Washington wine producers can expect strong prices for red bulk wines for the next several years, Josh Maloney, winemaker with Wahluke Wine Company in Mattawa, Washington, said during a grower caucus last November. He attributes strengthening prices to smaller than expected wine grape crops in the last couple of years, along with increasing demand because of the entry of E. & W. Gallo into the Washington industry.
Wahluke Wine Company is a bulk winery owned by Butch and Jerry Milbrandt. It is a separate company from Milbrandt Vineyards. It takes only about 10 to 15 percent of the Milbrandt grapes, which it makes into wine for the Milbrandt label.
In 2012, the company also took in 11,500 tons of grapes to make wine for other customers. About 80 to 90 percent of the volume was allocated to its customers by the time the grapes were harvested, and only about 10 to 20 percent was unallocated and available on the bulk market. About 5 percent of the company’s bulk wine sales goes outside Washington.
Generally, lower-tier bulk red wines go on the market six to nine months after the vintage, and higher-priced reds 12 months after the vintage, Maloney said. White wines become available three to four months after the vintage concludes.
Washington produced 140,000 tons of red and white wine grapes in 2011, down from 160,000 tons in 2010.
In January 2012, there was still a fair amount of 2010 red wine on the market, but when buyers saw how light the 2011 red grape crop was, bulk wineries started getting lots of phone calls, Maloney said. Almost all of the 2010 red wine on the market was allocated by mid-2012.
In early 2012, bulk wineries were concerned about a high volume of 2011 Reisling and Pinot Gris in the marketplace that they didn’t think would move very quickly, but by the end of the year, there was little left.
The 2011 vintage was a difficult one, Maloney said. “But I love the quality and style of the whites that came out of it. I think a lot of people appreciate it.”
There were not a lot of high-tier red wines from the 2011 vintage to begin with, and anyone who had not signed up going into the 2011 harvest did not have a good chance of obtaining what they wanted or of getting a good deal.
Washington’s 2012 crop was estimated to be at least 190,000 tons. Maloney thought initially that the big harvest would mean there would be a lot of bulk wine on the market next year, but customers have signed up for greater volumes. In many cases, they want to ship it out in bulk and bottle it somewhere else.
“There’s going to be some excess in 2012, but not nearly as much as you might think,” he told growers at the caucus, which was held in Pasco and presented by the Washington Association of Wine Grape Growers.
Bulk wine availability will vary by variety. Riesling picked out high so will definitely be available, he said, and there might be some Merlot, but supplies of Cabernet Sauvignon are likely to be tight.
If the industry had experienced three to five years of normal growth, the 2012 volume might seem high, Maloney said, but the bulk wineries are barely catching up with demand.
In 2013, buyers should be able to find both red and white bulk wines in the varieties they want, but not at the bargain prices of a few years ago. Prices for lower-tier red wines, in particular, have increased by 10 to 20 percent over the last couple of years and should stay strong even if the industry enters an era of good supplies in the next couple of years.
“The price per ton of this crop is going to demand that the price per gallon is set at a higher level than three or four years ago,” he said.
Mahoney said many of the growers that Wahluke Wine Company has made offers to for their fruit say they’ve received higher offers from Gallo. He believes Gallo is willing to lose money for the first few years to establish the brand.
“It’s making negotiations more difficult, and it’s certainly putting growers in a much stronger position,” he said. “What we’re finding is, whether we’re going to talk to a grower about existing grapes or talking to a grower about planting, the terms for the contracts are being pushed higher, price per ton and price per acre.”