Top 10 business stories of 2015 in Sonoma County

Simply put, 2015 was a good year for business in Sonoma County.

Like the rest of the Bay Area, the local housing and job markets remained strong thanks to a buoyant regional economy that showed no signs of slowing — despite the risks that an increasing number of workers are finding themselves priced out of living in the area.

The wine industry, a major cog in the county's economy that also helps drive the related tourism and restaurant industries, continued its growth despite a smaller grape harvest this fall.

But one of the most notable aspects of the past year was the way niche categories in the local farm-to-table food culture began breaking out on their own, both nationally and internationally. The trend was led by the county's booming craft beer business. Specialty food producers also made headlines, as well as companies preparing for the further legalization of marijuana.

As we look back on the past year, here are the top 10 business stories of 2015 in Sonoma County, including some topics you likely will read even more about in coming years:

1. Lagunitas Brewing Co. continues rapid expansion, teams with Heineken

It was only a matter of time before the ramifications of the tremendous growth of the craft beer sector would impact the local industry, which has roughly two dozen breweries. And the most likely candidate would be fast-growing Lagunitas Brewing Co.

In June, the Petaluma company — the nation's sixth-largest craft brewer — announced that it would open its third U.S. plant in the Southern Californian city of Azusa, on the heels of opening its Chicago plant last year.

While Lagunitas invested in expanding, many craft brewers sold out to bigger companies as the sector continued its consolidation. But Lagunitas founder and owner Tony Magee has always been a little bit different, even in an industry that prides itself on standing out from the crowd. And he did just that when he announced what Lagunitas would do this year in a sink-or-swim environment that requires large amounts of capital to grow. In September, Magee announced that he was selling a 50 percent stake in his company to Heineken International to bring his hoppy beers across the globe, starting in Mexico. The deal valued Lagunitas at an eye-popping sum of around $1 billion.

Under the unusual partnership, Magee will remain chairman and continue to lead the company, quieting charges in some quarters that he sold out.

'We can partner with one of the world's greatest family-owned, really beer-centric companies to find our way into all of these markets globally,' Magee said of the deal.

2. Rising home prices, rents bring new attention to supply of housing

Sonoma County home prices climbed enough in 2015 to justify building new homes, a product in short supply since the housing bubble burst in 2008. But rents kept rising last year, causing both business leaders and elected officials to worry that a lack of affordable housing would hurt both county residents and the economy.

The median price of a single-family home peaked this year in June at $546,000, its highest level in nearly eight years and within 15 percent of the record median price of $619,000 set in August 2005. The median since has since slipped, ending November at $529,275.

Rising prices were cited as a prime reason for a significant increase in new housing projects that emerged this fall. A December survey by The Press Democrat found builders moving forward with more than 20 projects and at least 1,400 units, by far the most homes in at least seven years.

However, no one is predicting that the building upturn will end what local leaders are calling a housing crisis for renters. Both county and business leaders held meetings this year to explore what might be done to boost the supply of housing, especially for renters. For the third quarter, the average apartment rent climbed 8.8 percent from a year earlier to $1,719 a month, according to Novato-based rent research firm Real Answers. Over the past four years, the average rent has increased 42 percent from $1,213 in third quarter 2011.

3. Winery acquisitions

Continuing a pattern of past years, the North Coast wine industry saw more family-owned wineries sell out to larger competitors. And no buyer was more active locally than the country's largest wine company: E&J Gallo Winery.

The Modesto-based vintner expanded its presence in the lucrative premium wine market of Sonoma and Napa counties. In March, Gallo purchased J Vineyards and Winery in Healdsburg from Judy Jordan. It followed that deal with one in July to buy the historic Asti winery — one of the largest production facilities in Sonoma County — and the Souverain brand from Treasury Wine Estates. It finished the year by purchasing The Ranch Winery in St. Helena.

Still, the biggest deal of the year was conducted by someone else: Constellation Brands purchased Joe Wagner's Meiomi wine brand for $315 million — a transaction that did not include land or facilities. It was further confirmation there appears to be no end in sight to growth in the premium pinot noir market.

Two prominent wine families also raised eyebrows when they sold their Glen Ellen wineries. In June, The Wine Group acquired the Benziger Family Winery. One month later, Vintage Wine Estates bought B.R. Cohn Winery.

4. Low unemployment, strong job growth

It's a buyer's market for job seekers this year as the county's unemployment rate reached an eight-year low in September at 3.8 percent, another signal of the relative healthiness of the local economy. By November, it ticked up to 4.2 percent, but that rate was still the fifth-lowest in the state.

Even banking, which suffered major job losses during the Great Recession, rebounded as marketplace lender SoFi established a Healdsburg office last year and was on pace to hire 200 workers in Sonoma County by year's end. Construction jobs also saw an increase in demand.

For many employers, the tight labor market presented challenges to finding qualified applicants, especially in high-demand jobs such as technology.

Some niche businesses, such as industrial sewing and hybrid-engine auto repair, were working with local economic development officials to create classes for specialized training given the high demand for such workers.

5. Amy's Kitchen gets into the fast-food business

The crowds lined up and declared the organic burgers, burritos and salads a hit when Petaluma-based Amy's Kitchen, already a natural foods powerhouse, opened its first fast-food restaurant in July.

