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North Bay Business Journal

Monday, November 4, 2013, 6:50 am

Solano wine industry ripe for expansion

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    Impact SolanoStraddling the markedly different wine worlds of giant Central Valley producers of low-priced wines for the masses and North Coast wineries seeking higher-end grapegrowing and production expansion opportunities, Solano County has a place in the wine industry that is growing even more formidable, according to a longtime local voice for winegrowing.

    A ski resort marketing executive turned grapegrower in 1988, Roger King, 65, is president of the Suisun Valley Vintners & Growers Association (svvga.com), a role he has held since helping to start the trade group in 2003. He owns Ledgewood Vineyards, a consulting business for 21 acres of Suisun Valley grapes and is winemaker of King Andrew Vineyards.

    Solano contains all of two American Viticultural Areas, which are federally recognized regions with historical, hydrological, climatic and soil distinctiveness from surrounding AVAs, and parts of two others. Suisun Valley and Solano County Green Valley AVAs encompass 15,360 and 2,560 acres, respectively, on the western edge of the county. They were approved in 1982 and 1983, the latter coming in the same year as the creation of the 3 million-acre North Coast AVA that encircles both of them. There are portions of Napa County’s Wild Horse Valley AVA on the northwest tip of the county and Clarksburg AVA on the southeast edge in the Sacramento River Delta.

    Mr. King is set to speak at at the Impact Solano conference in Fairfield on Friday about the economic impact of the wine business to the county and region. In the following interview, he explores the scale of the Solano wine business now and the affect that’s already being felt by announced plans by Caymus Vineayrds of Napa Valley to build a 5 million-gallon winery and plant vines to accommodate expansion.

    How significant is the wine industry to Solano County’s economy?

    MR. KING: It’s way beyond what we grow and what we make. A huge chunk of packaging provided to the wine industry comes from this area. There’s a [wine bottleneck] capsule manufacturer in Fairfield. There are major glass suppliers in the county and wine label printers in Benicia. In Dixon, there’s one of the largest agricultural chemical supply companies.

    There is a ton of economic activity in Solano being affected by the wine industry. It’s important because of the economic and public policy decisions that are coming. Just looking at the vineyards from the road would make one think the business is not that big. I’ve speculated it’s well into the nine-figure region. I’ve been told that’s pretty optimistic.

    S0lano doubled farm gate grape revenue from $9,387,615 on 12,602 tons in 2006 to $18,000,525 on 22,407 tons in 2012 with some new plantings and new acreage. More importantly from an economic value standpoint, grapes had fallen from the top ag product in the late 1990s and now are back in the top five.

    When you consider the 22,000 tons … in 2012 and use the standard metric that a ton produces 150 gallons of wine, that’s 3.361 million gallons of wine. At 2.337 gallons per [9-liter] case, Solano is generating 1.43 million cases of wine a year. In 2006, 12,602 tons equates to 1.8 million gallons and 775,000 cases.

    My old model figured that 96 percent of Solano grapes are sent to another county. If they were kept in the county, made into wine and bottled here, the net case wholesale value would be $179,775,000 based on $8–$10 a bottle.

    If the wine was FOB at the winery and going to a distributor then to a retailer or restaurant then to the consumer, the value would be $80 a case for most of the wine out of [Solano] — not the Ryer Island stuff — or $115,056,000.

    That brings to the surface that there is a huge economic loss in terms of employment and tax revenue as a result of not processing and having processing facilities in Solano.

    Caymus [Vineyards] is now going to impact this, with juice coming in from Monterey to package here. It won’t impact farmgate revenue, but taxes generated plus business from more packaging and trucking  do get recovered into this county. It’s a huge upside to the business. Now that the news about Caymus is out, I’ve been getting calls about the cost of putting in a vineyard or winery here.

    As you look around the North Coast and Lodi, you see vintners getting bound up with political or regulatory issues with fish or groundwater, while there is opportunity to expand here. Clearly, our wine economy is set to grow right now.

    How has the Solano wine industry changed over time?

    MR. KING: The move to get more sophistication in the vineyard got started in the late 1980s and was moving along pretty aggressively with three or four larger growers here. Some of the old winegrowers passed on, so some of that activity passed on along with them. There was very little movement in wine production until the 2000 break in the wine business and Constellation Brands bought the Turner Road winery from the Sebastiani family.

    There was a lot of contracting with Sebastiani at Turner Road, with the fruit being fermented there and brought back for coastal labels. Constellation then gave up on Suisun Valley growers. That’s when we formed the growers’ association. We were exporting 98 percent of the fruit, but that didn’t work at $75 a ton.

    In 2000 there were two wineries with the Suisun Valley appellation on the label. Then came the grape glut. We aggressively went after selling grapes. In 2010 there were 29 to 31 with Suisun Valley on the label.

    The comparative county is El Dorado, with 85 percent of the grapes grown there consumed by wineries in the AVA. We were the exact opposite with 6 percent used in the AVA and 94 percent to 96 percent outside the AVA.

    We would like to get to 50 percent, then that would lead to a change in planting.

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