Beckstoffer VineyardsP.O. Box 405, Rutherford 94573, 707-963-9471, beckstoffervineyards.com

Impact conference includes top economist, Napa wine industry leaders

Economist sees three paths for Napa economyBusiness Journal Q&As with conference panelists

Bart Araujo, proprietor, Araujo Estate Wines

Andy Beckstoffer, president, Beckstoffer Vineyards

Jayson Pahlmeyer, founder and proprietor, and Brian Hilliard, president, Pahlmeyer Wines

Mario Zepponi, partner, Zepponi & Company

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Andy Beckstoffer was trained as an engineer, but he's been training North Coast vines to produce world-class wines for four decades. He acquired what is now Beckstoffer Vineyards in 1973.

Today, the company is one of the 20 largest winegrape growers in California, farming 5,000 acres of North Coast grapes. That includes 1,000 acres of Napa County vines and 1,500 acres each in Mendocino County and the Red Hills appellation of Lake County.

Mr. Beckstoffer will be a panelist at the Impact Napa 2012 conference the morning of Aug. 30. He spoke with the Business Journal about how the 2012 crop has been faring, whether or not the North Coast has a shortage of winegrapes and the impact of any crimp in supply on grape and wine prices.

How is the 2012 winegrape crop shaping up?

We've got a crop which is different from last year. In Mendocino, we did not get bunch counts we wanted, particularly in chardonnay. After last year's spring, we expected bunch counts to be down in all counties. They're not way down.

At one point, we thought we would be 30 percent down in Mendocino County. I don't know why that has happened. It's been a great season, but that would not affect basal buds last spring. We've had almost twice as many heat units this year than last year in all areas.

We think quality is going to be excellent. The vines look good. (cabernet sauvignon) will be coming in, we hope, in late September or the first of October. We have a ways to go, but we will see what happens.

What are your projections for crop volume?

Twenty years ago, we replanted most of Napa Valley because of phylloxera. Grapevine life can be 20 years, and that means we will replant the county in the next 10 years. We expect in the next 10 years there will be a decrease in bearing acres. With new vines there will be an increase in quality but not in quantity. There won't be big crops, because we will be pulling so many grapes out.

What challenges and surprises have there been this season?

At this point, we haven't had heat spikes and not had sunburn with the new types of trellises in Napa Valley. We couldn't ask for anything better at this point. There have been a lot of conversations about vintners wanting to pick at less sugar. Last year, we were picking at less sugar because the crop was late.

One of the big challenges is we would like to plant more in Lake and Mendocino counties. We want to plant in Mendocino, but we can't plant until 2014 because there is no vine stock. Want to plant next year in Lake but can't.

We don't want to plant what we don't want to plant. Don't want to plant vine option No. 2. When you plant it once, you have to live with it for a long time.

How much have purchases of Sonoma, Lake or Mendocino grapes changed from Napa wineries?

Prices are up significantly, and there's more demand. We have some prices doubling in some cases. A lot of that is driven by the price of bulk wine, and when you convert it to the price of grapes there has been a signficiant increase of prices over 2011. It's happening primarily in cabernet sauvignon, both in Napa Valley and in the Red Hills in Lake County. There's also been a significant increase in chardonnay prices.

What grape buying activity has there been for the 2012 season?

We sell grapes largely on one- to five-year contracts and make a small amount of wine in bulk.

We're selling more grapes than we did last year. We also made more bulk wine, because we couldn't get the price we wanted.

What makes you think there is or isn't a supply shortage in the wine industry?

No, I don't see anything indicating there is going to be a supply shortage. Demand is inching up and increasing. We have not planted anything in a long time.

In the North Coast, we can't plant right away. For three years, the industry has been languishing and not planting anything. In this business, there was a precipitous drop in 2008, and in 2010 it was going back up. Rather than a V-shaped recovery, sometimes it's a big "U," because stays at bottom longer.

Demand is up for grapes, and the prices for grapes is up. Demand is up for wine, and we're hearing prices for wine is up. The balance will get back for profitability on both sides. No one has been smiling for three years, and now everyone is having fun again.