Grape Purchase Agreements: Key Terms for Growers and Buyers
A grape purchase agreement is a contract in which a grower agrees to sell, and a winery agrees to buy, the fruit from specific vineyard blocks at a stated price, quality standard and delivery schedule. The grower keeps farming the land and carrying the crop risk; the winery gets a predictable supply. In California, state law adds a few rules every contract must live with, including a deadline for setting the final price and a lien that protects unpaid growers.
For a vineyard owner, the contracts are often the most valuable paper in the file. They decide whether the next harvest has a buyer, at what price, and whether that buyer stays after the property sells. This guide goes clause by clause through the terms that matter most in Napa, Sonoma and the rest of the North Coast, then covers what happens to a contract when a vineyard changes hands. It’s part of our vineyard and winery guides.
Grape contract, lease or management agreement
A grape contract is not a lease. Under a vineyard lease, the tenant farms and owns the crop and the owner collects rent. Under a grape purchase agreement, the owner farms (often through a vineyard management company) and sells the fruit, so the owner keeps the weather, yield and quality risk. A management agreement is a service contract for the farming itself; see our vineyard management guide.
Buyers sometimes treat all three as “income” when they look at a vineyard. They behave very differently when a crop is short, when smoke arrives, or when the property sells.
The clauses that set price
Many contracts price fruit per ton, measured by the winery’s weigh tags. Other structures appear, and each moves risk between the parties in a different way. A 2012 presentation by the law firm Farella Braun + Martel listed fixed per-ton prices with or without future adjustments, per-acre pricing, prices tied to a district average or percentile, bottle-price formulas, and annual renegotiation with a default.
| Pricing method | How it works | Who carries the risk |
|---|---|---|
| Fixed price per ton | A set dollar amount per ton, sometimes with scheduled increases | Grower carries yield risk; both share market risk over the term |
| Price per acre | The winery pays for a block regardless of tonnage, often to control crop load | Winery carries yield risk; grower is paid to farm to the winery’s targets |
| District average formula | Price equals, or is a percentage of, the published average for the variety and crush district | Both follow the market; the price isn’t known until the report is out |
| Bottle-price formula | Price per ton tied to the retail price of the wine made from the fruit | Grower shares in the brand’s pricing, up or down |
| Annual negotiation with a default | Parties renegotiate each year, falling back to a formula if they don’t agree | Depends on the fallback formula |
Bonuses and penalties sit on top of the base price. Common triggers are sugar (Brix), acidity, pH, material other than grapes (MOG) and defects such as rot. Read how each is measured, by whom and when, because a penalty schedule can matter as much as the headline price.
The January 31 final price rule
Food and Agricultural Code 55601.5(g) requires grape purchase contracts entered into on or after January 1, 1977 to set the final price, including bonuses or allowances, on or before January 31 following delivery. A contract that doesn’t comply is illegal and unenforceable under that subdivision. Formula pricing has to be written so the number can actually be fixed by that date.
Using the Grape Crush Report as a price reference
The same section requires processors to report their grape purchases and prices to the state each year. Those reports become the Grape Crush Report, published by CDFA with USDA’s National Agricultural Statistics Service. The 2025 final report was released April 30, 2026. It includes purchased tonnage and prices for grapes with final prices set before January 31, 2026, and its weighted average prices include Brix adjustments, bonuses and allowances.
The report groups data by crush district, not by AVA, which is why a district-average clause should name the district, the variety and the table it relies on. For scale, the 2025 report lists these tons crushed (Table 2):
| Crush district | 2025 tons crushed, all varieties |
|---|---|
| District 3: Sonoma and Marin | 186,845.8 |
| District 4: Napa | 144,806.9 |
| District 2: Lake | 42,874.8 |
| California total | 2,761,914.2 |
The averages blend fruit from very different sites, so a premium hillside block can sell well above its district figure and a valley-floor block below it. Some tables exclude grapes that processors grew for their own production, cooperative pools and grapes crushed for growers’ own accounts. Our guides to Lake County vineyards and California wine regions show how districts and AVAs line up.
Quality, harvest timing and rejection
Quality terms are where most grape disputes start. A 2016 Duckhorn Wine Company grape purchase agreement, filed with the SEC as an exhibit and posted on Justia’s contracts database, shows how detailed they can be. We cite that one document only as an example of contract drafting; it says nothing about how Duckhorn handles its grower relationships today, and other wineries’ contracts differ.
- Fruit standards. The fruit must come only from the named block and variety, be mature, uniformly ripe and sound, and fall within a stated Brix range.
- Defect limits. The winery may reject a lot with mildew or molds, or where more than 2% of the grapes show bunch rot. A similar 2% limit applies to insect damage, sunburn, raisining and other listed defects.
- Contaminants, including smoke. The fruit must be free of pesticide residue, smoke taint and other contaminants that could affect the wine, as the winery determines.
- Farming control. The grower agrees to avoid overcropping and excess irrigation, follow the winery’s recommended practices, and get approval for major changes. The winery may enter, inspect and sample.
- Harvest timing. The winery picks the date, with reasonable notice and some regard for the grower’s labor and equipment, and decides which blocks and how much to pick.
Two questions deserve careful drafting. First, is rejection by load or for the whole crop, and must the grower keep harvesting after a rejection? Second, who decides whether fruit is smoke-affected, using what test and by what deadline?
A clause that leaves smoke to “the winery’s determination” puts the whole fire-year risk on the grower. Our guide to wildfire smoke taint covers testing and insurance.
Term, evergreen renewal and termination
Contracts run for a fixed term, often several vintages, or on an evergreen basis that renews automatically until someone gives notice. In the Duckhorn example, the agreement renews for one year every March 1 unless a party has already given written termination notice; notice given before a March 1 ends the agreement after that year’s harvest.
