Where Napa Valley is now

Vine Hill Ranch in April 2024

The French are arriving and younger consumers are leaving. A much shorter version of this article is published by the Financial Times.

Is Napa Valley quantitatively important to California wine? Absolutely not. The volume of wine it produces is just 4% of the total. But in terms of image and prestige it is vital. In fact, since 85% of US wine is grown in California, Napa Valley is emblematic of all American wine. 

I spent a week there earlier this month, at perhaps the most beautiful time of the year in ‘the valley’. After one of the rainiest starts to the year the hillsides were, unusually, brilliant green. Bright orange poppies, California’s state flower, dotted the verges. Blossom was everywhere and the ubiquitous cover crops between the vines that Napa Valley adopted so much earlier than most European vine-growers were also in full bloom, knee-high and above, ready to be mown down by the flocks of sheep that so many growers hire in, or raise themselves. Shepherding has become popular once more.

It's hardly surprising that Napa Valley, just an hour north of San Francisco and protected by so many ordinances, is a magnet for tourists. Napa wine producers have responded by turning tourism into a serious profit centre. No longer can you wander into a tasting room and see whether you like the wines or not. Slots have to be booked and paid for in advance when you have to choose your ‘experience’. According to the 2023 Direct to Consumer Wine Survey by the Silicon Valley Bank, the average cost of a ‘reserve tasting’ in Napa Valley was $128 last year. Even a tasting of a winery’s basic range cost $81 on average, and if visitors wanted to tour the winery and vineyard, they could end up paying far more.

For the wineries, being able to sell direct to a consumer who has just consumed their wine is bliss, especially in a country where the alcohol distribution system is a nightmare, still strangled by post-Prohibition regulations. By 2022 the average spend in a Napa Valley tasting room was, again according to the SVB report, almost $500. It’s no wonder that in the 2024 version of SVB’s annual score card, Rob McMillan’s State of the US Wine Industry Report, by far the most important sales channel for premium wineries, with 31% of the total revenue, was the tasting room.

‘Wine clubs’, basically subscription programmes whereby members commit to buying a certain quantity of wines, comprised the second most important source of revenue with 25%. Traditional sales via distributors and other wholesalers were just 17%. (Exports, by the way, represented a mere 2%.)

These profitable DTC (direct to consumer) channels are presumably one lure for the many French wine producers who are investing in Napa Valley. They are even allowed to sell their French wines direct to American consumers – blissfully free of the many middlemen who would otherwise take a cut.

The Rouzaud family of Champagne Roederer recently added Diamond Creek winery and its hallowed Napa vineyards to their portfolio, alongside Merry Edwards in Sonoma and their early investment in Roederer Estate in Anderson Valley. The Cathiards of Château Smith Haut Lafitte in Bordeaux have established Cathiard Vineyard in the lauded Rutherford foothills of the Mayacamas range on the west side of the valley. They followed the Pinault family of Châtour Latour et al who in 2013 dove in to buy what is now called Eisele Vineyard from the Araujos, and were so confident of their savoir-faire that they didn’t even impose a non-compete clause on the previous owners.

Domaine Chandon, Opus One and Dominus were long-standing Napa wineries with French owners or co-owners, respectively Moët-Hennessy, Baron Philippe de Rothschild and Christian Moueix. Carneros at the cooler southern end of the valley saw a rash of French investment at the end of the last century with Taittinger and GH Mumm from Champagne, and HdV, a joint project between Carneros grower Larry Hyde and Aubert de Villaine of Domaine de la Romanée-Conti, no less.

The ebullient Jean-Charles Boisset of Burgundy arrived at Raymond in 2009, Chanel Inc bought St Supéry in 2015 and the next year the Tesserons of Château Pontet-Canet in Bordeaux bought Robin Williams’ winery Pym Rae.

Families are one thing but ‘the Napa Valley community’, as Carneros grower Lee Hudson put it at a dinner at which both he and celebrated winemaker Cathy Corison felt guilty about missing one of grower John Kongsgaard’s chamber concerts for the locals, is not thrilled by the arrival of large corporations.

Joseph Phelps was a family winery but in 2022 was swallowed up by the luxury group LVMH, which had already acquired a substantial stake in Colgin on prized Pritchard Hill from Ann Colgin and Joe Wender. AXA Millésimes, the insurance company’s wine division, is considerably lower-key than Bernard Arnault’s vast LVMH empire, but has its own investment in Outpost on Howell Mountain east of the valley.

