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 update.  On the one hand, we are challenged with the highest interest rates in decades which is dampening demand as it limits purchasing power.  We are also challenged with low inventory, as would-be sellers are not ready to let go of very favorable rates that they locked in years ago. On the other hand, we have an economy that appears to be over performing combined with decreasing inflation.  As a result, we see some properties sell quickly while others linger, price drop after price drop.   Whether it is a vineyard, winery, vineyard estate or residential home the time-tested rules still apply; properties that are priced well, in turn-key condition and in good locations attract buyers.

Quality, Condition and Location

Quality, condition and location are the foundation of a buyers perspective of value, of course, price and insurability also have an impact.  Another factor that is unique to wine country is the business condition of the wine industry.  When wine sales are booming, grape prices follow, as do land values.  Typically, when the wine industry is in a slump, grape prices and land values are impacted.  Unless you are located in super premium areas like Napa Valley growing high quality Cabernet Sauvignon that is still in demand.  Other premium quality appellations in Sonoma County, such as the Russian River and Alexander Valley AVAs should also continue to demand a premium.

Where are we now?

With wine sales lagging and a stagnant bulk market, wineries and growers are anticipating their next move.  This year’s harvest looks to be at least average which could result in a surplus of wine grapes and bulk juice.  This may put pressure on grape prices and encourage some vineyard and winery owners to consider selling.  The changing dynamics of the market present an opening for those looking to get into the business, starting a new brand, having access to quality juice, vineyards, wineries and a place to call home.  It never hurts to start with a premium product and begin enjoying the wine country lifestyle.

Staying Ahead of the Curve

Enterprising buyers continue to be driven by passion and opportunity even in challenging markets.  They will continue to seek out quality assets in Napa and Sonoma or look for value in a place like the Sierra Foothills, known for producing high quality fruit in a great setting that provides a nice lifestyle at a fraction of the price.

Industry veterans also continue to plan for the future. Numerous blue chip quality vineyards, wineries and vineyard estates have traded over the last year.  This trend will continue because quality land and locations are finite.  Due to the limited supply of super premium assets, certain buyers are always looking for the next move in order to stay ahead of the competition.   Below is a continuing list of major transactions throughout the year.

Wine Country Real Estate Update

• 2023 Year in Review Top M&A Deals – Wine Business Monthly
• The Duckhorn Portfolio Announces an Agreement to Acquire Sonoma-Cutrer Vineyards
• Treasury Bets its Future on Paso Robles
• Vine Cliff Winery in Oakville AVA Sold to Quiet Owner
• Soracco family sells 81-acre property near Healdsburg for $8.1 million
• Gallo buys Napa Valley’s Massican
• Rombauer Vineyards Purchased by E & J Gallo Vineyards
• Royal Wine Corp & Herzog Wine Cellars Acquire Sonoma-Loeb Boutique Winery
• Brion Wise Acquires 128-Acre Pritchard Hill Estate
• St. Supery Buys 48-Acre Rutherford Vineyard from LMR Wine Estates for $14.8m
• Napa Valley’s Rombauer buys Sonoma Valley vineyard to supply demand for sauvignon blanc
• A Sonoma winery has purchased one of California’s most treasured vineyards
• The Wonderful Company Adds Vineyard Near Calistoga
• Napa Valley’s historic Alfred Frediani vineyard sells for $18.5 million
• Memento Mori Purchases 17-Acre Calistoga Estate
• DuMOL Acquires Dr. Galante Estate Vineyard, Doubling Down on the Russian River Valley
• Cakebread Cellars Announces Acquisition of Vineyard in Carneros
• The Duckhorn Portfolio, Inc. (NAPA) Acquires North Coast Winery and Vineyards
• Shafer acquires ‘world class’ Napa vineyard
• Spring Mountain Vineyard sold for $42 million after months of bankruptcy proceedings

If the economy continues to improve, expect to see forward- thinking buyers take a swing at opportunities for the next leg up.  If your thinking of a purchase and would like to contact a lender, click here.

Any way you look at it, a good formula for success in wine country is to have a long-term strategy combined with appreciation of the stunning beauty and quality of life that surrounds us every day.  If you would like to discuss your property or are interested in a confidential Broker Opinion of Value, please reach out.

Curious about Past Wine Country Real Estate Updates

Wine Country Update – Late Fall / Early Winter 2015

Sonoma and Napa Real Estate Values 2019

Download PDF Version Here

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.