Araujo Estate Wines2155 Pickett Rd., Calistoga 94515, 707-942-6061, www.araujoestate.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

[caption id="attachment_60380" align="alignleft" width="180" caption="Bart Araujo"][/caption]

Homebuilder-turned-vintner Bart Araujo and his wife, Daphne, purchased the acclaimed 39-acre Eisele Vineyard just east of Calistoga in 1990. Featured in top wine critic Robert Parker Jr.'s The World's Greatest Wine Estates, Araujo produces about 6,000 cases of estate-bottled wine annually, primarily of cabernet sauvignon (retails for $300 a bottle) with a small amount of syrah ($135) and sauvignon blanc ($50).

The Alta Gracia secondary brand ($98) is a blend of Bordeaux varietal wine from grapes purchased from several top Napa Valley vineyards.

Each year, Araujo also produces about 1,000 bottles of grappa and an equal amount of olive oil from 500 trees on the property.

Mr. Araujo will be a panelist at the Impact Napa 2012 conference the morning of Aug. 30. He spoke with the Business Journal about the challenges and opportunities facing a high-end, small-production Napa Valley winery.

What are the main challenges facing the Napa wine industry and your winery?

We're, essentially, in a luxury goods business. Our challenge every year is to maintain an extremely high level of quality with a product that is agriculturally based. That requires us to be quite obsessive in the things we can control in the vineyard and winery. As we learn more about our vineyard -- we've been doing it for 22 years -- we learn ways to continue to do it better.

Where do you see the industry going in the next five to 10 years?

From a luxury-brand standpoint, the opportunities are quite wonderful. The first chapter of our business life has been heavily weighted to domestic U.S. demand. In the last five or more years, we've seen tremendous international demand, not only in Asia, where all the attention is focused, but also and in Europe and South America.

How are you adjusting to this international demand?

Less than 10 percent of our sales are export now. We're spending a lot more time in international markets than we had to in past to understand nuances and build relationships before make a significant commitment to any new market. That's true with new domestic markets as well.

What have been the changes in demand for luxury wines from Asia recently?

It continues to get stronger as the market becomes more attuned to American products. In most international markets, European brands are well-established. It has been an educational experience to introduce fine wine from California. People are pleasantly surprised.

How much do you plan to grow or contract your business in the next 12 months?

Our main source of growth is the Alta Gracia brand, by virtue of the fact we can acquire exceptional grapes and can expect it grow to some degree.

We're limited to 39 acres in the estate vineyard. There will be natural growth with our 20-year replanting program, and we're pretty much done. We typically don't have vines produce commercially for at least five years, even though they produce in the third year. Fruit from young vines historically goes into Alta Gracia.

Do you see any long-term affects to discounting that occurred over the last three years?

We've experienced no change. We don't discount our wine, and buyers don't ask for discounts.

Unity Marketing's latest Luxury Consumption Index shows decreasing demand for high-end products in recent months, though some general consumer-spending figures show renewed strength. What are you noticing?

We just released our 2009 cabernet sauvignon. About 1,600 to 1,700 cases were produced. It's essentially sold out, and we still have people signing up on the website waiting list daily. The waiting list is extensive.

What is your winery’s sales mix between direct to consumer and wholesale sales?

Part of our plan is to have our wine available in most of the best restaurants in the United States, Europe and Asia. Although we could sell all of it direct, we feel it is really important to have a really diversified base. We see comments from people signing up on our mailing list that they had our wine at restaurant and how wonderful it was and how could they get it. It adds another element to experiencing our wine.