Arroyo Grande Valley is the southernmost AVA in California's San Luis Obispo County, just seven miles (11km) from the northern border of Santa Barbara County. Located in a valley that cuts inland from the town of Arroyo Grande, the AVA experiences persistent fog and cold ocean winds that lower temperatures in the area. Pinot Noir and Chardonnay are the most important grapes planted here, producing both single-varietal wines and blended sparkling wines.
The AVA covers the land within the Arroyo Grande Creek valley and the reticulate canyons and valleys immediately south of this. The valley is oriented in a north-west direction from the coast and culminates in the Lopez Lake reservoir, 16 miles (25km) inland. The land to the north of Arroyo Grande Valley falls under the Edna Valley AVA.
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The terroir in Arroyo Grande Valley is markedly maritime, which is noticeable in both the region's soils and climate. The orientation of the valley causes air from the cold Pacific Ocean to be funneled up the valley, and much of the lower part of the AVA is shrouded with fog for a good part of the day. These climatic conditions are well suited to the cool-climate-loving Pinot Noir and Chardonnay varieties, letting them develop rich varietal character without losing acidity.
Further inland, the higher altitudes and shelter from the prevailing winds mean there is a distinct fog line, past which the fog ceases to have such an effect on the vineyards. Here, plantings are dominated by Zinfandel and Syrah, and cooling effects come from the surrounding mountains. The altitudes lead to a diurnal temperature variation, where warm days are followed by cold nights, lengthening the growing season and resulting in grapes with a good balance of ripeness and acidity.
The soils in Arroyo Grande Valley vary, but the most distinctive are the calcareous deposits of limestone left by an ancient ocean bed. These are free-draining and often quite shallow, meaning the vines are deprived of water and consequently produce berries with a higher concentration of flavors. This part of the Californian coastline has been particularly ripped up by tectonic activity over time, and these limestone soils are joined by volcanic rock and alluvial loam soils.
Arroyo Grande Valley was home to one of the first Spanish missions in California, but the area was not used in any great way for wine production before the American wine renaissance of the 1970s, due to its marginal climate. The valley attracted attention in the 1980s after Maison Deutz, the California branch of the Champagne house Deutz, acquired land in the area (much like Roederer Estate in Mendocino's Anderson Valley). This has since been sold, but sparkling wine is still made in the AVA.
Despite having similar names, Arroyo Grande Valley and the Arroyo Seco AVA in Monterey County are quite distinct, although they share a similar terroir.
