Vol 3 No 8…a ‘sideways’ look at the Central Coast – prelude to a guide

Back in March, TB wrote a series of posts on his trip from the Central Coast up to Washington (Vol 3 No. 2.0-2.5). In light of all that has happened since I thought I would provide some ideas if you are making a trip there soon. This was prompted by a chance meeting with a friend…in a wine shop of course (Wine Republic, Excelsior MN), and promised to provide the names of some wineries to visit. Given the way the harvest is looking September would be a much better time to go than August…as always!

Let’s recap the weather in California (or the entire West Coast for that matter), over the past decade. Until 2016 it can be summed up in a word: drought!!! Not just drought, mind you, but the equivalent of right before the Great Flood. Imagine, a 900 year record drought…not just in one area of California but the entire state and much of the rest of the West Coast too!

TB grew up in Southern California…Santa Monica to be exact in the early years of surfing…although he was really a body surfer. In those bygone days one would go to the beach and spend a day – sans sunscreen, get a bad sunburn that peeled and then have a great tan for the rest of the summer…fortunately no melanoma so far!

About the time TB got married in 1969, he noticed a change. It didn’t take all afternoon to get burned…in fact he had it happen in about an hour at the beach one day! Rains? We always had a wet rainy season…can’t recall a dry years. Oh, and fires…Malibu, one year, Mandeville Canyon the next, Bel Air the next, then the San Fernando Valley…like clockwork. TB recalls being at school and knowing there was a fire starting: Santa Ana winds, a dryness in the hair, above normal temperatures and finally the sun would turn orange and the temperature would soar into the hundreds. Later, the destruction on the evening news…but it was simply a fact of life in Southern California.

So what happened to the weather? Dare I say climate change or the dreaded ‘global warming’? The naysayers…of which I have never found among winemakers…say it always changes…yes it does but over much longer time periods and we have, through burning fossil fuels destroyed the ozone layer which is our insulation from ultra violet rays, and in a nutshell, that is the argument for why we must change our ways or leave our grandchildren in a very precarious position. Take a look at Burgundy, where the weather is becoming more extreme, or Bordeaux where winemakers say there will be no more merlot in a decade or so. Alarmist? Hell no, that is their livelihood. Now you know.

To those who think we can relax again…think about the fires so far this year, following that incredible rainfall (except in the Central Coast between Santa Barbara and Santa Maria. Lake Cachuma provides the water supply for Santa Barbara and it was virtually empty at the start of the season and unlike the other dams in the state is the only one that isn’t full to capacity. Note that is the lack of rainfall that stresses the vines and produces rich, intense fruit, but this is ridiculous. As of yesterday, Cachuma is at just 49% of capacity! That is not much margin for error…or another dry year.

Ah, but there were few vineyards in the 1960’s…although there was one just east of Los Angeles that went back to the days of the Spanish explorers…Virgina Dare – now gone and the site was between two freeways (San Bernardino and Riverside). About the only other ones were in Livermore, where Wente, the first, and Concannon reigned supreme. Today there are about a dozen.

Moving north to Napa Valley there were also perhaps a dozen…mostly In Napa, such as Beaulieu (aka BV), Beringer, Inglenook, Charles Krug, Christian Brothers and a few others, until 1966 when Robert Mondavi built his beautiful winery and that kicked off a surge in winery openings. His was the only one that looked like a winery, sleek, and reminiscent of the California missions, instead of an industrial warehouse. That was all about to change. In 1969, vineyard land in the valley was $5,000 an acre…but you had to buy a minimum 20 acre parcel. Compare to today’s $350-450,000 an acre going price, and you cannot make money at that price…so more McMansions of the wealthy, producing their 50-100 cases of wine a year, getting 90 point ratings and selling for upwards of $150 a bottle. Still not profitable…but they don’t care…they call it passion but is it really? Not unless you do the grunt work yourself and few do (Rupert Murdoch bought one of the two in Los Angeles (Moraga), a second one is in Malibu…which also provides the name. Not recognized as great growing areas….unless the terroir is smog? But who cares?

