-May 17,2019-
Bakersfield-based Sun World announced this month they would get out of the grape growing business. They said its leased and owned California farming property would be sold to an investor group, which has contracted with Exeter-based Sun Pacific to farm the vineyards.Sun Pacific owns the Cuties trademark.
The acquired entity will be called Famous Vineyards.In news release Sun World, led by David Marguleas, laid out 6 reasons why it was good time to exit the table grape business.
1) California’s minimum wage law raising the cost of production
2) Worldwide over-production of grapes
3) Mexico on the front end and Peru on the back end, eliminating the once profitable shoulder seasons
4) Many new varieties not delivering on a promise of better taste, but still costing in royalties and licensing fees.
5) Consolidation on the buying end of the business, allowing for great pricing pressure to be put on producers.
6) Spain and other producers competing for Asian business that once was exclusively a market for California grapes.
The release sums up that” one can see in the Sun World deal an expectation that time and money will produce better returns invested in the Sun World Innovations business than in growing grapes in California.
“Yet for every seller there is a buyer, and anyone who knows Berne Evans and the Sun Pacific story would have nothing but expectations of success. “
Farmers were prolific in 2018 and the large supplies of table grapes from California led to a decline in grape prices, a pattern seen in many crops over the years.
This month the The California Chapter of the American Society of Farm Managers and Rural Appraisers 2019 TRENDS report estimating land values in the Valley noted that land planted to table grapes is down in value.
Table grape growers reported a“disastrous year” in 2018 due to trade tariffs and over-production. There is a consensus that there will “be significantly fewer growers in the coming years, perhaps as soon as 2019.” The annual report said table grape vineyards that had ranged from $30,000-$45,000 in 2016 have now declined in value to $26,000-$35,000 per acre.