Fall 2023 Wine Country Outlook

Wine Country Outlook A GUIDE TO ESTATE, VINEYARD & WINERY VALUE & ACTIVITY | FALL 2023

Wine Country Estate, Vineyard & Winery 2023 Market Outlook 20 23

An in-depth, localized look at values and activity of Wine Country Estate, Vineyard, and Winery properties. Including Napa, Sonoma, and Mendocino counties.

Kevin McDonald DRE# 01944953 kevin.mcdonald@sothebys.realty 707.391.3382 | sothebysrealty.com

Jamie Spratling DRE# 02041493 jamie.spratling@sothebys.realty 707.339.6468 | spratlingrealestate.com

Before the Harvest As we embark on Harvest 2023, we can?t help but reflect on the fact that crafting world-class wines begins with exceptional fruit, grown in fertile soil, where the vines take root and express their unique terroir. And, that it all begins with a piece of dirt and a vision.

We recognize your mastery in the cultivation of remarkable fruit, crafting incredible wines, and keeping Napa, Sonoma, and Mendocino Counties at the top of the list of premier wine regions.

Our team strives to be your primary resource for all aspects of wine country real estate, with expert insight on vineyard, estate, and winery activity, as well as benchmark values in the area. Your trust in our knowledge and the services we provide is greatly valued.

Throughout 2023, there has been a mix of both on and off-market activity, yet the prevailing sentiment points towards a soft market. The abnormally high cost of capital has been a major contributing factor to the slowdown in activity, as interest rates from agricultural and commercial lenders approach 10% or higher. The failure of several banks with deep connections to the wine industry earlier in the year has only added to the challenge. Additionally, the repercussions of the 2020 crop loss due to smoke taint and wildfires are becoming evident, as that vintage, which would have found its way to bottle this year, was lost. The broader economic slowdown has also led to less direct to consumer wine sales, creating additional strain for some producers. All these factors have led to caution in expansion and new acquisition of vineyard and winery assets.

Vineyard values have remained steady, with an absence of significant activity that might tip the market in either direction. Premium vineyards and vineyard sites continue to command record prices, while secondary and outlying vineyards struggle to find buyers.

Redevelopment costs have skyrocketed with the recent record inflation, making acquisitions of older sites in need of replanting infeasible from an economic standpoint. The prevailing market conditions have also prompted wineries to exercise a higher degree of caution in their contracts with both new and existing growers.

Estate properties featuring land and/ or commercial agricultural components have seen a decline from their elevated pandemic levels. Although financing costs have acted as a deterrent to some extent, it?s apparent that there is available capital, whether it?s poised to become more active in the latter part of the year or continue to hold, remains to be seen. This leads us to anticipate a resurgence of strength in the market, potentially making a comeback in early 2024.

Our outlook for the coming remainder of 2023 and 2024 is optimistic. The next three quarters may remain soft, with limited activity. We hope to see inflation improve and borrowing costs stabilize towards the middle of 2024, leading to increased demand for vineyard and winery assets, as well as estate properties.

While we cannot predict the future, one thing remains certain, we are so very fortunate to live and work in one of the most exquisite regions in the world; a place deeply intertwined with the industry we are all passionate about. High-quality assets will persist in retaining their values and garnering demand, regardless of the market fluctuation. Opportunity is all around, all it takes is a discerning eye to uncover them, a team in place to acquire them, and vision to bring it all to life.

We wish you all a happy harvest, 2023!

Kevin and Jamie

NapaCounty Vineyard and winery activity in Napa Valley has remained robust throughout 2023. With a steady flow of notable vineyard and winery sales at all levels of the market, premium vineyard assets continue to see high demand. Institutional and foreign buyers continue to acquire these top-tier sites, endeavoring to increase brand value and secure quality fruit for years to come.

Although there continues to be a strong demand for large estate properties throughout the Valley, they have experienced a bit of downward pressure from the market. We feel this decline is not necessarily due to fluctuations in the interest rates but rather the result of a more cautious sentiment. On a positive note, we are observing promising indications of increased activity with previously hesitant buyers growing more confident in the current market conditions.

We anticipate that the winery and vineyard market will maintain its momentum through the end of 2023, with an uptick expected in Q1 and Q2 of 2024. Prime properties are likely to command premium prices, while secondary offerings may require more time and effort in order to connect with the right buyers.

