By Rick VanSickle
With harvest underway in Niagara, there’s a more concerning issue on the minds of grape growers in Niagara — another looming surplus.
The over-supply of grapes in the region is heading for the largest glut since 2009, eclipsing the surplus of last year and prompting concern from the industry.
In 2009, about 8,000 tonnes of grapes were cut to the ground, while over 5,000 tonnes went unsold in 2023. Unlike other wine regions, where surpluses are a result of over-enthusiastic planting, Ontario’s 2009 surplus was driven to a large degree by the needs of the larger wineries in Ontario who have licences to make International Domestic Blended wines, requiring only 25% Ontario grapes. In that year, those wineries purchased nearly 14,000 fewer tonnes of Ontario grapes than the previous year despite strong sales of IDB wines.
Debbie Zimmerman, CEO of the Grape Growers of Ontario, doesn’t know yet what the surplus will end up being, but it’s shaping up to be “really bad,” she told Wines in Niagara. “Growers are under the gun and we’re trying to fix the surplus.”
A quick count of grapes for sale on the GGO website, seen here, shows over 3,500 tonnes already unsold, with most of the over-supply is with the more expensive Bordeaux reds, particularly Merlot and Cabernet Franc. Not all wines for sale are posted on the GGO site.
A note sent on Wednesday by GGO chair Matthias Oppenlaender, below, and obtained by Wines in Niagara, called the surplus of grapes in Niagara “unsustainable” and has asked for a meeting with the provincial government next Friday with Ontario Craft Wineries and Wine Growers Ontario in attendance. “The industry’s current state is unsustainable now and for the future, and these meetings at that table with industry partners are critical for the stability of our growing future,” Oppenlaender says in the letter.
The full letter is below:
Dear Members of the Grape Growers of Ontario,
I am contacting you to provide an update on the status of the Ontario Government’s modernizing of the beverage alcohol industry. In December 2023, the Government announced significant changes to how alcohol will be sold in the province. As you know, the government has accelerated the opening of more retail opportunities across the province. While this has been met with some trepidation, the GGO is anxious to get to the table to set in motion plans to assist with this year’s crop, and a plan for the long-term success of our industry.
Today, we are encouraged to inform you that the Government of Ontario has announced that the Wine & Grape Industry Sector Table (WGIS) will meet next Friday. This meeting will include Wine Growers Ontario and Ontario Craft Wineries, our industry partners. As we are all aware, the industry’s current state is unsustainable now and for the future, and these meetings at that table with industry partners are critical for the stability of our growing future.
We need a plan reflecting the value of grapes grown in Ontario for the wine produced in Ontario. We have asked the Ontario Government to take immediate measures to assist this year’s crop by purchasing all unsold grapes.
In addition, we have requested the Government of Ontario to create a $25 million per year Transition Fund reserve to assist growers with stabilizing our sector. This reserve money could be used to purchase unsold grapes or vineyard removal.
The Transition Fund will provide assurance to growers that lingering contractual changes will be addressed appropriately while a longer strategy is developed.
Today’s announcement of the Wine & Grape Industry Sector Table is the first step towards developing a collective strategy rather than the punitive tactics currently being used against growers.
Our conversations with the Government and our partners are to see the Ontario grape and wine industry thrive and succeed, and these objectives drive our efforts. Please see the attached link for further information.
Thank you,vMatthias Oppenlaender, Chair, Grape Growers of Ontario
Many factors are contributing to the over-supply of grapes, growers say:
• Decreasing wine sales resulting in reduced grape demand
• Lots of unsold 2021 wines from that big yield vintage
• Most vineyards across the region fully bounced back from 2021/22 winter damage
• High interest rates making it more costly to finance working capital for wineries and making grape purchases more risky
• General economic malaise causing perception of risk of investing in new wine production to be heightened.
One grower told Wines in Niagara he still has 25 tonnes of Cabernet Franc, five tonnes of Chardonnay, 15 tonnes of Cabernet Sauvignon and 20 tonnes of other “premium” still unsold.
“We had two important customers, who we were counting on to want some organic fruit, pull out at start of year because they are focusing on their home vineyards, which (have) bounced back after 2021/22,” a grower told Wines in Niagara. “Others are pulling back because their business can’t substantiate paying premium prices for premium grapes, as their customers are increasingly price sensitive. Even with us offering to sell some grapes to folks at reduced prices (which is not a viable long-term strategy for us), several folks have just said ‘it’s not about price — we just can’t do it.’ ”
To make matters worse for grape growers, crop insurer Agricorp has sent a letter to clients warning them of what is covered and what isn’t during an over-supply season.
“Agricorp understands the unique challenges you face during this harvest season,” the letter to clients begins. “To ensure maximum production insurance coverage during this upcoming grape harvest season, please consider the following carefully when making marketing decisions about your crop.”
• Market conditions are not an insured peril under your Production Insurance policy.•
• It is your responsibility to market your crop to the best of your ability.
• If you have no market (unsold) for any of your grape varieties/blocks you must advise your adjuster as soon as possible so that a yield can be estimated to be included in your yield history.
• If your grapes are refused by a processor, Agricorp requires two rejection letters from separate, unrelated processors.
• All perils affecting your crop, whether insured or not, must be verified by your Agricorp adjuster.
• After all your grapes are harvested, your yield value will be compared to your total guaranteed production value (by category) to determine if you are eligible for a production Insurance claim.
• You may be required to provide a copy of your spray records to your Agricorp adjuster.
• If you had a marketable crop and the processor delayed harvest resulting in un-harvestable grapes, your yield tonnage will be estimated by your Agricorp adjuster together with you the grower, and will be included in your yield history.
• Your grape production insurance policy only covers losses due to insured perils and will not cover losses if farm management decisions led to the crop being unmarketable.
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