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Sonoma, Napa wineries bullish on premium chardonnay market

In the wine world, cabernet sauvignon has been described as the king of the grape varietals while chardonnay is known as the queen.

But the queen has been a little neglected in the overall conversation within the wine industry between the skyrocketing prices for cult cab out of Napa Valley and the fandom of pinot noir from such areas as the Sonoma Coast and Russian River Valley.

But in fact, the green-skinned grape that originated in Burgundy, France, is the biggest seller by volume in the United States and a staple of most wineries and supermarket shelves. The premium and luxury chardonnay market led by Sonoma and Napa counties has continued to grow for the wine that comes in a range of styles but is mostly known for its subtle tropical flavors.

That was especially spotlighted when the Australian wine company Treasury Wine Estates last month bought the Frank Family Vineyards in Calistoga for $315 million. Its executives specifically noted the upscale chardonnay market as an incentive in buying the family winery.

“Frank Family has a strong position in the large and growing U.S. luxury chardonnay market, and combined with our existing portfolio, will see us now ranked as the No. 3 overall in luxury chardonnay and No. 2 in $25 and above,” Ben Dollard, president of the company’s America division, said on a conference call announcing the deal.

In fact, while overall chardonnay volume decreased by almost 7% in 2020 from the previous year, the market for bottles priced at $25 and above grew by 6%, according to data from the Wine & Spirits Wholesalers of America.

Wine sales are growing significantly in the direct-to-consumer market and luxury chardonnay also has seen a boost in that category.

Bottles in the varietal priced from $30 to $50 have increased 13% while those in the $50 to $100 range have climbed by 17% over the past year as of September, according to data provided by Sovos ShipCompliant and Wines Vines Analytics firms.

“It’s not so good at the lower end, but it’s much better as you go up the range. It’s not growing as fast as luxury cabernet sauvignon, but it’s still growing,” said Danny Brager, an alcohol beverage industry consultant.

That’s no surprise for David Ramey, the winemaker who founded Ramey Wine Cellars in Healdsburg. Earlier this year, he turned ownership over to his children, Claire and Alan.

The winery has sold out of its single-vineyard chardonnays. Its 2019 vintage will be released early next year, and the winery is raising the price on it from $70 to $75 a bottle.

“Business is business. When you are sold out, you get to raise the price,” Ramey noted.

The winery annually makes between 20,000 and 25,000 cases of seven different chardonnays.

The winemaker, who once interned at the famous Château Petrus winery in Bordeaux, is a proponent of using oak barrel fermentation. He prefers only 15% from new barrels so the vintage is not an overly oaky-tasting wine, but one with a nuance of complexity in the mouthfeel.

Ramey also noted chardonnay, unlike other aromatic white wines, goes through malolactic fermentation, which converts the malic acid into lactic acid in the juice to stabilize the wine and adds a softer acidity.

“That’s one of the two things that make it (chardonnay) the red wine of whites and makes it the most compelling and complex white wine in the world,” he said of chardonnay.

The winemaker then made this bold statement: Some of the wines made from the Sonoma Coast and Russian River Valley grapes by local wineries are “in many cases, better chardonnay than Burgundy is.”

Rick Tigner, the chief executive officer of Jackson Family Wines, is also optimistic about the growth of the premium segment of chardonnay.

The Santa Rosa company was founded by the late Jess Jackson, who turned Kendall-Jackson’s Vintner’s Reserve into the country’s best-selling chardonnay for the past 30 years. Generations of consumers have gravitated to the company’s flagship brand for its slightly sweet, yet crisp flavor.

Jackson Family Wines is moving out of the below-$15 a bottle category and using its large land holdings across California and Oregon to showcase the different types of chardonnay through its numerous brands, such as La Crema, Copain and Gran Moraine in Oregon, he said.

For example, vineyards in Santa Barbara produce a more tropical flavor, while those grapes around Monterey have a more citrus taste. Sonoma County fruit has the flavors of pears and apples, Tigner said.

“The chardonnay category has more than one style. And then for us, we've been expanding in the chardonnay category,” he said.

The company is especially bullish about its Gran Moraine label, which was founded in 2014 and located in Oregon’s Willamette Valley. The winery is producing a blanc de blanc sparkling wine from chardonnay grapes, which is selling for $90 a bottle on its website.

“I’m excited about us venturing into the sparkling wine business because the sparkling wine business is actually using chardonnay and pinot noir grapes, which we are experts at,” Tigner said.

The popularity of the grape also has boosted prices for local farmers, though it is not as valued in the marketplace as some less plentiful reds like pinot noir and cabernet franc. The latter was the highest-priced grape variety at $3,535 per ton on average in Sonoma County, according to the county agriculture department.

The chardonnay grape is the largest grape variety harvested by tonnage in Sonoma County. Last year, 47,878 tons were picked with an average price per ton of $2,296, according to Turrentine Brokerage.

The value of the grape has grown steadily over the years -- $1,845 per ton average in 2010 and at $1,590 in 2005, according to the firm.

The grape variety has seen single-digit growth from buyers in recent years even with such a large marketplace for wineries to select from, said Brian Clements, a partner at Turrentine Brokerage. Fruit from the Sonoma Coast and Russian River Valley wine regions attract the highest price given their reputation.

“Chardonnay is always one of those varieties that somebody around California is looking for. It’s a huge variety that’s in demand one way or another,” Clements said.

That was proved the past week when Foley Family Wines bought Chateau St. Jean in Kenwood from Treasury Wine Estates and said it would refocus the winery on producing single-vineyard chardonnay wines.

Founder Bill Foley has noted he has been a longtime white wine fan and Chateau St. Jean will compliment his company’s other Sonoma County holdings, such as Chalk Hill Estate Vineyards and Ferrari-Carano Vineyards and Winery, both of which are in Healdsburg.

There will be some challenges going forward, especially in Napa County where chardonnay vineyards represent slightly less than 6,000 acres out of almost 47,000 available acres.

In addition, an increasing number of chardonnay vineyards are being replanted to cabernet sauvignon sites as the latter grape variety can fetch more than $3,200 per ton than chardonnay on average based on 2020 prices, according to Jon Moramarco, managing partner of wine industry consulting group bw166.

The average price in Napa County last year for chardonnay was at $3,028 per ton, according to the Napa County Agriculture Department.

“The supply has gone down to a degree for some of the chardonnay producers, and so actually chardonnay at the luxury price is becoming more difficult to get,” Moramarco said of Napa County.

You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.

Bill Swindell

Business, Beer and Wine, The Press Democrat  

In the North Coast, we are surrounded by hundreds of wineries along with some of the best breweries, cidermakers and distillers. These industries produce an abundance of drinks as well as good stories – and those are what I’m interested in writing. I also keep my eye on our growing cannabis industry and other agricultural crops, which have provided the backbone for our food-and-wine culture for generations.

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