Moving back to the north again, Contra Costa County had a few small ones, bulk producers where you brought your jug to the winery in those days. There are now even some in Orinda where TB lived before being transplanted to Minnesota (Lamorinda AVA…huh?). Oh, wait. Lake County had Konocti Winery and Sonoma had Buena Vista and a couple of others that went back to the 1800’s.

Ah, but the Central Coast? Nothing, nada, zip, zilch…not until 1978 when six investors took a chance and started Zaca Mesa in the belief that good wine could be made there. How right they were, especially when a young Ken Brown was hired as winemaker. Ken in turn hired numerous luminaries to work for him including Adam Tolmach, Jim Clendenon, Bob Lindquist, Lane Tanner and others. A ‘who’s who’ of the Central Coast!

Still, even as the winemakers above started their own wineries, the area was virtually unknown except to locals and people from Los Angeles. However, they started a project that continues today: the Central Coast Classic and Wine Auction organized by local radio personality, Archie McClaren. Only because we had friends who moved to Santa Maria did we learn of it in its infancy in about 1989…it began in 1986 and is a charitable event second only to the Napa Valley Wine Auction, but to TB a lot more fun. It became and remains the second largest wine event in California!

Still, it was pretty much virgin territory except to locals but that event started a change. This was augmented and superseded in notoriety by the movie, Sideways, which while fun, gave a distorted view of wine, denigrating merlot while elevating pinot noir to star status. Within weeks, merlot moved to the bottom shelf, replaced by pinot at eye level there is a certain irony to this as protagonist Miles’ favorite wine was Cheval Blanc which is…primarily merlot (by the way if you decide to read the book, you will find that Miles is really just another wine snob and it gets disgusting in the sequel – avoid!).

It also created so much demand for the grape that Napa vintners were buying it and driving the price up to where many of the locals couldn’t compete. Wait…what about Paso Robles?

There are two initiators of the fame of Paso: Gary Eberle and Kermit Lynch. Eberle was the first to plant syrah and also provided the shoots for Randall Graham who was called the ‘Rhone Ranger’ in an article in Wine Spectator and the name stuck for the region. However, he, Bob Lindquist and others traveled to Berkeley, California to talk to a budding wine importer with a penchant for Rhone style wines. After tasting them, including Vieux Telegraphe, Domaine Tempier, August Clape, and more.

Kermit’s book Adventures Along the Wine Route is a fantastic addition to anyone’s library and love of wine…highly recommended…it was a game-changer for TB!

All of the names in the previous paragraph our passionate about wine and winemaking…it is not a rich man’s hobby for them…respect that! Besides they make some of the best wines on the planet!

Wow…talk about a diversion from my original outline…so I will follow this up with suggested wineries to visit on the Central Coast.

Back soon.

 

Vol 3 No 4 How many wineries fit on the head of a pin?

Now that ole TB has got your attention, the real question is how many wineries are there in the U.S.? Answer: 8,702! That’s an increase of 5% over last year. As one would expect California leads the pack with 4,207! That should not be surprising – except the number is huge! Back to the totals: 7,061 are bonded wineries that make the wine on site, but there are also 1,641 ‘virtual’ wineries. Wine Institute

A bonded winery is licensed by the feds and has to have a specific space to store wines that have been taxed, so they can be open to inspection. A virtual winery is not in cyberspace as one might think, but make their wine in other wineries, especially ones that specifically make wine for several brands. Don’t scoff at these as many ‘cult’ wineries that produce a small number of cases, do this in order to make the operation feasible. Frankly, I was amazed there were that many, mostly in California, I am sure. Licensing is less strict for these although they have to keep the same records as other wineries.

Consider that going back to 1900-Prohibition there weren’t much more than 100 wineries in Napa Valley. Here is some data from the cited article for number of California and U.S. bonded wineries:

California       United States

1940                   474                  1,090      Just before start of WWII

1970                   240                     441      Beginning of Wine Boom

1997                1,011                  1,988      1st time Cal. >1,000

2004                2,059                  4,356      More than 2,000

2010                3,364                  7,626      More than 3,000

2014                4,285                10,417      1st time >10k for the U.S.

