October 2020, Volume 26, Number 4
California has too much wine, due in part to a record 4.3 million ton harvest in 2018 and a drop in demand for wine in 2019, when 3.9 million tons were harvested. Some 200,000 tons of wine grapes were not harvested in 2019 because growers could not find buyers for their wine grapes. There may be more unwanted wine grapes in 2020.
California wineries shipped 276 million nine-liter cases of wine in 2019, including 87 percent to US consumers and 13 percent abroad. In 2019, Chardonnay was 20 percent of US wine sold, Cabernet Sauvignon 15 percent, and red blends and Pinot Grigio 10 percent each. The US has been the world’s largest wine market since 2010, with total sales of $75 billion, including $44 billion worth of California wine.
The Glass Fire broke out in September 2020 in northern Napa and Sonoma counties, damaging or destroying at least 30 wineries and prompting some wineries to announce they would not make wine in 2020 because smoke tainted their grapes. Napa county has 45,000 acres of wine grapes and 475 wineries, and Sonoma county has 60,000 acres of wine grapes and 400 wineries.
There is too much wine in France, Italy, and Spain, the three countries that produce almost half of the world’s wine and consume about 40 percent of all wine. Many French wineries with unsold wine from 2019 accepted less than $1 a liter from the French government in summer 2020 to distill the surplus into industrial alcohol products including hand sanitizer. A similar wine glut in 2009 prompted subsidized distillation of surplus wine.
Grape growers represented by the SGV and buyers represented by the UMC negotiated over the permissible yield of grapes for champagne in summer 2020. Average yields are about 12,000 kg per hectare or 5.4 tons per acre. Buyers want the 2020 maximum yield to be less than 10,000 kg per hectare or 4.5 tons per acre due to falling sales of champagne, while grape growers want higher yields. France produces about half of the world’s sparkling wine.
Eastern Europeans harvest many of the wine grapes in France, Italy, and Spain, and Covid-related travel restrictions reduced harvest workforces in 2020. About 20 percent of Romanian workers are abroad. Many work seasonally in Italy’s grape harvest, earning E1,200 a month. Italian grape growers said they were short 36,000 workers for the fall 2020 harvest, prompting some provincial governments to allow newly arrived Romanians to work in pods or crews upon arrival that were separated from other crews to avoid the spread of covid.
South Africa’s government imposed several bans on alcohol sales to slow the spread of Covid, hurting the wine industry. Two-thirds of South Africa’s wine is consumed domestically; the alcohol bans threatened to bankrupt many smaller producers. South Africa’s government debt is approaching 100 percent of GDP, the value of the rand is dropping, and the government wants to borrow more money to launch infrastructure projects that create jobs.
Food. Walmart, which sells over 20 percent of US groceries, announced Walmart+, a $98-a-year subscription that provides free home delivery for orders over $35. Walmart hopes that the option of ordering online and picking up orders at one of its 4,700 US stores will attract subscribers. Walmart is the largest private US employer, with 1.5 million employees. The competing Amazon Prime costs $119 a year and has 150 million subscribers.
Bakersfield-based Thomson International recalled onions in summer 2020 after hundreds of people were sickened by salmonella-tainted onions. Salmonella causes 1.4 million infections and 26,500 hospitalizations a year in the US. Cal-Maine Foods, the largest US egg producer, reported an average price of $1.58 a dozen in spring 2020, up from $1.06 in spring 2019.
More people working remotely is expected to reduce rents for downtown office buildings, prompting speculation that vertical farms producing leafy greens and herbs could take over some downtown space. Hydroponic and aeroponic farms using high-performance LED grow lights are expanding to produce root and vine vegetables as well as berries. Indoor farms attain much higher yields and are closer to their customers, but are not economical for orchard fruits and field crops.
The Supplemental Nutrition Assistance Program (SNAP), previously Food Stamps, provided electronic benefit transfer cards to 40 million people in FY18 who had gross monthly incomes of under $2,790 or net monthly incomes under $2,146 for a family of four. The difference between gross and net income reflects deductions for earnings and certain medical expenses. The maximum SNAP benefit for a family of four in 2020 was $646, and for one person households $194. Recipients must have assets of less than $2,250 excluding homes and retirement assets, and those 18 to 49 with no dependents must work or be in training at least 80 hours a month.
Americans normally consume 40 million turkeys at Thanksgiving, most processed by Butterball and Hormel Foods, but may consume fewer in 2020 due to the pandemic. Up to half of Americans in surveys said they would limit Thanksgiving celebrations to those in their immediate households, which is expected to reduce the demand for whole turkeys.