It’s not just row crop farmers dealing with challenges and low prices. In California, prices are low for everything from nuts to fruits, and financial stress is weighing heavily on farmers. Grape growers are in a particularly unique situation. Declining demand for wine and an increase in imported wine means there’s a glut of grapes this year, and it’s so bad there’s a surge in the amount of unharvested grapes that still don’t have a home. Now, there are fears it could ultimately force more true family farmers out of business.
Jennifer Thomson took over the family farm in 2012. Napa Valley is broken into American Viticultural Areas (AVAs). Thomson’s vineyard is situated in the Los Carneros AVA. Thomson is one of the few family farmers still left in Napa Valley.
“I think it’s incredibly rare. When you truly meet a family grower who is hands on and drives their own tractor and is responsible for selling their own fruit and is responsible for paying the taxes on the land, and there’s no middlemen involved, that’s a rarity in 2024,” she says.
The toil she’s dedicated to the land runs five generations deep, yet when she took over, she truly made the operation her own. She focused on plant health, mechanizing some of the labor-intensive tasks on the farm and truly paid attention to every detail.
This year, the vines are a sign of her hard work. The vines that line her vineyard are loaded with a healthy crop that’s sized up nicely and mildew free.
Battling different weather each year, she says this year, there actually haven’t been too many speed bumps in the road. Even with the heat making headlines, grape growing has been good in her area of California. Yet, her vibrant and healthy vines aren’t as full as they’d normally be.
“I made some decisions during pruning to reduce the crop load in conjunction with this being a sluggish grape selling market,” says Thomson.
No Home for Most Her Grapes
In December of 2023, Thomson received some gut-wrenching news.
“Ultimately, all of our contracts were canceled on December 31, 2023. All of them with the exception of one,” she adds.
Thomson’s vineyards produce just under 300 tons of grapes each year, and for the first time in more than a decade, two-thirds of her crop is uncontracted and without a home.
“I have found limited and very small homes. And by that I mean am I able to sell two to eight tons here or there? Yes, but that has been through existing clients who were smaller family-owned wineries. Our parcels produce hundreds of tons worth of grapes,” Thomson explains.
First Time in More than a Decade Farmers Have Faced Uncontracted Grapes on Vines
Walking lush vineyards and staring at young healthy vines loaded with unsold grapes is a flashback to what area vineyards saw 15 years ago.
“During sort of the ".com” era and the financial bust of 2008 and 2009, a similar pattern occurred in the marketplace where wineries canceled all contracts across the board for many growers or even those growers who had contracts were told do not deliver those grapes to the winery,” she says.
Napa Valley is known for grape and wine production. 4 percent of California’s wine production happens in Napa Valley, but its value is higher.
Impacting Multigenerational Farms
Nearly 60 miles east of Napa Valley, you’ll find grape growers in another fruitful production area of California, which is Lodi. It’s an area that is home to 20% of California’s wine production. And grape growers there are faced with the same dilemma.
“Our community is multi-generational farming families that have been farming grapes for over 100 years,” says Stuart Spencer, executive director of the Lodi Winegrape Commission. “And so their whole identity is wrapped up in growing grapes. And so it’s really hitting some of our people hard.”
Dwindling Wine Demand
Home to 100,000 acres of grapes, Spencer says the current issue is both too much supply and dwindling demand.
“We were fortunate in our industry, and in the United States, to have about 30 years of positive growth, year-after-year growth. One of the challenges with growth is it tends to hide the problems and challenges,“ he explains.
Spencer says the U.S. wine market started to see demand flatten in 2018. One reason is the Baby Boomer generation growing older.
“Then we went into the pandemic and the pandemic really distorted sales and shipments, and we are still dealing with the hangover of the distortions from the pandemic,” Spencer explains.
As consumers bought more wine, beer and spirits during the pandemic, retailers also beefed up their inventories to meet the booming demand. But now, the story has changed. With inflation and other concerns in the economy, consumers are drinking less wine and retailers aren’t buying as much.
