1,100 + Wine Producers in the Napa Valley?

In the “Local Tastes” column, I will be exploring food and wine throughout the Napa Valley. As a part of the process, I wanted to know the number of restaurants and wineries in the area. That would seem to be a pretty straightforward question, but it has turned out to be much more complicated than I originally imagined.

Search the web and you’ll find many references suggesting there are 475 wineries in the Napa Valley. These are often defined as having a physical location (e.g., Mondavi or Castello di Amorosa), but I know from experience that there are many other wine producers in Napa that either have only tasting rooms or make and sell their wine “virtually.”

Virtual wine producers do not have a winery but instead make their wine in what is called a custom-crush facility. This is how I make my own wine. The way it works is that producers supply grapes (either by growing them or purchasing them from a grower) and then rent space at an existing winery to make the wine. They can either make the wine themselves, hire a consulting winemaker or have the facility make the wine. This practice has been going on for years. But back in the early 2000s it became especially popular, because it allowed a producer to make a Napa Valley wine and then try to sell it in the marketplace as a bona-fide Napa Valley brand.

This new accessibility, coupled with the rising price of high-end Napa Valley wines, resulted in many would-be vintners entering the winemaking marketplace. Grape farmers took advantage of this opportunity, too, with many starting their own wine brands.

The growers also came to realize (some much faster than others, such as Beckstoffer and Nickel and Nickel) that “branding” their vineyard’s name on a wine bottle allowed for higher prices of both wine and grapes. Some of these growers helped build their vineyard’s brand by leveraging the burgeoning virtual winery marketplace, selling grapes in small volumes at very high prices.

The situation created a perfect storm of relatively easy access to creating new wine brands and raising prices, so even more people rushed to become Napa Valley vintners.

For those entering into the wine business through the standard process of obtaining vineyard land and building or purchasing a winery, going about the business of creating a wine empire remains basically the same. But for those who created virtual brands, it was the Wild West. Some of these non-land-owning wineries have failed, while others have been wildly successful. Recently, Constellation Brands paid $285 million for The Prisoner, a wine brand with no strong connection to any place or type of grape. The Prisoner brand sourced grapes for its flagship wine “from more than 80 vineyards throughout the Napa Valley’s premier wine-growing region,” according to their website. They also have a very hip tasting room in St. Helena.

Not all such strong wine brands are The Prisoner, yet I am sure many investors are looking at such brands with new interest because only six years ago Huneeus Vintners (founder of Quintessa winery in Rutherford) bought The Prisoner for $40 million. Making a $235 million profit in six years will get people’s attention.

But back to the question at hand. How many “wineries” are in the Napa Valley?

Besides the oft-quoted figure of 475, Napa County’s website has a list of around 500, but I don’t think these numbers include many of the virtual wineries. So, knowing that wineries need permits to operate, I looked at the number the Alcohol and Tobacco Tax and Trade Bureau has issued — 969 permits within Napa County for the “production, bottling, importation or distribution of beverage alcohol products.” But since many Napa wineries have multiple permits, that’s probably not the number, either. That being the case, I looked at the specific permits needed, such as Type 02 (“winegrower” or winery permit).

According to the state Department of Alcoholic Beverage Control, there were 1,335 Type 02 permits issued in the Napa area, but at least some virtual wine sellers use a Type 17 (beer and wine wholesale) permit, and there are 722 of those.

Was I in the weeds yet? A little. It was a lot harder than I thought to find the exact number of wineries. David Thompson is even trying to answer this question the old-fashioned way: He’s actually trying to visit all the Napa Valley wine producers he can find.

“I’ve personally been to more than 800,” he said. “I’ve created a database that is on our site (napawineproject.com). It has over 1,100 Napa Valley wine producers listed, and this does not include their second labels or producers making Napa wine outside of the Napa Valley. If I included those, I bet the number would be in the thousands.”

Knowing the actual number matters, because for this column I am interested in finding out what makes the world of wine and food tick in the Napa Valley. Part of that mission is understanding the playing field and part is exploring some of them together. As it stands, the range for wineries that I could possibly visit seems to be from around 500 physical wineries and an additional 600-plus virtual wineries.

When I mentioned this 1,100-plus number to Napa-Valley-vintner and restaurateur, Ted Hall, he said that including the virtual wineries probably didn’t make much sense seeing how many of them were likely short-term projects and so wouldn’t be around for very long.

“Besides,” he said, “in order to make a viable winery business, you have to produce over 50,000 cases to make the numbers work.”

Maybe Hall is right, but I can’t forget how The Prisoner started: a small virtual brand that just sold for hundreds of millions of dollars. Is the world of wine changing in the Napa Valley? Do the old rules still apply? We may never agree on the final number of wineries, but if you have some opinion on the topic, let me know.

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Originally published in the Napa Register, April 2016