Themes in the California Wine Industry: Exploring Paso Robles AVA
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When it comes to wine made in the United States, California is the undisputed leader, accounting for more than 80% of national production. Paso Robles AVA (American Viticultural Area) is one of California’s largest wine regions and currently its fastest-growing.
New research from our permanent crop investment team takes a look at some of the major trends impacting the California wine industry, particularly within Paso Robles, and discusses how these shifts inform AcreTrader’s vineyard investment thesis.
Assets in great grape-growing regions continue to appreciate in value and are seen as attractive havens in turbulent macro environments…
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1. The premiumization trend in consumer preferences continues to hold as $15+ bottle wine sales grow.
There are currently two stories at play in the wine market: while sales for lower priced wines are decreasing, there is continued growth for higher priced bottles. This is a phenomenon known as “premiumization.”
Past performance does not guarantee future results and there is no guarantee this trend will continue.
For growers of grapes for these higher priced wines, suitable vineyard land is limited.
2. The Central Coast, specifically Paso Robles AVA, has drawn industry attention due its renowned cabernet sauvignon-growing climate.
California’s most popular premium wine grape is cabernet sauvignon, with over 90,000 acres planted.
Paso Robles’s climate is great for growing grapes due to a long growing season, calcareous soils, and a diurnal temperature shift that help grapes maintain acidity and limit sugar overproduction.
As evidenced by several recent high profile land acquisitions, Paso Robles provides what wine producers need: prime climate, great soils for cabernet sauvignon grapes, and an attractive entry price.
3. Land value growth in the Paso Robles region is supported by narrowing access to water-secure acreage.
As state and regional bodies across California continue to take measures to conserve threatened water resources, properties with established water rights may continue to appreciate.
San Luis Obispo County, where Paso Robles sits, has passed a planting moratorium aimed at reducing groundwater usage. The moratorium restricts new agricultural developments, limiting sites to their historical irrigation use.
When sourcing permanent crop investment opportunities, AcreTrader starts with a combination of restricted supply and strong demand trends around land. This leads us to be highly selective when identifying vineyard investment opportunities, especially taking into account AVA restrictions and water availability.
Get a closer look at these trends and how they affect AcreTrader’s approach to wine grape investments in the 10 page report, Themes in the California Wine Industry: Exploring Paso Robles AVA.
To learn more about investing in vineyards across California watch our full video below.
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The above content is not intended to be a comparison between products, but is intended for general, educational and informational purposes only. Any performance noted is historical and there is no guarantee any trends will continue. All investing involves risks, including the complete loss of principal. Diversification does not guarantee a profit or protect against loss in a declining market. It is important for each investor to review their investment objectives, risk tolerance, tax liability and liquidity needs before investing. Investment vehicles have differences in fee structure, risk factors and objectives. Investments are considered speculative, involve a high degree of risk and therefore are not suitable for all investors.
Content provided is not intended to be a recommendation or investment advice and is not an offer to buy or sell any security. This presentation is for educational purposes only and should be treated as research. Please consult with your tax and/or financial advisor prior to making any investment. This document represents the views and opinions at time of production and is subject to change.
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