The week just past produced some changes in Santa Barbara County's world of wine, and so it seems a good day to debut a occasional feature: Central Coast Wine Press' Wine Week: Here are but a few of the highlights:
Bank projects up to 10% sales growth in U.S. wine industry
Silicon Valley Bank (SVB), a commercial banker to many wineries, especially in Napa and Sonoma counties and the Pacific Northwest, Thursday released its annual "State of the Wine Industry Report."
Based on the bank’s survey of nearly 650 West Coast wineries, as well as ongoing research, the report outlines trends and issues in the United States' wine industry.
"Despite news to the contrary in recent months, wine supply is in balance heading into 2014 and we expect the highest rate of sales growth since the recession, despite a tough economy,” said Rob McMillan, founder of Silicon Valley Bank’s Wine Division and author of the report.
“News is good for the consumer: Demand is up, supply is in good shape and pricing is stable. For the winery, however, increased grape costs and flat consumer pricing means lower profitability.”
Some key points:
In the short term: Look for continued growth in the demand for wine and limited pricing power for producers;
In the long term: Baby Boomers’ declining demand for wine will not be immediately replaced by Millennials’ demand. This may affect wineries’ ability to sustain their current rate of growth;
Supply: Expect final numbers on the 2013 harvest to reach 3.94 million tons — the second largest harvest on record in California after the 4 million tons harvested in 2012;
Sales Growth: In the realm of fine wine, sales are predicted to rise by six to 10 percent in 2014, which is the first increase in three years;
Pricing: Bottle prices will remain stable, as the increase in grape and bulk wine costs are not being passed on to the consumer. This means that gross profits will be down, however;
Demand: The greatest increase in demand will be in the range of bottles that cost $10 to $18;
Wine deals: Consumers can expect to find slightly better deals on merlot, zinfandel and chardonnay, as producers have slightly more inventory with these grape varietals;
M&M: Mergers and vineyard acquisitions will continue at a record pace.
Speaking of mergers and acquisitions … let’s segue to Alma Rosa, whose owners this week welcomed the financial support of Houston businessman Robert Zorich.
Richard and Thekla Sanford, who founded Alma Rosa Winery & Vineyard in 2005, have an investor in Zorich, a graduate of UCSB with a lengthy career in banking and oil exploration.
The Sanfords, who in 2012 filed for bankruptcy protection from creditors who threatened to take the pioneering winemakers off the map, are no doubt thrilled by Zorich having stepped up to pay off their millions in debts.
This news does indeed mean Sanford is now Zorich’s “employee,” but luckily the well-loved winemaker is still the man behind the Alma Rosa label and in charge of the vineyards and production.
The same year the couple filed for bankruptcy, Sanford was named to the Culinary Institute of America’s Vintners Hall of Fame list.
“These inductees are the leaders who helped California become the center of the American wine industry while producing some of the best wines in the world, CIA President Dr. Tim Ryan noted at the time (in a story I wrote for my “Wine Country” column for Lee Central Coast Newspapers).
Zorich is the managing partner of EnCap Investments LP, according to his biography at www.encapinvestments.com. Prior to founding EnCap, he was senior vice president of Trust Company of the West, also in Houston.
Moving eastward into the greater Santa Ynez Valley, a long-rumored change in occupancy and management at another winery was announced Tuesday: In a pact with the Firestone family, Andrew Murray, longtime proprietor of Andrew Murray Vineyards, will lease the Curtis Winery vineyard, winery and tasting room.
Under the direction of President Adam Firestone, the Firestone family will continue farming its 200-acre estate vineyard for Curtis, Jarhead and Andrew Murray Vineyards, and Murray will take the reins as winemaker.
Winemaker Ernst Storm, who has produced the Curtis label under general manager Chuck Carlson since summer of 2011, has left Curtis Winery, the former said Thursday.
The South African native will continue making his own label, Storm Wines, at either Area 51 or the facility on the Curtis property formerly used by Doug Margerum, Storm noted.
Storm hopes to boost his own production to about 2,000 cases beginning with the current vintage, he noted.
And finally: Longoria Wines broke ground early this week on its owners’ long-held dream of owning their own winemaking facility.
Rick Longoria, who opened both his Los Olivos tasting room and current winery in the Lompoc Wine Ghetto in 1998, is anticipating a showpiece of a facility at the corner of East Chestnut Avenue and North D Street.
On the lot is a structure built in 1913 as a farmhouse. Its long history includes ownership by Johns-Manville, later Celite World Minerals, and use by the companies as a clubhouse, union meeting hall and site for training seminars, Longoria said.
Inside, some of the floors slope and creak and windows need replacing, but the building exudes charm and Lompoc history.
Longoria said he hopes to move his entire winery from the Lompoc Wine Ghetto in the Sobhani Industrial Park by July, just in time for the harvest of 2014, which could begin as soon as mid August.
The former farmhouse, now white with blue trim, will be repainted a classic “barn red” with white trim, which Longoria said he hopes will pair with his new winery facility, to be constructed of metal at the north side of the lot.
San Luis Obispo-based Rarig Construction is the builder. Among that company’s former clients are Sea Smoke Cellars, Foxen Winery’s newer facility, the Central Avenue facility that houses both Loring Wine Co. and Pali Wine Co., and Buellton’s Terravant Wine Company, Longoria said.