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June 2018 WINES&VINES 15 WINE INDUSTRY NEWS T he purchase of two vine- yards in California's Santa Barbara County announced within a week by E. & J. Gallo Winery un- derscored the popularity of Pinot Noir and Chardonnay wines and reflected a continuing trend among the state's large wine companies determined to secure ample supplies of those two varietals. Gallo is buying 542 acres of the well-known Si- erra Madre Vineyard in the Santa Maria Valley AVA of Santa Barbara County from owner Circle Vision. An- nounced May 9, the pur- chase by a Gallo affiliate includes the Sierra Madre trademark and 151 acres of vines within the Santa Maria Valley AVA. The vineyard was an early mover in Santa Bar- bara premium grape pro- duction. It consists primarily of Pinot Noir and Chardonnay, and currently supplies about 35 winer- ies. Sierra Madre customers have ranged from big brands like Meomi to classic California Pinot brands such as Calera, Sanford and David Bruce to boutique operations like Hitching Post and Kunin. Gallo had announced on May 3 the purchase of the less-well- known Rancho Real Vineyard, also in the Santa Maria Valley AVA. The 436-acre property is located along Highway 101 and is 13 miles southeast of the town of Santa Maria. The vineyard consists of 211 acres planted to Pinot Noir, Chardonnay, Syrah, Grenache, Viognier, Pinot Gris and Gamay. Neither Gallo nor the sellers revealed the price of either transaction. Nine deals since 2015 The deals were the latest of nine major vineyard/winery acquisi- tions since 2015 by Gallo, all aimed at fulfilling demand for wines in the company's premium division. The moves have added an estimated 2,372 acres of vines to the family-owned company's portfolio, along with various brands and production properties. (See the interview with Gallo ex- ecutive Roger Nabedian on page 58 for more details.) In the Central Coast alone, the company already owned Edna Valley Vineyard in San Luis Obispo County, Bridlewood Es- tate Winery in Santa Barbara County and Talbott Vineyards located in the Santa Lucia High- lands appellation of Monterey County. The popularity of Chardonnay and Pinot Noir and the continuing premiumization of the U.S. wine market are driving these pur- chases. The best examples of each varietal almost invariably come from moderate coastal climates, so that's where wineries need to shop for premium-quality grapes. Sonoma County earned the highest average price per ton for Pinot Noir in 2017 at $3,912, ac- cording to the California Grape Crush Report. Mendocino County was next at $3,267, followed closely by District 8 (Santa Bar- bara, San Luis Obispo and Ventura counties) at $3,028. District 7 Pinot Noir from Monterey and San Benito counties averaged $1,765. Robert Nicholson, a principal of International Wine Associates, represented the seller of the Sierra Madre Vineyard acreage, Circle Vision, a diversified farming com- pany. He said the sale was to help Circle Vision and its founder Doug Circle realign their assets. Buyers seek coolest areas As for the buyer, "I think it's very specific to the AVA, if you will," Nicholson said. "I think it's fair to say that as Pinot Noir explodes on a number of different premium quality levels, buyers are looking for the highest quality sources they can find, and that means the coolest areas they can find for Pinot Noir and Chardonnay." Nicholson said that he expects Russian River Valley and Sonoma Coast properties "to remain buoy- ant" and that Monterey County's cool-climate Santa Lucia High- lands AVA continues to escalate in value. Nicholson was also in- volved in the sale of Monterey County's Talbott Vineyards to Gallo and the sale of Calera Wine Co. in neighboring San Benito County to Duckhorn Wine Co. Nicholson singled out the Santa Lucia Highlands where Tal- bott's 565-acre Sleepy Hollow Vineyard is located as particularly hot for Pinot Noir properties. What is encouraging vineyard and winery owners to sell? "Some people are ready to move on, and some people are ready to move things off the table" to realign their assets, he said. Regarding the Sierra Madre purchase, a Gallo spokesperson said, "We expect to continue sell- ing grapes to the vineyard's existing customers while using some of the grapes for our own wines. We will honor all existing Sierra Madre Vineyard grape con- tracts and land leases." Sierra Madre planted in 1971 Sierra Madre was first planted to vines in 1971 and has had several owners, including founders George A. Lucas and Sons, Dale Hampton and partners and Robert Mondavi Winery. In 2003 businessman and strawberry grower Doug Circle purchased 500 acres of Sierra Madre, according to the Circle Vision website. In a statement, Doug Circle said, "We feel blessed to have had the opportunity to shepherd this magical Central Coast vineyard for 15 years of its exceptional 47-year history, and are pleased that it is now passing to another family who will responsibly steward it into its next chapter." Gallo has previously purchased grapes from the vineyard. "Sierra Madre Vineyard wine grapes con- sistently over-deliver," the spokes- person said. "This purchase also affirms Gallo's commitment to compete in the luxury wine seg- ment and gives us the opportunity to continue making and selling our own luxury wine offerings in addi- tion to developing new brands." Nabedian, senior vice presi- dent and general manager of Gallo's Premium Wine Division, said, "This purchase supports Gallo's commitment to continue making and selling luxury wines, while growing the finest grapes in Santa Barbara County." —Jim Gordon TOP STORY Gallo Secures Premium Pinot Noir Sites The Sierra Madre vineyard, seen here, was first planted in 1971 and currently supplies grapes to 35 wineries.On may 3, E. & J. Gallo Winery purchased the 211-acre Rancho Real vineyard near Santa Maria, Calif.