Newsletter

Quality is King in wine country. Climbing Peaks Troughs Napa And Sonoma

Quality is King

As we make our way through the first quarter of 2018, we can look back and say one thing for sure, the last year has been a year that we won’t soon forget!  This newsletter highlights values over the last two decades and identifies interesting trends for premium vineyards and prime areas throughout Napa and Sonoma Counties.  First and foremost, quality is king in wine country.  Whether it is Napa Valley Cabernet Sauvignon or Sonoma Coast Pinot Noir, quality is the undisputed driver of prices.  Like many things these days, the value cycle continues marching forward.  Natural events, stock market, politics… it’s been one big blur. Fortunately for us, wine country is an excellent place to watch it play out.

Let’s keep things positive by pointing out that 99.8% of area vineyards were not impacted by the wildfires of October 2017.  That said, our thoughts and prayers go out to all of those who were not so lucky.  There is more positive news.  Grape prices in Napa and Sonoma Counties have increased.  The annual grape crush report notes an increase in wine grape prices by 11% in Napa County and 8.2% in Sonoma County in 2017.  Grape prices provide a solid foundation for vineyard values.

sonoma-coast-pinot-noir

sonoma-coast-pinot-noir

Maximizing Value

With respect to vineyards, maximum value comes from combining the most desirable appellations with the most desirable varietals for the particular area.  In Napa County that means ultra premium quality Cabernet Sauvignon planted in areas like Rutherford, Oakville, Howell Mountain and other prime regions.  In Sonoma County that means Pinot Noir in the Sonoma Coast and Russian River appellations.  These combinations command the highest prices leading the way to increased values for our entire region.  Quality matters.  In other words, quality is king in wine country.  The same principle is true when discussing Chardonnay, Sauv Blanc, Zinfandel, Syrah or other varietals.

In other words, if you have old vine Zinfandel in Dry Creek Valley, premium Chardonnay in Los Carneros, or cult quality Cabernet Sauvignon in Alexander Valley the same rule applies, quality is king when maximizing value.

Climbing Peaks, Plateaus and Troughs

*Values reflect highest quality vineyards in highest demand Appellations / Varietal combination

NAPA VALLEY

napa-valley-vineyard-chart Quality is King

SONOMA COUNTY

sonoma-vineyard-values Quality is King

Up, Down, Sideways… Repeat

Aside from some of the macro elements that impact value, one variable has become much more dominant…. scarcity: the lack of more quality land to plant.  For all intents and purposes, Napa County is planted out… and has been for quite some time.  In Sonoma County, quality plantable land is becoming much more limited.  It is not far-fetched to point to scarcity as a value driver in a world-class wine-growing region.  Lacking ground to plant, existing vineyards become more desirable… and you guessed it, more valuable.  Scarcity can also be a potential hedge / insurance policy against macro economic downturns.

Planted Out

As mentioned previously, Napa County has been effectively planted out for years.  Reviewing the chart illustrates that the highest end vineyards and regions in Napa County essentially flattened out during recent economic downturns, including the Great Recession, while other regions were pummeled.  In Sonoma County values for the highest end vineyards have had a different pattern filled with peaks, troughs and recoveries as a result of economic turmoil. A question in my mind is whether the ultra premium vineyards in Sonoma County have recently entered the scarcity hedge plateau status of their neighbors in Napa County.  I suppose we will find out eventually.

What goes Up, Sometimes Goes Up More

When naysayers comment on the prices of our prized vineyards, I point to Bordeaux and Burgundy.  Their vineyards come at a much higher premium.  Putting things in perspective and using other world-class grape growing regions as a guide, we have plenty of room to appreciate. Either way, it is my view that quality land and vineyards are only going to continue their upward trend over time.

Currently vineyard values range from $150k – $500k+ / acre in Napa Valley and from $90k – $225k / acre in Sonoma County (2023).  There is a wide range but it all comes back to condition, location and quality. Quality is king in wine country.

The Tax Man

As they say, the only thing certain in life is death and taxes. For now, let’s focus on taxes.  A big question is how the new tax law is going to affect California? Looking into the crystal ball, the answer is we don’t know for sure.  What we do know is that California is the greatest economic engine in the country and buyers still want to live and work in the Golden State. We also know that our legislators are looking into creative solutions to reduce the burden of this new law.  Despite this and other challenges wine country is still one of the most desirable places to live, work, and produce world-class wine grapes. People will still want to invest in Napa and Sonoma Counties.  The future is bright.

Cheers!

David Ashcraft

Download PDF Here

vintroux_2018_spring_newsletter

 

 

 

 

Quick Wine Country Facts

Top 10 Vineyard Owners In Napa Valley
1. Treasury Wine Estates3,416 Acres
2. TIAA / Silverado Investment Mgmt Co.2,500 Acres
3. Bayview / Laird Family1,811 Acres
4. Constellation Brands1,330 Acres
5. E&J Gallo1,123 Acres
6. Beckstoffer Vineyards1,015 Acres
7. Jackson Family Wines690 Acres
8. Antinori California561 Acres
9. St. Superey Vineyards / Chanel Inc.535 Acres
10. Yount Mill Vineyards / Napa Wine Co.500 Acres
(Source: WineBusiness.com)

  • Devastating Fires Spare Vineyards, Mostly

A recent survey by Sonoma State University’s Wine Business Institute found that 99.8 percent of  the region’s vineyards — or 138,937 of the 139,204 acres of vineyards on the North Coast — were not affected by the October
fires. (Press Democrat)

  • Perspective

From a 1988 interview with Napa Valley winemaker Louis P. Martini, on what it takes to make wine:

