SB County winemakers comprise panel

By RAY ESTRADA — June 19, 2009

Despite the troubled economy and growing foreign competition, a panel of Santa Barbara County wine experts said while the industry is faced with problems, it will follow a cycle and rebound as it has over the past four decades.

The MIT Enterprise Forum of the Central Coast hosted the Wednesday night panel, titled “Winemaking in Santa Barbara County – A World of Entrepreneurs,” at the Cabrillo Pavilion Arts Center.

While the fourth quarter of last year “was the worst ever” for California’s 2,700 wineries, Central Valley and Santa Barbara and San Luis Obispo sales continued to rise even though Napa and Sonoma counties declined, said Rob McMillan, executive vice president and founder of Silicon Valley Bank Wine Practice.

However, Santa Barbara County’s 90 wineries have only 20,000 acres of wine grapes planted while Napa has twice that, he said. And, vineyard land costs about $50,000 an acre while Napa land goes for $250,000 an acre.

Historically, Napa and Sonoma were once considered the state’s “wine country” since regions such as Santa Barbara did not start large-scale production until 40 years ago when only 200 acres were planted with grape vines.

Several of those wineries are of commercial Napa Valley size. The rest are entrepreneurial enterprises founded by winemakers, growers, retired chief executive officers, gentlemen farmers and others in a bizarre collection of interconnecting relationships.

Making a profit

To make a profit, McMillan said, Santa Barbara-area wineries must sell their products for $25 a bottle. That will yield about a 12 percent profit. Most premium California wines sell for about $15 a bottle. But the biggest problem is getting the wine to the consumer, he said.

“It’s hard for small wineries to get distribution,” McMillan said. Some wineries try direct or online sales, but most states have strict regulations about wine sales. “It’s a lot of work,” he said.

These days, McMillan said, it would cost about $5 million to buy a small vineyard with the equipment needed to run it. However, it would take about 16 years to break even on that investment, he said.

Alma Rosa

Another panelist, Richard Sanford, founder of Alma Rosa Winery & Vineyards near Buellton, described his career after almost four decades in the wine business.

“Farmers said the grapes couldn’t grow here,” Sanford said.

He’s most famous for bring pinot noir to the county and more recently for growing certified organic wines. He said, however, there is no economic advantage to making organic wines.

A staunch supporter of sustainability, Sanford said he is committed to using grape-growing methods that were employed before the advent of pesticides in the 1950s. However, not everyone has agreed with his methods over the years.

In 1970, he co-founded Sanford & Benedict, but some years left that partnership to start his own winery with his wife, Thekla, in 1981. However, about the terrorist attacks in 2001, they had to regroup their business.

“After 9/11, restaurants stopped buying wine for about 10 months,” he said. It was after that trend ended that the couple founded Alma Rosa in 2005.

“To be an entrepreneur, “ Sanford said, “you have to be an optimist.” He noted that his chardonnay sales are up 20 percent compared to last year.

Also describing the ups and downs of the wine business at the forum was panelist Brett Escalera, winemaker at Consilience Wines and Tre Anelli Wines. He previously worked at Fess Parker’s winery in the Santa Ynez Valley and Byron Winery near Rancho Sisquoc.

Not a sure thing

“Sometimes it’s a roll of the dice,” Escalera said of his industry, which he called very capital intensive. He said it takes several years to grow and bottle the product before it can be sold.

Panelist Jeffrey Newton, co-owner of Coastal Vineyard Care Associates, said, “We can’t compete with wineries Argentina and Chile because they have cheaper labor and cheaper land.” He said those countries are producing “some of the best Malbec and Syrah wines in the world.”

Newton said his company manages 3,000 acres in Santa Barbara county and employs 600 workers. Started in 1984, it is the second-largest firm of its kind in the area, Newton said.

The company sells grapes to 80 wineries, he said.

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