Bay Area residents have flocked to the Amy's Drive Thru in Rohnert Park for a chance to taste its all-vegetarian menu. All the food is certified organic except the sodas, which are free of preservatives.

Food industry experts are watching how the company's first organic fast-food restaurant will change the industry.

Amy's Kitchen, meanwhile, already ranks among the top 20 U.S. makers of frozen meals and entrees. Last spring, it employed 2,200 workers in three states with plans to eventually build a new factory in New York state.

Amy's owners, Rachel and Andy Berliner, have said more restaurants are in the works, but said they expect only a few in the next year or so.

6. Cyan purchased

In the 1990s, an influx of tech companies made Sonoma County such a hub it became known as Telecom Valley, employing thousands of workers and making some early investors incredibly wealthy. But those days are long gone. Though a few remnants linger, the sector has an increasingly smaller footprint. For example, the remains of the first local tech startup, the Alcatel-Lucent facility in southeast Petaluma, closed its doors in June.

But the most notable news occurred in May when Ciena Corp. bought Petaluma-based Cyan Inc. in a $400 million deal. Cyan was co-founded in 2006 by Mike Hatfield, a local legend in tech circles for founding companies, spinning them off and then moving on to the next venture.

Under the deal, the Petaluma facility will be home to 'a new center of excellence' for Ciena, a Hanover, Md., company. Hatfield was appointed in August as senior vice president to lead a division that will merge the software between the two companies.

7. Hershey buys Krave jerky

Sonoma County, once known primarily for its wine, is increasingly becoming known for its specialty food products, whether it's olive oil, hard cider or cheese. Those products are not only attracting the interest of foodies but also food companies looking to increase their market share.

Such was the case in January when chocolate giant Hershey Co. bought Jon Sebastiani's Krave Pure Foods Inc. in a deal that reportedly valued the producer of exotic-flavored beef jerky between $200 million and $300 million. How exotic? It has products such as Black Cherry Barbeque Pork Jerky, Basil Citrus Turkey Jerky and Sweet Chipotle Beef Jerky.

But those unusual flavors helped Krave become the No. 2 jerky brand in U.S. stores, generating about $35 million in net sales in 2014.

Krave remained based in Sonoma, where 25 workers were employed at the time of purchase in offices near the Sonoma Plaza. Sebastiani, a member of the well-known winemaking family, remained as president.

8. Uber goes hard into Wine Country

After first setting up shop in the North Bay in the spring of 2014, San Francisco-based Uber made tremendous inroads into the local taxi market this year with use of its ride-hailing smartphone app and its army of 2,000 drivers in Napa and Sonoma counties.

Through November, Uber drivers have completed more than 150,000 trips in Sonoma County and nearly 300,000 trips in Napa County, seriously disrupting the local taxi and limousine market along the way.

This year, Uber concentrated on marketing to tourists who go from winery to winery, offering a less expensive alternative to all-day drivers, along with the added flexibility of choosing how long to linger at each location. It specifically targeted young professionals who come up from the San Francisco area for the day and do not want the burden of limiting their alcohol consumption because they have to drive back home.

In response, Petaluma's Pure Luxury Transportation launched its own on-demand car service available by app, BlinkCar, using trained drivers with regular or luxury sedans or SUVs.

9. Scotts Miracle-Gro buys General Hydroponics

As the state-by-state march toward the legalization of marijuana continues to grow — including the possibility of being on the ballot in California next year — the business of the bud is swelling as well.

The North Coast will be directly impacted by the outcome. Mendocino County is part of the Emerald Triangle, the largest pot-growing region in the country and noted for producing some of the highest quality herb.

But the ancillary businesses related to the crop are also becoming more valuable. That was proven in April when a subsidiary of fertilizer giant Scotts Miracle-Gro Co. bought General Hydroponics Inc., a Santa Rosa-based producer of liquid nutrients used to grow food, flowers and indoor marijuana. Financial terms were not disclosed but it was reported by Columbus Business First to be $130 million.

Larry Brooke, a plant scientist and a proponent of medical marijuana, founded General Hydroponics more than 35 years ago in Sebastopol and expanded into a global supplier, with manufacturing plants in Santa Rosa, West Virginia and France.

'I wasn't looking to make the company to sell it,' Brooke said in April. 'I was making a company to serve the world and my need to be part of something that was fun.'

10. Hospital merger influences the future of Memorial, Petaluma Valley hospitals

St. Joseph Health, which operates two hospitals and employs some 4,000 people in Sonoma County, announced an agreement in November to merge with Providence Health & Services, a large Catholic health care provider that serves the Pacific Northwest.

The new partnership, Providence St. Joseph Health, would have a presence in the western United States, with 50 hospitals in Texas, New Mexico, California, Oregon, Washington, Montana and Alaska.

It could potentially have a significant impact on the local economy as St. Joseph Health is one of the largest private employers in Sonoma County, where it operates Santa Rosa Memorial and Petaluma Valley hospitals. It has an additional 1,300 employees in Napa County, where it operates Queen of the Valley Medical Center in Napa.

The state Attorney General's Office is currently collecting information about the merger, and St. Joseph Health officials expect regulators to review the proposed merger by late January.

Staff Writers Robert Digitale and Martin Espinoza contributed to this report. You can reach Staff Writer Bill Swindell at 521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.