Top 10 Sonoma County business stories in 2021

We greeted 2021 in the throes of a major uptick of coronavirus cases in which many local retailers were forced to revert to a grab-and-go business model and a wide swath of employees continued to work from home.

Twelve months later, 2021 is ending with fears over a new variant that is much more transmissible.

But for the most part, 2021 was a year when the local economy rebounded from the depths of COVID-19, thanks to an aggressive vaccination effort that mitigated the pandemic along with stimulus dollars from federal and state sources.

Things aren’t completely back to normal. But there were bright spots: Unemployment dropped. Tourists returned. Customers went shopping. And notable businesses implemented growth plans.

The regional economy also was boosted with no significant wildfires nor smoke in Sonoma County that resulted in poor air quality.

Here are Sonoma County's top 10 business stories for 2021:

1. Economy gets back to near normal. The bounce the regional economy took this year is most starkly seen through the declining jobless rate in Sonoma County.

In January, the level was at 7.1% and by November it had dropped to 3.7%, near the mark before the health crisis. Even with the progress, civilian employment in the county stood at 247,600 workers in November, which was about 8,000 jobs below the start of the pandemic.

The restaurant industry and government still lag on job loss while construction and manufacturing have rebounded, said Sonoma State University economist Robert Eyler.

Construction will grow even more in future years with a continued need to build more residential housing along with passage of the federal infrastructure bill. In that legislations, California will receive more than $25 billion for highways, $4.2 billion for bridges and $9.4 billion for public transportation.

Local businesses also celebrated the fact the county avoided major wildfires in the region. That especially impacts the tourist sector that is a major driver of the Sonoma County economy. PG&E also had very limited preemptive power shut-offs that in the past has inconvenienced its local customers.

2. Home prices continue to climb. Summer 2020 marked the latest boom in the Sonoma County home market, but 2021 may have been the year a ‘new normal’ for home buying set in.

Historic high home prices this year continued to be driven by buyers from San Francisco, Silicon Valley and beyond pouring into the North Bay. And the lack of properties for sale as the region continued to rebuild the roughly 6,000 homes wiped out in wildfires since 2017 only put more pressure on real estate values.

In June 2021, the median sale price of a single-family home in the county reached an all-time high of $825,000. Prices have softened since — to $775,000 in November — but remain around 15% higher than pre-pandemic.

Local real estate agents say even though the intense competition for homes began to subside in the second half of 2021, they expect higher prices for the foreseeable future. That’s because with the shift to remote work appearing permanent, Sonoma County could remain a viable option for buyers who may otherwise not have considered leaving urban centers in the Bay Area and the rest of California.

The influx has raised concerns about the region’s already existing housing shortage — and whether middle-class families in the county will ever be able to afford to buy homes.

But anyone counting on a local housing bubble on the verge of bursting shouldn’t get their hopes up, local real estate agents and economists say. Unlike the risky lending that fueled the speculative boom in 2007, today’s hot market is mainly the result of simple supply and demand.

“I think we’re going to be cruising at this altitude for the next two to three years,” Sonoma State University’s Eyler told The Press Democrat in October.

3. Wine industry consolidation ramps up: The North Coast wine industry resembled a Monopoly board game this year with major and mid-size wine companies trying to get bigger to gain more market share.

The biggest deal occurred in early 2021 when E. & J. Gallo Winery finished its $810 million mega-deal with Constellation Brands Inc. Gallo, the nation’s largest wine company, acquired such budget brands as Clos du Bois and Ravenswood.

That transaction set in motion more mergers and acquisitions. In the spring, the Duckhorn Portfolio of St. Helena and Vintage Wine Estates of Santa Rosa announced they would become publicly traded companies to finance additional acquisitions.

In July, Napa-based Delicato Family Wines bought the Francis Ford Coppola Winery of Geyserville as the fifth-largest wine company in the country wanted to grow its premium portfolio.

The year ended with Foley Family Wines of Santa Rosa buying Chateau St. Jean in Kenwood. Founder Bill Foley wanted to return the beloved winery back to its glory days with a focus on single-vineyard chardonnay and pinot noir wines priced for the premium category.

4. Cannabis blues. The growth of the cannabis industry hit the biggest roadblock this year since the 2016 passage of Proposition 64, which legalized weed for recreational use.

Small growers spoke openly about concern over their long-term viability as they face a state cultivation tax that will go up Jan. 1, in addition to local taxes that are assessed. The tax bump comes as the price for wholesale marijuana in the regulated market dropped by as much as 50% this year.

Growers also are competing with illicit marijuana coming in from such places as Oregon and Oklahoma. “Our industry is in deep trouble,” Erich Pearson, founder and chief executive officer of Sparc, said last month. He also operates a biodynamic cannabis farm in Glen Ellen.

Industry leaders throughout the state have called on California legislators to lift the state cultivation tax, impose a three-year suspension of the state excise tax on the plant and allow more dispensaries to be able to operate, especially in such areas as Napa and Marin counties that have been resistant to the emerging sector.

