Vineyard to rugged coast, farmstead to urban center, roadside picnic to haute cuisine, the North Bay has it all. In 2005, the tourists took it in. And those in the know think it’s likely that connoisseurs, adventurers and conventioneers will return in full force in 2006, and increasing numbers will be popping corks to taste a bit of our terroir on their home turf too.
It’s academic
Robert Eyler, chair of the Economics Department at Sonoma State University, says the local wine industry acts as both an agricultural and manufacturing anchor for the North Bay and should experience growth in 2006 and beyond. “The low value of the dollar worldwide should continue to stimulate interest in American wines outside the United States, and internal competition is providing American consumers with a vast choice of wine at relatively lower prices than in the past. Thus, even if the national or regional economies slip into recession in 2006, the wine industry should experience moderate growth,” he predicts.
Of local tourism, Eyler says it’s more dependent on the national economy’s movements but can also benefit from a continued lower value for the dollar worldwide. “Its local ties to the wine industry, especially in Sonoma and Napa counties, help tourism indirectly. However, the United States moving into recession would hurt tourism somewhat. Fears over travel, airfare hikes due to gas prices, gas prices continuing to rise generally, all hurt tourism. However, there may be some increase from regional tourists seeking getaways in West Sonoma, for example, rather than taking vacations elsewhere,” he notes.
I owe it all to the BID
According to Mark Essman, executive director of the Marin County Visitors Bureau (MCVB), Marin has had a fantastic year for tourism in 2005. “PKF Consulting reports that we had an almost 8 percent increase in occupancy across the board from January to June 2005 compared to the same period in 2004, and the statistics aren’t in yet, but we are projecting that 8 percent will carry over through the end of 2005. A lot of the remnants of 9/11 are finally being dissolved,” he says. Like Eyler, he thinks rising energy costs could dampen both leisure and business travel, but he remains “cautiously optimistic,” especially since his organization is now funded through a business improvement district (BID) assessment.
Before May 2004, the MCVB was run by the County of Marin and competed with other programs for funds from the Transient Occupancy Tax. “The hoteliers and hospitality professionals wanted a separate organization dedicated specifically to marketing tourism within Marin County, so a BID was formed, and we became a private, self-assessed tourism organization. Our hoteliers now voluntarily contribute 1 percent of their receipts. That’s how important they feel tourism is to Marin,” Essman notes. “With this support, we’re working to establish a brand and identity for Marin and translate that message into collateral marketing materials to get the word out to potential visitors.” The organization just flipped the switch on a new, interactive website that should be completed this spring. “Our goal is to make our Internet site a one-stop shopping site for all potential tourists visiting Marin.”
Essman also helps local businesses work together. “Mark is doing some overview work, generating knowledge about what’s here, and we’re kind of doing the other part of the work in trying to get tourists to come here,” says Paul Krieder, president and CEO of Ross Valley Winery in San Anselmo and a member of the MCVB. “We have so much right here, all within walking distance. People can drive from, say, San Francisco, park their cars and just relax.”
Krieder’s working closely to market San Anselmo with Julie McNair, who co-owns The San Anselmo Inn with her husband Peter. They bought what was a seedy, residential hotel five years ago and transformed it into a 15-room, Provence-style bed and breakfast that attracts everyone from international tourists to family members of local residents. “The merchants, the antiques association and I are getting together to do packages that include a stay at the inn, wine tasting at the winery next door, shopping and dining in San Anselmo. We have more than 100 antiques dealers here and three restaurants cited by the San Francisco Chronicle’s Michael Bauer as in the 100 best in the Bay Area: Fork, Insalatas and Cucina,” she says. “We were all working as individuals before, but now through the Marin County Visitors Bureau, we’re actually working together. It’s so much better as a community.”
Destination Sonoma
Another BID is funding the newly established Sonoma County Tourism Bureau (SCTB). A third of its revenue comes from transient occupancy tax revenues collected from unincorporated areas of Sonoma County, and two-thirds comes from the BID, which is funded by lodging establishments earning more than $350,000 yearly. Municipality by municipality, they have assessed themselves 2 percent of their revenues for this. “Sonoma and Healdsburg are the only cities that haven’t joined us yet, but every other city has, and it’s very exciting because now we’re going to be in league with destinations like Tahoe and Palm Springs that have multimillion-dollar budgets. Sonoma County had about a $1.3 million budget before, and now we’re at about $3.5 million,” says Ken Fischang, SCTB’s president and CEO.
Thomas Becker, general manager of the Fairmont Sonoma Mission Inn and Spa, is also chairman of SCTB’s board. He’s committed to building Sonoma County as a destination. “It’s important that we continue to build global awareness of our Wine Country—Sonoma and Napa—because many new wineries have been created worldwide in the last 10 to 15 years. With the growth of New World wine destinations, competition for a Wine Country holiday intensifies. There are some great wineries down in Africa, for example. So, if you live in Europe you have many more choices to explore Wine Country than you did before,” he notes.
