(Wines&Vines) - At the annual North Coast meeting of Allied Grape Growers last week, Tony Correia of The Correia Co. reported about California vineyards and land prices, correlating those to a dramatic jump in crop value in Napa and Sonoma counties from 2011 to 2012. They doubled for Sonoma Pinot Noir and grew 50% for Napa Cabernet.

The rise in value of the total California crop value itself has been spectacular during the past four decades. In 1973, the California grape crop totaled about $40 million, rising sharply until 2000, when it plateaued at about $1.75 billion before starting a steep rise again in 2010. It now sits at a little over $3 billion.

During that time, tonnage grew from 1 million to 4 million tons, while average price per ton rose from $200 to $750 for the state (and obviously much higher in Napa and Sonoma counties).

The total crop value was relatively static from 1997 to 2008, when it began a significant rise. A major factor in the increase was “the great grape shortage of 2012,” as Correia put it. “Wineries returned to the market, aggressively firming up sourcing, buying vineyards and land to plant new vineyards” as a result of the grape shortage. 

Three recent deals underscored the demand for vineyards: Duckhorn Wine Co. bought the famed Three Palms Merlot Vineyard in May.

The Wine Group bought Benziger Family Winery and its prime Sonoma Valley land in June, then Constellation Brands bought the Meiomi brand for $315 million from Joe Wagner, who said he would use the proceeds to buy 2,000 to 3,000 acres of California vineyards in the next five years. 

Napa Valley

Correia then took a look at land prices in different grapegrowing regions of California, starting with the most valuable, Napa Valley.

In 2014, Napa County Cabernet Sauvignon averaged $6,000 per ton, and about 67,000 tons were crushed.—compared to 33,000 tons at $1,500 in 1995.

What’s particularly interesting is that after averaging about $250 million per year from 2005 to 2011, the average value jumped 50% to $375 million from 2012 through 2014.

Cabernet acreage grew 87% from 1995 to 2014, with Merlot up 25% and Pinot Noir up 19%, while Chardonnay acreage dropped 21%.

Vineyard values track Cabernet grape prices, as expected; Chardonnay prices per ton have remained static since 2001. 

Around 2004, the prices of prime Napa vineyards made a big jump—from a $175,000 maximum per acre to the more current value of $300,000 per acre. (This land starts at about $225,000 per acre.)