Most people would be shocked to hear a county assessor say, “My job is to keep you from paying more in property taxes than you should,” but that’s just what Napa County assessor and clerk John Tuteur did at the 20th annual Vineyard Economics Seminar at the Marriott.
He does that every year. His message this year emphasized caution about settling up corporations or new legal entities that could trigger reassessment. “Talk to me before you make changes,” he cautioned, also recommending that you use a lawyer and CPA expert in vineyard and winery operations.
What may seem minor could cost a lot, for properties are reassessed after changes in ownership under Proposition 13, and if you’ve held the property a while, you could be talking about hundreds of thousands of dollars in new taxes. And that’s true even if the deal isn’t recorded.
Tuteur also cautioned about leases, which have many snares, and about separating out improvements in vineyards from the real estate and vines in valuations.
He also alluded to the benefits of putting land in conservation easements, which both protect the land forever and also can provide large tax deductions.
Tuteur’s counsel was only part of the flood of information absorbed by growers, winery personnel, lenders and support providers at the all-day conference.
It began with a quick summary of 2014 by Kathy Archer, president of the Wine Industry Symposium Group, who gave the report for founder David Freed, who was away on family business.
— Statewide, replanting and new vineyard plantings are slightly down but there’s more replanting and new planting in the North Coast
— The big three producers were flat or down in volume for the first time in recent memory (though only in wines retailing for under $10).
— Imported wines, both bottled and bulk, declined 6 percent from 2013, with bulk shipments down dramatically.
— Direct shipments from wineries to consumers grew 15 percent in 2014.
— The decline in sales of wines under $10 continued while strong sales growth of wines over $10 increased
The large inventory of wine left over from the last three bountiful harvests was on everyone’s mind as it looks like 2015 will be another average or larger harvest.
And though the drought is on everyone’s mind, almost all agree that it hasn’t had much impact so far. A number of speakers commented, however, that they weren’t sure what would happen if the drought continues.
In any case, the drought is forcing many changes in the way growers operate, including more regulation. John Aguirre, president of the California Association of Winegrape Growers, said, “Today’s drought leads to tomorrow’s laws.”
Fortunately, forecasters say an El Niño pattern is forming in the southwestern Pacific and that could bring some relief.
Also threading through the talks was sustainability and its impact on the market.
Wine regions have been trying to use the issue to differentiate themselves, but most observers agree that the issue will lose its punch as everyone adopts the practice. Steve Smit, the vice president of grape management at Constellation Wines, said, “Sustainability will become a mainstream part of society and business. The use of sustainability as a marketing tool will disappear.”
Last year, the Sonoma County Winegrape Commission published a goal of making its members 100 percent sustainable by 2019, and they’ve already gotten 60 percent to sign up and one third certified. (Napa has also set a similar goal).
Its president, Karissa Kruse, said that many consumers say they’d choose a sustainable wine over others. In addition, Coppola and Jackson Family wineries are paying more for sustainable grapes and.
However, Smit of Constellation said that while his company took sustainability into account in choosing grapes, they don’t pay more. “We believe it’s more economic to farm sustainability and the grower benefits.”
If anything is scarier to growers than a grape glut, pests and viruses or drought, it’s labor issues. Between fights over illegal immigrants — the Obama administration has deported more illegals than any other, mostly those with arrests — gender and safety concerns, and unqualified farm labor contractors, growers feel like they’re tiptoeing through a mine field.
Amid all the concerns, however, one bright spot is use of technology in agriculture. Garrett Buckland, vice president, Premiere Viticultural Services listed all the technology that plays a key role in optimized viticulture: plant stress and vine health, irrigation application and efficiency, pest control, wine quality, planting choices, and managing all of this data
That alone could occupy a whole day of seminars, but the final presentations were about competing manned airplanes and remote-controlled aircraft (“Don’t call them drones”) that provide visualization of vineyards, and may someday even be used for applying pesticides selectively.