The Foreclosure Crisis hits California Wine Country

[marmar]

Vineyard Defaults Surge as Bargain Wines Hurt Napa (Update2)
By Dan Levy


March 8 (Bloomberg) -- In California’s Napa Valley, producer of the most expensive U.S. wines, 2010 may be a vintage year for foreclosures as the industry is squeezed by falling land values and a consumer shift to cheaper brands.

As many as 10 wineries and vineyards in Napa will change hands in distressed sales or foreclosures this year and next, up from none in 2008, according to Silicon Valley Bank. In a bank survey of vintners, 7 percent called their finances “very weak” or “on life support.”

“We have 250 vintner clients saying this downturn is the worst in 20 years,” Bill Stevens, manager of the bank’s wine division in St. Helena, California, said in an interview. “Anybody who was late to the party won’t have staying power.”

Land values in Napa, home to about 400 producers, have fallen 15 percent from the 2007 peak, driven in part by slumping demand for high-end wine, said Robert Nicholson, principal at International Wine Associates, a consulting and financing firm in Healdsburg, California. The decline makes it harder for owners to refinance mortgages, especially if the property is worth less than the loan. .............(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601109&sid=abg.shiw4RtI&pos=11

[Auggie]

1. It's quite expensive to produce fine wine grapes...

and profit level on wine is not nearly as great as it is for distilled spirits. A lot of people don't realize this.

Grape growing is not done by machine -- not extensively in the Napa Valley. Shoot pulling, canopy management, fruit thinning, harvest -- all done by hand. Many Napa Valley vineyards are attended this way up to 20 times in a single growing year, opposed to perhaps one or two times in the Central Valley. That's a lot of people hours.

[vadawg]

2. not a wine drinker though i do make the stuff, shame if they disappear

one of the things i love is just seeing the grapes growing on the hillsides in the warm sun, something very farmville about it :)

[Auggie]

3. The article claimed 10 producers/vineyard owners will change hands...

that's out of more than 400 -- closer to 500 or 600. Not a huge percentage, all things considered.

[vadawg]

4. yeah im sure that they will be bought out, i just like to see the vines growing and fruit ripening

i guess all the snow has gotten to me this year as im waiting with baited breath for my acre of raspberries to ripen, mmmm the cold mountain nights make them very sweet and they distill into a very fine ahem wine ;) though my kids eats shit loads of them too if they get there before the local wildlife... :)