Fruit, Grape and Wine Outlook 2004

1
Fruit, Grape and Wine Outlook 2004

• Presented by
• G. B. White
• Department of Applied Economics and Management
• Cornell University
• December 2003

2
General overview

• Larger apple crop nationally than last year, but
  manageable. (223 M. Bu 9 above last year, but
  -8 below 5-Yr. av. Short crop in WA)
• NYs apple growers had a large crop.
  Substantially reduced prices for fresh fruit,
  strong prices for peelers, given the large crop
  in NY (28.6 million Bu). Projected receipts139
  M (3rd best in last 10 years in nominal dollars)
• Decreasing bearing apple acreage! Down 27 in
  NYS in last 10 years, and nationally, lowest in
  20 yrs!
• Tart cherry production in the US rebounded after
  last years worst crop in decades, with a fair
  sized cropprices still sky-high at 40 cents/lb
• With high prices, tart cherry returns, although
  lower than last year because of lower production
  in NY, will be abnormally good (3.2 M)

3

Export Situation

• 1997/98 1,100,253 Bu
• 1998/99 908,057 Bu
• 1999/00 867,202 Bu
• 2000/01 759,957 Bu
• 2001/02 809,803 Bu
• 2002/03 540,614 Bu
• 2003/04??? 800,000 Bu
• Administration dodges the EU Tariff bullet!
  Exports will bring about 16 million to NYS
  industry from the 03 crop. Excellent market for
  a smaller sized apple.
• Shipments through Nov. already 250 Th. Bu (30
  above last year).
• MCPShipments of Empires into UK into August!
• Combination of short crop in the EU, big crop in
  NY, and MCP means excellent potential this year

4
Overview (cont)

• US Grape crop is down 8, but still a large crop.
  Worldwide surplus of grapes, concentrate, and
  bulk wine is hanging over the market. Affecting
  NY wineries (CWC as well as small wineries) and
  National Grape Coop and Growers Coop
• NYs grape production estimated at a record
  210,000 tons, a record. But the combination of
  high crop loads, and cool, wet weather has meant
  that about 4 thousand acres (32,000 tons) were
  unharvested as growers failed to meet minimum
  sugar requirements. National Grape paid some
  growers 600 per acre not to harvest!
• Finger Lakes small wineries (relying heavily on
  direct sales) experienced declining sales or, at
  best, no growth, in the first 6 months of the
  year. In the second half of the year, both sales
  and visitation increased modestly. Quite a
  (Negative) change from the recent past!

5
Small Winery Situation

• Plentiful supplies of grapes, juice, and bulk
  wines have led to the development of new extreme
  value labels
• Two-Buck Chuck (Trader Joes Charles Shaw
  product line)
• Upscale wines packaged in a plastic bag inside a
  box for 16 to 36 for 3 L. (4-9 per bottle)

6
Factors affecting small wineries

• 9/11 Terrorist attacks
• Stalled economy through 1st half of 03
• Down stock market
• Wars in Afghanistan Iraq
• Profound impact on how consumers affect the wine
  purchasing decision
• More attention directed to home life
• Demanding the highest possible quality at all
  price points
• Impact on NYS small wineries (dominated by direct
  sales) of extreme value products in new
  packaging???
• Long run implications favorable for wine
  consumption (quantity consumed)broadening the
  base for future consumption, as infrequent
  consumers and young people consumers are
  attracted to wine. However, consumers are
  looking for high quality at the lowest possible
  price points-offers opportunities and threats to
  the states small wineries!

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US wine consumption
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Value of Fruit Production in NYS
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Apple prices received by NYS Growers
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Grape prices received by NYS growers
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Value of utilized grapes grown in NYS