2017                4,202                  8,702      Likely some consolidation

If you find this interesting and would like to see more interesting facts, see  Wine Business data

Most of the increase in the 1970-1997 period, I believe, came from development of new growing areas in California (Sonoma County, Central Coast, North Coast, etc.), as well as Oregon and Washington.

Hope you found this interesting. TB started out just looking for a current number and look what he got!

Does anyone remember the wine theft at the French Laundry just before Christmas? They were caught due to an honest collector becoming suspicious after buying the wine and then going to authorities. Well, the main guy was sentenced in March, and, he admitted to another wine theft from a restaurant. So…what was his sentence? FIFTEEN Months jail time…and make restitution on $600,000. Good luck on that. I thought the punishment was supposed to fit the crime? What if he stole $50,000 from a bank? That would have been at least a ten year sentence!

Also, you may recall the fraudulent sale of wine futures by Premier Cru, an Oakland, California wine shop that has had trouble in the past. The wine inventory was sold from the store and received lower bids than expected. Now they have to divide up the proceeds between the victims…and you thought wine people was good people. Think again!

Think I’ll go have a couple of glasses of wine…my head is spinning!

TB

 

Vol. 3 No. 2.5 some potpourri…

This will be short and sweet as not much of the rest of the trip related directly to wine, but you might find it of interest.

We drove from Calistoga to Jacksonville, Oregon the next day, in and out of heavy rains. When we crossed the Sacramento River near Williams on I-5, I had never seen the river so full. It was just before this that they became concerned that the Oroville Dam could collapse.

We stayed with my sister-in-law in Jacksonville, a town near Ashland but without so many tourists due to the Shakespeare Festival. Previously, we have gone with her to visit many of the Applegate wineries, and I was amazed that there are even more now.

She took me to Dancin Vineyards, the name coming from combining those of husband and wife owners, Dan and Cindy. It also tied in with Cindy’s love of dance. They have built a beautiful winery and restaurant and there are some scattered tables with umbrellas away from the building. Their focus is on pinot noir and chardonnay which they both love, their tastes having migrated from big red cabs. I recommend a stop to enjoy the winery and their award-winning wines, which also includes a port-like wine.

Our next stop was to visit family in Bend, Oregon, the brewpub capital of the USA. We tasted some great beers, visit a legal pot shop which was very clean and more like a jewelry store. We also had a great dinner at the Pine Ridge Inn, and is just a typical restaurant and bar in the front but the dining room in the rear is the place to be. It is highlighted by two huge pine trees growing in the center of the room through the ceiling. It is owned by Bill McCormick, one of the founders of McCormick & Schmicks after he sold his interest.

The next day we drove all the way to Seattle and other than some rush hour traffic at the end it was uneventful. We visited friends there, including our oldest friends who loaned us the car. There are a few things we did that might be of general interest.

First, stayed at the Hyatt on Lake Union, which has beautiful views of the lake. Second, we had a Sunday brunch at Bastile over in the town of Ballard, which is always fun to visit. Then we visited the new Starbuck’s Roastery, which is a pilot program that proved successful as a very high end coffee bar. It is reminiscent of Willy Wonka’s Chocolate Factory and thus a magnet for families. It ain’t cheap though, but a fun experience. They are opening one in New York City and in Shanghai in 2018…check it out.

Secondly, the guys went to a whiskey bar I have wanted to visit since hearing about it. A friends son and a world-class bartender have in a few short years created, Canon, in downtown Seattle, and rated the sixth best whiskey bar in the world. While the basic cocktails are typically priced, their specialties can run from the $15-20 range and for a few made with extremely old liquors, into the hundreds. But that is just the hook. All of us enjoyed our drinks, while sitting at the bar which I highly recommend because the bartenders are experts at making their most exotic cocktails. I had Sazerac Experience ($20) which was made in three variations: Cognac, Rye, and Cognac & Ry in combination. It was fantastic.

