48 MARKET WATCH | MARKETWATCHMAG.COM | MARCH 2016

PHO

TO B

Y (T

OP)

CH

AD K

EIG

SONOMA SOARSAs investment continues to drive up vineyard prices in Sonoma,

winemakers are focused on marketing and sustainabilityBY ANGEL ANTIN

WINE FILESSONOMA

This diversity of terroir makes Sonoma hard to pin down. “Its wines are both luscious and elegant,” says Christopher Silva, president and CEO of St. Francis Winery. St. Francis, which is part of the Kobrand portfolio, makes 28 wines produced exclusively from Sonoma fruit. “The Pacific Ocean slows and moderates the ripening process in all Sonoma AVAs, so the wines possess both elegance and balance along with fruit-forward suppleness,” Silva adds. While the core St. Francis wines carry a Sonoma County appellation, its recently launched reserve tier ($18 to $40 a 750-ml. bottle) is made with grapes grown in more specific Sonoma AVAs. “Last year was our most profitable ever, with our depletions rising,” Silva says.

“Business in Sonoma is very healthy,” says Corey Beck, president and director of winemaking at Francis Ford Coppola Winery. “Pinot Noir’s ascent has done wonders for the region.”

Coppola produces more than 100,000 nine-liter cases of wine sourced exclusively from Sonoma annually, including the Francis Coppola Reserve ($30 to $39 a 750-ml. bottle), Director’s Cut ($21 to $39), Director’s ($17 to $21) and Virginia Dare ($18 to $25) brands. Beck notes strong growth in the Director’s Cut and Director’s lines.

“Sonoma’s location, coupled with its legacy, results in incredible wines,” says Rich Kranzmann, vice president of premium wine at Modesto, California–based E&J Gallo. The company produces several Sonoma brands, including Frei Brothers Reserve ($17 to $27 a 750-ml. bottle), Gallo Estate ($50 to $95) and MacMurray Estate Vineyards ($20 to $60). Kranzmann says the company has made significant investments in the county over the last decade and plans to continue.

Newly purchased Sonoma wineries often retain the original winemaking team, who benefit from the influx of capital and the increased access to marketing and distribution channels. Caroline Shaw, executive vice president and chief marketing officer of Jackson Family Wines, says the company’s Siduri, Murphy-Goode and Matanzas Creek wineries continue to operate independently. “They get the investment, but the heart of the winery remains the same as it was,” she says. Jackson owns more than 10 Sonoma

MARCH 2016 | MARKETWATCHMAG.COM | MARKET WATCH 49

PHO

TO B

Y (T

K) T

K

Sonoma County boasts roughly 60,000 acres of vineyards, 450 wineries, 1,800 growers and 17 AVAs, according to the trade organization Sonoma County Vintners.

Recent years in Sonoma County have been marked by some major deals involving wineries, vineyards and brands—a trend fueled partly by the sustained consumer interest in Pinot Noir. Prices for premium vineyards are on the rise, particularly for cool-climate sites where the varietal thrives.

Last year, E&J Gallo acquired J Vineyards, Asti Winery and the Souverain brand, while Jackson Family Wines bought Siduri and Novy. Also in 2015, The Wine Group bought Benziger, and Vintage Wine Estates bought B.R. Cohn Winery. In the last few years, Pernod Ricard acquired Kenwood; Napa-based Crimson Wine Group bought Seghesio; and Foley Family Wines bought the Sebastiani winery and vineyards from the Sebastiani family.

In addition, major players have continued to roll out new Sonoma wines, with a focus on super-premium bottlings. Joe Wagner’s Copper Cane Wine & Provisions extended its

Beran brand last year with a Sonoma Zinfandel ($35 a 750-ml. bottle). Deutsch Family Wine & Spirits launched The Calling, featuring several Chardonnays, a Cabernet Sauvignon and a Bordeaux-style blend ($30 to $60); and Moët Hennessy rolled out Smoke Tree Chardonnay and Pinot Noir ($20 to $25). With continued investment from big firms and small wineries alike, along with a new focus on sustainability, Sonoma is positioned for continued success.