NOTABLE SALES Winery and Vineyard: -

Pom Wonderful Company acquires Robert Sinskey Vineyards for a rumored $35,000,000

-

St. Supéry Vineyards and Winery acquires 48-acre Rutherford Vineyard from LMR Wine Estates for $14,800,000

-

Gallo acquires Rombauer Wine Properties for a rumored $85,600,000

Estate Properties: -

850 Sanitarium Rd. St. Helena closed for $12,500,000

-

5440 Silverado Trl. Napa closed for $14,250,000

-

1561 S Whitehall Ln. St. Helena closed for $17,950,000

NapaValley Benchmark Values LAND USE

PRICE PER ACRE

DEMAND

Vineyard | Prime

$300,000 - $700,000

Strong

Vineyard | Secondary

$165,000 - $375,000

Limited

Vineyard | Outlying

$50,000 - $165,000

Limited - Moderate

Plantable | Prime

$200,000 - $500,000

Strong

Plantable | Secondary

$165,000 - $245,000

Limited

Plantable | Outlying

$50,000 - $110,000

Limited

Homesite | Prime

$2,000,000 - $5,000,000

Moderate

Homesite | Secondary

$300,000 - $3,000,000

Limited

Homesite | Outlying

$0 - $500,000

Limited

ACTIVITY

TREND

Moderate

Stable

Limited

Stable

Limited

Stable

Limited

Stable

Limited

Stable

Limited

Stable

Moderate

Stable

Limited

Stable

Limited

Stable

SonomaCounty Sonoma County?s real estate landscape has experienced moderate to low activity over the past year, largely influenced by external forces, putting a damper on overall sales. While sales activity is muted, there has been an influx of on and off-market vineyard and winery offerings over the past few months. Increasing inventory appears to be the theme for the second half of the year. It is yet to be seen how mildew and other environmental elements will impact yields in Sonoma County, leveling out the supply, and potentially invigorating demand for the healthy vineyard inventory we see now. Prime vineyards sites throughout the county continue to see robust demand.

In parallel, the estate and luxury ranch market has undergone adjustments due to limited activity. Through Q1 and Q2 of 2023, we saw unmotivated sellers hold firm on price, but we are now observing a positive trend of price reductions, reigniting interest leading to more transactions.

Our forecast is for limited to moderate activity through the end of 2023. Secondary vineyard sites and winery activity should remain soft in Sonoma County until we see improvements in the general economy.

NOTABLE SALES Winery and Vineyard: -

Royal Wine Corp. and Herzog Wine Cellars acquires Sonoma-Loeb Winery for an undisclosed price.

-

DuMol acquires Dr. Galante Vineyards for $4,525,000

-

C and F Company, LLC acquires Soracco Family Dry Creek Vineyard for $8,100,000

Estate Properties: -

3315 Westside Rd., Healdsburg, closed for $8,500,000

-

20745 Denmark Ct., Sonoma, closed for $10,650,000

-

2020 Lawndale Rd., Kenwood, closed for $11,750,000

SonomaCounty Benchmark Values LAND USE

PRICE PER ACRE

DEMAND

Vineyard | Prime

$100,000 - $300,000

Moderate

Vineyard | Secondary

$70,000 - $100,000

Limited

Plantable | Prime

$65,000 - $110,000

Moderate

Plantable | Secondary

$25,000 - $45,000

Limited

$250,000 - $3,100,000

Moderate

Homesite | Secondary

$0 - $250,000

Limited

Sonoma/Marin | Pasture

$7,000 - $14,500

Limited

Homesite | Prime

ACTIVITY

TREND

Moderate

Stable

Limited

Stable

Moderate

Stable

Limited

Stable

Moderate

Stable

Limited

Stable

Limited

Stable

Mendocino County The market for Mendocino County vineyard, winery, and estate properties has been rather lackluster throughout 2023. Sales of vineyard properties have been limited to prime offerings in Anderson Valley and inland areas. The inflationary surge of vineyard redevelopment has put a damper on the market, as the economics do not favor replanting efforts. There is a glut of excess fruit on the market at this point in the year, which makes vineyard acquisition less than appealing in this market. Notably, there have been no significant sales of winery assets Mendocino County in 2023.

The estate and ranch market has also experienced decreased activity. Transactions have been scarce, especially within the upper price ranges for this region. Due to its northern location within the wine country, Mendocino County often feels the effects of a slowing market before its more southern neighbors.

