The Stratospheric Cost of Napa Valley is a VERY GOOD THING

Please stand and give Napa Valley a golf clap for helping to create exposure for other wine regions

Dear Lettie:

Lettie, I feel your pain!

When Lettie Teague, the Wall Street Journal’s wine columnist, recently lamented the sky-high prices of a Napa Valley experience (“With Napa’s newest hotel offering a base rate of nearly $1,300 a night, I can’t help feeling that the region’s main crop is cash, not grapes.) I just shook my head in acknowledgment. Hey, I’m the guy who moved from Napa in order to find affordable luxury (Thank you, Willamette Valley).

What I appreciated most about Teague’s public lament was that she did not engage directly in the populist notion that Napa Valley is overpriced and not a value. This kind of nonsensical claim shows up far too often and I’m regularly surprised to see really smart people make that claim.

Last year, the great wine writer Oliver Styles suggested that the powers that be in the wine industry ought to subsidize the cost of great wines for folks in the industry because if they can’t taste the stuff then presumably the industry is doomed. Granted, it wasn’t a dig at Napa Valley, but Oliver’s suggestion comes from a similar place as those who claim the wine and hospitality aspects of Napa are overpriced.

As a quick review, the price of nearly anything that is publicly available (wine, hotels, winery tastings, toilet plungers) is based on the amount of the thing that exists and the demand for that sort of thing. There is a great deal of demand for Napa Valley wines, Napa Valley wine experiences, and places to stay in Napa Valley. If the current prices for hotels in the Valley, which surely average at least $500 per night, are overpriced, then eventually the management will lower the prices. Until we see an across-the-board lowering of prices then we can say with relative confidence that Napa Valley amenities are not overpriced.

It’s worth remembering just how unique Napa Valley is. It’s a wine country destination, but this is not a unique thing. Hou can find such things throughout California and the United States, not to mention the world. But Napa Valley has something more. It’s “Napa Valley”.

Nearly forever, Napa Valley has been the best-known wine region in America. Napa Valley was also the first American wine region to develop a reputation for high-quality wine. This really started back in the 1960s and no other region in America has ever come close to matching its reputation for high-quality wine. The phrase, “the Napa Valley of (fill in the product)” is ubiquitous. To be the “Napa Valley of Apples” means to be the source of the best apples in America.

The best of anything attracts a certain clientele. Those with means make a point of experiencing the best of things. As Napa Valley developed its reputation throughout the 1970s and 1980s, it attracted a well-heeled clientele of the rich and famous. This trend wasn’t lost on investors who swooped in a bought land and wineries, built hotels and opened restaurants. The reputation of the region’s wines influenced investors to create products that lived up to that reputation. As a result, Napa Valley may have the greatest restaurant food per capita in the country. This circumstance leads to even more well-heeled folks visiting the region. As more come, prices increase.

When folks observe and complain about the fact that some winery tastings cost $1,000 per person or that the average hotel room is $500+ per night or that the wines themselves commonly cost over $100 per bottle or that a three-course meal for two with wine at a middling Napa restaurant will set you back at least $200 they don’t really mean to complain the experience is overpriced. They mean to say they can’t afford that experience regularly.

The idea that these kinds of experiences should not be priced this high, despite the demand, is a plea for charity. And it’s a plea for the worst kind of charity—the sort that benefits primarily middle-class folks.

As Lettie not so subtly points out, there are alternatives for those that can no longer afford Napa Valley. The end of her Wall Street Journal column reads:

“Of course, there are many other wine regions in California where the prices are lower and winery tastings are even, often, free. ‘I tell wine lovers to go to Mendocino, to go to Santa Barbara,’ Mr. Kenward said. I decided to follow his advice myself.”

Put another way, the sky-high prices of the Napa Valley experience is a very good thing for Mendocino County, Paso Robles, Willamette Valley, Walla Walla, the Sierra Foothills, Southern Oregon, and numerous other bonafide wine countries with hospitality infrastructure located around the country. As Napa Valley prices out the middle class, those folks don’t lose interest in wine. They gain interest in more affordable experiences. This in turn will allow these other regions to increase their prices and reap more profits—leading to more jobs and more investment.

And this is how I come to the conclusion that the hugely expensive Napa Valley wine experience is a very good thing for the American wine industry. It will directly lead to other wine regions gaining more exposure, selling more wine, and attracting more visitors, creating more jobs.

So, let’s all stand up and say, “Thank you, Napa Valley. All your work is paying off for us.”