Rich TerroirSonoma strikes a balance between the cool coastal areas and warmer inland regions. Pinot Noir and Chardonnay grow best in the Russian River Valley and Sonoma Coast AVAs, while Cabernet Sauvignon thrives in warmer areas such as Sonoma Valley, Knights Valley, Alexander Valley and Dry Creek Valley. Dry Creek also produces world-class Zinfandel. In addition, producers such as Gloria Ferrer, Piper-Sonoma, and Korbel make sparkling wine using fruit from the county’s cooler regions.

OPPOSITE: Francis Ford Coppola Winery (exterior pictured) champions sustainable production by paying bonuses to organic, fish-friendly growers. THIS PAGE: Jordan Winery (oak tank room pictured above) makes all its wine from Sonoma fruit, which can produce a wide array of wine styles (fermentation room pictured left).

begin on the 15,000-square-foot Wine Spectator Learning Center. The Wine Spectator Scholarship Foundation donated $3 million to support the project, and many Sonoma businesses have also contributed. Some WBI graduates step into local leadership roles. The local industry also benefits from the WBI’s research on global wine commerce, as well as its support of initiatives such as Sonoma County Winegrowers’ project to certify 100 percent of the region as sustainable by 2019.

“No other region in the country has staked its reputation on the ambitious goal of sustainability in the way Sonoma has,” says WBI director Ray Johnson. Remarkably, Sonoma is on track to meet its sustainability goal: 58 percent of growers and vintners are currently certified sustainable, according to Sonoma County Winegrowers. “Sustainability is part of the fabric of Sonoma’s wine community, and it affects our bottom line,” says Shaw of Jackson Family Wines. “Sonoma has an agricultural economy, with the land as our primary resource, so everyone wants to protect that.”

Jackson has joined Coppola, Rodney Strong and others in pledging to pay growers more per ton for sustainably grown grapes. “Sonoma’s sustainable wineries are helping growers do the right

thing,” says Coppola’s Beck. Coppola paid $100,000 bonuses to growers who practiced organic and fish-friendly farming last year. “These bonuses are helpful for getting certified, especially for the small growers,” Beck adds.

Winery executives say strides toward sustainability will not affect pricing. Although it’s conceivable that the larger players will absorb those costs, rising real estate prices may have an effect in the next few years. However, Sonoma’s wine prices tend to be lower than Napa’s, and consumers may be willing to pay a premium for certified sustainable wines with a sense of place.

Litteral sees the pros and cons of large companies’ continued investment in Sonoma. “Some wineries will improve, and their wines will become even more polished, while others could lose their charm,” he says. “It depends on the ambitions of the purchasing or investing partners.”

At Charlie Palmer’s Dry Creek Kitchen in Healdsburg, wine director Rolando Maldonado has curated an all-Sonoma wine list featuring over 500 selections from each of the county’s 17 AVAs. He predicts an increase in small, high-end projects as consolida-tion continues. “The concentration of capital in Sonoma has caused a surge in smaller wineries and custom-crush wines,” he says. “While we’ll see an increased focus on branded wines, we’ll also witness a proliferation of offerings from smaller wineries, the best of which will have a total commitment to their site. In both cases, Sonoma will continue to produce world-class wines.”

Silva of St. Francis says that while Sonoma’s changes may seem dramatic, the regions’ winemakers remain focused on quality. “The wine business is a fight for market share and shelf space,” Silva says. “Yet there’s such a sense of pride here. I’m proud of what I see and taste in Sonoma.” mw

Angel Antin is a Denver-based freelance writer.

MARCH 2016 | MARKETWATCHMAG.COM | MARKET WATCH 51

wineries and produces dozens of Sonoma wines, including the Kendall-Jackson ($19 to $70 a 750-ml. bottle) and La Crema ($23 to $90) brands.