We drove with our friends back down to Portland where they left us at other friends home and continued on their way back home. They took us to Archery Summit Winery for a tasting and it turned out to be a tie-in for the book. The winery was the creation of Gary Andrus who also started Pine Ridge in Napa Valley. Due to a divorce the winery was sold and Gary started this project. He built the first wine caves in Oregon under basalt, and the tasting was held deep in the caves following a tour. Gary died and the winery was sold to an investment group but it runs pretty much the way he did. They are expensive pinot noirs but the closest I have ever found to Burgundy. It is expensive but a fantastic experience!

Lastly, we stopped on the way back at Domaine Drouhin, which also makes Burgundian pinot’s. It is a large winery and the wines, under the direction of Veronique Drouhin, are very nice, especially the two reserves, Laurene and Louisa, named after her two daughters. The latter is very limited and only available to club members.

It was an incredible trip despite the occasional torrential rains and after three and a half weeks, including catching a horrible cold the last day, we were ready for home. Interesting that the entire time we were gone it was warmer in Minnesota than on the West Coast!

 

Vol 3 No. 2.4 off to Dry Creek Valley

The thin ribbon of a canyon beside the Silverado Trail leads from Calistoga to the Alexander Valley. It is a pleasant drive that opens up past the canyon to more vineyards and wineries. Most notable is Silver Oak Cellars in Geyserville just off Highway 101. It was an offshoot from their Oakville winery that has produced many of the great cabernets. It was built by Justin Meyer and Ray Duncan but some years ago Justin sold his interest to Ray and his partners. I only point this out to show the breadth in the Alexander Valley, which I could have spent more time in if I wasn’t conducting interviews for my book project.

Also note that north of Geyserville is Cloverdale, from which you can go over the mountain towards the coast and descend into the Anderson Valley, which also has many good wineries including sparkling wine producer Roederer Estate, owned by the French Champagne producer, Louis Roederer which produces their top of the line Crystal. But as you drop down into the valley the first you come to is Meyer Family Cellars, opened by Justin Meyer after selling his interest in Silver Oak. We stumbled upon this winery and not knowing about it entered the tasting room where Justin was working alone. Sadly, a few years later he died but the winery continues under his wife Bonnie, son Matt and his wife. Again, I had wanted to go up there but time was too short but Justin will be part of the book project.

The car’s GPS brought me to a series of turns until I was headed west again (to the south is the town of Healdsburg and the normal way I enter the Dry Creek Valley), and not paying too much attention realized the road had gone up a small mountain and as it rode the crest I noticed Ridge Winery, a fav, to my left and realized that I had ended up on Lytton Springs Road. From there it gradually descends until it turns and ends up in the valley on West Dry Creek Road. You can follow the road around the entire valley which is just over a mile wide at the widest part, the center filled in with wineries, and a few bridges for shortcuts crossing the creek. To the west is Lake Sonoma which closes the valley.

I turned left and drove to Lambert Bridge. On the corner is the Dry Creek General Store and Bar, operating since 1881. It is a must stop for us, to get a coffee drink or pick up a lunch for an afternoon picnic. Don’t miss it. It has a colorful history and good food. It is now owned by Gena Gallo of the Gallo family who owns a respected winery just down the road. Last December, the bookkeeper was just convicted of embezzling $416,000 over the prior seven years. The bar is a locals hangout but is supposed to be a great ‘dive bar’.

Drinking my latte, I drove back west to Unti Vineyards, a must visit. I discovered it around 1998 when I purchased some of their syrah on line. The next trip there, we stopped and never miss the opportunity of visiting their tasting room. It is no nonsense but they are so friendly that you immediately feel at home. I met with Mick Unti, the son of George who planted the vineyards in 1990, although the family had owned the land for decades. I learned from Mick their close ties to their native Italy and how they had planted sangiovese, along with barbera, segromigno, verdicchio, as well as the syrah. All are well-made and can hold up well to their Italian counterparts due to the combination of soils and climate, with afternoon breezes coming off the lake. I thought I might be able to use Unti for the book project and came away convinced of it.

