California wineries struggle amid internal, external hardships

Oversupply, labor shortage, mechanization stigma hamper the state’s wine grape industry

By Kaitlin Washburn 

CALIFORNIA – It’s late morning on a perfect fall day as Bryan Babcock drives through his vineyard in Santa Barbara County’s Santa Ynez Valley. He navigates his truck along a dirt road, passing a barren field on one side and recently harvested vines on the other. 

This area, known for its pinot noir and chardonnay varietals, is a jewel of the Central Coast. Grapes thrive in a cool coastal climate, enjoying the crisp air from the Pacific Ocean that wafts through the vineyards. 

“When I first started here, we were the only commercial vineyard and winery on Highway 246. Now I’ve got neighbors,” Babcock said. “The conditions here are ideal and vineyards are growing some spectacular fruit.”

Babcock’s parents established Babcock Winery and Vineyards in 1978 just as Santa Barbara’s wine industry was finding its footing. Babcock started working for the family business in the early ‘80s and eventually took over operations.

He just wrapped up the vineyard’s 37th harvest season, evident by the empty vines and their red-orange leaves. While he’s glad he made it through another season and satisfied with the grapes he produced, he had to make another round of difficult choices.

Maintaining a small vineyard has never been as romantic as it appears to the patrons of winery tours. But for Babcock and thousands of other growers throughout Califorina’s robust wine regions, times keep getting tougher. 

Aside from the precipitous drop in labor impacting the entire agriculture industry, wine grape growers are dealing with a stagnant demand for wine, an oversupply of grapes, threats of tariffs and stigma surrounding mechanization. 

Over supply, flattening demand

 Grapes are one of California’s major crops, and wine grapes make up the lion’s share. The state’s grape industry values $5.7 billion, and wine grapes make up $3.6 billion. The United States is the third largest producer of wine, closely behind Italy and France. And the vast majority of the nation’s wine exports — 81 percent — come from California. 

Most of California’s wine grapes come from the San Joaquin Valley and the Central and North coasts. North Coast wines, most notably Napa’s Cabernet Sauvignon, are sparsely produced and more expensive than the wines of the San Joaquin Valley, such as the Zinfandel variety extensively grown in Lodi. 

During the 2018 harvest, 4.3 million tons of wine grapes were crushed in California, one of the highest yielding years in decades. The United States Department of Agriculture is estimating 4.2 million tons for the 2019 season. 

Despite more grapes on the market, wine producers are hesitant to take in more fruit as wine sales have slowed and U.S. wine consumption has stalled, said Peter Vallis, the executive director of the San Joaquin Valley Winegrowers Association. 

“It’s been a very difficult time for the wine grape industry, not only for the San Joaquin Valley, but throughout California’s wine regions,” Vallis said. “I wouldn’t say there’s an oversupply, but there’s an under demand. Wine sales have plateaued and there hasn’t been any growth in sales or consumption.”

Wineries were caught off guard by this trend and have been slow to adjust, Vallis said. During the recent harvest seasons, wine producers were unable to renew contracts with growers, let alone take in excess grapes. 

“There’s a lot of uncertainty and a lot of full tanks with old wine,” Vallis said. 

The Trump administration’s recent threat to impose a 100 percent tariff on all European wine imports is adding to the worries, especially among wine importers, distributors and retailers of European wines.

Upsetting the European Union with such a tariff would also hurt the relationship between European consumers and American winemakers since many wineries depend on the same distribution networks. 

“Europe is our biggest export market and there’s a lot of fear that what is already a stagnant demand for California wine could go down,” Vallis said. 

To buck this trend, the California wine industry learns to market itself better to reach more consumers, Vallis said. The industry should move away from marketing wine as a luxury product and more as a beverage for everyone.

“Once you’re over the Rockies, less than 50 percent of wine on shelves in the Midwest are from California,” he said. “By the time you get to the East Coast, you’ll mainly find foreign wines.”

Mechanization versus tradition

Bryan Babcock said he’s been savvy as he navigates the problems plaguing his industry. 

Over the last 10 years, he had to remove 80 acres from his vineyard after Pierce’s disease, a deadly grapevine bacteria destroyed parts of his vineyard. But he’s not rushing to replant.

“I don’t plan to run back in and plant because there aren’t enough workers available to maintain more acres than I am currently growing,” Babcock said. “To go back in and plant at this point is crazy.” 

Babcock maintains a small, year-round workforce who work both in the vineyard and his winery. He uses seasonal labor during the harvest, but he’s never able to get all the hands he needs. Being a small grower makes it even more of a challenge. 

To cope, Babcock has restructured his trellis system so that maintaining his vineyard is more efficient, mechanically friendly and requires fewer hands. His trellising, which he calls integrated nature, also works with gravity and respects the growing patterns of a vine. 

“This system is helping the vine grow in a way it wants to grow,” Babcock said. “What you have should enhance your process, and we can now harvest twice as fast and be twice as gentle on the vine. The fruit flies off easier. And what would take 40 people now takes four.” 

The move to mechanization is happening throughout the wine grape industry as many growers are turning to it as a solution to the labor shortage. But some winemakers remain skeptical of the quality of a grape harvested by a machine compared to one by hand. 

The argument has become almost as heated as the battle over corks and screw tops. But California wine growers are behind their global competitors on this front. Australia, Europe and South America mechanized their operations years ago. 

Kevin Merrill, another Santa Barbara County wine grape grower, turned to mechanization as the labor shortage threatened his ability to harvest his crop each year. 

On his vineyard, Merrill has mechanized what he can — he has machines for pruning, harvesting, fruit thinning. When asked about his decision, he states the obvious: a machine can do more, at any time of day and without breaks. 

“The machines are better now too, they pick a nice, clean fruit. The industry is adapting,” Merrill said. “Working on a vineyard is more of a specialized job, there’s more training with the skills that are expected.” 

However, he faces issues when he tries to sell his crop to winemakers who worry that their wine will not be as good if the grapes weren’t harvested by a skilled hand. 

“We’ve had to debunk that thinking,” Merrill said. “And part of that is working with wineries to make sure they understand that the fruit is just as good whether it’s hand or mechanically harvested.” 

Monterey County, the northern tip of the Central Coast, is another one of California’s hearty wine regions. Thanks to a deep marine canyon in the Monterey Bay, the area — best known for its Burgundy varieties — has the cooler coastal weather wine grapes enjoy. 

Kim Stemler, the executive director for the Monterey County Vintners and Growers Association, has watched as Monterey growers turn to mechanization as the labor shortage sapped the hands on their vineyards. They’ve turned to machines that can prune and harvest their vines.

While those machines replace some of the labor a grower needs, they still require human operators. The demand is for a more technical worker. 

“The workforce that’s needed for that is drivers, mechanics, fabricators,” Stemler said. “They need a much higher skill set than the people who originally signed up for the job. The skills sets are very different.”

Back in Santa Barbara County, Bryan Babcock knows that in order to survive, he’ll have to accept the new realities and continue to innovate. But he still finds great joy in his work and is not planning on quitting anytime soon.

“It really doesn’t get better than this,” Babcock said, standing in his winery later on that beautiful fall day as visitors sampled wine and Fleetwood Mac played in the background. 

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