More than 20 vineyards and wineries in California's Paso Robles region have changed hands in the past two years as 'lifestyle' owners have succumbed to financial pressures and sold up, according to a new report.
Paso Robles and its sub-regions. Credit: Paso Robles Wine Country Alliance / Mike Bobbit
Estate agency Pacifica said 18 vineyards and five wineries got new owners during 2013 and 2014. The wineries were sold for an average price of $3.2m and the vineyards for $2.24m, it said.
Pacifica’s figures show that that Napa Valley and Sonoma are far from the only areas on investors’ radars, but it cited financial difficulties as a key reason for owners selling up in Paso Robles.
‘The majority of winery and vineyard sales over the last two years have been dominated by asset-only and distressed sales,’ said Newlin Hastings, of Pacifica’s wine division.
Paul Shannon, also of Pacifica, said most of the sales resulted from a combination of weaker economic conditions in the area and so-called ‘lifestyle’ buyers realising that the reality of owning a vineyard doesn’t always match the dream.
‘The issue was that distribution is extremely hard to pick up and they didn’t necessarily have the education on the actual cost to run a winery,’ Shannon told Decanter.com. He added that many also failed to properly estimate the amount of marketing needed to stand out in a wine region that has around 250 wineries.
Vineyard land remains relatively in cheap in Paso Robles, a large American Viticultural Area covering 25,000 hectares of land. Vineyard land sells for $20,000 per acre ($50,000 per hectare) on average, compared to between $50,000 and $100,000 per acre in Napa Valley and Sonoma.
Estate agency Knight Frank said recently that vineyard prices in Sonoma County were rising faster than in any other wine region worldwide.
Pacifica believes recent price rises in California’s better-known wine areas are starting to ‘trickle down’ to Paso Robles.
Shannon said Pacifica wants to take lifestyle purchases out of the market and there are signs that this is happening with recent deals.
‘Most of the buyers are coming in from Napa and looking to purchase some established brands in the area,’ he said. ‘Second, land values are up to pre-recession prices, and above in some cases, and there is a lot more knowledge in the area.’
He added, ‘There are still quite a few wineries that are small family run wineries with no succession planning and they will probably move as asset only or close to asset only prices but the price per ace of prime grape ground is still substantially lower than a Napa or Sonoma County.’
Written by Chris Mercer