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As Drought Endures, Napa Wineries See A Glass Half Full

A persistent drought is threatening California's storied vineyards, which employ hundreds of thousands in the Golden State alone. But there is still water, for now.

Auction Napa Valley charity wine event
Auction Napa Valley charity wine event
Francesco Semprini

NAPA — The thick morning fog slowly lifts as we leave the Golden Gate Bridge behind us on Highway 101, heading northeast. We're in the San Francisco Bay in northern California, and the landscape around us changes radically as we cross the long red bridge. The city's pleasant modernity and the enchanting atmosphere of Baker Beach give way to bucolic scenery that recalls the faraway countrysides of France and Italy. Generations of emigrants from the Old Continent made the Napa Valley the marvel that it is today, building America's wineries with their hard work and passion.

California produces 90% of American wine, and it's the world's fourth-largest producer after Italy, France and Spain, generating 250 million crates of wine a year (12 bottles to a crate). Production has risen by 22% over the last 10 years, and the state is now home to over 4,000 wineries, up from only 1,870 in 2003. Wine has fueled phenomenal economic growth, adding over $125 billion to national GDP and creating 330,000 new jobs in the Golden State alone.

The industry remains primarily a family-run affair, peculiar for a country built on economies of scale and large corporations. But much like every other Californian business, Napa's vineyards are facing serious challenges resulting from severe drought that has brought rainfall to historic lows and worsened the state's already hot climate. The drought's effects are visible as we follow the 101, the bright green vineyards bordered by fields of progressively intense shades of yellow. It's a sign that some crops have been abandoned in favor of grapevines and olives, northern California's other major agricultural export.

Self-imposed restrictions by California's farmers have added to the water-rationing regulations imposed by state and local authorities. Despite water-saving mechanisms such as crop rotation and the suspension of 25% of production, agriculture still comprises 80% of the state's annual water usage. But the vineyards have been left untouched by these provisions, and the industry has its own dedicated water supply.

The question is, what will happen to Napa's wineries when there's no water left? To find the answer we visited the Jacuzzi Family Vineyards, one of the most famous in the Sonoma Valley, home to California's most prized wines. Giovanni and Teresa Jacuzzi left Italy for the United States in 1921, and their passion and dedication to their work gave life to a cellar visited by thousands of tourists and connoisseurs.

It's here that we realize that Napa is home not only to cabernets and sauvignon blancs, but also to some of Italy's most prestigious grape varieties. Bob, a bearded veteran of the Jacuzzi estate, passionately describes the different types of wood used in the barrels to age the wine. He presents us with a 2011 Sonoma Coast Sangiovese and a 2012 Nebbiolo, which are among the Jacuzzi's best.

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Vineyards in Napa Valley — Photo: Brocken Inaglory

"The drought? It's not a problem now, but it will be in the future," he says. "The grapes aren't suffering directly from the water rationing. In fact, the water shortage helps them develop properties that make for more full-bodied, fruity wines with a higher alcohol content."

Small producers in crisis

We ask him if this means that the state's wine producers aren't afraid of the drought. "No, problems will arise in the medium term, like a year or so from now," he says. "Grapes are undoubtedly more resistant than other crops, but they're not invincible."

His opinion is shared by many other wine producers in the region, like the Sebastiani family. "The drought is hitting small producers of less expensive wine," the manager at this family estate explains.

Data from the Allied Grape Growers confirms this, showing that in the first nine months of 2014, sales of bottles costing less than $7 decreased by 2% to 3%, whereas sales of expensive bottles grew by double digits. The drought has also increased production costs, forcing producers to cut profit margins to keep their prices competitive.

This is also true for the most renowned wineries, and it risks derailing the tremendous growth of Napa's wine industry even as early as next year. Demand for wine has increased by 3% since 2008, and forecasts show it increasing further until at least 2019. With the drought's dangers apparent, producers must act quickly.

But some remain optimistic, including the Mary Madonna Estate, an organic vineyard in Napa. "We survived the phylloxera plague of the late 1800s and the prohibition era of the 1920s," the manager here says. "We'll get through the drought as well."

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