Random Ramblings of a Weary Winemaker, Episode 6: The Phantom Menace

by Peter Wellington

Ain’t No Cure For the Wintertime Blues - Tues. Nov. 27, 2007

Well, there’s no more of the excitement of crush, the vines have lost their leaves after the first hard freeze of the season, and I feel like staying in bed when it’s cold outside. We’re still “tidying up” in the vineyard and winery some, but our attention has returned to the 2006 wines which haven’t been sampled, tested, tasted or racked since before harvest. I wrote about the Victory blending trials last week. We start from the top and work our way down, so next in line is the single vineyard Cabernets, then the Merlot and the Sonoma County Cab. With the Mohrhardt Ridge Vineyard Cab we preferred it with all the press wine included and still found it just a little tart and thin. We then tried this (blind, of course) versus a sample with a bit of Merlot and one with a bit of Cab Franc. A vineyard designated wine must come at least 95% from the named vineyard; we are usually at 100% but do blend occasionally if it significantly improves the wine without destroying its uniqueness. The Mohrhardt Ridge Cabernet has been bottled unblended in 15 of the previous 17 vintages, but in this case we all had a strong preference for the blend with Cab Franc. The Cab Franc added richness and a slightly chewy texture, intensified the fruit and lengthened the persistence of the finish. With the Handal-Denier Cab we also used all the press wine, with the Karren Vineyard Cab we used none of the press wine; both will be 100% single vineyard. With press wine there is often (but not always) a trade-off of more richness and fruit versus more harshness and astringency. With the Merlot we preferred it without the press wine, and decided to look at possible blends with Cab Franc and Petit Verdot. Inclusion of either would mean giving up the Estate designation, which requires 100% estate grapes. After three days of tastings we settled on approx. 5% PV and 2.5% CF. This leaves the Sonoma County Cab, which will be a complicated project, with several different batches of Cabernet sauvignon, the press Merlot and the remaining PV and CF to consider. Anything that doesn’t fit (doesn’t improve the wine) will likely end up in our generic table wine “The Duke”.

The real bummer this week is the impending layoff of the new (as of July) cellar man. As feared, he never really got up to speed. I’m not sure exactly why, but he was a slow learner and continued to make the same mistakes over and over again.

Contest # 2: You Name the Topic - Mon. Dec 3, 2007

Contest # 1 (see “Randy Wino Mimes…”) will close Dec. 10th, but we’ve already got our first winner in contest #2, before it was even officially announced: mlust3905 sent in this week’s suggestion for a blog topic. Regarding contest #1, there are some great entries and I’ve already got one of my daughters working on a design for the Bandolier of Corks. Send more suggestions, please.

Here’s mlust’s post: “Is it possible to give some insight into the economics of winmaking (sic). How is wine generally priced? Is pricing based upon perceived quality? How does the public/winery benefit from the woot model? ( Elimination of distributor and retailer) How is product that is exceptional or disappointing handled? I realize there may be some overlap in the questions as posed, but your insight would be very interesting.”

Wine pricing has to take several things into consideration: cost of production, marketing budget, the competition, and perceived value being four major inputs. Starting with cost of production: the price of any wine with a retail price under $15-20 is heavily influenced by costs; below that range you get into the realm of low cost grapes, barrel alternatives and cheaper packaging. Above that range pricing is related less to production costs and becomes much more subjective. The price and the value of any luxury item are determined in large part by the perception of quality. Unfortunately (IMO), the inverse is often true: for many people perception of quality is affected by price. I believe this latter phenomenon has had a negative effect on some people’s perception of our wines. While we get some people telling us what incredible value our wines give (“This is better than any $50 Napa Cab I’ve had”), others dismiss them as “cheaper”. Some small producers have an incredible amount of chutzpah (I’m not naming names). I’ve tasted $50 wines that I wouldn’t pay $10 for, much less $20.

My approach to pricing has evolved somewhat over the years. Obviously we need to be profitable to stay in business, but I have always believed in giving people their money’s worth. We spend very little on promotion and marketing, and depend heavily on customer loyalty and word of mouth. Because we sell almost half our wine retail (tasting room, wine club, internet), where the gross margin is much, much higher, we have been able to keep our prices lower than if we were selling only wholesale. We couldn’t stay in business selling only wholesale without significant price increases. In setting individual wine’s prices my main considerations are my assessment of quality and supply and demand. I’m willing to sell some wines at or below cost and make up for it with higher prices on our best wines. To wit: the costs for “Victory” are only marginally higher than the costs for “The Duke”; we sell one for $40 and the other for $8. This in large part also answers the question of how I handle exceptional or disappointing product.

The question about how “the public/winery benefits from the woot model” is harder to answer. Certainly the public (consumer) benefits by the availability of good to great, hard to find wines at substantial discount. Wineries benefit in different ways, including increased brand exposure, selling relatively large amounts of wine (for small producers), and moving excess inventory. (BTW: “excess inventory” should not be equated with inferior product. I won’t get into the whys here.) Some may be surprised that selling through woot does not result in great margins for the wineries. Between the discounts, woot’s cut and winery subsidized shipping, winery returns are similar to returns from sales to distributors. That WineDavid drives a hard bargain. Sometimes I think I’m accommodating him in order to get max playing minutes for my daughter when basketball season rolls around and he becomes CoachDavid.