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Chapter 8. Grape and Wine Production in California

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Grape and Wine Production in California CHAPTER 8. GRAPE AND WINE PRODUCTION IN CALIFORNIA JULIAN M. ALSTON, JAMES T. LAPSLEY, AND OLENA SAMBUccI ABSTRACT ACKNOWLEDGEMENTS Grapes were California's most valuable crop in 2017. They The work for this project was partly supported by are grown throughout the state for wine production and, the National Institute of Food and Agriculture, U.S. in the San Joaquin Valley, for raisins, fresh table grapes, Department of Agriculture, under award number 2011- grape-juice concentrate, and distillate. This chapter 51181-30635 (the VitisGen project), and award number outlines the broader grape-growing industry as a whole 2015-51181-24393 (the Efficient Vineyard project). The to provide context for a more detailed discussion of wine authors are grateful for this support. Views expressed are grapes and wine. We discuss the regional variation in wine the authors’ alone. grape yields and prices within California, and the evolving varietal mix; the economic structure of the grape-growing and wine-producing industry; and shifting patterns of production, consumption, and trade in wine. We interpret these patterns in the context of recent changes in the global wine market and the longer economic and policy history of grape and wine production in California. ABOUT THE AUTHORS Julian Alston is a Distinguished Professor in the Department of Agricultural and Resource Economics and the director of the Robert Mondavi Institute Center for Wine Economics at the University of California, Davis, and a member of the Giannini Foundation of Agricultural Economics. He can be contacted by email at [email protected]. Jim Lapsley is an academic researcher at the UC Agricultural Issues Center; an adjunct associate professor in the Department of Viticulture and Enology, University of California, Davis; and emeritus chair of the Department of Science, Agriculture, and Natural Resources for UC Davis Extension. He can be In 2017, California had 935,000 acres of grapes reached by email at [email protected]. Olena Sambucci planted, which produced about 6.5 million tons of is an assistant project scientist in the Department of grapes, worth some $5.7 billion at the farm. Of this total, about $3.6 billion was for wine grapes, $1.6 billion Agricultural and Resource Economics at the University for table grapes, and $0.5 billion for raisin grapes. of California, Davis. She can be contacted by email at Photo Credit: UC Davis [email protected]. 181 California Agriculture: Dimensions and Issues CHAPTER 8. TABLE OF CONTENTS Abstract .................................................................................................................................................................................................................181 About the Authors ..............................................................................................................................................................................................181 Introduction .........................................................................................................................................................................................................183 Current Grape Production Patterns — An Overview...............................................................................................................................184 Area, Volume, and Value of Production ...............................................................................................................................................184 Figure 8.1. Area, Volume, and Value of Production, by Type of Grapes, 1967–2017 ........................................................185 Figure 8.2. Area, Volume, and Value of California Production, by Type of Grapes, 2017 ...............................................186 Figure 8.3. Grape-Producing Areas of California .......................................................................................................................186 Table 8.1. Area, Volume, and Value of Production, by Types of Grapes and Region, 2017 .............................................187 Structure of the Grape-Growing Industry ............................................................................................................................................188 Table 8.2. Total Grape Area and Number of Grape-Producing Farms, 2017 ......................................................................188 Table 8.3. California: Size Distribution of Grape Producers, 2017 .........................................................................................189 Utilization of Grapes Grown in California ...................................................................................................................................................190 Table 8.4. Utilization of California's Grape Crush, 2000–2017 ...............................................................................................190 Table Grapes ................................................................................................................................................................................................191 Raisins ...........................................................................................................................................................................................................192 Juice Concentrate and Distillate ............................................................................................................................................................192 Wine Grapes and Wine ....................................................................................................................................................................................193 Table 8.5. Characteristics of U.S. Wine Grape-Growing Regions, 2017 ...............................................................................193 Box 8.1. Evolving Demand for California Wine and the Media ................................................................................................194 Figure 8.4. U.S. Wine Regions: Area, Volume, and Value of Production, 2017 ..................................................................195 Wineries ........................................................................................................................................................................................................196 Table 8.6. Characteristics of California Wine Grapes Crushed, 2017 ...................................................................................196 Domestic Production and Consumption .............................................................................................................................................197 Table 8.7. Gallons of Bottled Wine Removed, Tax-Paid* into the U.S. Market, 2005 and 2017......................................197 Table 8.8. Shares of all California Licensed Wineries and Tons of Wine Grapes Crushed by Region, 2017..............198 Imports and Exports ..................................................................................................................................................................................199 Figure 8.5. U.S. Imports and Exports of Wine, by Value, and Volume, 1966–2017 ...........................................................199 Conclusion ...........................................................................................................................................................................................................201 Box 8.2. U.S. Per Capita Consumption of Wine in Context .....................................................................................................201 References ..........................................................................................................................................................................................................202 Appendix Table 8.5A. Characteristics of U.S. Wine Grape-Growing Regions, 2017 ........................................................204 Appendix Table 8.6A. Characteristics of California Wine Grapes Crushed, 2017 ............................................................205 Appendix Table 8.8A. Shares of all CA Wineries and Tons of Wine Grapes Crushed by Region, 2017 ................... 206 182 Grape and Wine Production in California INTRODUCTION Grapes have been cultivated in the United States for more varieties—such as Thompson Seedless—could be grown than 400 years and in California for more than 200 years. for any and all of these end-uses, and flexibly allocated However, California’s grape and wine industry did not among them from one season to the next. Nowadays, vari- really take off as such until the end of the 19th century. As eties, trellises, and other aspects of the production system discussed and documented in detail by Pinney (1989, 2005) are much more specialized for particular end-uses, and the and summarized by Alston et al. (2018), the longer history different parts of the grape industry are much less inte- of grape and wine production in America reflects several grated with one another. In many ways, they are now alto- significant influences. These include ongoing struggles gether separate industries, each of which is complicated against the biological barriers to development of an indus- and interesting in its own ways. Taken together, table, try, eventually overcome about 150 years ago when the raisin, and wine grapes have been
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