That timing matters to sellers and buyers alike. An evergreen contract gives the grower no assurance beyond the current harvest once notice is given, even if the relationship is decades old. When you value a vineyard, ask:
- When is the next notice date, and has either party given notice?
- Is the price fixed through the term, or reset each year?
- Does the contract cover every block, or only some, and which tons are uncommitted?
- Can the winery cut tonnage, and does it pay anything if it does?
- What force majeure language applies? The Duckhorn agreement lets the affected party cancel the undelivered portion for the year after a fire, flood, pestilence or crop failure, but not for financial reasons.
Payment terms and California producer protections
Payment timing is a negotiated term. Under Food and Agricultural Code 55601, a processor must pay at the time and in the manner the contract specifies; if the contract sets no time, payment is due within 30 days after the processor receives or takes possession of the product. The Duckhorn agreement, for example, splits payment into halves due December 15 and the following January 15.
State law adds protection for growers selling to processors:
- Late charge. Under section 55881, a delinquent payment carries a charge of 5% of the unpaid balance for the first month and 1% a month after that, accruing daily. A waiver counts only if the grower gives it in writing after the delinquency occurs.
- Producer’s lien. Section 55631 gives a producer who sells to a processor a lien on the product and on all processed forms of it, such as the wine, for the agreed price, or the product’s value on the delivery date if no price was agreed.
- Licensing and complaints. CDFA’s Market Enforcement Branch licenses processors, verifies license status, investigates verified complaints, and offers informal mediation. Failure to pay in full is among the most common complaints it lists.
The lien has its own timing and enforcement rules, so a grower facing a late payment should talk to counsel quickly rather than wait for the next harvest.
What happens to grape contracts when a vineyard sells
A grape contract is usually an unrecorded agreement between the grower and the winery, so whether it passes to a vineyard buyer depends largely on its own assignment and successor terms. In the Duckhorn example, neither party may assign without the other’s written consent, and if a party sells all or substantially all of its assets, including the vineyard, the transferee must take on that party’s obligations until the agreement ends.
For a sale, that creates a short checklist:
- Read the assignment and sale clauses before pricing. Consent rights, assumption requirements and termination-on-sale language all affect value.
- Get the winery’s confirmation. An estoppel letter from each buyer confirming the contract is in force, the price, the blocks and that no notice has been given works much like a tenant estoppel certificate.
- Allocate the current crop. Decide in the purchase agreement who delivers and gets paid for fruit hanging at closing, and who receives any unpaid amounts from prior vintages.
- Line up the farming. If the contract requires the winery’s approved practices or manager, the new owner has to keep them in place through harvest.
Contracts are a large part of what an income-based appraisal values. Our vineyard valuation guide explains how contracted versus open fruit changes price, and our vineyard due diligence guide lists the records a buyer should request. Winery buyers taking on growers’ contracts should also see our winery due diligence checklist.
This is general information, not legal advice; have a California agricultural attorney review a grape contract before you sign it, renew it, or take one over in a vineyard purchase.
Questions people ask
What is an evergreen grape contract?
One that renews automatically, usually year to year, until a party gives written notice. In one published winery agreement, notice given before March 1 ends the contract after that year’s harvest, so a long relationship can end within a single season.
Does a grape contract transfer when the vineyard is sold?
Only as its terms allow. Many contracts bar assignment without the winery’s consent and may require a buyer of the vineyard to assume the grower’s obligations. Read the clause and get the winery’s written confirmation before closing.
How is the price of grapes set in California contracts?
Usually per ton, sometimes per acre, or by formula tied to a district average or bottle price, with bonuses and penalties for quality. State law requires the final price, including bonuses, to be set by January 31 after delivery.
When must a winery pay for grapes?
When the contract says. If it sets no time, Food and Agricultural Code 55601 requires payment within 30 days after the processor receives the grapes, and late payments carry a statutory late charge.
What is a producer’s lien on grapes?
A statutory lien under Food and Agricultural Code 55631 that protects a grower selling to a processor. It attaches to the grapes and to products made from them, such as wine, for the agreed price.
Can a winery reject my grapes?
If the contract allows it. Rejection rights usually turn on Brix, rot and defect limits, and contaminants such as smoke taint. Check whether rejection is by load, who tests the fruit, and what happens to rejected fruit.
Where can I find average grape prices for Napa or Sonoma?
In the annual Grape Crush Report published by CDFA and USDA NASS, which reports weighted average prices by variety and crush district. Napa is District 4; Sonoma and Marin are District 3.
Selling or buying a vineyard with grape contracts in place? We can review the contracts’ term, price and assignment terms against the property’s value and the sale timeline. See how we approach vineyard sales, or read our guide to buying a vineyard.
Sources & notes
- California Public Law: Food and Agricultural Code section 55601.5 (grape price reporting; January 31 final price)
- California Public Law: Food and Agricultural Code section 55601 (payment by processors)
- California Public Law: Food and Agricultural Code section 55881 (late payment charge)
- California Public Law: Food and Agricultural Code section 55631 (producer’s lien)
- CDFA Market Enforcement Branch: program pamphlet
- USDA NASS and CDFA: 2025 Final Grape Crush Report (April 30, 2026)
- Justia Contracts: Grape Purchase Agreement, Duckhorn Wine Company (evergreen, 2016-2017)
- Farella Braun + Martel: Negotiating and drafting grape contracts (2012 presentation)
- eXtension Grapes: Contracts between wineries and growers
Crush report figures are for the 2025 crop. No prices are quoted here; use the report’s price tables or a current appraisal.
Last reviewed October 2026 by Matthew Martinez.
