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34 WINES&VINES December 2015 Viewpoint ask someone who planted Merlot in the years before "Sideways" was released or the guys at the Federal Reserve in 2008. Right now Cabernet Sauvignon is king. While this discussion certainly pertains to Pinot Noir in Sonoma, Calif., and other variety-site combinations, I will focus on Cabernet Sauvi- gnon for this article. Cabernet Sauvignon in California We all understand the cyclical nature of this business. When prices are good, we plant and plant and plant. Prices continue to rise as we continue to plant, so we plant more. But the new acreage has not yet come into full produc- tion. When it does, prices fall and fall and fall. As prices fall we stop planting, even though demand continues its slow, inexorable rise. Then—often within a single harvest—all of the buyers who have been hammering growers on price find themselves without enough fruit, prices rise, and they all scramble to secure supply. Especially in recent years, our state's grape market has fractured into a matrix of markets across regions, varieties and pricing tiers. Therefore, I cannot speak to the market as a whole. I can tell you that a great deal of Cab- ernet Sauvignon is being planted across the state, especially in California's northern inte- rior. And I would bet good money that we will reach a state of oversup- p l y, a n d s o m e g o o d f a r m e r s will get hurt. I'm not telling y o u n o t t o plant Caber- net Sauvignon, but I am asking you to consider di- versification and to make sure that you are modeling the potential for a price cliff into your finan- cial planning. W ould you invest your en- tire retirement account in o n e s t o c k t h a t y o u thought would do better than any other? No, of course not. You might take a "flier" on that one stock, but you would—I hope—stay diversified with bonds, cash, funds that contain hundreds or thousands of stocks and maybe even some alternative assets or real estate. Why? To reduce the risk of catastrophic market fluctuations. Now, let's say you are going to plant a vine- yard in Napa, Calif. What is your first thought as to what to plant? Cabernet Sauvignon. How much of your vineyard should be planted to it? The answer I keep hearing is 100%. Across the state, we've seen a move toward monova- rietal regions, and this is increasing both sys- temic risk for the industry and financial risk for individual entities. The risks What are the risks? First, when a region nar- rows its monoculture from one species to one cultivar, this likely increases susceptibility to biological risk. Second, it adds logistical risk, since phenological development of the region's vines will cluster more tightly around the same dates, creating a shortage of physical and human resources at those times. The biggest risk, however, is the financial risk. Lack of diversification increases vulner- ability to price volatility and market shocks. Fads change and unforeseen events occur. Just n GABRIEL FROYMOVICH Don't Put All Your Grapes in One Bin DORIT PHOTOGRAPHY If you are planting outside of Napa, I would strongly caution against putting all of your hopes on Cabernet Sauvignon. Consider varieties that are better suited to your site.