Drought could lead to sticker shock

Steve Delaney
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California is experiencing a drought. Almost the entire state is rated as experiencing either severe, extreme or exceptional drought conditions this winter.

2012 Twisted Old Vine ZInfandel. — Image courtesy www.twistedwine.com

What helps make California a great wine-producing region is partly its climate. It gets most of its rain and moisture in the winter while vines are dormant, and then very little during growing season and harvest. Careful attention to irrigation allows for just the right mix of sun, heat and water to optimize grape development and flavours.

Rain in some wine-growing areas is a fraction of usual values, and the snowpack in the Sierra Nevada Mountain Range is only 12 per cent of usual amounts (limiting meltwater supplies).

What’s more, this is the third dry year in a row, so the effects have been compounded.

Those effects are likely to become obvious in the 2014 vintage that is just getting underway.

There is a lot of competition for the water that is left with other agriculturalists as well as residents who need tap water. New plantings are on hold in many parts of the state and some growers have to make the difficult choice as to which plots to save and which to let go. Predictions are that some regions will see a drop in their crop of up to 25 per cent.

This is happening as California wine crops and exports have been booming. The United States (mostly California) is the fourth largest wine producer in the world and the eighth largest wine exporting country in the world. Canada is a major buyer of California wines, as you might expect.

When supplies are reduced normally prices rise, but in today’s international wine trade there are plenty of other sources of exportable product. Prices for the food produced in the region are going up, however, so those farmers will have more options when it comes to sourcing water supplies. The long-term effect of competition on prices and lower crop yields (and income) suggests some growers and wineries are going to have problems.

While drought may not be affecting the price of the product at the farm gate, we can expect price increases on California wines in Canada. The culprit isn’t even taxes, although there have been some increases from that source. This time it is the exchange rate that is going to be affecting the price of our California wines.

For much of the last two years we had favourable rates against the Unites States, but now our rate is lower than it has been since 2009. As new stock is purchased and put on our shelves, we should see prices rise. (Note that wines from some countries such as Chile and Argentina are often sold in U.S. dollars, so we can expect changes there, too.)

The exchange rate with Australia is also up a little over its average of the last two years, but is still lower than it was in 2010.

The one bright spot for us, especially if you like European wines, is the Euro, which has now dropped to its lowest level since 2009.

Back to California: there are still many value wines available. The Twisted Old Vine Zinfandel 2012 (NLC $15.99) has the fruit impact one might expect from this varietal with cherries and bramble fruits. There was just enough tannin and acidity to keep the “jam” interesting in this medium to full-bodied wine. Score: 14/Good.

Steve Delaney is a member of the Opimian Society.

Email him at sdelaney@nfld.com

Twitter: @delaneystephen

Organizations: Opimian Society

Geographic location: California, United States, Canada Unites States Chile Argentina Australia

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