Issue link: http://winesandvines.uberflip.com/i/331901
18 W i n e s & V i n e s J U LY 2 0 1 4 J U L Y N E W S J U L Y N E W S N apa, Calif.—For years fol- lowing the recession that began in 2008, vineyard sales slowed to a near halt, but all that has changed, according to speakers at the Vineyard Econom- ics Seminar held May 14 in Napa. "From 2009 to 2011, labels had traction. It was tough to sell wineries, and you couldn't give vineyards away," said Joe Ciatti, a principal of vineyard and win- ery broker Zepponi & Co. "Now, except for a few hot brands like Mark West, vineyard sales are far stronger." Portfolio manager Dana Sex- ton Vivier, who buys, manages and sells vineyards for GI Part- ners, speculated that "both grapes and vineyard prices are respond- ing to a scarcity of grapes." "Wineries are paying more for vineyards," she said. In fact, winer- ies are buying up vineyards at a record pace to ensure their grape supplies. "Of the past 16 properties we've sold, 15 went to wineries." Silverado Investment Manage- ment Co. was one of few buyers actively scouting and purchasing vineyards during the recession. "They had the market to them- selves three years ago," Ciatti said. Now such investment buyers are largely shut out. "We can't compete," explained Mark Couchman, Silverado's CEO. "It was hard to buy good properties three years ago. We didn't have competition, but we didn't know where we could sell the grapes or what price we could expect." Another big change in the mar- ket is that not all buyers want contracts for the vineyards they buy. "If you're developing a vine- yard, get a contract first," Ciatti said. "If you plan to sell, stay away from contracts." Couchman also sees custom- crush wineries expanding due to a shortage of production capacity. "Every custom winery is adding capacity. It's easier to add 10% or 15% than build a new winery." Vivier also sees wineries mov- ing bottling and case-goods stor- age to less valuable industrial space rather than further develop valuable vineyard land; Napa Valley-based Caymus is building a large plant in neighboring So- lano County, Calif., for example. —Paul Franson Vineyards Outsell Wineries After Years of Little Interest Source: 2014 Vineyard Economics Survey in California WINE INDUSTRy SyMPOSIUM GROUP 50% 40% 30% 20% 10% 0% Long term (3-5 years) 46.3% short term (1-2 years) 31.3% spot 22.4% Which Grape Contracts Will Increase in Coming Years?