Napa Valley Debate : When Is a Winery Not a Winery?

Times Staff Writer

Just south of town, in the middle of some of the most prized vineyards of the celebrated Napa Valley, there sits a very unusual and, for many here, a very unwelcome new winery.

This winery has no equipment to squeeze the must, or juice, from any sweet chardonnay grapes; it has no stainless steel fermenting tanks coaxing the must into wine, and no oak aging casks giving the wine complexity and character.

It is, in plain fact, a warehouse and tasting room designed to sell wines made somewhere else to tourists visiting "the wine country."

"It's like opening a damned liquor store in the middle of the vineyards," groused a more conventional vintner, aghast at the effrontery.

It is also forcing America's premiere wine-making region to deal with the unusually difficult task of legally defining what a winery is--and is not.

Widespread Effect

Such a law could affect not only small operators accused of violating agricultural preserve laws, but also major wineries that open restaurants, host concerts and hawk T-shirts and cork-pullers to promote their wines.

The debate over what makes a winery is serious stuff here. Many people fear that legions of new tourist-dependent "boutique" wineries are skewing the economy so that Napa's heavenly earth someday soon may be too pricey to farm.

At the same time, however, most residents are careful to avoid criticizing tourists, because tourists help some wineries stay afloat and help Napa Valley wines in general sell better--at higher prices--despite a wine glut.

"Tourism really is a double-edged sword," said Mel Varrelman, a St. Helena accountant and chairman of the county Board of Supervisors. "It is important to the industry, but it's something we would really rather do without."

Feels Misunderstood

Tony Peju, owner of the controversial Peju Province Winery, believes he is misunderstood. He said he started his tasting-room-only operation because the task of obtaining permits for a real winery has taken longer than expected.

"We don't want to do anything that somebody else doesn't do," he said.

Besides, he claims, his business--where he sells wines "custom crushed" at another winery--could actually meet the county's current, loosely written legal definition of a winery. County officials disagree.

In any case, people do agree that the Napa Valley draws more tourists each year and that small wineries are relying more and more on them, either to establish reputations, improve cash flow or simply empty warehouses.

This, in turn, has caused some second- and third-generation wine makers and growers to resent their well-to-do new neighbors who open wineries and attract the often bothersome tourists. Old-timers also fear that their descendants will be priced out of the local real estate market.

Despite this, small wineries say they cannot afford to change.

"I think selling direct is the only way for a small winery to make it," said Daryl Sattui, owner of V. Sattui Winery and one of the most successful small vintners in the valley.

His new cut-stone winery with its adjacent delicatessen and picnic grounds is seen by other wine makers as both a marketing masterstroke and a bad example that too many other small wineries are scrambling to copy.

Napa County now has about 200 wineries, most of them small and most of them lacking the necessary county permit for public tastings. Those without permits can hold tastings only by appointment or invitation, and most do.

"When we sell a bottle of wine (at the winery) for $10, we get just about 10 bucks, not the $5 we get from wholesale distributors--and we don't have to wait 60 to 90 days to get it," Sattui said.

Sattui sells all of his wine at his winery, which is unprecedented. Most of the other small wineries instead use retail sales to help even out their cash flow between their annual fall releases, or sales, to their distributors.

"During slow periods, sales at the winery help you to meet daily sorts of things, like payroll and PG&E; (utilities)," said David Spalding of Stonegate Winery. "It's important. It can even be a matter of survival at times."

It is also important to major wineries, though not a matter of survival.

Big wineries rely on visitors to expand the wine market in general--and their own share of that market in particular. Retail sales are often seen as simply a way to cover the cost of running the tours and pouring free wine.

"There is no better place to educate--and convert--than right here, with everything at our fingertips," said Gwendolyn Rogers, visitors center director at Domaine Chandon, the elegant French-owned champagne cellar.

"Our ultimate goal, of course, is to create repeat customers out of the visitors."

Paul Wagner of the Christian Brothers said 500,000 people a year used to tour the landmark Greystone winery before it closed for structural repairs. "Ford Motor Co. could spend millions to address 500,000 people on TV for a minute; we had them here for an hour for nothing," he said.

Whether winery tours are as efficient an advertising vehicle as television may be debatable, but there is no doubting the effectiveness of the wineries' hospitality in attracting more tourists each year.

