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Low yield harvests in Napa Valley mean high yield investments and great tasting wine

29th October 2015


It is the paradox of the wine industry that poor growing conditions ultimately lead to better tasting grapes, and smaller harvests drive up prices due to “impending scarcity”. For California’s Napa Valley wineries, this isn’t something to complain about.

 

High quality, low quantity – the key to successful wine investment

“It’s pretty easy to find anything else you want right now. If there’s something in short supply, it’s good quality Napa Cab”, says Rob McMillan, executive vice president of Silicon Valley Bank, a market leader in the California wine industry. He’s talking about the region’s prized Cabernet Sauvignon, Napa’s most famous grape and a traditional marker of the quality of a particular vintage.

After three years of drought, California’s 2015 harvests are predicted to be smaller than usual. At first glance this doesn’t mean a lot – 2012 and 2013 were record harvests and 2014 was the third largest in the region’s history. But shorter supply means taller demand and in turn, higher prices.

 

What doesn’t kill you makes you more delicious (if you’re a vintage wine)

While continuous water shortages have meant cutting back on car-washing and lawn-keeping for Californians, the relentlessly hot, dry weather can only be good news for the quality of Napa Valley grapes. Vines grown under stress produce fewer grapes with stronger flavours.

“It will be a good year for Cabernet with concentrated flavours and ripe tannins if things continue to progress as they are. We expect a heat spike this week, which is not scary for Cabernet with its sturdy thick skins. The fruit quality is reminiscent to me of the 2004 vintage” said Elizabeth Vianna of Chimney Rock winery.

And it’s not only the Napa Cab that’s in for a good year.

Steve Gerbac of Rusack Vineyards in Santa Barbara Country says “Pinot quality has been awesome this year. The colour in both Santa Maria Valley and Santa Rita Hills fruit has been darker than I’ve seen in years, and the wines have some great structure already. We just had our first picking of Syrah last week, so it is a little early to tell, but the fermenters are sure smelling great.”

 

Top Bordeaux wines have “little to no impact” on Napa prices

What’s more, McMillan says harvest conditions and prices of other top-end vintages, such as Bordeaux and Burgundy, will have minimal impact on prices in Napa.

“They’re different wines, totally different. At the very top end, they’re luxury products, and it depends on how you brand them. And the Bordelais continue to give (Napa producers) some headroom to grow with their first-growth prices.”

 

Our experienced advisors here at Capital Vintners are always available to answer your queries about investing in top quality Californian wines.

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