The winery purchases grapes from many areas of the state and is also concerned about the Cabernet Sauvignon crop, "but until everything is in the bin and at the winery, we just won't know," Hurliman said.
The expected smaller crop comes at a time when demand for domestic wine is growing by 3% to 5% a year and the market for wines in the $12-to-$20 range is soaring by 18%, McMillan said.
He expects a grape shortage to develop because in addition to this year's smaller crop, demand for California wine is growing faster than vineyard plantings.
Stung by a grape glut in 2002 and 2003, farmers pulled out thousands of acres of vines and have been reluctant to add to their holdings.
Although a shortage would be tough on some wineries that don't have large vineyard holdings or long-term contracts with growers, the state's roughly $19-billion wine industry typically is at its most profitable when there is a slight grape deficit, McMillan said.
It enables growers to get more money for their fruit and keeps wineries from having to discount to move product as they did with the giant 2005 vintage and in earlier grape gluts, the banker said.
Additionally, the current weak U.S. dollar will continue to help the industry by bolstering exports of California wine and making it harder for foreign producers to make money here, he said.
McMillan and others in the industry believe that the state could be at the start of a sustained grape shortage. Even if growers rush to plant new vineyards in the spring, it will be years before those new plantings would produce any quantity of grapes.
The varieties that will be most affected are Pinot Noir, Chardonnay and Cabernet Sauvignon, said Beckstoffer, who has been adding acres of Cabernet in Napa and Lake counties and Chardonnay in Mendocino County.
"I think we are a bit ahead of the curve," he said. "The market for growers is going to be excellent over the next several years."
Although the Central Valley did not get the frost that attacked vineyards closer to the coast, it did get the rest of the bad weather, "and the grapes we are picking are 10% to 15% off from last year," said Nat DiBuduo, president of Fresno-based Allied Grape Growers, the state's largest grape cooperative.
He said the price increase for grapes wouldn't be as profitable for growers as he had hoped because of soaring energy and fertilizer expenses.
