This Market Update includes Central Coast (Monterey, San Luis Obispo, and Santa Barbara Counties) Winery and Vineyard real estate sales information. For a broad wine industry update, look up the recently released "2019 SVB State of the Wine Industry Report".
2018 Highlights
Total of approximately 24 significant winery and vineyard sales for 2018 including:
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19 vineyard sales: activity was steady in 2018, peaking in the summer with the E. & J. Gallo vineyard purchases and capped by several lifestyle vineyard sales.
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5 boutique winery sales, under 10,000 cases annually.
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The number of sales in 2018 was similar to the prior two years.
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The median price range was $30,000-$75,000 per planted acre. The low end of the range consisted of transactions in less desirable areas in need of replanting; mainly the 20-30+ year-old vines. In the high end of this range were transactions of younger vineyards, with good water in popular AVAs such as Santa Lucia Highlands, Willow Creek, and Santa Rita Hills.
Market Conditions
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"Turnover Rate": the average 2018 winery and/or vineyard days on the market, the DOM or amount of time it takes to sell, was about 456 days. This often included price reductions and numerous listing agents.
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"Absorption Rate": is the rate at which available properties are sold during a given time period. In 2018 the absorption rate was a ten-month supply. A six-month supply is considered balanced, it was a buyer's market.
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Producing Acreage: According to the County crop reports, the Central Coast is planted with 113,000 acres of vineyards; Monterey 45,000 acres, San Luis Obispo 47,000 acres and Santa Barbara 21,000 acres, and many acres came into production in 2018.
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Grape Pricing: There was some localized downward pressure on pricing and contract terms due to increases in yields, the carryover inventory of bulk wine, and newly planted vineyards coming into production.
2019 Forecast
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Potential water restrictions and redevelopment uncertainties due to the Sustainable Groundwater Management Act "SGMA".
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Production costs will continue to move upward due to labor cost increases and rising interest rates.
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Narrowing supply of land suitable for higher-end wine production.
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Growth of the Central Coast's importance for sourcing rapidly expanding brands.
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Bulk wine excess. According to Turrentine Wine Brokerage, "Excess has brought opportunity stemming from the diminished prices. While downward pressure on spot market prices for bulk wines and some grapes was a significant characteristic of 2018, the trend actually started in 2016 for many regions and varieties and the peak of prices has most likely already passed. In 2018, spot market prices remained relatively strong early in the year, but as the crop size and the plateau of consumer demand became apparent, spot market prices dropped for many varieties and regions"
