NORTH BAY BUSINESS JOURNAL EVENT

2008 CONSTRUCTION CONFERENCE

Building the North Bay: What's on the horizon?
Tuesday, May 20, 2008, 8-11:30 a.m., Hyatt Vineyard Creek, Santa Rosa

E-Mail Express

Name:

Company:

E-mail:

Phone:

Wine, tourism play larger role in region

WINERY REVENUES TOTAL $270 MILLION; ‘LEAKAGE’ BIG ISSUE

UKIAH – The wine and tourism industries account for about a quarter of the $4.1 billion in gross annual revenues for all businesses in Mendocino County and 28 percent of the 42,000 jobs in the county, according to preliminary results from an analysis of the "visitor services" business cluster.

Winery revenues total $270 million a year, with sales of winegrapes making up most of the $52 million in fruit sales in the county annually, according to Warren Jensen, who is managing the cluster study at Chico State University's Center for Economic Development. The county's breweries ring up another $50.7 million in revenues, with the area’s bustling visitor services accounting for the rest of the cluster’s $1 billion impact.

In addition to the impact of wine and tourism, one of the matters being analyzed in the study, to be turned over to county staff next month, is the amount of revenue flowing from local businesses to businesses outside the county, commonly called "leakage."

For that part of the study, the center focused on specialty manufacturers in the county. Among the business opportunities that have emerged so far, $14.5 million a year is going to purchase wine and beer bottles from outside the county.

Another major area of leakage for the wine business in the county has been grape sales. Some 65 percent to three-quarters of the annual winegrape harvest, which increased 14.5 percent to 70,900 tons last year, is trucked to wineries in Sonoma and Napa counties, according to Fred Buonanno, chairman of the Mendocino County Winegrape and Wine Commission and head of winery relations for Brutocao Vineyards & Cellars in Hopland.

"There is lots of opportunity to take up excess capacity," he said.

More wine capacity expected

Some extra capacity is coming, with Redwood Valley Cellars going into full ownership by the Barra family and former partner Bill Pauli looking to build his own winery.

The record 2005 winegrape harvest together with a big one last year left more than a few tons in the county unsold as the tanks brimmed at wineries to the south.

"Mendocino, Lake and Solano counties depend on shortages from Napa and Sonoma counties because not as many wine labels support those place names," said Brian Clements, a senior partner and winegrape broker for Turrentine Wine Brokerage in Novato. "However, wineries are missing opportunities for chardonnay in Mendocino and Solano counties."

Chardonnay from cool appellations such as Russian River and Napa Carneros are in hot demand, but not so for Mendocino. That's despite chardonnay in 22-ton-truck-sized quantities going for $1,650 to $2,100 a ton from Napa and Sonoma counties but only roughly $1,000 a ton in Mendocino.

GoMendo.com is launched

That tough grape sales market helped rally support for the formation of the commission in May 2006. This year the group is pushing hard with grower showcases throughout the North Coast to create excitement about brands that sport Mendocino appellations on the label. Part of that is the joint marketing effort with local lodging and tourism groups on the GoMendo.com Web site.

Further helping the chardonnay supply situation is erratic flowering and widespread "shatter," or failed pollination during flowering, which is setting up a crop that is 10 percent to 15 percent smaller than early-season estimates based on observations of two clusters per vine shoot, according to Mr. Clements.

Add to that the fact that Mendocino County received 35 percent its normal rainfall, and many rain-dependent vineyard reservoirs are only half-full, and the 2007 North Coast crop could be average-sized, according to grape experts.

Book of Lists Online