“It’s pushed the inventory back upstream, basically to the wineries, who then turn around and cut grape purchases to the growers,” he says.
However, it’s not just the fact consumers aren’t home as much drinking wine. Spencer says there’s also been an anti-alcohol sentiment in the news over the past year that’s pushing people away, including claims from the World Health Organization.
“One of the problems we see there is they’re not differentiating between ‘abuse and healthy use.’ The World Health Organization come out with saying no level of alcohol is safe. And so a lot of these things are kind of in a backdrop that’s really putting pressure on wine.”
Issues Started in 2023
With a decline in demand, Spencer says it came to a head during last year’s harvest when growers started facing a brutal reality.
“A lot of our growers in the Lodi area operate on what are called ‘long-term contracts.’ And many of the large wine companies were using every kind of loophole in the contracts to get out of purchasing grapes and using quality parameters and things like that, which really put pressure on the growers.”
He says estimates show 400,000 tons of grapes went unharvested last year in California alone. There are fresh fears this year could be even worse with more grapes left without a contract this close to harvest.
“One of the real frustrating things for the growers in California is that our largest buyers - and the top seven wineries - control about 70% of the U.S. wine market,” says Spencer. “Over the last 20 years, they’ve evolved into kind of what we call global alcohol companies. And so they’re no longer just sourcing California grapes, but still selling their wine there.”
A Surge in Imports Hurting Family Farmers
As those major wine companies increase imports, it’s another challenge for California’s grape growers, especially when those wine companies’ claims can be misleading.
What’s being called a “dirty secret “ is the fact 20 million gallons of imported bulk wine poured into California just in the first five months of this year, all while a large portion of California’s grapes for wine don’t have a home. Some argue that the government stepping in with tariffs on imported bulk wine would actually help save family farmers struggling to survive.
“I’ve been digging into this for the past six months, and there is a loophole in our trade regulations, and it’s called, double duty drawback, which allows these imports to come in basically tax free,” says Spencer. “And so they’re basically getting 99% of their alcohol taxes and duties refunded to them if they can provide matching exports. And so that’s a handful of companies getting potentially hundreds of millions of dollars, which has created a significant incentive for this bulk wine imports to take place, which has undercut the California grape grower.”
As imports increase, it’s another challenge for California’s grape growers who have no home for their grapes. Even when they do have somewhere to take their perishable product, the prices they are being paid haven’t gone up as much as costs to produce that ton of grapes.
“We were being paid $2,000 to $2,500 a ton back in 1998. Maybe in current times, in 2023 2024 for sparkling wine grapes, we’re being paid $2,850 to $2,900. And that’s really only a 10% increase over 20 years or more.
Thomson says at the same time, her costs are up anywhere from 30% to 50%.
Ask for American-Made Wine
Taking over her family farm, there’s nothing else Thomson would rather do. She’s convinced the future of wine in the U.S. can find renewed demand, as she hopes there’s still a group of consumers that want to a connection to the wine they drink.
“I really do feel that there is a group out there that are millennials who are really getting into collecting wine, or they have that authentic need to connect,” says Thomson. “There’s an opportunity in the industry, and I think that the smart wineries will capitalize on that. The question will be for us as family farmers. How long can we wait for them to discover this?”
Grape growers across the U.S. want consumers to not only drink more wine, but to make sure the wine they’re consuming is actually produced from grapes grown in the U.S.
“At the end of the day, we need the customer to pay attention to where their food comes from and where their wine comes from, and to be looking at the labels and care about that. I think that’s the most important thing.” says Spencer. “We as an industry are going to be fighting some of these issues as best we can, but the farmers are at the bottom of the food chain. And so our resources are limited.”
“I would just ask for people in the Midwest or wherever you might be across the United States, when we say, ‘get to know your farmer,’ we really mean, even in the wine industry, know who the farmer is behind those grapes and know who the winemaker is,” says Thomson.
