St. Helena has been classified by some as a dying town that is now conflicted about what steps must be taken to remain a viable community. How did a beautiful world-class tourist destination end up in such a dilemma? We can look to five stages of decline as identified by Jim Collins in his book “How the Mighty Fall” for insight.
Stage 1: Hubris Born of Success -- Hubris means exaggerated pride or self confidence. Perhaps the wild success of our transition from a variety of agricultural products to a more exclusive vineyard and wine making region went to our heads.
Stage 2: Undisciplined Pursuit of More -- More will be better. Hence the exponential growth in vineyards, wineries, hotels, spas etc.
Stage 3: Denial of Risk and Peril -- We didn’t recognize the rabbit hole. Now we face deteriorating infrastructure, tired civic buildings, very heavy traffic, severe lack of affordable rental housing for service and agricultural workers and families in general. Home prices that require a sizable downpayment backed with a household income in the six figures and inflated commercial rents strangling small business owners. There is more.
Stage 4: Grasping for Salvation -- The perceived path to salvation is now in contention. We have a debate regarding the future of 5.6 acres of vineyards, in a prime location just a couple blocks over from downtown, owned by the City of St. Helena. In the simplest terms, one group wants to sell the property for privatization and the other wants the property preserved for civic use only.
Here is where it gets real interesting. It is nice the city gathers ideas from the citizens. Infinite wisdom is not held in the mind of the masses. Leadership, with professional advice and the courage to make decisions is fundamental to a better future for St. Helena.
Which professionals exactly will be the ones from whom we derive the advice and will the wisdom of the citizens of our town be factored into the process? We did, after all, get in this rabbit hole in part by following professional advice over the last several decades.
To name a few, will we seek the advice of cultural anthropologists who know what might kill or revive a community? What about social engineers who can advise toward structuring demographic balance within a community? Of course we’ll consult environmental engineers who understand the direct threats of global warming on an agricultural community. Right?
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1. Wine sales in the U.S. are actually down over the last six months – the first such drop in 25 years. According to Rob McMillan, executive vice president of Silicon Valley Bank's wine division, in the 2019 State of the Wine Industry Report, the reason is the inexorable changeover of the main market from boomers, who love expensive wine, to millennials, who do not. "The big surprise for me is that the younger consumer is not taking on any of the more expensive wine," McMillan said. "To the extent that was growth in the expensive wine category, it was 75 percent from Gen X and 25 percent from boomers and zero percent from millennials."
2. Competition from spirits, and increasingly from cannabis, is part of the reason. Millennials are more into spirits than either beer or wine, according to research from MarketWatch.
3. The average number of visitors per winery is up in Virginia and New York but down in Napa and Sonoma counties. In fact wineries in those counties – the epicenter of the American fine wine industry – now receive fewer visitors than the national average. An important caveat is that because Napa and Sonoma have so many wineries, the overall visitor numbers to Northern California are still greater than Virginia or New York.
Silicon Valley Bank has produced the State of the Wine Industry Report for 18 consecutive years. The 2019 report reads as ominous at best. Analysts hoped the millennial generation would be transitioning over to more wine consumption during the last few years. That isn’t happening. The U.S. wine industry’s sales growth has been quiet as of late and could decrease, something that hasn’t happened since 1993.
Recreational cannabis was a $6 billion industry in 2016, and, as more states move to legalize marijuana, it’s projected to increase more than 700% to $50 billion in annual legal sales by 2026, according to financial firm Cowen and Co. Make what you want of that information.
Stage 5. Capitulation to Irrelevance or Death -- We know how Millennials are leaning. Generation Z, people born from the mid-1990s to early 2000s are a larger cohort than Baby Boomers or Millennials. Let’s try and think ahead folks. What will they want? I don’t believe it’s another five-star hotel.