Wine Industry Network

Turrentine Market Update, February 2025

February 25, 2025

2.84; 20 Year Floor

By Steve Fredricks

As we have reported over the last several days, the California's 2024 wine grape harvest was significantly lower than recent years, representing the smallest crop since 2004. This decline is attributed to a reduction in grape acreage, lack of demand for grapes, and statewide heat waves, with the heat having an especially strong impact on the crop size in the Central Valley and the Central Coast. White grapes crushed were nearly equal to reds in 2024 with a difference of just 33k tons between them. For perspective, going back through 2000, red grapes were on average about 500,000 tons greater. This signifies weak grape and wine demand, acreage removals for red grapes, and a consumer preference shift toward white wines. The majority of this difference in tons crushed was due to the fewer red grapes harvested in the southern interior and in the Central Coast. Central Valley white varieties available late in the season were sold for use in concentrate.

Of the key grape varieties where there was a significant reduction in tons crushed, Cabernet Sauvignon had the most notable decrease compared to both last year and the five-year average. Sauvignon Blanc, particularly in the Central Coast, was impacted by heat leading to lower yields. There was also a decrease in tons crushed due to heat for Central Coast Pinot Noir and, to a lesser extent, Chardonnay.

Despite the historically record low demand for grape contracts in 2024, the preliminary average price per ton is the second highest on record, surpassed only by 2023. This seemingly paradoxical situation is due to the majority of grapes being under a multi-year contract signed in previous years, some of which include price escalation clauses, and the fact that fewer tons were contracted in 2024 with tons going unharvested or custom crushed by growers. These unsold and unharvested grapes are not included in the Crush Report’s calculation of average prices, resulting in artificially high district average prices. Despite a very light crop, the industry will continue to face ongoing oversupply issues in the near future. This is perhaps best illustrated by Turrentine’s statewide bulk wine graph, which shows near record volumes actively for sale. Even before the 2024 vintage lots were starting to be listed in October, roughly 22 million gallons were available—more than at the peak of any of the last 20 years, except for 2023 and after the record 2018 harvest (nearly 4.3 million tons crushed). The industry is still correcting via acreage removals and trying to gauge the current level of consumer demand to find a new equilibrium. Further bulk wine and casegood inventory reductions are likely, and we are seeing increased discounting by wineries for both bulk wine and casegoods to accelerate this process. However, until consumer sales stabilize, or even rebound, continuing challenges are likely.

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