All Eyes On Sonoma

Sonoma County Winegrowers (SCW) has long been advocating for the county’s winegrape growers, while educating the community on the importance of protecting and preserving Sonoma County as a winegrowing region. Now, in the third year of its ambitious five-year plan to have 100 percent of the county’s winegrapes sustainably grown by 2019, the organization is garnering national and international attention for its efforts, promising to increase both the visibility and the profitability of its grapes.

“I thought it would be meaningful, especially locally, if Governor Brown recognized us as sustainability leaders,” says Bevill. Full article

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2015 Preliminary Grape Crush Report

NOVATO, CA — (Marketwired) — 02/10/16 — The California Department of Food and Agriculture’s Preliminary Grape Crush Report for 2015 has been released. It is a critical barometer for the wine and grape industry, containing tons crushed and prices of wine grapes sold during the 2015 harvest. The Crush Report provides growers and wineries insight into the inventory position for the California wine business as a whole, and influences market dynamics for the current bulk wine market as well as the upcoming 2016 harvest.

Key Insights

General/Statewide
“The 2015 Preliminary Grape Crush Report, as released by the National Agriculture Statistics Service, announced a California statewide wine grape crop of 3.7 million tons. This is the lightest California wine grape crop since 2011 — down 5%, or about 32 million gallons from 2014. The crop was especially light in coastal regions which predominantly supply premium and luxury programs. Overall, the lighter crop helped to balance out inventories built up from the previous three good sized crops.”

-Steve Fredricks, President, Turrentine Brokerage

“The 2015 crop came in below estimate in most coastal areas of California and in some areas the crop delivered was dramatically under expectations. This has caused the grape and bulk wine markets to become very active in the early months of 2016.”

-Brian Clements, Vice President, Turrentine Brokerage

North Coast
“Due to poor weather during bloom, grape cluster weights were down in Sonoma County. This adversely affected Chardonnay and Pinot Noir in particular. Sonoma County Pinot Noir was down 36% off of the five year average, while Chardonnay was down 27%. This has stimulated the bulk wine market and the grape market to start earlier than previous years.”

-Brian Clements, Vice President, Turrentine Brokerage

“The release of the 2015 California Grape Crush Report shows grape prices continuing to climb to record highs for Sonoma County and Napa Valley Cabernet Sauvignon, $2,642 and $6,224 per ton, respectively. Turrentine Brokerage’s internal sales show that newly contracted grape prices are even higher than that.”

“The Sonoma County Chardonnay crop was down 27% off long-term average and Pinot Noir was down 36%. Cluster counts early on left the impression the 2015 crop could be reasonably sized again, but poor weather during bloom and a warmer summer resulted in much lower cluster weights. The low crop has meant wineries are active in the bulk and grape markets much earlier than the last few years.”

-Mike Needham, North Coast Grape Broker, Turrentine Brokerage

“The total crush was down 5% from last year due mostly to the short crop in coastal regions. However, an ample harvest in Sacramento and San Joaquin Valley helped lift the total California grape crop. Northern Interior production was 2% down from last year, bolstered by new acres and a better Chardonnay crop than 2014.”

-Erica Moyer, Interior and Central Coast Grape Broker, Turrentine Brokerage

 

Pinot Noir at Hanna Occidental 9-3-15

Trends in Agricultural Land and Lease Values

Rows at Stuhlmuller (1) 8-11-15

Sonoma County’s agricultural markets remained very similar to what was seen in the two previous years. 2014 saw strong demand and sales volume for commercial vineyard and vineyard estate properties of all sizes. This continued trend is a direct result of a strengthening economy, low interest rates, and wineries purchasing vineyards and plantable land to better control grape supplies and costs, given increasing regulations and higher costs for new vineyard developments. Overall market pricing has seen steady, with upward movement seen within the existing value range. Cool climate Pinot Noir and Chardonnay vineyards with established reputations for luxury to cult wine quality have been at record highs. Sonoma and Napa County wineries remained the principal buyers for large commercial vineyards, as well as small vineyard designated or boutique style vineyards. Other buyers included foreign and local investors, and Native American Tribes.

American Viticultural Areas (AVA) and vineyard designates continued to play a greater role in property pricing. There can be substantial value differences within a single AVA due to individual micro climates, soils, and grape varieties grown. These factors greatly influence grape tonnage and quality and directly impact net earnings. A good example of grape pricing variance is the Russian River Valley AVA, where vineyard prices can range from approximately $80,000 to over $125,000 per acre.

Even after three years of large grape crops and stabilization in grape pricing, there is continued demand for appropriately priced properties. Vineyard viability remains highly scrutinized and marginal vineyards continue to be purchased at prices near bare land values. In the current market environment, even lifestyle vineyards are expected to provide a return over farming cost.

“Non-farm” and “non-local” professionals, executives, or business owners remain the principle buyers or properties that provide a “lifestyle” element, such as private view sites in desirable locations or properties improved with large estate quality homes. Lifestyle properties have rebounded in value since 2011. A few “world class” properties have been offered for sale in the $20,000,000 and over category, but have not sold.

Few Sonoma County wineries sold in 2014. Winery sales indicated a stable value trend for smaller facilities (40,000 cases or less). Sales of wineries with successful brands, daily public tasting, and locations in primary tourist areas exhibited little building depreciation. Wineries that sold without a recognized brand exhibited normal levels of physical depreciation, plus some external obsolescence. Larger facilities (40,000 cases or more) were discounted beyond typical levels of physical depreciation due to a very limited buyer base. Vested winery permits for unimproved properties typically only contribute value when the property is in a primary tourist area. Significant premiums are paid for permits, on sites in prime tourist areas that allow for public tours, tastings, retail sales, and events.

The Sonoma-Marin agricultural area is described as coastal foothill pasture and hardwood forested lands within Southwestern Sonoma County and Northwestern Marin County. Most of the area is devoted to agricultural uses of livestock pasture and dairies, in addition to a limited number of equestrian facilities, poultry facilities, vineyards, and specialty vegetable production. Average to estate quality homes are also positioned throughout the area. The residential appeal is attributable to the desirable coastal climate, rural foothill settings, and proximity to San Francisco and Bay Area employment centers.

Credit to: 2015 TRENDS IN AGRICULTURAL LAND AND LEASE VALUES – California Chapter, ASFMRA

California North Coast Water Tables Stable

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While the West Coast drought has been catastrophic for grapegrowers in some areas of California, it has had little impact on vineyards in other parts of the state. Comparing data about groundwater tables in various California grapegrowing regions highlights how different conditions can be. Read more about the West Coast drought here.