April 2016

2015 North Coast Vineyard Acreage Down

Originally outlined in The Press Democrat, April 14, 2016, vineyard acreage in the North Coast was down slightly for the second year in a row. The breakdown of this decline is what is most intriguing. Napa, Sonoma, and Mendocino counties all decreased a bit, while Lake County acreage jumped 7.7%.

In an article titled “North Coast grape acreage losing ground,” Kevin McCallum suggests that cost and disease are the primary reasons for the increase in Lake County plantings. Cost is fairly straight forward as Napa grapes command an average $4336/ton, Sonoma at $2443/ton while Lake is at $1601/ton. Mendocino grapes are listed as $1520/ton. These prices per ton are tied somewhat to the cost of land and Lake County is significantly cheaper. Some winemakers have taken to blending Lake County grapes with fruit from Napa and/or Sonoma to reduce costs. Another cost factor has to do with a tight labor market and multiple years of drought.

Aside from cost, red blotch has been a huge problem affecting grapes in Napa and Sonoma. Some vineyards have been completely removed, but growers are hesitant to replant until more is known about the disease and how to prevent it. It seems that winemakers facing a dearth of grapes from Napa/Sonoma due to scarcity and/or cost can look to Lake County for fruit.

Who’s Doing the Drinking?

We posted a recent blog breaking down the drinking population.   While it’s true that Millennials (ages 21-37) now outnumber babyboomers (ages 50-67), there has been some debate over which group is actually drinking more wine. In an article in The North Bay Business Journal on April 4, 2016, Jeff Quackenbush discusses the enigma. There have been reports (Rob McMillan of Silicon Valley Bank) that baby boomers buy more bottles of premium wine (over $20) than millennials, while the Wine Market Council reported at their conference in New York that millennials buy more cases of all still and sparkling wines than baby boomers. The council then revised their figures to state that baby boomers consume more wine at each outing than millennials. The discussion is important if wineries take this information and craft their marketing strategies based on any one of the aforementioned reports. What the Business Journal concluded after much analysis was that baby boomers “drink more wine in total than do millennials, but the gap is closing”. So in terms of creating a marketing strategy for the future, it makes sense to target the growing drinking population of millennials.