After that it was across the bridge to the first Dry Creek winery I ever tasted: A. Rafanelli. The first time I tried their zin I loved it. We were at the former Heritage House in Mendocino, and it was recommended. The next day in town I found a case of 375ml bottles and we have been buying and drinking it ever since. The founder Alberto came over from Italy in the early 1900’s. Prohibition came and went and they produced grapes which were sold to other wineries. Then in 1979, son Americo turned it into a winery and then passed to son, Dave. Dave has kept the style the same but made gradual improvements in the wine which has a cult following and is a great value in the $40-50 range as is their only other wine, a great cab.The fourth generation is now making wine with daughters Rasheel (Shelly) the winemaker, and Stacy the operations manager. The winery is open by appointment only and production is small so it sells out quickly, mainly to fans who have been on the mailing list for years. I always knew that the family would be in my book project and after taking our glasses of zin to the far corners of the caves to talk, I am convinced of it.

My last stop was to be Montemaggiore, built and founded by Lise and Vince Ciolino. Being first generation winemakers wouldn’t seem to qualify them for the book project since they only began the winery on a hilltop on the south side of the valley, but I tasted their syrah when I was down on the Central Coast and spent the next year trying to find them. When I did, I saw why. Both had careers in the technology industry, Lise in marketing and Vince in sales. When the company was sold they got married and immediately bought the land and planted the vineyard as well as a beautiful villa. Lise’s father was a collector and her first wine was at Hermitage where she fell in love with syrah. She makes the wine and he is the viticulturist. In addition, he planted olive trees and makes award winning olive oil. They make reds, whites, and a rosé, but syrah and a cab/syrah blend are at the top of the list. They have a son, Paolo, who is a teenager now and just recently had an offer they couldn’t refuse on the winery. It occurred to them that they had only had two vacations in sixteen years, and both related to wine. When I contacted them about the book project they informed me that the winery had just been sold – however, they retained the name and would continue to make wine on a smaller scale at a winery friends own. I expect the quality to continue.

So instead of meeting at the winery, we had lunch in Healdsburg, and caught up on all of our adventures over the past several years. Rather than disqualify them from the book they will remain a part of it as the exception to the rule.

After lunch, I drove back over the mountains past the Petrified Forest and Old Faithful Geyser to Calistoga where our friends joined us.

The next day, we had some free time in the morning and I thought of an old standby to visit: Chateau Montelena, not far away. It had been several years since our last visit and it had changed for the better. The tasting room had stand-up round tables where an associate would discuss the wines with you. All seemed eager and knowledgeable and as always the wines were great. The chateau was built by Albert Tubbs in 1888 as a barrel making facility and is built of stone. It is charming with a lake and a few islands for members to enjoy. Bo Barrett, who succeeded father George as CEO still runs the winery with Matt Crafton, winemaker. Wife, Heidi, is arguably the busiest winery consultant in the valley and also owns La Sirena, while together they make award-winning Barrett & Barrett cabernets which have a cult following. They are busy people and Heidi will only accept consulting jobs within 45 minutes of home, where she flies a helicopter to reach some of the far reaching clients, so she can also be an active mother.

That makes Napa Valley a rap. Hope you enjoyed the trip and maybe found some new wineries to visit.

TB

Vol. 3 No 2.2 on the road to Napa

(Note: an apology for the delay in this post. The cold I had turned into an infection that has plagued me since. Finally, on my second course of medications, my body is winning the battle. Hopefully, I can get back on track to finish this story and tell of my most interesting vino experience that occurred last week. TB)

We drove up towards Napa taking Hwy 37 across to Sonoma and the heart of the Carneros Region. Carneros in Spanish means ‘rams’ (although it sounds like it would mean any animal such as cattle), and we were going to a winery on bay side Sonoma Raceway. I was familiar with the area because, besides taking a driving course at the track, a classmate from high school, Vicki Lott had married Sam Sebastiani and after a falling out with the family, they built Viansa Winery, a combining of both their names, here. It is like an Italian hill town and very charming. This, however, was not our destination but I mention it as this area is not on the radar for most Napa Valley visitors. We were headed for Ramsgate Winery, and when you reach the top of the hill it is situated on you are immediately stunned by the elegance of the winery. It is very modern but in an environmental way with an amazing use of blending wood with concrete. We were greeted in the atrium with two glasses of their pinot blanc to enjoy as we toured the winery with our guide. The wine was perfect and only added to the visual sensations.

