The future of the Napa Valley wine industry revolves around collaboration, producing even better-quality wines, preserving agricultural land and enhancing the value of the Napa Valley brand.
So reported a panel of wine industry insiders at Thursday’s Impact Napa conference hosted by the North Bay Business Journal at the Napa Valley Marriott Hotel & Spa in Napa.
The four panelists, led by moderator Richard Mendelson of Dickenson, Peatman & Fogarty, each spoke at length about the challenges and opportunities facing the industry.
“The Napa Valley is the finest wine-growing region” in the country, said Bill Harlan of Harlan Estate. But that title, he added, must be preserved and nurtured. “We need to produce better and better wines and farm our land better in every block in this county. As we do that, every bottle of wine we produce enhances the value of the Napa Valley,” he said.
“Things have never been brighter for Napa Valley,” said Bruce Phillips of Phillips Family Farming LLC/Vine Hill Ranch in his opening comments. “Never before have we seen a situation where vineyard owners have been so well capitalized and access to credit so available.”
The challenge the wine industry faces is not new, Phillips said. “It’s been the challenge of this industry for 50 years — to maintain focus on our success. It’s critical that we maintain focus on the objective to establish Napa Valley as the pre-eminent wine-growing region in the world,” he said.
To do so, “We need to maintain an environment where growers can stay in business for a long time,” said appraiser Tony Correia of Correia-Xavier Inc. “To maintain family ownership of wineries in the valley will be one of the greatest challenges in the future.”
How wines are sold, both today and tomorrow, is another concern, said panelist Peter Mondavi Jr. of C. Mondavi & Family.
“The distribution system is an ongoing challenge,” said Mondavi. “Selling direct to consumer is significantly hampered throughout the U.S.” Further, consolidation among distributors “makes it difficult unless you are a very large winery” to get wines in the hands of drinkers, he said.
Direct-to-consumer sales and the current three-tier sales system can coexist, he said, but “there is no silver bullet” for distribution.
Harlan shared his thoughts about wine distribution. We need the three-tier system of producers selling to distributors and then to consumers, he said, “but Napa Valley also needs relationships with chefs and sommeliers and importers to spread the word about Napa Valley wines.”
Selling wines directly to consumers can’t be the only sales channel, he said. “If we only rely on selling our wines direct to consumer, we’ll hit a ceiling for how high we can raise the prices on our wine. And we need to be able to do that.”
Harlan said collaboration between Napa Valley tourism and agriculture is also critical.
“Wine and hospitality need to work synergistically and continue to evolve,” he said. “We need to get people to come here year-round instead of just high season. We need to work better at doing that.”
The Napa Valley, as a whole, should attract “people that have an appreciation for our heritage and can afford to buy our wines,” Harlan said.
Besides arriving as tourists, some visitors are also becoming property owners. “We have continued to see lifestyle buyers from all over the world,” Correia said.
Investors have been buying everything from vineyard estates to small vineyards with large homes. “That’s a good thing for the local economy,” Correia said. However, “are they going to be committed to maintaining Napa Valley as an agricultural community?” he asked about those newer Napa Valley landowners. Will they share the same passion for preserving our agriculture as longtime owners do, he asked.
Regardless of where landowners come from, “we need everyone in this valley to work together,” said Harlan.
“Napa Valley has the potential of being a national treasure,” he said. “We all need to act like this deserves to come true.”