The First Grapes Planted In Sonoma County
As this is the 200th year anniversary of Fort Ross, I thought that I would clarify my understanding of who planted the first wine grapes in California. In 1580, Siberia was depleting of its fur-bearing animals. Emperor Peter the Great ordered a fleet of tall ships to head down the western coastline to find more fur-bearing animals. They went through Alaska, down the Western Coast of what we know as the United States; on one of their many trips back and forth they hit a fresh water tributary in the late 1600’s, which we now know that river as the Russian River.
It was a great fresh water outlet and they set up a harbor to moor their ships and venture inland to discover wonderful micro-climates and a comfortable place to live. The land was fertile and the micro climates cool, but inviting. They created townships and settlements, such as Sebastopol, Cazadero, Annapolis, and Duncan Mills and others. They planted many gardens of fruit, vegetables and captured and hunted animals for their milk, fur, eggs and meat.
In the 1728, on one of the tall ships the Russians brought in containers of grapevine cuttings from Croatia, called Zinfandel. The first vineyard the Russians planted was in an area on the border of what we know now as the Russian River Appellation and Sonoma Coast Appellation near Bodega Highway, where a cool breeze funnels through a gap in the hills. Since the micro-climate was too cool, the Zinfandel vines wouldn’t sugar up so they made vinegar instead of wine. They called this very first grape planting “Vinegar Hill”. It is believed that the “Old Vines” in the Dry Creek AVA are from these original Croatian Zinfandel vines planted on Vinegar Hill. Legend has it that these original vines had been cloned to many vineyards over the years and relatives of the original Zinfandel Vines are still producing some fine wine today.
Next up were the Spaniards heading north from Mexico in the mid 1700’s, and arrived in Sonoma in 1760. They were trying to take control of what we now know as the State of California. In 1812, the Russians built Fort Ross, to protect themselves from the Spaniards. As the Spaniards moved north through California, they caused havoc with the Pomo, Wappo, and the Coast Wiwok Indian tribes, who have inhabited the area since 8,000 BC. The Russians and Indians worked together in and around Fort Ross. The Russians offered protection to the Indians from the Spaniards, in exchange for their labor (logging, tending to the crops, catching animals, and doing whatever was needed). In the 1760’s, the Franciscan Fathers built their northern most mission in Sonoma and planted their first grapes in 1812 called Mission grapes. As the old fort was abandoned and sold several times over the years, it was finally donated to the State of California and turned into a park. The fort was deteriorating badly and, in 2011, it was slated to be renovated for its 200th birthday the following year. However as the California budget didn’t have the funds to repair it, the Russians came to the rescue of their Southernmost out-post into America. Today they are busy refurbishing a very important part of California history for the world to enjoy for another 200 years.
It's the summer of 2012 and we are looking forward to a bountiful grape crop in Napa and Sonoma counties. After four challenging years, it appears Mother Nature is going to be kind to us this time around. But, looking farther out, what does the future hold over the long run?
There is a grape shortage that appears to be on the horizon for at least 3 to 5 years. The last time anyone has planted a large vineyard was in 2007. Wineries are scrambling to buy as many vineyards as they can to control the costs of their production as their business improves. Growers are smiling because they see per ton grape prices increasing by 20% to 50%. These factors lead to a slowly improving local economy and more interest in the wine country.
On the other side of the equation are problems with a labor shortage and restrictions on water use. The state of California, along with Fish and Game, are out to protect the fish, erosion, and the trees. Many plantable acres in the past are under scrutiny because of these concerns. We talk about compromise and hopefully all entities will come together so that we all win in the long run.
There is probably no other industry with better insight to the large illegal immigration issue than the agriculture industry. As a result of the growing tactics to fight illegal immigration, we are finding ourselves with fewer options for labor. We must remember that not all of the working vineyard laborers are illegal aliens. We need as many of these men and women to keep working because it has been no easy task to fill these jobs with others. One option is the mechanical harvester. Over the years it has become more and more prevalent due to improved technology, and the ability to save thousands of dollars in labor costs. At this stage many of our ultra-premium grape growers still prefer the human touch when it comes to maintaining and harvesting their grapes. How will it all unfold? No one really knows. We do know that we need to come up with a compromise between labor and the entrepreneurs that need that labor.
Throughout history man has been fighting over water, more locally Northern California has been feeding Southern California for decades. In the last few years we’ve seen droughts that have devastated the Central Valley farmers. Many went out of business as the waters dried up in the canals. Fortunately, we're seeing some reprieve at this point as the water is beginning to flow again. Looking ahead it is always impossible to know how long our recent good fortune will last. This is causing another problem for the grape farmers in our area who are using river water for irrigation. The environmentalists are fighting for the fish that swim in those waters. Again, compromise is the answer. Both the fish and farmers need to thrive, the fish need the water to live and the farmers need the water to grow.