Carneros is the best area in Napa Valley for pinot noir, and chardonnay, as it is not only the coolest region, but the proximity to San Pablo Bay provides cooling breezes even on the hottest summer days. That is not just my view but one that was expressed decades ago by great Andre Tchelistcheff, who was the inspiration for my book project. It took decades before the cooler climes of Santa Lucia Highlands and Santa Barbara County would be found to have similar attributes.

A friend of mine and a few of his long time friends decided buy the land and create the winery, and they have done wonders. Looking out on the marshes of the bay with gentle sloping vineyards pointing the way they are planting mainly the two varietals, Andre said would prosper. In the meantime, they are sourcing fruit from some of the best North Coast vineyards and their acclaimed winemaker, Jeff Gaffner, is producing great wines.

A group of friends could really enjoy just walking through the winery and finding one of the comfortable niches to relax in, or walk down the slope to a table and chairs and enjoy the natural look of the vineyard with the contrasting, yet not out of place, winery in the background. Note that reservations are required and while the costs are not small, they are in line with other new wineries. The point is, you get a lot for your dollar, something I failed to see in some of the other similar (not architecturally) wineries in the Valley. While they don’t have a restaurant, due to local ordinance, they have excellent pairings with their wines in their spacious event room overlooking the bay. Highly recommended. For more information visit their website at: Ramsgate Winery, the pictures alone are worth clicking.

From there we drove north to the Napa/Sonoma Road where there are several other wineries to visit, or you can keep going into the heart of Sonoma County wineries, some of which will be discussed in this series.

Some of you are aware of the quality of Howell Mountain wines, which is attested to as it being made a sub-appellation of the Napa Valley ava, in 1983, the very first. This was because of distinct characteristics such as the soils (volcanic), altitude, as high as 800 feet above the valley floor, which makes the temperatures more moderate (10 degrees higher in winter and a like amount cooler in summer while catching the evening breezes that blow over the valley floor), and creating a distinct terroir.

We arrived at Lamborn Family Vineyards, atop the mountain, which produces exceptional cabernet sauvignon and zinfandel’s. Mike Lamborn sat with us on his deck overlooking the vineyards and the distant mountains to the east and south.

I met Mike when he was a neighbor in, not to distant, Orinda, California. About eight years later I learned that he and his dad, Bob, one of the most interesting people I have met in the industry. They had to ‘unload’ some inventory that was costing them money by taking up warehouse space due to a distributor not fully promoting the wines. At the time, zin was all they produced, and it was very good as one would expect with winemaker/family friend, Heidi Peterson Barrett producing it. That was the beginning of a great relationship that drew me into the wine industry by frequent visits to the vineyard, pouring wine at events, and stimulating my interest in wine, beyond just a beverage.

I love Howell Mountain wines, and find the zinfandel’s far above other appellations. That may just be a preference but I believe, and have generally had agreement by winemakers that the spectrum of flavors is probably more distinct than any varietal except pinot noir. There is none that I like more and only a few that I would put in the same tier. As for the cab’s, they have Heidi’s imprimatur, guaranteeing an excellent wine now and for years.

You won’t find Mike’s wine in stores, which is similar for most of the other wineries I visited on this trip. The internet has opened direct client marketing and that plus membership clubs, allows most or all to be sold direct, saving a 35% haircut which is even more significant for a small winery operation. He does have a few select restaurants that he allows to serve his wine, another common trait.

