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You may have heard the bar story: every grapevine in California came from Kentucky, and we gave France its vines too. It's not quite true. But the real story of Kentucky wine is better, a University of Kentucky graduate is the hero, and it's one of the best lessons I know about the most important idea in real estate: the first use of a piece of land is never the last word on it.
America's first commercial vineyard was in Kentucky
In 1796, a Swiss winemaker's son named Jean-Jacques Dufour landed in America with one goal: grow wine here. He spent about two years scouting for the right soil and weather, and he picked Kentucky.
He didn't have the money, so he raised it. In January 1798 he ran an ad in the Kentucky Gazette selling 200 shares at $50 apiece, and that funded the Kentucky Vineyard Society. It was basically a crowdfunded startup. Henry Clay bought in and served as the group's lawyer.
They bought more than 600 acres on the Kentucky River in Jessamine County, near Nicholasville, and Dufour named it First Vineyard. In 1799 he planted around 35 grape varieties on terraces cut into the hillside. The first wine was poured in 1803 at a tavern in Lexington, and casks went to President Thomas Jefferson.
Then it failed. Disease got into the vines, and a hard freeze in 1809 finished the job. The Dufour brothers moved up the Ohio River to Vevay, Indiana, where they made it work. That became the first commercially successful winery in the country.
And the Nicholasville land sat for about two hundred years. Then new owners dug through old deeds and surveys (one done by Daniel Boone), proved it was the original site, found Dufour's terraces, replanted them and reopened First Vineyard in 2012.
The Ohio River Valley was America's first wine country
After Dufour, people planted grapes up and down the Ohio Valley. By the second half of the 1800s, Kentucky was the third-largest grape and wine producer in the country. Third, not first.
First place was right across the river. In Cincinnati, Nicholas Longworth planted a grape called Catawba, and in 1842 a batch accidentally fermented twice and became the first commercially successful American sparkling wine. By 1859 Ohio was making more than 570,000 gallons a year, roughly twice what California made. Missouri ran second before Prohibition. Kentucky was third.
California wasn't waiting on us. Spanish missionaries brought vines up from Mexico, and the first California harvest happened in 1782, more than a decade before Dufour arrived.
How American roots saved French wine
Here's the part of the bar story that's true. A tiny root-eating bug called phylloxera (fill-OX-er-uh) is native to America. Our wild grapes grew up with it and shrug it off. European grapes had no defense. It showed up in France in 1863 and killed vineyards by the square mile. France offered a 300,000-franc reward for a cure. Nobody could stop it, and to this day nothing kills it.
The fix was a graft. Grafting means attaching the top of one plant to the roots of another so they grow together as one. The French kept their famous grapes on top (Cabernet, Merlot, Pinot Noir, Chardonnay) and put them on American roots the bug couldn't hurt.
Missouri sent cuttings first, and many died in France's chalky, limestone soil. Enter Thomas Volney Munson. He graduated in 1870 from the Agricultural and Mechanical College of Kentucky, the college that became UK, with the second degree it ever handed out. He worked as a nurseryman in Lexington, then moved to Denison, Texas, and became the country's top expert on wild American grapes. When France sent scientist Pierre Viala looking for roots that could handle chalky soil, Munson pointed him to a wild grape in the Texas limestone hills. In 1888 Munson's crews collected 15 wagonloads of cuttings that shipped to France. France knighted him for it.
Today, more than 90% of the world's grapevines grow grafted, mostly on American roots. And yes, it comes back to real estate: Munson and his brother ran Munson Realty in Texas from 1883 to 1915, and he eventually sold most of his nursery ground as residential lots. Grape guy. Land guy. Same guy.
Kentucky lost its wine industry, then came back
Disease, the Civil War and Prohibition wiped out Kentucky wine. Farmers planted tobacco instead. Even after Prohibition ended in 1933, Kentucky didn't let wineries operate again until 1976.
Then tobacco faded. In 1998 the tobacco companies settled with the states, and Kentucky put a big share of its money into a fund to help farmers grow something new. In 2004 the federal tobacco program ended, and UK sent experts out to help turn tobacco fields into vineyards.
- Kentucky had about 40 acres of wine grapes in commercial vineyards in 1998. It's around 600 now.
