Market Analysis:
Table Grapes Industry Overview

Table Grapes - The California Table Grape Industry is centered in the southern half of the state.The season begins with early harvests from the desert vineyards of the Coachella Valley, then, as the grapes mature, working up the state, through the Arvin area, then into the massive production of the Delano area, with the later season expanding farther north into the Visalia, Fresno and Madera areas. Early production from the desert areas has traditionally enjoyed the benefit of opening the window on the market, with resulting high prices for the first production of the season.However, the changing world market has diminished the desert's advantage, as fruit is now being provided to the market on almost a year-round basis. Consequently, the desert's window of opportunity, and the higher prices enjoyed historically, appears to be shuttered by the influx of fruit from our neighbors to the south.The flip-side of this effect is that domestic consumers have become accustomed to year-round supplies of high-quality fruit at reasonable prices, and have increased their consumption, per capita. The table grape market, however, continues to be fickle, with consumer preferences shifting to newer varieties, especially in the export markets.Many of the traditional older varieties have largely lost their place in the market, and are being displaced by the newer, more desirable varieties. Bearing acreage, after expanding to a historical high of 85,400 in 1988, stabilized in the area of 77,000 in the following seven years. However, the 1998 figure indicates a bearing acreage of 83,000, up slightly from the previous years, with non-bearing acres estimated in excess of 14,000 acres, up from previous years.

Please refer to the statistical graphs and table for the bearing and non-bearing acreage, production per bearing acre, total production, average grower returns per ton and acre.

• California Table Grape Industry: Bearing / Non-Bearing, Graph 1

• California Table Grape Industry: Production / Average GR Return Per Acre, Graph 1

• California Table Grape Industry: Table 1

With the exception of the massive 1988 crop, total production has stabilized in the range of 602,000+ to 717,800+ tons. Excluding the large 1988 crop, yield per acre has consistently grown to over 9 tons in the past seven years. Total average grower returns per acre have grown, for the most part, in step with the increased yields, increasing from a low of $1,707 during the very worst year of the agri-recession of the mid 1985, then climbing steadily to the most recent high of $5,168 in 1996.This industry, then, can be seen to enjoy the rare phenomena of increasing production and price in tandem.Production of the respective varieties has remained centered heavily upon the dominant Thompson Seedless variety, which has historically accounted for 35% to 40% of total shipments.Prior to this, the Thompson grape had averaged 44% to 48% of the total market.The shift in production has moved away from the older, seeded varieties, such as the Emperor and Ribier, and primarily into the newer seedless varieties such as the Flame Seedless, and the newest export favorite, Red Globe.Newer varieties with strong promise include the Fantasy, Crimson, and Australian Maroo.

These shifts in production are driven by the market, with consumer preference forcing prices up on the newer varieties, and down on the older varieties, with the obvious exception of the industry work-horse, the Thompson Seedless grape, which continues to enjoy a dominant position in the market.Thompsons have continued to command average pricing levels in the range of$9 to $11 per 23 pound box, while Emperors have bounced from $7 to $9. The Red Globe, again, driven by strong export demand, currently commands prices in the range of $12 to $24. At one time the Red Globe commanded prices as high as $26, however the market appears to have reached equilibrium as the larger crops of recent years have reached the market.Recently, the prices paid for both the Fantasy and Christmas Rose varieties range, on average, from $10 to $15 per box range, although over planting of these varieties, like Red Globe, is placing downward pressures on prices.

The industry's major negative factor is its dependence upon hand labor, with the consequent problems attendant to labor-intensive crops. Fresh market crops, of course, are always subject to the slings and arrows of a volatile market, with a relatively perishable crop. This effect is minimized in the table grape arena by the prudent use of cold storage, allowing grower/ packer/shippers to hold fruit from weak market periods, storing product for marketing in later periods with stronger prices.In terms of per-capita consumption, the industry is currently benefiting from the prevalent health conscious attitude in the nation, amplified by effective generic marketing efforts by various trade commissions and other associated organizations.

The 1997 season began with the promise of a record-setting harvest. Coming off a smaller than normal 1996 harvest (63.9 million 21-lb boxes), which was preceded by a record-setting harvest in 1995 (72 million 21-lb boxes), the initial 1997 crop estimate was set at 74.2 million 21-lb boxes. Shipments from the Coachella Valley reached 10.2 million 21-lb equivalents, up 7 percent from the valley’s original estimate of 9.5 million. In early July, with the weather holding, the total crop estimate was revised to 79.9 million 21-lb boxes. High volume defined the nine weeks of mid-summer (July 13 - September 7).

In August, 1997, after five years of negotiation, the government of China opened its marketplace to California grapes, the first arriving in Nanjing on October 16, 1997. Shipments were down considerably in October and November from the record-breaking 1995 season and down sporadically from 1996. By mid-December, with movement continuing in a declining but steady manner, it became apparent that the industry would make its original estimate of 79.9 million 21-lb equivalents after all. At 80.5 million 21-lb boxes, the industry has set a new record; volume is up 26 percent from the short crop of 1996 and up 12 percent from the record-setting harvest of 1995.

In summation, the California Table Grape Industry is a massive economic engine, marketing over 80 million boxes of fresh grapes, annually, with the industry capable of responding to shifting market demand for newer varieties.Although the market remains fickle in terms of such varietal preference, demand for the dominant Thompson Seedless variety continues to carry the industry's water.A very positive development in the California Table Grape industry is the recent announcement that China would allow table grape imports in 1997. Many industries have attempted to negotiate U.S. exports to China, with little success. The California Table Grape Commission and the USDA were integral in the trade negotiations. However, exports to China are reportedly been limited to Madera, Fresno and Tulare Counties, in Central California. The impact of the changing global economy, and the NAFTA agreement, may impact this industry in coming years.At first glance, this impact may be viewed as a negative, however, the recent opening of the Mexican market to California grapes may be a boon to the state's growers. The stability of the table grape industry over the last several years has translated into relatively stable to slightly increasing land values for table grape vineyards.

The 1998 table grape season indicates a significant downtrend in overall production and average grower returns primarily due to weather related conditions.Cool spring time weather and El Nino rains, pushed back fruit maturity and caused fruit quality problems throughout the season, for most of the fresh fruit crops produced in the Central San Joaquin Valley. Although a general downtrend in grower returns was apparent, market values for table grape vineyards have not shown signs of declining.Sales activity continues to remain relatively strong, most likely spurred by very favorable interest rates and the general stability in the overall California and National economy.