Even though the Lamborn’s bought their two parcels before the land boom, selling the wine through distributors would significantly reduce profits, and for those purchasing land in the valley today at prices of $350,00 an acre, direct selling  is imperative.

Visits to all Howell Mountain wineries are by appointment only. This is due to avoiding congestion in this rural area, and similar regions, so contacting a winery you are interested in directly is the answer. Speaking of the congestion, even though we were there in February, and in the wettest winter since 1935, there is always late afternoon traffic on Hwy 29, especially between Rutherford and Calistoga. This was primarily due to the level of local drivers. It is dreadful during the tourist season.

As along the Central Coast, I have never seen the valley so lush and beautiful. It has been years since this last occurred. After our visit, we drove to Calistoga, at the north end of the valley, for what was the nicest lodging I have found, on a par with the aforementioned Petit Soleil in San Luis Obispo (and no I do not receive anything for mentioning any lodging or restaurant, it is a service to make readers trips more enjoyable). It is the Cottage Grove Inn. This former small trailer park just past downtown Calistoga is truly unique. Each room is a separate building and all have every amenity you can imagine. Like Petit Soleil, the wine and cheese hour features good wines, cheeses and other surprises, and a wonderful buffet breakfast. Want to be in the wine region but also be alone, this is the place to let down. If you are planning to visit the adjoining Alexander Valley, Dry Creek, Anderson Valley, or Healdsburg or head back to Sonoma, this is an outstanding location.

When we first came to Napa Valley in 1969 there was only one place to stay other than the hotel in St. Helena or in downtown Napa. We have stayed at several, beginning with the first and only in the valley, La Bonita motel just out of town on Hwy 29 in St. Helena. It is a traditional motor court motel, but they have kept it up and it gets high reviews for a reasonably-priced place to stay in the valley and in a great location. I was surprised when we drove past it and even more  I heard it was more than it looked like, confirmed when I went to their website. Imagine what the value of the land is!

More Napa wineries next.

TB

 

 

 

 

 

 

 

Vol. 3 No. 1 First blog of the year and what a year it could be for the wine industry

We are only 19 days into the new year yet a huge number of things that will affect the wine industry already. I will recap some of them from industry sources and my  own observations. Here goes:Winery sales – late last year the Vietti winery in Piemonte, Italy, was sold. Having visited with the patron, Alfredo Currado, some years ago, it was with a touch of nostalgia. The good news is this: his son Luca will continue as winemaker and chief executive. That is good news and comes a year after the American, Kyle Krause, purchased another Italian winery, Enrico Serafino. Krause has made a point of letting the prior owners continue to run the winery, and Vietti’s case that is one of producing high quality Barolo’s, and other fine wines. Krause says that it is to have a stake in his Italian roots. Earlier this month Stanley Kroenke, a billionaire who owns both the Los Angeles Rams and the Denver Nuggets and also Screaming Eagle vineyards, bought Bonneau du Martray vineyard, producer of perhaps the best Corton-Charlemagne, and has been owned by the same family since the French Revolution.In Burgundy sales are infrequent, especially one of this pedigree. I believe he too, will not change the operations of the winery.

Just yesterday, a Bloomberg article said perhaps half the U.S. wineries might be sold over the next five years, and recapped the sales mentioned above. This is not uncommon in Bordeaux, especially since 2008, when the Chinese went crazy (there is no other word for it), bidding up the prices of the best cru’s.

But here is the paradox: as wine has increased in popularity, and especially since the billionaires began buying up wineries and land, most producing small quantities that become cult wines, and with the help of flying winemakers and 100-point rating systems the price of the wine goes off the charts. In other words, they can only be afforded by ‘their kind of people’. But as I have pointed out in previous posts, several things have happened on the way to the wine shop:

