By Justin Charbonneau, GrapeConnect Co-Founder
July 23rd, 2019
The GrapeConnect team is excited to share our Market Pricing Report for the Second Quarter of 2019. We’re grateful to all our users that reached out to provide feedback and ask questions on our prior quarterly report, and hope this report proves to be helpful with harvest right around the corner.
Our Q1, 2019 Report contained numerous examples that confirmed the macroeconomic conditions that we and others anticipated once it became clear that CA’s 2018 harvest was coming in big. However, we also shared some unique pricing insights that surprised us -particularly related to pricing impacts across varietals and the different major U.S. markets (California, Washington + Oregon; sorry New York, Texas, and others; we hope to be able to provide meaningful insights in the future but presently lack sufficient data volume for your regions). In our Q2 report, for example, it is interesting to note that pricing for Merlot continues to remain fairly inelastic for both the spot bulk wine and grape markets:
As with our prior report, we illustrated Q2’s quarterly average market pricing comparison for 2019 versus that of 2018 (though we further added data from Q1, 2019 as well). We did this for the top 5 varietals by listing volume (see the ‘Assumptions & Methodology‘ section in the report for more information) and parsed data by state. Below, you can see a summary graph illustrating the varying levels of percentage-change in pricing by respective varietal and listing-type for Q2 ’19 as compared to Q2 ‘18:
One special dynamic that we’d like to note: for certain varietals in certain markets, our high-level analysis shows increasing pricing in Q2 ’19 when compared to Q1 ’19, or even Q2 ’18. See Cabernet Sauvignon grape pricing in CA within the example figure below:
However, from others’ market reports, our additional data analysis, and anecdotally –we know that bulk wine and grape pricing has trended downward over that period. One reason for this enigma within some of our graphs is the nature of the source of pricing data for analysis (aggregated online data from GrapeConnect [users and partners] as well as other publicly available sources such as online classifieds). What we’ve observed coming up to 2019’s harvest are far greater volumes of fruit and juice from premium appellations being advertised on the spot market as compared to last quarter and 2018’s harvest. Thus, although market pricing mostly trends downward across granular markets, this supply of pricier fruit has the effect of increasing our average pricing figures for the broader market analyzed (California Cabernet Sauvignon grapes, per the above example). We will dig into this topic in more detail in a follow-up blog post soon, however, it is also worth quickly mentioning that numerous users have voiced that this season is the first in years that they’ve had uncontracted fruit available due to long-time buyers deciding not to renew grape contracts.
To provide meaningful pricing data for a larger number of varietals and with greater granularity, we also assembled average-pricing heat-maps that reflect a longer time horizon (1/01/18 – 6/30/19 for bulk wine, 1/01/19 – 6/30/19 for 2019-harvest grapes). A heat-map preview for Cabernet Sauvignon bulk wine is shown below, where the higher-priced appellations are focused toward the top of the visualization:
We hope the data in this report helps meaningfully inform your respective sourcing or sales strategy as harvest commences. The GrapeConnect team is here to help our customers through these challenging market conditions and welcome you to reach out with feedback or questions by leaving a comment below or sending us an email at firstname.lastname@example.org.
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