Concord Grape Prices Rise For Local Growers

Westfield, NY, August 20, 1997

New York state grape growers, while contemplating a crop that won't be as large as last year's, can expect to receive more money for the grapes they harvest this fall. That's the news growers received late last week when New York state grape processors announced cash prices in the neighborhood of $270 a ton, some 35% higher than last year's cash price.

Most growers view the situation as a classic case of supply and demand: there simply aren't enough Concord and Niagara grapes available to match the increased consumer demand. That demand was sparked, in large part this year, by a report that indicated purple grape juice may be beneficial to the heart because of its anti-clotting properties. Immediately after the report, which was released at a convention for cardiologists in California, sales of purple grape juice skyrocketed.

The situation certainly is a far cry from the early 1980s when area grape growers were only getting $130 a ton or less for the grapes they brought in and inventories of the major processors were greater than a year's worth. Today, even though many of those processors have closed their doors, the tanks used for storing excess inventories are empty.

This in spite of the fact that Concord and Niagara grape production during the intervening years has more than doubled. What happened?

Daniel P. Dillon, president and chief executive officer of Welch's, believes he knows the answer. "The increased demand for Concord and Niagara grapes can be directly attributed to the popularity of grape juice and other grape-based products," he said recently. "Much of this growth is the result of the initiatives Welch's has undertaken over the past 10-12 years to increase consumer demand and double per capita consumption for grape juice and other grape-based products."

Noting that Welch's receives more than 50% of the Concord grapes and 80% of the Niagara grapes in the United States, Dillon cited several major Welch's programs that have added to the demand for purple and white grape juice products in recent years. They include:

• introduction of new Concord grape-based products, such as 100% purple and white grape juice frozen concentrates;
• introduction of white grape juice products such as White Grape Juice Blends -- a $40 million business in 1996;
• supporting of scientific research into the health and nutritional benefits of grape juice --research has indicated that white grape juice is easier for infants to digest than apple juice and purple grape juice may offer the same anti-clotting benefits as an aspirin per day;
• introduction of single-serve grape juice products;
• increased distribution of grape juice products in the convenience store and drug store categories;
• increased sales and distribution of grape juice products in wholesale clubs;
• continued support of the Women, Infant and Children (WIC) nutritional feeding programs;
• development of more convenient plastic packaging;
• increasing advertising from less than $2 million to more than $20 million this year.

Welch's alone uses more than 300,000 tons of Concord and Niagara grapes to produce its purple and white grape juice products. "This is a much different scenario from 10 or 15 years ago when the Concord grape market had fallen to where growers were being paid as little as $120 per ton," stated Dillon.

Welch's has historically and consistently paid its growers more than the cash market price. And the cooperative has done this while continuing to make significant investments to generate increased demand. "That," added Dillon, "is something no other grape processor has done. No other grape processor -- other than Welch's -- is advertising, introducing new products or supporting medical research studies."

Does he resent their riding on Welch's coattails? "No," he says, "Welch's is Concord and Niagara grapes. We feel we have the responsibility to grow consumption. If others capitalize on the market we create, that's good for the growers. We've always based our decisions on what is right for our growers and what we believe is right for the Concord and Niagara grape business from both the long-term and short-term perspective, and that's what we're going to continue to do."

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