The Napa Valley wine industry has become increasingly reliant on a direct-to-consumer sales model, which requires bringing customers into winery tasting rooms to drink the wines — and drink in the Napa Valley experience — before deciding whether to buy.
Napa County adopted a landmark regulation of the wine industry in 1990 called the Winery Definition Ordinance, but recent growth in the industry has led some members of the Napa County Planning Commission to question if the WDO can properly address the advent of direct-to-consumer sales models. The commission will be meeting with the Board of Supervisors on Tuesday to discuss that topic.
Policy changes are sure to be discussed, but no action is expected from the meeting. Planning Director David Morrison said he is looking the supervisors and commissioners to say how seriously they want staff to pursue any change, which would require extensive work with the industry.
“It’s certainly not a subject I would wade into lightly,” Morrison said. “My intention is to introduce the topic and stay out. I’m much more interested in what the board and the planning commissioners have to say.”
As wineries have proliferated over the years, with about 500 in Napa County, the sales model has been transforming the local wine industry. Just being in Napa Valley may longer be the selling point it once was to consumers, and stiff competition with other wineries has put greater emphasis on having larger marketing plans, higher daily visitation, as well as more tours and tastings and special events.
But that, in turn, brings a host of related effects to county residents, ranging from being stuck in traffic on Highway 29 behind limousines and tour buses, to groundwater usage, to questions of whether the county produces enough grapes, and even how late the late-night parties at wineries should go.
Commissioner Matt Pope said he appreciated the focus on these issues. Past meetings between the board and the commission have emphasized “shop-keeping stuff” such as whether the code enforcement division was adequately staffed.
The economic recovery across the U.S. and California has driven up the number of applications for new wineries, or expanding existing wineries, according to a Napa County staff report. The Planning Commission meets twice a month, and typically has approved two to three of these applications per meeting.
As the number of new approvals jumped, so has criticism and pressure on the commissioners to address the impacts the extra traffic has on neighbors, or how new wineries’ groundwater usage would impact neighboring wells in the severe drought California has experienced in recent years.
The commissioners have said repeatedly that they can’t treat new applicants any different than older ones. The broader policies have to be addressed, they’ve said.
“It would be a really good opportunity to sit down with the policy makers,” Pope said. “My expectation is that the board walks away with a better understanding and appreciation of the reality we’re seeing.”
The continued applicability of the WDO tops the list of things Pope said he wants to discuss with the board. Pope moved to Napa County from Silicon Valley, where he saw the massive build-up of the tech bubble in the late 1990s, only to witness it burst seemingly as quickly. He said it behooves the county to determine if direct-to-consumer sales models are the new normal, or perhaps another bubble.
“What’s real? What’s our expectation? What’s the legitimacy of this? What adjustments in our policies do we need to make?” he said.
One of the cornerstone elements of the WDO is that wineries have to maintain a connection to agriculture, and Pope said it’s fair to ask whether new, smaller wineries’ ratio of production to the size of the marketing plans still meet that criterion.
“It’s an important topic for everybody in Napa County,” Pope said. “My concern is that we’re still ensuring that wineries are maintaining a connection to agriculture, and not just becoming a tourist attraction that makes a little wine on the side.”
Rex Stults, director of government relations for the Napa Valley Vintners, said leaders of the Vintners, the Napa County Farm Bureau, the Napa Valley Grapegrowers, and the Winegrowers of Napa County met last week to discuss these topics.
Stults said the direct-to-consumer sales model was not at all prevalent in 1990, but has become vitally important today.
“If anything, direct-to-consumer sales at wineries were the cherry on top of the sundae,” Stults said. “(Now) it’s the ice cream. Like it or not, it’s a very important part of the Napa Valley wine industry. There needs to definitely be a discussion on this issue.”
Supervisor Diane Dillon said the board has to weigh the needs of the wine industry to drive tourists to tasting rooms with the impacts that will have on residents.
“This is not an uncomplicated situation,” Dillon said. “Vineyards need wineries, and wineries need tourists. We all need to appreciate that it’s much bigger than one thing.”
Dillon said Tuesday’s meeting will have to focus on identifying the problem, before any solutions and policy changes can be proposed, evaluated and decided upon.
“You can’t solve one problem until you identify it,” Dillon said. “It’s how you balance these things.”
She said she will value the input from the commissioners on how they’ve attempted to address the issue, but noted that it’s incumbent on the supervisors to decide how to resolve it.
“The Planning Commission can’t change the rules of the game,” Dillon said. “They can’t treat applicants coming in now any differently that the ones who did the last time the policies changed. It’s not that I don’t want the discussion. I welcome it. I just don’t know how deep we’ll get into the weeds.”