We anticipate continued softness in the Mendocino County market throughout the remainder of 2023. This softness in vineyard asset prices may persist until mid-level fruit demand returns. Similarly, the estate and ranch market is also expected to remain subdued until we begin to witness an overall economic turnaround.

NOTABLE SALES Winery and Vineyard: -

Sonoma Donum Estate acquires Savoy Vineyard for $5,244,000

-

Wentworth Vineyards acquires Abel Vineyard for $1,400,000

-

Prudential Insurance Co. acquires Haiku Vineyard for $12,000,000

Estate Properties: -

7349 Highway 128 Boonville closed for $2,100,000

-

45150 Caspar Point Rd. closed for $2,750,000

-

34375 Pacific Reefs Rd. closed for $2,800,000

Body text

Kevin McDonald Jamie Spratling Kevin McDonald and Jamie Spratling both grew up in Northern California with strong roots throughout the Northern Wine Country. Together they bring considerable experience, cutting edge technology, and strong marketing expertise to their sellers, leveraging the Sotheby?s International brand to expose their property to the most qualified buyers. When working with a buyer their local knowledge and diligence is unparalleled. With extensive contact lists and a drive to succeed they explore every avenue available to locate and close on a client's desired property. Kevin and Jamie value integrity and feel that quality eclipses quantity; they are passionate about helping their clients actualize their real estate dreams.

Featured Listing OFF-MARKET ST. HELENA WINERY AND VINEYARD ESTATE

A coveted St. Helena Valley Floor Vineyard, Winery and Estate offering with generous entitlements and rich Napa Valley History. The desirable up-valley location is convenient and buffered from the well-traveled Highway 29 and Silverado Trail, at the end of a bucolic country lane. Encompassed by vineyards and the organic landscape of the Napa River, the agrarian setting is unrivaled, offering everything wine country often promises, but rarely delivers.

The offering consists of a substantial vineyard component, winery and public tasting room operations and multiple residences which embody a classic Napa Valley style.

A pre-WDO winery permit delivers entitlements which are nearly impossible to attain in today?s permitting environment. Access to fruit from the estate?s vineyards and substantial winery and tasting infrastructure allow for continued growth and success.

This business and real estate opportunity is primed for individual and institutional interest, offering the ability to continue the operations, relocate an existing brand and or create a lifestyle brand in an extraordinary location and setting. The offering and location are confidential. Please inquire for additional information.

Our Distinction Collaboration with Kevin McDonald and Jamie Spratling promises a distinctive and unparalleled real estate experience.

Our unwavering commitment to exceeding our individual client needs results in a personalized journey that consistently goes above and beyond expectations. We strive to connect with clients who share our vision of excellence, capitalizing on our brand?s rich heritage and sterling reputation to optimize results.

Our association with Sotheby?s International Realty extends unparalleled reach, ensuring that your property receives the best possible exposure through partnerships with leading print media outlets, in person marketing events, and social media exposure. Our commitment to quality is evident in how we employ cutting edge technology for maximum impact for our listings and utilization of our extensive contact lists for clients looking to acquire vineyards, wineries, and luxury estate properties.

Our dedication to you, our clients, extends across the globe. Our most notable example being our recent excursion to Hong Kong, where we promoted an off-market winery, during the prestigious Sotheby?s Auction House Autumn Sales event, to an international audience including consumers and real estate professionals. We are actively engaged in curating future exposure opportunities for our clients at upcoming industry events and continue to educate ourselves using our brand?s learning platform.

Our commitment to elevating your real estate experience and securing optimal results is unwavering.

We invite you to contact us to explore how we can harness the strength of our brand, draw upon our wealth of experience, and actualize your real estate objectives.

Globally Connected Sotheby?s International Realty is the only truly global real estate brand, with a network of residential brokerage companies in more than 81 countries and territories.

Through our personal relationships, our sellers reach a highly qualified group of global clientele.

© 2023 Sotheby?s International Realty. All Rights Reserved. Sotheby?s International Realty® is a registered trademark and used with permission. Each Sotheby?s International Realty office is independently owned and operated, except those operated by Sotheby?s International Realty, Inc. This material is based upon information which we consider reliable but because it has been supplied by third parties, we cannot represent that it is accurate or complete and it should not be relied upon as such. All offerings are subject to errors, omissions, changes including price or withdrawal without notice. If your property is listed with a real estate broker, please disregard. It is not our intention to solicit the offerings of other real estate brokers. We are happy to work with them and cooperate fully. Equal Housing Opportunity.