What is an Apellation?

The word 'appellation' as it's used in the wine industry refers to a geographical name under which a wine grower is authorized to identify and market wine.

All great wines begin in the vineyard, and the best vineyards for certain varieties of wine are located in very specific locations with very specific soils and temperature ranges.

In a viticultural study conducted by the University of California at Davis, California has been geographically classified by region according to the average annual heat summation. The regional classifications were then reviewed to establish which varietals produced the best grapes. To quote from Richard Nagaoka's excellent series 'Varietal Profiles: Pinot Noir poses challenges for California wine makers,' (Real Estate Reader, May 21, 1999: http://rereader.com/nagaoka/).

"Region I is the coolest and includes areas such as Carneros, the Willamette Valley or Champagne, Burgundy and the Rhine. Region II is considered from Napa to Oakville in Napa. Region III Includes Oakville, Rutherford, St. Helena, and Sonoma. Region IV heads over to the Central Valley where it's quite a bit warmer to include Lodi and Livermore. Region V would be the hottest and include Fresno and Bakersfield."

Different grape varieties do well in each region. For example, Pinot Noir, which is used to make sparkling wine as well as still wine can be grown successfully in a wide range of soil types but requires the coolest climate of all the varietal grapes. It is widely recognized that the best Pinots are grown in the Carneros District in Napa and Sonoma Counties, the Alexander Valley in Sonoma, the Anderson Valley in Mendocino and the Willamette Valley in Oregon. Napa Valley Grape Grower recommended prices for Napa Pinot are $1400 per ton for sparkling wine and $2000 per ton for still wines.

Cabernet, on the other hand, requires more heat than Pinot, and does extremely well in Region III, which is the area between the town of Napa and the town of Oakville. It is recognized that some of the finest Cabernet Sauvignon is grown in this small district. Names such as Mondavi, Opus I, Silver Oak Cellars, PlumpJack, Martha's Vineyard, among others are wineries that grow their grapes in the Oakville district. In addition to having an ideal climate, the Oakville district includes 'benches' of volcanic soil. These benches are alluvial fans which were created by great rivers rushing out of the mountains and depositing volcanic detritus in various areas in Oakville. As many grape growers now recognize, the best Cabernet grows in the loose, cobbly, well-drained soil such as found in the Oakville benches. Cabernet Savignon grapes are selling for as high as $5,289 per ton.

It is an established fact that the best wine is made from the best wine grapes. If you plant Chardonnay grapes where it's too hot, the greatest wine maker on earth could make a fine wine from it. And this fact brings us back to the importance of Appellation to the wine industry.

Appellations are formed by grape growers who have found, through trial and error, that a certain, distinctive style of grape can be grown in their area. The Bureau of Alcohol, Tobacco and Firearms handles all applications for the establishment of new appellations. ATF officials study the reports presented to them and can grant an appellation if their requirements are met.

The use of a designated appellation on bottles of wine is strictly regulated by the ATF. Violations can incur enormous fines. In California, for any bottle of wine to carry a designated appellation name, the grapes that went into that wine must comprise 75% of the blend.

This is why land for Napa and Sonoma County vineyards is so expensive. There is little over 36,000 acres of Napa land planted to grapes. There are almost 41,000 acres of Sonoma County land planted to grapes. The reputation of Napa is such that the growing demand for Napa wine is beginning to exceed the amount of grapes available. This is why we've seen a recent increase in the cost of the great Napa and Sonoma wines and why similarly, we've seen an enormous increase in the value of Napa and Sonoma County vineyards and vineyard land.

Understanding appellations therefore is necessary in understanding wine country vineyard land values. Dirt that produces grapes that go into $100 bottles of Cabernet Sauvignon is going to cost more than dirt that produces $7 bottles of Ol' Thunderbird. It's only logical. In 1998 we saw the first sale of an established vineyard at $100,000 per acre. That is not a fluke. It's a trend.

An established vineyard in the Oakville Appellation is unavailable at any price. There are, however, a few unplanted parcels one of which I have a listing for. As you might imagine this particular parcel is rather expensive. That's to be expected in the neighborhood of Mondavi, Meyers, Martha, and Getty among others.

Appellations are therefore marketing tools for wine makers and guides to wine quality and style for consumers.

California is itself an appellation that has 76 sub appellations within it all the way from the Central Coast appellation with 5, 463,269 acres down to the Cole Valley appellation with only 187 acres. Napa Valley is an appellation with a dozen or so sub-appellations. To quote from the Napa Valley Vintners Association web page (http://napavintners.com) :

"Appellations can be as specific as 'Stags Leap District' or 'Dry Creek Valley' or as broad as 'California.' The Napa Valley and the Sonoma Valley are, themselves, appellations. Within the Napa Valley appellation exists a number of other appellations or AVA's including Atlas Peak, Howell Mountain, Los Carneros, Mt. Veeder, Oakville, Rutherford, St. Helena, Spring Mountain, Stags Leap District and Wild Horse Valley. Within the Sonoma Valley are Sonoma Coastal, Northern Sonoma Russian River Valley, Dry Creek Valley, Alexander Valley, Knights Valley, Los Carneros, Chalk Hill, Sonoma County Green Valley, and Sonoma Mountain."

Oakville has a well established reputation for producing some of the finest Cabernet Sauvignon in the world. Having Oakville on the label of a Cabernet is not a guarantee of a great wine...but it's the next best thing.

New appellations are being sought every day. Whether or not an area produces a distinctive style of wine grape is a matter examined by government scientists. Whether an appellation has a great reputation for fine wine is something established by consumers.

California is blessed with an ideal climate for a wide range of grape varieties. The establishment of appellations is an effort to identify specific geographic regions as being especially suited to a certain variety and style of grape. A Sonoma Valley Cabernet and a Central Coast Cabernet may both be great wines but the differences in climate and soil will give each one a distinctive style.

Appellations, then, are representative of the growers and wine makers that are within them. Through hard work and sometimes plain luck, demand for a certain region's wines takes off and the growers are rewarded by consumers with a higher price per bottle. When such happy occasions occur, the price of vineyards and vineyard suitable land also rises.

To a certain extent, all of this explains the effect on land values of the success of the wine industry in specific geographic locations. By understanding the trends, a vineyard buyer can foresee growth in certain areas and get in on the ground floor. On the other hand, if you have the money, it's not a bad idea to buy a quality vineyard with an established reputation. Understanding the nature of the wine industry is essential for understanding the relative value of different vineyards and vineyard land.

If you have a dream of owning vineyard property in Napa, Sonoma, Mendocino, or Lake Counties, I would like to hear from you. You may wish to go to my home page www.bergmanvineyards.com and scroll down to my questionnaire, and fill in the blanks first. I will pay close attention to your desires and would like to help you create your dream of living in the wine country.