“Napa Valley mindshare is huge. It may be one percent of the sales, but it’s ninety percent of the market awareness.”

By Ray Isle
Updated July 13, 2020
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From left to right: Jill Matthiasson, Matthiasson Wines; John Skupny, Lang & Reed Napa Valley; Nicole Carter, Merry Edwards Winery; Chris Hall, Long Meadow Ranch
Gamma Nine Photography/Marc Fiorito

Back in November—almost in a different era, it seems now—F&W convened an industry roundtable in Napa Valley. The topic: “What is the Future of Napa Valley?” I moderated the discussion between panelists Kimberley Jones of Kimberley Jones Selections, Dan Petroski of Larkmead Vineyards, Josh Phelps of Ad Vivum and Grounded Wine Co., and Nicole Carter, former marketing director of Hess Vineyards and now president of Merry Edwards Winery (yes, in Sonoma; we gave her a pass for the day). In attendance were 45 winemakers, winery owners, marketers, and journalists. The discussion was far-ranging and, for anyone whose business is making or selling Napa Valley wines, I hope enlightening (even in the current circumstances). Here are some of the takeaways.

One vital question for any wine region is its identity—what does it represent in the minds of consumers around the world? As panelist Dan Petroski of Larkmead Vineyards noted to start, “Napa Valley mindshare is huge. It may be one percent of the sales, but it’s ninety percent of the market awareness.” And indeed it is. But a “huge” mindshare among regular consumers can prove surprising. Damien Wilson, the Hamel Family Chair of Wine Business education at Sonoma State College, pointed out that “regular wine drinkers in the U.S., if you survey them, fifty percent recognize Napa. That it’s only fifty percent should be scary. But Sonoma is about twenty-five percent, and then it’s daylight between there anywhere else. We have 244 American Viticultural Areas in the country. What if you’re in one of the other 242? No one has heard of you.” Sobering words, to be sure—if you’re not in Napa Valley.

Yet as another commenter from the audience noted, “There are plenty of wine regions in the world who are still trying to define who they are, and still trying to hang their hat on something that they can stand behind. That's one of the reasons why Napa Valley is known around the world: because winemakers found what they did best, and that happens to be Cabernet Sauvignon. Do we need to rethink that? If you think about Riesling, are people standing around in Germany saying, are sommeliers demanding that we provide more diversity?

”When it comes to Cabernet Sauvignon, an inescapable part of any wine discussion concerning Napa Valley, price is an equally inescapable topic. For me, as a wine editor and a wine lover, I was able to learn about wine partly because I could afford some of the great wines of Napa Valley; a bottle of Diamond Creek or Mayacamas wasn’t outside my graduate student financial reach (note: this was eons ago). But what about today, when the average price of a ton of Napa Cabernet is over $8,000 and therefore, by a standard wine industry rule of thumb, the average price of a bottle is over $80. That isn’t pocket change for practically anyone.

John Skupny of Lang & Reed Winery noted that “in 1984, we were able to sell two bottles of Napa Cabernet for $7 in Safeway. But the reality is we can no longer be the low cost leader. We left that lane 25 years ago. And the only other option is to be the best we possibly can be.” He added, “If you look at the real numbers, Napa Valley produces four percent of the wine made in California. 22,000 acres of the 44,000 acres in Napa Valley are Cabernet, so that means 2% of the wine made in California is Napa Valley Cabernet.

”To which Dan Petroski added, “Look, if Napa Valley represents two percent of the wine in California, which it does, then in terms of the total U.S. audience, we’re already the one percent.”

So, don’t look for Napa Valley Cabernet on the bargain shelf, and it would be crazy if producers in the region swerved that way. But not all Napa Valley AVA wine is Beverly Hills real estate. As Nicole Carter pointed out, “When Hess went into Pope Valley in the late 1990s, people thought,

‘I don’t even know what’s out there. I mean, it’s Pope Valley. There’s a tire shop. You can’t even get a cup of coffee.’ But despite that, it’s still considered part of Napa Valley, and now Hess is producing 80,000 cases of a $35 Napa Cabernet. And it’s profitable.”

And, to round off that discussion, Josh Phelps of Ad Vivum and Grounded Wine Co. observed, “In 2007, which was my first vintage, Cabernet pricing here was half of what it is now. There’s no question it’s gone up. But high-end Napa Cabernet is an aspirational market. And I think that’s ok.”

Perhaps because Phelps himself is a millennial, or perhaps because no wine discussion these days can exist without addressing the question of the millennial generation’s drinking habits, conversation moved to that topic. Maria Sinskey of Robert Sinskey Vineyards was particularly direct: “As producers, we need to look to the next generation and what they’re really into, because the people who are buying $300 and $400 bottles are literally dying off.”

This brought us back to the question of diversity. Jill Matthiasson of Matthiasson Vineyards noted, “I hate to broad brush any generation, and we may have lots of diversity in our customer base too, but the newest generation of buyers, which are the millennials, are used to more diversity in their choices than we were. I had one choice. We had Hershey's chocolate when I was kid. Now there’s like thirty different chocolate makers to choose from. It’s the same with coffee, and beer. They're a curated generation, and they're looking for a more curated product base.”

Jerusha Frost, at the time working for Silicon Valley Bank, but who since left to start her own company, added, “I think the difference with millennials, too, is that as we age, we aren't saving. So we may actually spend more as we continue to earn more, compared to what our parents did. We won’t be saving as much, so our wealth won't be housed in home and property. It will be spent for experiences.”

Which Napa Valley obviously offers. Chris Hall of Long Meadow Ranch observed, “Twenty years ago, if you asked somebody what the number one reason they were coming to Napa Valley was, they said, ‘wine tasting.’ Today if you ask somebody what the number one reason they're coming here is, it's to eat and drink. Wine tasting is second, or even third, these days. So our tourism has only grown. People come here, they may taste Cabernet or they may taste a Ribolla Gialla, but what they’re here for is to experience Napa Valley.”

In this coronavirus moment, with winery tasting rooms and restaurants closed for an unknown amount of time, that sentiment is jarring, even saddening, but it’s also true. The impulses that drive people to wine regions extend beyond standing at a tasting bar and sipping five wines today. Any wine region that ignores that, ignores its own potential future.

And what of the future? With luck this moment will pass, the doors will open again, tourists will return. And yet, there are still additional concerns. As Dan Petroski said, “I’ve gotten a lot of shit for talking about the possibility of Napa Cabernet going away due to climate change. But the actual Cabernet mindshare is a very modern phenomenon here in California, so don't discredit yourselves and your own talent to say, ‘Oh, we only need to be making Cabernet here.’ We’re going to grow great, delicious wines in this Valley for a very long time. It'll be a bump in the road to convince someone that they have to pay $200 for a Napa Valley Touriga Nacional in a bottle [a more heat-resistant varietal], but I always say this. If you've ever had Barca Velha, which is Touriga, you'll pay $450 dollars for that wine. It’s one of the greatest wines in the world.”Which—though the conversation went on for easily another hour—sums up the general tenor of the discussion: that Napa Valley makes some of the greatest wines in the world.

Will those wines be primarily Cabernet Sauvignon in seventy-five years? Will their prices be stratospherically high or will they stabilize? Will the millennial generation fall in love with the Napa name the way other generations have? To be determined. So maybe Food & Wine will convene another roundtable in ten years time. But right now, as we shelter against the disconcerting world outside, we know that one continuing comfort to be found lies in simply opening a bottle of wine.