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Who’s growing fast, and who’s not, according to the latest survey

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Silicon Valley Bank’s annual industry survey has been summarized by Lewis Perdue’s Wine Industry Insight, and while I don’t have a link (it came late yesterday via email), I’d like to make it the focus of today’s post.

The most interesting part is SVB’s “predicted sales and case growth by region.” I did manage to drag the chart onto my desktop, and reproduce it here.

Regions

It’s kind of small: sorry about that.

As you can (or cannot) see, the chart takes nine California regions and predicts their case growth and sales growth for this year. The regions with the least growth are the Sierra Foothills, Lodi, the Central Valley and, surprisingly, Napa County (in that order, from least upward). The region with the highest growth by far is Anderson Valley/Mendocino County. Mid-Coastal (Santa Cruz/Monterey)) also is projected to have high growth, as are Sonoma County, Lake County and the Central Coast (San Luis Obispo/Santa Barbara).

I don’t find any of this in the least surprising. It’s actually quite interesting, because it’s always interesting to see a bird’s eye view of these large regions and compare and contrast them with one another. I’m delighted that Anderson Valley is doing so well. It’s a small region, but so impressive, especially for Pinot Noir and the Alsatian varieties. Someone described Anderson Valley Pinot to me as a cross between Santa Cruz Mountains and Oregon, and I think that’s about right.

Mid-Coastal is a term I hadn’t heard before regarding Santa Cruz/Monterey; generally, I think of those as Central Coast. Santa Cruz isn’t a very big wine-producing county, although it is of high quality. Too bad all those vineyards in the Santa Clara Valley are now housing developments and Silicon Valley companies! But Monterey is a very high-production place, and as we’ve seen for some time now, it’s also coming up in quality. I’m not talking just about its best-known AVA, the Santa Lucia Highlands, but the county as a whole. Prices also have remained reasonable, which surely is one of the most important reasons why Monterey is doing so well. People are looking for a bargain, and they get it with Monterey wine.

I said Napa County was one of the places with the least predicted growth, but that’s a little misleading. It’s on the lower side compared to the higher-growth regions, but not by much. The point, I think, is that sales there are limited by the high prices. We can argue about whether they’re warranted another time; for now, suffice it to say that American consumers, post-Great Recession, seem to be looking for value, and Napa doesn’t really represent value, any more than, say, Classified Growth Bordeaux represents value, unless you’re willing to say that a 95-point Cabernet that costs $150 is a “value.” I mean no disrespect to Napa Cab, only to suggest that it is a little too pricy for most people, and that’s what seems to be holding back Napa’s sales growth.

Sonoma County on the other hand is doing well, and I think that’s because their prices just haven’t kept up with Napa’s. We all know that Sonoma County, with its many appellations, is far more diversified than Napa, or for that matter than just about any other major wine-producing region in the world, in terms of the varietal range. And quality, too, is really high. But the Sonomans have never been able to charge Napa-esque prices, which is to our (the consumer’s) benefit.

Then there’s Central Coast, defined as Santa Barbara (mostly) and San Luis Obispo. Santa Barbara has been one of my top wine regions for more years than I care to remember. I was championing it early, and the reason I can say that is because Santa Barbara vintners were telling me, a long time ago, that I “got” their region, while other critics didn’t, in their view. I don’t know about that, but I do know that Santa Barbara, with its various AVAs (Santa Ynez Valley, Santa Rita Hills, Santa Maria Valley) caught my fancy in the early 1990s, and whenever a Santa Barbara winemaker told me that other critics never visited there, I always was astonished.

Santa Barbara’s a funny place, price-wise. The best wines are expensive, but, again compared to Napa Valley, not really. And there are quite a number of fabulous wines, across varieties ranging from Pinot Noir and Chardonnay to Cabernet Sauvignon, Merlot, Sauvignon Blanc, Viognier, Syrah and Grenache, that haven’t leapfrogged into the too-expensive category…yet. I think Santa Barbara prices are heavily connected to the economy, but they’re still reasonable, which explains why the region is experiencing growth.

I won’t say anything about the low-growth regions here. I wish them luck.

Anyhow, as you read this, we northern Californians are hunkering down for the Great Storm of ’14. Good luck to us, and to you.

  1. Robert Arnold says:

    Of course, it is SO much cheaper to make wine in Sonoma than Napa…(sarcasm) Sonoma has been eating a lot of the costs for years and waiting and waiting. You can’t make it up in volume either, at least for most of the smaller folks. Now for K-J, well they probably can.

  2. Steve,
    You would be perhaps surprised that the Santa Clara Valley Vineyards are alive and well, producing some great award winning wines. Without the traffic, hype and crowding found in the North Bay valleys, nor the austere soils of the Mountains in Santa Cruz and Monterey county our wines are what people remember not the views and architecture.

    Stop by and taste sometime, our proprietor managed wineries have character and express the variety of terroir from Morgan Hill through Gilroy down the valley floor, with the Uvas Valley (Watsonville Road) a slightly cooler pocket with hillside vineyards.

    http://www.santaclarawines.com is our AVA association.

    regards

    Sheldon Haynie

  3. Living in close proximity, it would be great to see the Sierra Foothills levels go up 2-fold in the next 10 years. It’s taken some time, but high quality vineyard practices are starting to spread. Ann Kraemer’s family vineyard is top class outside of Sutter Creek and bottlings from Favia and Keplinger are proving what can be done with Rhone varietals from there. Miraflores, Pruett, Easton/Terra Rouge, and of course Turley are adding to the local buzz. With more financial investment there’s no reason why this region can’t drastically improve as a whole in a decade.

  4. David Rossi says:

    Napa’s issue is not necessarily pricing, but the fact that it is further along the development curve than other regions. It’s close to maxed out in terms of land development and winery saturation. Once you get really big there is only so far to go. So year over year growth slows. Just how the numbers work.

  5. Dear Sheldon, I’d like to do that someday.

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