The moratorium on planting grapes on wooded hillside areas in Sonoma County is another problem that needs compromise. We all understand erosion can lead to major issues. Creating a process and guidelines intelligently can help resolve the problem. However the plan to plant a tree for everyone destroyed is a good solution. If only we had cooperation in this area as well.
The Beat Goes On
For hundreds of years, we have seen problems in the vineyard and winery business. As technology, tastes and growing practices change, the problems seem to evolve. There will always be something to worry about and there is always something to be thankful for. We should look on the good side of things and find those things that we are thankful for. Living in the wine country, for example, and being able to enjoy this beautiful California weather and majestic surroundings are great examples of why we should be considered blessed. We have to resolve those few problems through compromise.
In Napa County, Cabernet Sauvignon production fell 27% in 2011. The shortage of grapes raised the price per ton over 10% last year. Merlot saw a 35% reduction in 2011. The Burgundy varietals, such as Chardonnay and Pinot Noir, suffered only a 7 to 11% reduction. Sauvignon Blanc increased 2.5% over 2010. For 2012, we feel that the increase overall of the average grape per ton sale price will increase between 10% and 40%. If Mother Nature holds up, the yield should be higher for everyone. So far, she has been smiling on us. We must remember that it is already summer and we only have a few precious months to get through before harvest.In Sonoma County, the Cabernet crop is down 24% and the Chardonnay harvest was down 16%. Other varietals lost production tonnage as well, but it appears that 2012 should be a much better year for both counties.
Napa County has seen prime vineyard sales in the $300,000 per acre range, ranging from a low of $60,000 in Pope Valley to the $300,000 range in Rutherford. The price per vineyard acre depends on appellation, varietal and quality of the fruit. Sonoma has seen sales of late running between $60,000 to $140,000 per acre with the highest price ranges falling in the Russian River, Sonoma Coast, and Green Valley Appellations. Mendocino County has seen sales of their vineyard for $14,000 to $75,000 per acre, with their highest priced ranges falling in the Anderson Valley Appellation.
California Wine Exports
Wine sales from California accounted for 61% of overall US market exports. These sales account for nearly 200,000,000 cases, with the estimated retail value at approximately $18.50 per bottle. All 50 states have wineries, with California leading the way. Chardonnay is #1 in sales for all the California wines, with sales up over 5% (53 million cases sold last year). Cabernet follows with 33 million cases sold last year (a 6% increase). Pinot Noir, Zinfandel, Riesling, and Muscat are all close followers. The sale of California wine priced over $ 20 per bottle has increased by 27%.
China On Fire
There are an estimated 1.31 to 1.6 billion people drinking wine in China and the number is growing, daily. China is the fifth-largest wine import destination of the United States, selling more than $62 million worth (mostly California wines). Compare this to China’s thirst for French Bordeaux’s at $400 million last year. According to the Chinese Customs Office, there are 3,863 companies importing wine from around the world, increasing 15 to 20% a year. At the last the Vin-Expo in Hong Kong the Bordeaux varietals from France held 45% of the market in China. California has stepped up its percentage of wine sales annually for the last five years, significantly. Napa and Sonoma counties are the primary targets for the Chinese consumer. It is interesting to see when a Chinese client calls in to talk about wineries; they always want them in Napa. When they become more knowledgeable about Sonoma quality and value they tend to open up and consider crossing the county border. We're seeing more Chinese sales in Napa than in Sonoma, but the Sonoma wine sales are beginning to become attractive to the Chinese, as well.
Ever Changing Cycle
It seems like every 5 to 10 years we see the same vineyard sales cycle. It’s either a Buyers-market or a Sellers-market. These cycles always move back and forth, regularly. The values of the per ton grape sale to the vineyard per acre value have strong correlations. When one goes up, so does the other and when one goes down, so does the other. We are always bouncing between having a grape glut or a shortage. The beat goes on over and over again, just like it’s been since the beginning of time. We feel that the solution is not to panic the next time a certain varietal falls out of favor. It will come back, quicker than if you ripped it out and waited for the new varietal to start producing.
The crystal ball is dusty, but it looks like grape prices will continue to climb, wine sales will continue to increase and there will be more demand for vineyard. This trend should continue for at least 3 to 5 years until our newly planted vineyards begin to show a crop. The value of all items related to the wine industry are on the up-swing, so continue to do your thing, work hard and you will see better times ahead.
Let us know if you would like us to come to your property and give you a “Confidential” evaluation of your property. We like helping the Buyers and Sellers of wine country properties.