Three years ago, the inn, with its onsite, flowing mineral waters and 18-hole golf course nestled beneath the Mayacamas Mountains, became part of Fairmont Hotels & Resorts and underwent a $65 million renovation. Business in 2005 was very good. “We were impacted by 9/11, but we were equally impacted by the dot-com bust. Our occupancy levels are directly related to the overall economic health of California. A large percentage of our guests drive from other parts of the Bay Area, and their discretionary income decreased. For example, they might just get one spa treatment instead of two, or order a $100 bottle of wine instead of one that sells for $300,” Becker says. “But we are getting closer to meeting or exceeding 2000 levels, and I think it’s because people have come to realize that lifestyle is important. They need the break; relaxation and quality time are paramount.”
Becker has found that creating innovative packages adds to their momentum. “On the higher end, we have Speed Meets Spa, in which we partner with Infineon Raceway. People come to racing school for seven days, stay at the hotel, enjoy dinner here and have spa treatments.” This idea came through research done by their corporate offices, something Becker wouldn’t have had the resources to do on his own. “More and more people are looking for lifestyle, experiential packages. They want to be able to do something they’ve never done before, whether it’s culinary or adventure. So our goal is to find out what’s of interest to our guests and create packages.”
Another successful advertising phrase the inn has created is “Come for the Wine, Stay for the Water,” which accentuates the mineral waters flowing through the property. “There’s no question that the wineries are the primary reason people come up here,” Becker admits. “We’re in the business to convince them to stay overnight, and offering culinary, spa and golf amenities as well as a number of authentically local, experiential opportunities has been the key to our success.”
Courting Napa tourists
Cindy Barbarick, director of marketing and sales for Balloons Above the Valley in Napa, has noticed that an increasing number of her patrons are coming from Sonoma County hotels and inns. “A lot of our passengers are staying in the town of Sonoma at the higher-end hotels and coming over to Napa to fly with us, where before they would actually stay in Napa,” she says. “There’s a lot of wine countries now that are going after the same tourists we are, and yet Napa County provides some of the lowest funding for tourism.”
Except for an unusually rainy June, Barbarick’s monthly business in 2005 was equal to or better than 2004. She does do joint marketing with several hotels to keep it that way. “About 70 percent of the people that contact us to book a balloon ride haven’t made their hotel reservations yet, so we’ve put together packages so not only are the hotels giving us business, but we’re giving them business back,” she says.
Barbarick’s other joint promotions include serving Domaine Chandon sparkling wine at the brunch that follows each balloon ride as well as featuring it in their promotional videos. They also make reservations for unique winery tours, such as O’Brien Family Vineyard’s romantic tasting that features its hit wine called Seduction.
Brand me
“The increasing number of wineries worldwide makes brand recognition very challenging. You’re competing with lots of people for shelf space, basically, the mind of the consumer and, ultimately, sales, so people are spending more time and attention thinking about various ways to promote their brand,” vineyard owner Bart O’Brien observes.
In 2004, O’Brien came out with Seduction, a big, full-bodied red wine geared towards women. “We thought about women as a group of consumers in the way we package the wine. We’ve made the label romantic, and we also package each bottle in a gift bag because one of the differences between men and women is that when women bring wine to a party, they mean for it to be a hostess gift, and they want it wrapped. So we package it in a sheer, elegant red gift bag, which saves the woman a second purchase process, plus adds value to our bottle of wine,” O’Brien says. “Men never bring wine as a gift; they only plan to share it with a select few of the guests.”
The success of Seduction has O’Brien feeling very optimistic about 2006 and beyond. Seduction was featured on Good Morning America and on ABC World News last June. It was written up in about 12 major newspapers including USA Today and the New York Times. This has dramatically increased sales, so Seduction is now being placed on allocation.
For small wineries whose wines haven’t become household names, O’Brien thinks the loosening of restrictions on direct shipping is a godsend. “It suddenly frees small wineries from the choke points of the consumer distribution channel where they have to first get the attention of a distributor and then get the attention of various retail stores and restaurants,” he explains. “If you sell wine directly to the consumer by your website, you make three times as much money in terms of operating margin as if you sell it through normal distribution channels, and that’s not even counting the type of sales and marketing support you have to give those distribution channels.”
One hot harvest
O’Brien, like many North Bay growers, had a phenomenal harvest in 2005. “Both the quantity and the quality of grapes is absolutely superb. It depends a little on your geography, though. We happen to be on the valley floor, so we benefited from everything that happened. We’ve heard that some people higher up in the hills may have had a difficult time getting all the fruit to ripen due to the late harvest and too much rain,” he says.
Paul Bialla, owner of Bialla Vineyards and president of the North Coast Grapegrowers Association, says weather influences the harvest size and fruit quality more than any other factor. “Conditions were perfect in 2005. We had a consistently cool summer with no exceptional heat spikes, which led to longer hang times for all varietals, and a slow, gradual ripening process in which both sugars and acids reached perfect balance,” he says.