Even local bankers acknowledge the importance of tourists in the success--sometimes even the survival--of new wineries.

"One of the first things we ask is, 'What is your marketing program?' " said Robert J. Patterson, a senior vice president of Napa Valley Bank. "It's very tough to market wines now. You can't just start a winery, sit back and visit it on the weekends. It won't work."

Plying the tourist trade can be one of the easiest ways for a new winery to find a niche in today's very competitive market, he said.

Still, many residents, after recounting tales of tourists clogging traffic, stealing produce and even snooping inside private houses, wonder aloud whether wineries cater too much to tourists.

"If someone wants to start a winery and make wine, that's fine. This is the place to do it," said Bill Corey, a Calistoga homeowner who manages a local lumberyard. "But the outside money that's building wineries today is more interested in building tourist attractions. It's ruining this area."

A tourism study released a year ago by the private Napa Valley Foundation concluded that at least 2 million people visit the valley each year, and the number is growing. The study estimated that tourists spend $135 million a year here, a sum that also is likely to increase.

Businesses already have started exploiting this trend.

Four major hotels and dozens of quaint bed-and-breakfast inns have appeared in the valley. About a dozen fine restaurants, among the best and fanciest in the state, dot the northern end of the valley, where fewer than 10,000 people reside.

Perhaps the most visible, and to some the most irksome, changes are in the small towns along California 29, "winery row." Art galleries and antique shops have replaced feed stores and hardware emporiums.

Bob Dwyer, executive director of the Napa Valley Grape Growers Assn., sank into his chair and sighed while recalling the genuine, small-town atmosphere of St. Helena when he arrived in 1964. "Now look at Main Street," he said sadly. "It's one boutique after another."

Not all of the changes have been for the worse, local officials point out. A hotel in St. Helena that used to cater to bikers and brawlers now hosts tour groups and honeymooners, while the entire town of Yountville has enjoyed an economic renaissance.

Some people, however, contend that there are already too many such tourist-oriented developments. As more such businesses arrive, residents worry that the county will be pressed to allow for even more tourists--perhaps at the expense of vineyards.

"It's an invitation to grave trouble," said Jack Davies of Schramsberg Vineyards in Calistoga. "The lure of money to be made and taxes to be collected may be too much to resist."

That idea is discounted by James H. Hickey, director of the county Planning Department. He said the county's 17-year-old agricultural-preserve ordinance has successfully prevented the removal of vineyards by limiting subdivisions and corralling development within established cities.

"The county has decided that agriculture is not simply a 'holding action' until something better comes along," he said. "It decided that agriculture is the highest and best use of the land."

He said the current effort to legally define a winery--and spell out exactly what activities will be allowed at wineries within the agricultural preserve--is further proof of the county's commitment.

However, Davies, Dwyer and others aren't worried about the county's current commitment as much as the priorities of future county supervisors. They note that the "a.g. preserve law," as it is known, is only a zoning ordinance that can be repealed or amended by a simple 3-2 vote by the board.

"Everybody thinks it is cast in stone," Dwyer said, "or that there is a plaque at the entrance: 'This will be the Napa Valley forever.' Well, it's not like that at all."

Change already is evident, not only in local ambiance and shopping habits, but in the people who live here. The core of immigrant Italians and Germans is giving way to an odd mix of laid-back urban refugees and chichi jet-setters.

"Do you want to know Julia Child? It's easy," said Harvey Posert, spokesman for the Robert Mondavi Winery, which was founded by the son of an Italian immigrant. "Buy a winery and get involved. For some people, it is important enough to spend the money."

And it can involve a lot of money. Patterson, the bank vice president, said some people in the valley are paying $15,000 an acre for bare land and $30,000 to perhaps $50,000 an acre for top-producing vineyards.

"You can't pay much more than $15,000 to $20,000 an acre and have a viable economic unit," Patterson said. But people do pay more, sometimes for what he called "the romance of owning a winery."

Walter Chavoor, supervisor at Monticello Vineyards, compared it to farming in Beverly Hills.

"You buy into a life style, really," Dwyer said. "It's a wonderful thing to say at a cocktail party in, say, the south of France, 'Oh, I own vineyards in the Napa Valley.' "

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