Two massive conglomerates with substantial interests in Napa Valley are Constellation Brands based in New York State and Australia’s wine giant Treasury Wine Estates. Constellation’s flagship Robert Mondavi winery, once the jewel in Napa’s crown and global pioneer of smart wine tourism, is currently a messy building site while being redesigned. Very un-Napa. Ditto Treasury’s tank farm opposite its Beringer winery which is so capacious that it is difficult to believe all those tanks hold nothing but Napa Valley wine. These two companies are accused by more fastidious growers of planting vineyards designed for machines not skilled humans whose attentions can cost $25,000 an acre a year in a top-notch vineyard.

‘What’s this place turning into?’ was the worried comment of Silverado Farming Company’s Miguel Luna, recently named Viticulturist of the Year. These concerns about the corporatisation of the valley, also about succession and taxes in family-owned wineries, sound eerily Burgundian.

One major new player in the valley is an individual, a newcomer to wine production. Tennessee agri-billionaire Gaylon Lawrence Jr has over the last few years bought up a slew of famous wineries, including Heitz Cellar, Stony Hill, Burgess Cellars and more in Napa Valley and even second growth Château Lascombes in Bordeaux.

Ink Grade Pavilion

It's too early for a consensus to have emerged on the wines produced by the new empire – and I was assured that rumours that they will no longer be producing Stony Hill’s iconic Chardonnay and Riesling are false. But I heard approval by the Napa community for their apparent determination to operate each winery separately and I can personally vouch for the stylish nature of the Ink Grade Pavilion, the tasting room pictured above constructed last year on the main Highway 29. It is presumably designed to sell the wines of the extensive Ink Grade Howell Mountain vineyard that came with the Heitz acquisition (of which Lawrence Wine Estates CEO Carlton McCoy became aware only during the due diligence procedure). 

But how easy will it be to sell these wines? During my four days in San Francisco before heading north to Napa, and even in the valley itself, I heard the cry, ‘Napa Valley wines are too expensive’ alongside enthusiasm for imports which many wine lovers – especially younger ones – feel offer better value and more variety. Cabernet dominates Napa Valley but is a pretty heterogeneous category, and can be hundreds of dollars a bottle. The valley’s most expensive Cabernet blend, Harlan Estate, costs about twice as much as its counterpart from Bordeaux.

The 2024 SVB report is clear that imports are becoming an increasingly attractive alternative, in a shrinking US wine market. In the 12 months to September 2023, according to SipSource, the data arm of the WSWA (Wine & Spirits Wholesalers of America), imports declined by only 5.9% while sales of American wine were 8.2% down. As San Francisco-based Master Sommelier and wine educator Evan Goldstein puts it, ‘flat is the new up’ as far as wine sales figures go.

The only imported category to have grown over the previous year was New Zealand wine, now, amazingly for such a small country, more popular in the US than either Australian or even Spanish wine.

A real worry for California grape-growers in regions less exalted than Napa Valley such as Lodi is that the big brand owners in the US have started to substitute wine imported in bulk from cheaper sources than California such as Chile, without necessarily changing the label other than adding a discreet country name.

Caveat emptor, however much you pay.

Napa wines with a French accent

Recommended for quality not value. Excludes 2021s, on which I will report next month.

Dominus, Napanook 2016 Napa Valley 14.5%
£53.01 Lay & Wheeler

Ulysses 2018 Oakville 14.5%
£144.30 Corney & Barrow

Diamond Creek Volcanic Hill 2018 Napa Valley 14.5%
£1,399.24 per case of 6 Goedhuis Waddesdon

Joseph Phelps, Insignia 2014 Napa Valley 14.5%
£325 Hard to Find Wines

Cathiard Vineyard 2020 Napa Valley 14.1%
£339.20 Brunswick Fine Wines & Spirits

Eisele Vineyard Cabernet Sauvignon 2018 Calistoga 14.8%
£413 Hedonism, £441 Berry Bros & Rudd

Opus One 2019 Napa Valley 13.5%
£418 Hedonism

Colgin, IX Estate 2015 Napa Valley 15.3%
£1,871.05 per case of 3 Corney & Barrow

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