As the largest wineries increase their vineyard holdings, industry veterans say future expansion of vineyards in Sonoma County may be minimal because there is little land left to plant.
The land that remains doesn't have the water or the warmth to support premium vineyards, and regulations on hillside planting are strong enough to dissuade those who can't afford to clear those hurdles, many say.
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"It's like going to the supermarket at the end of the day, and all the best fruits and best tomatoes are picked over," said David Freed, chairman of Silverado Premium Properties, the third-largest vineyard owner in Sonoma County.
But 15 years ago, wine industry veterans were saying essentially the same thing.
Vineyard acreage had swelled from 28,000 acres in 1989 to 44,700 acres in 1998, an increase of nearly 60 percent in just nine years, according to data on the county's grape crop collected annually by the Agriculture Commissioner's office.
"No one thought there was any more room, and then the whole Sonoma Coast thing got started," said Jon Fredrikson, president of Gomberg, Fredrikson & Associates, a Woodside wine industry consulting firm.
Over the next decade, vineyard acreage grew more than 40 percent in Sonoma County, peaking at 62,900 acres in 2009. It fell to 59,200 acres last year, after the recession led many wine consumers to trade down to cheaper wines, and growers and wineries had less capital to invest in replanting older vineyards.
Today, the 10 largest vineyard owners in Sonoma County control more than a quarter of the county's $400 million grape crop, according to a Press Democrat analysis of county property tax records.
The best vineyards are largely held by families or companies that don't want to sell, so those who want to buy in or expand will have to pay top dollar to compete. Some fear that small family farmers will recede as larger companies win out.
"It sure makes it hard for my son to buy 10 acres or 20 acres and become a grape farmer," said Pete Opatz, vice president and senior viticulturalist at Silverado Premium Properties. "He will be priced out of the market, unless his Dad wins the Lotto. When you start paying $100,000 an acre for land ... unless you have some scale and scope behind you and can keep your costs down, it becomes difficult."
Vineyard values more than doubled in the past two decades, even as new vineyards spread across the county's hills and valleys. Prices ranged from about $25,000 to $40,000 per acre in the mid '90s, but in the past several years, buyers have paid between $60,000 to about $125,000 per acre, according to the American Society of Farm Managers and Rural Appraisers.
The regulatory landscape has changed significantly since the mid 1990s, when there were fewer restrictions on planting vineyards and opening wineries than there are today.
The county passed measures to regulate hillside planting and limit erosion, restricting tree removal on steep slopes. Regulators have cracked down on water diversions from the Russian River, making it harder for growers to irrigate their land and protect their grapes from frost that can wipe out their crops.
"Now we are getting into a place in Sonoma County where we're getting into some difficult ground to develop," said Tony Linegar, the county's agricultural commissioner. "Ground that's steep, ground that has wetlands, ground that has endangered species. And some of the projects we look at now are more complicated, because they have those elements."
Smaller farmers are less able to deal with the growing amount of paperwork, permits and fees required to operate in the county, Opatz said. He feels the bureaucracy and regulations are unending, and said he's fortunate to work for a large company that can afford to hire legal and compliance staff.
"It's like a fox chewing its own leg off in a trap," Opatz said. "What you've done is you've changed the family character of the county forever, and made it much easier for people like me to operate."
Even so, his company is looking to acquire more vineyards, Freed said.
Jackson Family Wines is the largest vineyard owner in Sonoma County with about 3,230 planted acres owned by the company and its affiliates. It plans to expand its holdings here to 5,000 planted acres, said Hugh Reimers, chief operating officer.
"We love Sonoma County, it's our home," Reimers said. "They're not making any more land in Sonoma County. A lot of it is locked up in families who don't want to sell."
In the competitive landscape that vineyard buying has become, Jackson Family Wines is known for its willingness to pay the most per acre, said Dave Murray, a real estate broker in Alexander Valley.
E&J Gallo, the second-largest vineyard owner in Sonoma County with about 3,170 acres, also has picked up its vineyard buying pace in recent years.
Meanwhile, some in the wine industry speculate that Treasury Wine Estates, the Australian company that owns about 880 planted acres in Sonoma County, may be pressured sell off its U.S. assets because of its inventory problems and slow sales. Asked whether the company planned to acquire or unload any vineyards, spokesman Joel Fisher declined to comment.
Newer buyers have emerged, like Foley Family Wines, which owns about 790 planted acres in Sonoma County; Ken and Diane Wilson, who own about 250 planted acres; and Bill Price, who owns about 160 planted acres, according to county records.
As land gets more expensive and scarce, and the grapes on the land increase in price, some believe that may increase the cost to make wine in Sonoma County.
"Those that can pay more for grapes will win out," said Steve Smit, vice president of vineyards and grape management at Constellation. "The result is higher prices for wine."
But others believe fears that the industry is heading into a grape shortage and that wineries are taking over the supply of grapes are overblown.
There has been new planting in the past two to three years, taking the edge off concerns that supply would run short, said Joe Ciatti, principal at Zepponi & Company, a wine industry mergers and acquisitions firm based in Santa Rosa.
"Everyone should take a deep breath on that," Ciatti said.
Growers are rebounding financially after plentiful harvests in 2012 and 2013, and may have the capital to re-enter the vineyard buying game.
"We've seen the wineries as the big buyers the past few years, but you'll see the growers out there in the next year or two," said Tony Correia, founder of Correia-Xavier Inc., an agricultural appraisal and consulting company with offices in Fresno and Sonoma.
Any vineyard growth will be limited by what wineries can sell, and what consumers are willing to pay for high-end wine.
"When you think about growth in terms of total acreage, there's only so many winegrapes that can be purchased and produced," said Karissa Kruse, president of the Sonoma County Winegrowers, a trade group funded by local growers. "There's not an incentive to plant something that can't be sold."
Many of the best vineyards are held by families that don't want to sell, brokers and owners said.
The Sangiacomo family, which owns about 1,175 planted acres in Sonoma County, hasn't really expanded its vineyard holdings since 2000, although it has invested in replanting less productive vines, said Steve Sangiacomo, partner at Sangiacomo Family Vineyards. The family would consider buying more, but it's getting tougher for growers to pay what wineries are willing to shell out for vineyards, he said. But his family plans to hold on to its vineyards.
"We're committed to Sonoma County," Sangiacomo said. "It's our bread and butter. It's our home."
The growers' commitment to Sonoma County is unshaken despite recent studies by Stanford University and other institutions that predict rising temperatures could alter the climate in the world's leading wine regions.
Growers said they're already learning techniques to keep the vineyards cool and protect grapes from heat. But in general, most said climate change is not altering their vineyard plans.
"It's something we're concerned about," said Doug McIlroy, director of winegrowing for Rodney Strong Vineyards, a Healdsburg winery. "We're carbon neutral here, we farm sustainably, and we're definitely concerned about climate change, but it's not something we've really had to worry about on the vineyard side at this point."