  • The price jump that had occurred ever since Robert Parker created the 100-point, in reality 50-point system since the first 50 are a given, no longer causes the price of the wine to jump as it once did. While the intent was good, there are so many raters that if you can’t get a 90 from one of them, you should either stop making wine or sell the operation.
  • As commented on in this blog numerous times, globally, good wine is chasing out bad, but as that happens the number of wines in the next higher price group keeps increasing. 2015 was the first year that the fast growing segment was the $10-20 range. Prior to that it had always been the Under $10 category. Once you get above $30 it is stagnant. What is happening is basic economics and now just because your formerly $30 wine gets a 90+ rating, the price no longer jumps to $50, and so on up the wine chain. What’s a winery owner to do?
  • To understand this, we have to go back to what agriculture is in economics: is is a competitive industry where there is no pricing power. When I, in my former life as a wine snob went to ‘an uncle’s winery of a new-found friend, I thought nothing of it. However, it turned out his uncle was Joe Heitz! After spending the main part of an afternoon with he and his wife, I was hooked on this man’s personality and philosophy. What is wine? Agriculture…farming…nothing more, not romantic, and as such no matter what you are able to do, god and nature have the last word. That is humbling to anyone, but especially to people who are dependent on cashflow for their solvency. I came to this realization a couple of years later when I went to work for Merrill Lynch in San Francisco as an institutional bond salesman. Seeking to combine business with pleasure, I contacted all the big wineries…even Mondavi…and the story was the same: you grow the grapes, make the wine, bottle the wine, sell it to a distributor and wait for the money to come in so you can begin another year. Cash is always tight – except for one I contacted: Gallo! Gallo had millions at Bank of America and I saw an opportunity. When I worked for a bank I learned that BofA always…always…had excess cash so they were a SELLER of funds, not a buyer. I moved the banks money to two other banks and earned as much as 25 basis points more on it (0.25%!), and that was on over $100 million a day! So I told the money manager at Gallo that I could help them earn at least 25bp’s over what BofA was paying them. He said, “you know it, I know it, but if I did that even once I would be fired. Fired? You have to remember the relationship of the Gallo’s to their bank, then run by A.P.Giannini and a fellow Italian…that added to trust but mainly A.P.’s word was his bond. I believe at least until the bank was bought by Nations Bank, they continued to only deal with BofA.
  • Now if cashflow is your biggest problem, along with the things that can come up unexpectedly like phyloxera, glassy-winged sharpshooter’s, Pierce’s Disease, frost, late season hail, drought and more, you have to have a marketing plan. As your unsold wines decline your storage costs stop declining with them once you get to a certain level. Do you dump them? In the old days, that was an option but what if you are producing a $100 cab and have 50 cases left? Do you have your distributor take it off your hands or sell it to Trader Joe’s and see it on the shelves for $40 or less? Once that happens it is difficult if not impossible to get your price back up, and as more and more vintners are put in the same position it is akin to the old gasoline wars when I was a kid…and that is not good for the owner.
  • Your other options are to sell to an internet company, and an extremely popular one now is wtso.com (wine till sold out). They manage the offerings so they are up less than an hour but that wine discussed above might have to go for $29.95! But what did the winery have to sell to them for? Another popular option is to sell it to the Chinese. You might even get or exceed your own retail price and that could be the difference between success and failure.
  • Lastly, in ever wine region I go to in the U.S. more and more wineries are springing up. The prices have to be high enough to pay the mortgage, unless you are one of those billionaire buyers discussed above. Sadly, I see some rough times ahead for the industry which increases with the big box stores, especially Total Wine. They are also a threat to supermarkets with wine sections, liquor stores, and boutique wine shops. Now add to this the internet sellers and the price pressure, although they would like to see it go higher, has to, IMHO, decline and it doesn’t make me happy to say that as I believe they need to be compensated for their investment and labor.

It gives me no pleasure to write this having made so many friends in all areas of the wine business, but if you find a wine you like…and I don’t mean Two-Buck Chuck…support them. I, no longer buy any wine from big companies…the last was when Mondavi sold out to Constellation Brands…and the same goes for beer where my favorite was Stella Artois, but now is part of the merged conglomerate SABMiller/AmBev. Strictly craft brews for me from now on. It doesn’t matter one iota but if more and more people take a stand there is still hope.

Even winemakers need a little love…show it to them.

TB