- UK counts 76 wineries in the state.
- A 2025 study from WineAmerica, the national winery trade group, puts the wine business's total footprint in Kentucky at nearly 12,000 jobs and about $2.3 billion.
Same dirt. New crop. Louisville sits inside the Ohio River Valley AVA (American Viticultural Area, an official federal wine region), created in 1983 and covering about 26,000 square miles across Kentucky, Indiana, Ohio and West Virginia. It's the second-largest wine region in the country.
Drive across the bridge to Starlight, Indiana, to see land use done right. In 1843 Simon Huber bought an 80-acre farm there. Six generations later, the family runs almost 700 acres: Indiana's oldest and largest estate vineyard, a winery, a distillery, U-pick fruit, Christmas trees, a farm market, a cafe and event space for up to 2,000 people. One year they reported 580,000 visitors and 85 weddings. That's not just a farm. That's a clinic on land use.
The real estate lesson: highest and best use
Think about everything Kentucky has been: frontier vineyards, hemp, tobacco, bourbon, horses, a river town that grew because boats had to stop at a waterfall, and now home to the UPS worldwide air hub. Every time one thing faded, the ground didn't go anywhere. Somebody grafted something new onto old roots, and the people who saw the next use first made the money. Here's how I'd use that.
1. Know the roots, then pick the graft
Appraisers use the phrase "highest and best use." It means: what's the most valuable thing this property can be? Ask four questions:
- Is it legal? (What does zoning allow?)
- Is it physically possible? (Lot size, slope, the building's bones.)
- Does it make financial sense?
- Of the options that pass all three, which one earns the most?
Most people look at a property and see what it is. Ask what it could be.
2. When an old use dies, the value moves
Tobacco barns. Churches with more land than members. Strip centers emptied out by online shopping. Old warehouses near downtown. The seller usually sees the use that died. The buyer who wins sees the next one. The dirt is the rootstock; the use is the graft. If you own one of these, our guides on church ground leases vs. selling and selling a vacant strip center are good places to start.
3. Stack your uses
The Hubers didn't pick one thing. They layered. You can too, on a smaller scale: a duplex where you live in one side and rent the other (that's house hacking), a house with a basement apartment, a lot with room for a second building, a warehouse with a storage business in the back. Before you plan anything, check zoning. In Louisville, that's Louisville Metro Planning and Design Services.
4. Grafts take time
A new vineyard takes years to make good wine. Rezonings, renovations and leasing up a building take time too. Budget time the same way you budget money, and you won't get spooked halfway through.
5. Pick strong rootstock
The French didn't pick the flashiest roots. They picked the ones that could survive their soil for a hundred years. Louisville is rootstock. It's steady, it's affordable compared to most of the country, and it sits on a river, a highway crossroads and one of the busiest air cargo hubs in the world. If you're investing in Louisville from out of state, that's what you want under your money.
Frequently asked questions
Where was the first commercial vineyard in America?
Jean-Jacques Dufour planted First Vineyard on the Kentucky River near Nicholasville in 1799. It failed by 1809, and the Dufours then built the first commercially successful winery in Vevay, Indiana. The Kentucky site reopened in 2012.
Did American grapevines save French wine?
American roots did. After phylloxera hit France in 1863, French growers grafted their grapes onto resistant American rootstock. UK graduate Thomas Volney Munson helped find roots that suited France's chalky soil.
How many wineries are in Kentucky?
The University of Kentucky counts 76 wineries in the state, with around 600 acres of wine grapes in commercial vineyards, up from about 40 acres in 1998.
What does highest and best use mean in real estate?
It's the most valuable use of a property that is legal under zoning, physically possible and financially sensible. Appraisers use it to value land, and investors use it to spot properties worth more under a new use.
Is Louisville in a wine region?
Yes. Louisville is inside the Ohio River Valley AVA, a federal wine region created in 1983 that covers about 26,000 square miles across four states.
Got a property whose old use has run its course?
A building, a farm, a church lot, a strip center, a house that doesn't fit anymore: let's figure out the graft together. Get a free home value, or if you're looking to buy the next one before everybody else sees it, set your buy box (free). Or text or email Rob at Winner Realty, (502) 305-8915.
Equal Housing Opportunity.