But having such a robust crop has a down side for growers who are unable to sell all their grapes. “Growers who have been unable to sell their fruit would normally go to custom crush facilities in the hopes of selling their wine at a later time, but even custom crush capacity is at its limit now, so that’s becoming less and less of an option for growers who have unsold fruit,” he says. Demand for some varietals is greater than others, and that varies year to year. But even so, Bialla thinks the North Coast is achieving a good balance in supply and demand for the fruit, with the exception of Mendocino and Lake counties which are having greater difficulties in meeting their sales objectives.
Will we have a great harvest in 2006 as well? Bialla says that since it all hinges on the weather, there’s no way to predict that. But if you have a heavy year, chances for a second year being equally heavy will be “very slim because of the pressures on the vine itself and the fact that it’s difficult for all the nutrients to develop year after year in a consistently high fashion.”
Clouds on the horizon?
The weather’s not the only concern of growers in these parts. Industry consolidation looms large as well. “It’s desirable for growers and wineries to have a close, harmonious relationship, and this is achieved best between growers and small- to medium-sized wineries. As wineries become absorbed into large corporations, the relationship becomes more remote,” Bialla notes. “Certainly these larger corporations are more responsible to their shareholders than they are to the growers and sometimes even the quality of the wines they produce. When there’s downward pressure on the price wineries are willing to pay for grapes, and growers receive insufficient compensation, it becomes very difficult to continue producing the high-quality fruit we’ve been noted for. North Coast wineries have been most successful in the high-quality wines, so there’s ultimately little opportunity for us to remain successful without producing premium quality grapes,” he adds.
Nick Frey, executive director of the Sonoma County Grape Growers Association, finds being in a global marketplace is tough. “Imports continue to gain market share in the United States market, which will soon be the largest wine market in the world. So, everybody focuses their efforts in penetrating our market, and they’ve been fairly successful. I’ve been here six years, and imports have gained about 10 points of market share in that time. Now 27 to 28 percent of all sales in the United States are imports. That affects local growers, even if they’re selling at different price points.”
Sonoma County growers will be asked to consider forming a winegrape commission where growers are assessed, and the money is used to market Sonoma County grapes and wine. “Today we’re being outspent by not only a number of countries but also a number of wine regions throughout the United States. If we want to solidify our position in the market, we’re going to have to increase our marketing and promotion efforts to remain competitive,” he says.
Regulatory developments could pose further complications. “Essentially all of our streams have been designated critical habitat for salmon and steelhead,” Frey says. “Water flows in the Russian River could be adjusted for the salmon, and this could have an impact. Sediment in streams will get increasing scrutiny. Also, in the County’s General Plan update, increasing riparian setbacks could take income-producing acres out of production, and you’d still have to pay taxes on that land. And there may be an ordinance that would prevent conversion of timberland to vineyard use.”
A sense of place
Jennifer Kopp, executive director of Napa Valley Grapegrowers (NVG), sees promise ahead, given that consumers are drinking far more wine than they ever have and at younger ages, and the European markets are now more open to California wines. “What Napa Valley needs to keep at the forefront is retaining its reputation for quality and continuing to differentiate itself from anywhere else in the world,” she says.
Like Bialla, she thinks the road to success is to encourage growers to always produce the highest premium fruit. “Beyond that, we really have quite a bit of marketing to do. There are also threats to our integrity from those who would use the Napa name and actually make the wine in locations outside of Napa Valley, so we’re always watchdogging what’s going on and where the Napa name is being used falsely,” she reports.
NVG also puts a premium on community involvement, and to keep grape growing financially viable, the organization focuses on education. “We help growers understand their business better and how it fits into what’s now a global wine market. So we see the increasing importance of commissioning surveys, instigating research projects, producing cost studies, those kinds of things that give growers information about the latest trends and technologies and where they fit in all of it,” says Kopp.
The key to it all, she says, is terroir. “Our mantra around the office is ‘sense of place,’ and a lot of our initiatives relate back to a sense of place,” she says. One of their initiatives for 2006 is an historic vineyard registry that will include a large color map showing the Napa Valley vineyards pre-Prohibition. It turns out almost 19,000 acres were being cultivated in Napa at that time, just under half of what’s being cultivated today.
Another way NVG is fostering a sense of place is through its “Women in Winegrowing” 2006 calendar. It features 21 prominent Napa Valley grape growers including Mary Hall, who manages the vineyards for Harlan Estate, Bond Winery and the Napa Valley Reserve, and Elaine Honig of Honig Vineyards, who has long advocated for environmentally sound farming practices.
NVG would like to do more programs for visitors in the upcoming years. “People don’t book trips to tour prune factories. They come here because of the vineyards and because of the lifestyle they perceive, and we want to work closely with the vintners in the valley to encourage tourism and education about farming and the community,” says Kopp.
Que será será
It’s true that nobody can predict what 2006 will bring, but from vineyard to boardroom, raft to restaurant, the wine and tourism industries are led by people who love what they do and are committed to conveying their passion to their clientele. Perhaps Julie McNair of The San Anselmo Inn sums it up best: “We thoroughly enjoy what we’re doing, and we really pass on our overall happiness to our guests. It’s like being a mother. You’re looking after all of these individuals, and you go as far as you can. If it’s possible, you bend over backward and make it happen.”
