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Where to Put California's 2014 Vintage?

With tank sales soaring, wine industry sources tend to see production capacity balanced to grape supply

by Andrew Adams
Juice gets pumped over the cap inside a stainless-steel tank. Wine fermentation and aging vessels have been in demand due to the large harvests of 2012 and 2013. Photo: Jason Tinacci/Napa Valley Vintners

San Rafael, Calif.—While North Coast wineries may have found their fermentation and storage capacities strained by the consecutive record harvests of 2012 and 2013, yet industry experts claim the grape supply is in sync with the region’s overall capacity.

At Criveller California Corp. in Healdsburg, Calif., part-owner and enologist Davide Criveller reports that tank sales to wineries are robust. “Absolutely, this year has been a crazy year with tanks,” he told Wines & Vines.

The company is booked until after harvest with orders for tanks sized from 1,000 to 12,000 gallons, he said. For wineries looking to expand, Criveller estimated he has orders for 160 tanks from more than 25 clients.

Almost all of those orders are for wineries in California with a few orders from the Northwest and Mexico. He said the company’s factory in the East is seeing huge demand for beer tanks but not much from the wine side. Criveller thought wine tank demand could be low in the East because harvest predictions are smaller after a brutal winter that caused cold damage in vinifera vineyards.

Tank supplier expanding
Due to the strong demand for wine tanks in the West, the Criveller factory is hopping. “We’re actually building a new building because we can’t handle all of the orders,” Criveller said. The new expansion will be in Healdsburg, Calif., and follows a 2013 expansion at the company’s location in Ontario, Canada.

Zach Rasmuson, chief operations officer for St. Helena, Calif.-based Duckhorn Vineyards, said the wine company probably looked pretty shrewd when it acquired the 145,000-square-foot winery in Ukiah, Calif., that formerly housed Rack & Riddle Custom Wine Services right before two back-to-back large harvests.

But he said the move really came from the firm’s strategy of wanting to keep winemaking in-house. Because the company’s Decoy brand had grown so fast, Duckhorn found itself with too many custom-crush arrangements. The Rack & Riddle acquisition was about divesting itself from custom crush, not about securing additional capacity, Rasmuson said.

Capacity issue is one aspect of the industry where concern seems to ebb and flow, Rasmuson said. Right now the issue seems driven by robust wine sales. He said the company can handle the capacity stemming from its existing vineyard production on the North Coast, but another large harvest in 2014 could make things interesting.

No one has predicted that California will see a third large harvest in a row, but Rasmuson said early signs from the vineyard indicate it’s a possibility.

He said the equation of vineyard supply, winery capacity and consumer demand is always slightly changing. “It’s such a fun and complex thing to think about,” he said. “But what I’ve never seen ever is totally tapped-out capacity where grapes go unpicked because there isn’t any place to put them,” he said.

Earlier this month the California Department of Food and Agriculture released its latest figures about grape acreage in the state. The state’s report, based on voluntary reporting from growers, put the estimated bearing acreage of wine grapes at 570,000 acres with 45,000 non-bearing acres.

Larger companies planned for vineyard growth
Brian Clements, vice president and partner with Turrentine Brokerage said larger wine companies accounted for the growth in total vineyard acreage and expanded their production capacity accordingly. “The wineries that have the capital, have the room and can afford these tanks have done it,” he said. “I think we’re better off now than we were four years ago,” he said.

Clements said a lack of space is more of an issue for mid-tier and smaller production wineries that don’t have the ready resources to invest in expansion. Still, he said California’s total capacity is in line with grape supply. 

Clements, who has described 4 million tons as California’s “new normal,” said he’s also heard early reports from the vineyard that a third large crop in a row is possible. “The potential for an above-normal harvest is there in certain parts of California, but we have a long way to go and nothing’s for sure in wine and agriculture.”

Sales drive capacity needs
Rob McMillan, head of Silicon Valley Bank’s wine division, said the record harvests caused a perceived capacity shortage but most of the fruit left on the vine in 2013 was due to quality concerns not tank space. “So while there’s discussion about a lack of tank space, that comes more from vineyard owners who could have sold more grapes,” he said.

In 2012, wineries were willing to take additional grapes after the smaller crops of the previous two years. A year later, wineries had enough wine in their tanks and barrels and enough grapes coming in to support projected sales. “To see a need for tank space, we need to have higher growth rates in wine sales,” said McMillan, whose division serves 350 winery clients.

McMillan said he’s heard the 2014 harvest will be an average one, and capacity won’t be much of an issue. “If we have a normal harvest this year, you aren’t going to hear anyone talking about tank space.”


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Wine Industry Metrics
Off-Premise Sales » Month   12 Months  
July 2014 $557 million
$7,577 million
July 2013 $533 million $7,128 million
Direct-to-Consumer Shipments » Month   12 Months  
July 2014 $61 million
$1,674 million
July 2013 $56 million $1,517 million
Winery Job Index » Month   12 Months  
July 2014 312
July 2013 283 187
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