Because Sonoma’s landscape is diverse and its wines are varied, it helps to know the main appellations, says John Jordan, CEO of Jordan Winery. The company’s wine hails exclusively from Sonoma. “Sonoma has really begun to understand its AVAs, and winemakers now take advantage of the varied terroirs with the right cultivation,” Jordan explains. Jordan Winery produces 30,000 cases of Chardonnay ($30 a 750-ml. bottle) and 70,000 cases of Cabernet Sauvignon ($50) a year. Jordan says it’s too soon to predict the effect of increasing expansion and investment by large companies on the county.

Rick Sayre, vice president and director of winemaking at Rodney Strong Vineyards, says the company is carefully expanding its vineyard holdings. “I’m always looking in Chalk Hill, the Alexander Valley and the Russian River Valley,” he says. The company produces almost 1.1 million cases of wine ($17 to $75 a 750-ml. bottle), all from Sonoma. He says the county has made huge advances in identifying its best sites. “We give those grapes attention in both the vine-yard and the winery, then use small tanks to separate them. I call it precision grape-growing,” Sayre explains.

Sense Of PlaceDonny Sebastiani, president and CEO of Don Sebastiani & Sons, believes that Sonoma’s varied terroir and name recognition are in tune with current wine trends. “Consumers are moving away from brands and toward California wines with a sense of place—and Sonoma’s that kind of place,” Sebastiani says. “The Sonoma lifestyle resonates with consumers, even if they’ve never been here.” The company sells about 30,000 cases of Sonoma wine annually, including the Sivas-Sonoma range ($16 to $22 a 750-ml. bottle) and the Don & Sons Sonoma

Signature Series Sonoma Coast Pinot Noir ($22). Its New House Vintners winemaking unit, launched in late 2014, produces Custard Sonoma Valley Chardonnay ($20).

“Sonoma County has done a great job of branding the region while also promoting the uniqueness of the sub-regions,” says Mick Schroeter, director of winemaking at Brown-Forman Corp.–owned Sonoma-Cutrer. The winery’s labels include the Russian River Ranches Chardonnay ($28 a 750-ml. bottle) and the Russian River Valley Pinot Noir ($34). Schroeter says that super-premium bottlings like Les Pierres Chardonnay ($42) have been doing well.

High-end Sonoma bottlings also bring attention to the region. In April, Sonoma County Vintners will hold its second barrel auction for the trade, featuring small lots of rare wine. At last year’s auction, Scott Litteral, owner of the restaurant and retail venue Il Forno Classico in the Sacramento suburb of Gold River, California, bought futures for 20 cases of the exclu-sive 2014 Simi Merlot Magic. He expects the wine will retail for about $50 a 750-ml. bottle. “The event is one of Sonoma’s best new programs, and it generates a lot of excitement among the country’s top restaurateurs and retailers,” Litteral says.

At Il Forno, Sonoma wines are second in sales only to those from Napa. “That’s awesome considering we carry 650 labels at a time, and only 67 of them are from Sonoma,” Litteral says. In response to the popularity of Pinot Noir, he’s increased Il Forno’s Sonoma Pinot Noir selection by about 20 percent. The venue’s top-selling Sonoma wine is Gloria Ferrer Va de Vi sparkling wine ($9 a six-ounce pour; $22 a 750-ml. bottle at retail and $36 at the restaurant).

Business And BalanceThe Wine Business Institute (WBI) at Sonoma State University’s School of Business and Economics offers undergraduate and MBA programs in wine business. This June, construction will

50 MARKET WATCH | MARKETWATCHMAG.COM | MARCH 2016

Rodney Strong Vineyards owns 14 estate vineyards in Sonoma. The Rockaway vineyard (left) in Alexander Valley is planted primarily to Bordeaux varietals. Head winemaker Rick Sayre (right) says that the company will continue to buy new land, despite rising prices.

Jordan Winery experiments with different varietals across Sonoma’s diverse terroirs (Petit Verdot vineyards pictured above). Organizations like the Wine Business Institute (left) ensure a high level of expertise and professionalism as the industry keeps growing.