“A winemaker has got to be a bit of a farmer, a bit of a scientist, a bit of an artist and a bit of a businessman.  That does keep it from getting boring.”  (Mike Dunne – Sacramento Bee)

From a 2005 interview with Merry Edwards:

“Pinot noir pretty much is the only red varietal not blended, and that’s a new thing for people to experience. Cabernets, merlots and syrahs have all these blendings going on, and that’s a good thing, but to blend pinot noir would be a desecration. Pinot noir needs purity.  If you put a small amount of something else into it, you can just taste and smell it immediately.”  (Mike Dunne – Sacramento Bee)

  • Sonoma County Sustainably Farmed Grapes

72% of the vineyard acreage in the county – more than 42,083 acres – has been certied sustainable.  Nearing the goal of 100% by 2019, to become the nations first 100%sustainable wine region. (Marekt Insider)

Next Newsletter

Previous Newsletter

Some additional articles that might be helpful:

What is a vineyard really worth?  It depends.

Wine Country Real Estate Building Blocks

Looking to Buy A Winery, Start Here

So where exactly is wine country?

Buying a Vineyard?  A short course to the basics.

Which AVA came first?

If you are serious about your wine country search, please contact us today.  Last but least, here is link to more local resources.

Wine Country Real Estate Market in 2024

We are looking at a bifurcated wine country real estate market in 2024.  A stronger economy along with improving interest rates generally bodes well for real estate.  In contrast, the wine industry is struggling.... Read more

Wine Country Real Estate Update Summer 2023

Happy August!  A cooler than average growing season after major winter rains has been a welcome pattern this summer.  I hope you have been soaking it up.  On the real estate front the market has several competing variables creating an interesting dynamic to say the least.  It is time for the wine country real estate […]... Read more

Buying A Vineyard

Before You Take The Plunge In Buying A Vineyard - Ask yourself: why am I buying a vineyard? This may seem like an obvious question but the answer could lead you in numerous directions not yet considered. What’s the driver? Are you looking for lifestyle? Are you looking to create the next super premium Cabernet, Pinot Noir or Chardonnay? Are you going to be hands off or do you want to be out in field getting dirt under your nails? Let's take a quick look at some things you should consider.... Read more

Green Shoots in 2023, and Which AVA Came First?

Winter 2023 First things first, Happy 2023!  Another year to enjoy this beautiful area we call home.  With more than two decades of selling wine country real estate, I am still in awe of our backyard.  The dynamic landscape is a constant reminder of the amazing diversity throughout Sonoma and Napa Counties, from the Pacific […]... Read more

Napa and Sonoma Real Estate 2022

The Dream Lives on in Napa / Sonoma and Further Afield –  Real Estate Another exciting year is underway as we approach Spring.  Let’s take a look at Napa and Sonoma Real Estate 2022.  With pruning behind us, we anticipate bud break in the coming months. The cycle continues. Before going any further, I have […]... Read more

Sonoma and Napa Winter 2021

Light on the Horizon Dust Settles During the Sonoma and Napa Winter 2021 If there is one thing we have learned over the last several years, it is that wine country is resilient.  Wildfires, economic uncertainty, politics and a worldwide pandemic have all conspired to shake our core, especially in 2020.  But here we are, […]... Read more

Moving Forward – Sonoma and Napa Real Estate 2020

Clearly, we are enduring an unprecedented challenge with Covid-19 health issues and associated economic impact.    As a community I am sure we will ultimately arrive at a   destination that resembles the wine country that we all know and love.... Read more

Opportunities and Challenges in Napa and Sonoma

No doubt, the last few years have been good in wine country with increasing wine grape and real estate prices. While things are still good in wine country, there have been some changes in the market over the last six months.... Read more

Buyers Compete In Sellers Market, Spring 2017

So what are the current real estate values in wine country? The latest information shows continued price increases across the board. Even the median home price in Sonoma County has doubled in the last five years.... Read more

Wine Country Real Estate and Wine Industry News

It goes without saying that the vineyard, wine grape and wine industry has an impact on real estate in Napa Valley, Sonoma County and all other wine regions.  Be sure to check back often to read current and past wine country real estate and wine industry news.  Sourced from industry experts to keep you informed.... Read more

Buying a home, vineyard or winery in Sonoma or Napa & Video

Are you considering a move to wine country?  Does the image of rolling hills, rows of vineyards in a bucolic setting come to mind?  If so, purchasing a home, vineyard, or winery real estate may be your next step.  Buying and selling wine country real estate isn't always black and white.... Read more

Notable Vineyard and Winery Sales 2024

Throughout the year you can check back here to see any notable publicized vineyard and winery sales in 2024.  The various sales and transactions are not only interesting but may also point to trends that can impact real estate in Napa, Sonoma and other wine country regions. This page will be updated throughout the year […]... Read more

Wine Country Resources

When moving to wine country, or even after living the area for decades, there will be a time when you need some expert help and wine country resources.  Here are links to various experts in Sonoma and Napa Counties. Wine Country Experts – Sonoma and Napa Architects Designers Lenders Legal Advisors Appraisers CPA / Financial […]... Read more

Getting Back To Normal

The new normal.  I really don’t like that phrase anymore.  2020 has brought with it so many “new” normals that it is hard to keep track. ... Read more

Wine Country Real Estate Financing

Wine Country Financing Options – Sonoma & Napa Counties One of the key components of purchasing a wine country property, whether it is a vineyard, estate, winery or bare land is the capital to make the acquisition.  Many buyers are going to require some sort of financing for a purchase or perhaps a line of […]... Read more