In Santa Rosa, there is a healthy competition at the retail level as at least 14 dispensaries are slated to operate in 2021.

5. Tourism rebounds. The Sonoma County tourism industry bounced back in 2021, aided by a higher vaccination rate that allowed visitors to feel more comfortable to move about the state and country.

Hospitality businesses also were helped with a year that did not feature any significant wildfires in the North Bay. That marked a contrast with 2020, when tourism spending plunged by essentially half to $1.1 billion from 2019.

The higher traffic was experienced at Charles M. Schulz-Sonoma County Airport that through November had 390,484 passengers, which represented a 112% increase from the previous year. That level is still down about 12% from 2019.

The airport was aided by discount carrier Avelo Airlines adding flights between Sonoma County and Las Vegas. Alaska Airlines also added more flights.

Hotels also saw an uptick during the summer season as occupancy rates were close to 90% on weekends. New hotel openings also continued, such as The Stavrand Russian River Valley in Guerneville. The luxury space also had more competition with the Four Seasons Resort and Residences Napa Valley opening in Calistoga, where rates this past week started at $1,200 a night.

The activity took place even though many large-scale events did not fully return, with the notable exception of those at the Sonoma Raceway. The local industry also benefited as the federal government last month allowed fully vaccinated tourists to fly into this country, opening up more possibilities for visitors to experience the North Coast.

6. Agriculture weathers drought. Local farmers and ranchers faced a challenge with the drought this year. Dairy ranchers were affected the most as grassland went brown earlier than usual.

In response, they had to truck in water to maintain their livestock while others had to sell a portion of their herd to manage finances.

The local wine grape industry also was affected as some farmers had to let some of their vineyards go fallow with no nearby available water source. The long-term consequences of a tighter water supply also had more growers switching to wind machines, as opposed to overhead sprinklers, in their bid to prevent vine damage during spring freezes.

However, the local apple crop fared better as it is more drought resistant especially compared to some vegetables that are grown on small plots around the region.

The past year for local farms was still on a course to perform better than 2020, which resulted in gross production value of $680.6 million, according to the annual Sonoma County crop report released this month.

7. Retailers bullish. Independent retailers across Sonoma County reported strong holiday season sales heading into the late December with consumers looking for in-person shopping rather than a one-click experience on Amazon.

Additionally, such local stores as Ooh La Luxe and Bow N Arrow Clothing have found success by forging a strong online presence to go with their brick-and-mortar stores.

Outdoor shopping areas, such as The Barlow in Sebastopol and Montgomery Village, had significant foot traffic. The latter shopping complex was sold by David and Melissa Codding to WS Development, a large developer out of metro Boston that pledged to pour more resources into the 70-year landmark where generations of local families have shopped.

The increased activity also carried over to the auto lot as local car dealers reported ramped up buying even with less inventory for both new and used cars.

8. Beer expansion. Local brewers showed signs of growth after a rough 2020 for the industry when overall U.S. beer volume sales were down 3%. The biggest news was when HenHouse Brewing Co. of Santa Rosa announced this fall it was opening its third location next year after purchasing the Iron Springs Pub & Brewery in Fairfax.

The brewery, known for its rotating series of hoppy India pale ales, will for the first time add its own food component to a HenHouse taproom. In addition, Crooked Goat Brewing Co. of Sebastopol said it would expand into Petaluma at the vacant property at Howard Street and Western Avenue just west of downtown.

In related news, Seismic Brewing Co. of Santa Rosa engaged in a legal battle with Reyes Holdings, the largest beer wholesaler in the country. Seismic alleges Reyes and its various distributorships are engaging in anti-competitive practices that harms California beer consumers.

9. Local food industry goes more plant-based. One of the biggest local business stories this year was the growth at Miyoko’s Creamery in Petaluma. The maker of plant-based butter and cheese received $52 million in a round of investor funding to help ramp up more production.

The company has a major focus on its new liquid mozzarella that more properly melts on a pizza to mimic regular cheese. That activity was complemented by Amy’s Kitchen of Petaluma, a vegetarian food-maker which had about $600 million in annual revenues in 2020. Amy’s opened a new drive-thru restaurant in Roseville this month and the company wants to have at least 25 restaurants within the next five years.

The growth in the food trend will continue next year when Little Saint will open its plant-based cafe at the former site of Healdsburg SHED.

10. Local economic development official leaves. Economic Development Board Executive Director Sheba Person-Whitley left her job after 2½ years, citing a pattern of racial bias and microaggressions that she said made it untenable for her.

She left for a position as a regional director at the U.S. Economic Development Administration. The announcement sparked questions about the commitment to diversity within county government. In the aftermath, Ethan Brown was selected to serve as interim director for the board.

Staff Writer Ethan Varian contributed to this story. You can reach Staff Writer Bill Swindell at 707-521-5233 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.