his firm can help create a more competitive market and at the same time ensure that quality continues to improve.

"Trying to find a buyer for fruit is a major job," said Lee Hudson, who grows 12 varietals on approximately 150 acres of vineyards in Carneros. Neyers Vineyards and Arietta are among the wineries that use Hudson's grapes. "We've always had a grape exchange," said Hudson. The broker, who creates a broader market for growers to sell to, he said, "is the difference between having a yard sale or posting it on a telephone pole and putting it on Craigslist."

Proctor said that the overproduction of grapes in the past few years has hurt growers and wineries. In areas such as the southern Central Valley, the price for a ton of grapes has nearly doubled this year after the bottom fell out of the market starting in the late 1990s. But Proctor said this is largely a result of vineyards being taken out of production -- a phenomenon that has not reached Napa. "Napa and Sonoma are definitely at the top of the heap when it comes to perception and quality," said Proctor. "(But) we think we hit bottom in the grape market here in 02-03. "I think we hit a bottom line price, but we still see some grapes unsold as we go into crush," said Proctor. "I still think we're not out of the woods yet."

Proctor's job is not to negotiate the terms of contracts between buyers and sellers, but to connect parties. If a contract is signed, the broker takes a fee. Under the arrangement with Proctor, a portion of the broker's fee goes to the NVGGA, according to Jennifer Kopp, the group's executive director. "We have over 300 members, and access to small, really high quality premium lots," said Kopp. "We give the brokers access to some really key gems."

Brian Gallagher is a small producer of cabernet franc on three acres in between the Oak Knoll and Stags Leap districts. In the past, he has sold his grapes to Robert Mondavi Winery, but he's just getting ready to launch his own marketing campaign now, which includes contacting vintners and soliciting bids. "Right now is the right time to market, I believe, because they can see exactly what (the grapes) are going to do," said Gallagher, who added that he would consider using the exchange set up by the NVGGA. "I'm actually willing to take less this year," he said. "I'm looking for a long term contract, so it's negotiable."

While Hudson said it was clear that the brokerage provides Napa County growers with a broader market for their agricultural wares, he said it's too early to gauge all of the effects.

Napa Valley's high-profile status has always made it easy for vineyard owners to sell to wineries in other counties, Hudson said, and the grape exchange is unlikely to change that. He predicted the brokerage would create a more competitive marketplace that could fetch higher prices. Finding buyers earlier in the season gives growers incentive to cultivate the grapes to meet vintners' specific needs.

"I think any time you improve communication," said Kopp, " you improve relationships and you improve wine quality in the process, because the growers know what to expect and the buyers know what they're receiving."

Source:
www.napanews.com


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