Wednesday, May 18, 2005

Napa Winery Permit Issues

The situation I wrote about in Temecula is an interesting one, given what continues to evolve in Napa.

Napa county closely regulates winery permits - that is, they administer at the county level who can and who cannot make wine on their property and in what volumes. In 1990, Napa county defined what a "winery" is and limited new wineries to land parcels of 10 or more acres. Parcels of 10 or more acres now have substantially more value as many of them can (theoretically) be enhanced with a winery or at least a winery permit.

This has, of course, gradually created a NIMBY atmosphere where those who own or have recently purchased nice homes with a view of the valley on small parcels are fighting against those with larger parcels who want to put in a winery. Property rights, viewshed considerations, noise and traffic impact, water use, etc. are all being weighed for the "greater public good". It appears that, for now, the NIMBYs are turning the tide.

Interestingly, the county has started to move away from granting new winery permits (unless they come with severe restrictions on use) and granting expanded permits to existing wineries. I suppose the thinking here is that there are enough wineries in the valley and ending up with 3,000 ten-acre parcels, each with its own chateau might seem a little like, oh I don't know, France?

The downside for this is that smaller growers will either be forced to sell their grapes (for lack of a winery of their own), or make their wines at someone else's facility ("custom crush"). While many of Napa's cult wines are currently made this way, the risk is that this latest evolution will favor larger wineries who can grow their business to the point of shutting out the custom crush clients and ultimately reduce the number of branded wines, and therefore variety, on the market.


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