What’s remarkable is how the valley has evolved, particularly in the last 20 years, and rediscovered its agricultural roots.
Phil pointed out that back in the 1960s and 1970s, there were relatively few wineries in the state—Louie Martini, Inglenook, Beaulieu, Charles Krug to name a few in the Napa Valley. In those days, wineries made a full range of offerings from fruity (verging on sweet) whites to roses and a full line of reds. Each winery owned a shelf in the market for its offerings.
Oh, how that has changed as plantings of chardonnay have exploded along with cabernet sauvignon in the floor of the Napa Valley after the flood of 1986. That’s resulted in an explosion of vineyards in Napa where an inexpensive wine is $25 as well as across the state.
Phil pointed out that the demand for coastal premium wine grapes has grown at 6 percent annually year-after-year. That amounts of 12,000 new acres of grapes. That’s why you can find premium growing areas from Temecula near San Diego to Mendocino.
In the Livermore Valley, once the Ruby Hill development and the South Livermore Valley Plan were approved in the 1990s, that opened up thousands of acres of new vineyards in the valley and set up the explosion of new wineries.
The plan required planting an acre of grapes or olives for each new house and an acre for each acre of residential development that were reserved in perpetuity as agricultural open space. It sparked the surge of small vineyards and wineries over the last 20 years.
For those of us with long memories, we can recall that the Wente Family led a consortium of investors to buy Concannon from an international spirits distributor to preserve the historic brand. The investor group eventually sold it to The Wine Group, which has invested heavily in the property and made Concannon its premium brand. The Wine Group also employed Jim Concannon, the grandson of the founder, as its brand ambassador and, more recently, brought Jim’s son, John, back as general manager.
The two major wineries set the pace for an ever-expanding number of wineries that now are flourishing in the Livermore Valley. Jim Concannon, partnering with U.C. Davis, developed the Concannon Cabernet Sauvignon clones 7, 8, and 11 that are planted with about 80 percent of the variety grown in California.
The Wente Family bottled the first chardonnay as a varietal and truly were way ahead of the curve. In 1970, the family grew about 30 percent of the chardonnay in the state and back in 1960 there were only 230 acres of it growing statewide.
Phil observed that there are 15-20 Livermore Valley wineries “really doing it right,” making quality wines that score in the 90-point range.
Despite the success, Phil cautioned that the valley is “still half-baked” -- in other words there’s more to do to make it a tourist destination. A key missing piece is a first-class resort hotel and spa in the wine country. They’ve shown their properties to potential hotel investors, but the economics have not penciled. If it cost $300,000 per room, then average room rates need to be in the $300 range.
The same formula applies to wine grapes. If a winery is paying a grower $7,500 per ton, then it’s targeting $75 per bottle. The higher the per ton price, the more valuable the underlying land—thus the $1 million/acre land in prime Napa Valley Cab areas.