Napa Valley vineyard values past, present and future
By John Bergman
Many people believe the wine country is a romantic place to visit. Some believe that the business of wine must be as romantic and as sweet as the nectar that pours from this magic place.Ask any winery or vineyard owner, however, how romantic it has been in the last 10 years. Along with the vagaries of weather, grape farmers have had to contend with phylloxera (a louse infestation) as well as the shifting popularity of different grape varietals, not to mention the over and under abundance of grapes due to El Nino. These factors affect the value of vineyard land and grape sales.To measure the value of vineyard land I have formatted below a ten year trend line calculation.To make the survey accurate, I examined each vineyard sale in Napa and Sonoma counties over a ten year period then broke out from each sale all items of value that do not pertain to the actual planted vineyard portion of the land. In this way, we can arrive at an accurate valuation of vineyard land in Napa and Sonoma counties.The following chart shows sales statistics broken out every ten years over a thirty year period. This chart shows how Napa Valley vineyard land has changed in value since the 1960s. Note that the high end of the sales chart has climbed each period.
Napa County Vineyard Sales
Statistics Since 1960 (estimated)
|
| Year |
Average Price Per Acre |
10 Year % Increase |
Highest Per Acre Price |
| 1960 |
$2,000 |
- |
$3,500 |
| 1970 |
$5,000 |
150% |
$7,300 |
| 1980 |
$11,000 |
100% |
$23,750 |
| 1990 |
$41,500 |
500% |
$67,500 |
| 2000 |
$92,500 |
122% |
$143,000 |
| 2010 |
Projection =$180,000 |
100% |
$235,000 |
What does the future hold?
The statistics below show an interesting trend although different people will read different things into this analysis.
Napa County Vineyard Sales Since 1986
|
| Year |
# Of Vineyard Sales |
Average Per Acre Sale |
Highest Per Acre Price |
| 1986 |
12 |
$32,508 |
$45,800 |
| 1987 |
6 |
$35,158 |
$45,500 |
| 1988 |
12 |
$29,954 |
$48,131 |
| 1989 |
26 |
$37,467 |
$66,879 |
| 1990 |
16 |
$41,398 |
$67,500 |
| 1991 |
11 |
$69,200 |
$71,565 |
| 1992 |
11 |
$45,975 |
$67,300 |
| 1993 |
11 |
$26,960 |
$68,525 |
| 1994 |
14 |
$34,870 |
$60,036 |
| 1995 |
13 |
$42,500 |
$61,350 |
| 1996 |
21 |
$44,170 |
$57,800 |
| 1997 |
26 |
$48,750 |
$64,500 |
| 1998 |
33 |
$57,890 |
$100,000 |
| 1999 |
48 |
$71,500 |
$115,000 |
| 2000 |
39 |
$80,000 |
$125,000 |
| 2001 |
23 |
$91,750 |
$176,000 |
Look first at the average per acre sale price. You will see that the average sale in 1993 is lower than the average sale in 1986. I believe average values dropped due to panic selling by owners whose vineyards were threatened or infested with phylloxera.
Now look at the price jump in 1998. I projected the $100,000 per acre price to take place in the year 2000. It happened 2 years early.Buyers who know what they're doing will pay top dollar for vineyards that are proven over the years to produce a special bottle of wine.If the vineyard has an established track record producing quality grapes, has received top scores in the
Wine Spectator, or won Gold Ribbons from State, National or County Fairs year after year, this affects the property's value. An acre of grape that produces fifty dollar bottles of wine is worth more than an acre that produces five dollar bottles
n'est pas?Buyers who know what they're doing are not only buying the location, the soil, and the microclimate, but they are buying vines whose value has been proven.Once they are acquired, the new owner can clone any sick vines by grafting a portion onto proven resistant root stock and build a new inventory of vines. The new owner can then rip out and prepare the vineyard for replanting if necessary.When evaluating an existing vineyard, one must consider the viticultural importance of the vines as well as their proven marketing value. Certain vineyards produce grapes that are unique in quality and can only thrive in the specific micro-climate of their vineyard.Buyers who know what they're doing know that it's better to pay more for a smaller parcel of quality grapes than a larger parcel of average grapes.My crystal ball says that wine sales should be strong for the next 3 to 5 years. Grape production, due to replanting, will lag behind the demand.I predict that the average per acre vineyard sales price by the end of the year 2001 will be over $120,000, and the high end vineyards will command as much as $175,000.
I would like to thank John Tuteur of the Napa County Assessors Office for his help in gathering the information for this presentation. If you are thinking of buying a vineyard, I suggest that you go to my web site
http://www.bergmanvineyards.com and select the link for my questionnaire. Fill in the blanks and click on the submit button. I would be happy to help you create your dream of living in the wine country.
Vineyard Shoppers Questionnaire
