Shake-up at Eberle (Paso)

[ToddFrench]

@PeterH

@Robert.Fleming

@Todd F r e n c h

What possible incentive does he have to continue making wine for the label now??

35.5% ownership perhaps?

Which means he will either have to work his butt off to protect his investment, while having no control over the strategy, or else walk away and risk someone else screwing it up totally.

P Hickner

Exactly.

[Bob_Foster]

I wonder if he will end up like Mitch Cosentino-having no association with a winery that bears his name (or Mondavi or Martini or Dr. Frank or…

[Gary_Schulte]

Sad story. Gary’s in a tough position. Hopefully he reaches out to get consultant input on best steps forward for him.

[Randy_Bowman]

Trying to visualize the requirements for the increase in production makes me wonder if the power group has the knowledge and experience? Where do you get the grapes? Increase tonnage from 2 or 3 tons an acre to 4, 5, even 6 tons per acre and add megapurple for body and flavor? Over plant current vineyards and buy as many you can? Truck in grapes from Lodi and Lake County and call it a “California” Cabernet? But on the other hand, it must not be that difficult judging by the increase in production of a number of Napa producers over the past 10 years.

Gary has to be reeling from this.

[Brian_Z]

too bad - good guy

[Andrew_Kaufman]

Howie Steinbeck is or was a founding partner/owner. Howie told me this during a tasting room visit a couple of years ago. I wonder what his involvement was?

[Guillaume_Deschamps]

@PeterH

Which means he will either have to work his butt off to protect his investment, while having no control over the strategy, or else walk away and risk someone else screwing it up totally.

Or sell his shares.

[PeterH]

@Guillaume Deschamps

@PeterH

Which means he will either have to work his butt off to protect his investment, while having no control over the strategy, or else walk away and risk someone else screwing it up totally.

Or sell his shares.

To who?
His partners don’t need them. They need Gary.
Who else wants to be a minority owner of a risky enterprise, when the driving force is leaving the game?

[PeterH]

@Randy Bowman

Trying to visualize the requirements for the increase in production makes me wonder if the power group has the knowledge and experience? Where do you get the grapes? Increase tonnage from 2 or 3 tons an acre to 4, 5, even 6 tons per acre and add megapurple for body and flavor? Over plant current vineyards and buy as many you can? Truck in grapes from Lodi and Lake County and call it a “California” Cabernet? But on the other hand, it must not be that difficult judging by the increase in production of a number of Napa producers over the past 10 years.

Gary has to be reeling from this.

Truck in grapes from Lodi and Lake County and call it a “California” Cabernet?

That’s my guess. Get it stacked on the floor next to Apothic.

P Hickner

[TomHill]

@PeterH

@Randy Bowman

Trying to visualize the requirements for the increase in production makes me wonder if the power group has the knowledge and experience? Where do you get the grapes? Increase tonnage from 2 or 3 tons an acre to 4, 5, even 6 tons per acre and add megapurple for body and flavor? Over plant current vineyards and buy as many you can? Truck in grapes from Lodi and Lake County and call it a “California” Cabernet? But on the other hand, it must not be that difficult judging by the increase in production of a number of Napa producers over the past 10 years.
Gary has to be reeling from this.

Truck in grapes from Lodi and Lake County and call it a “California” Cabernet?
That’s my guess. Get it stacked on the floor next to Apothic.
P Hickner

Sourcing grapes is not the problem (mostly). The problem is that the wnry is pretty near to capacity right now.
Going up to 30,000 cs was going to be a squeeze. 100,000 cs?? No way.
Tom

[Edward_H_Earles]

An elephant in the room, that has gone unmentioned, is drought. How anyone in California expects to increase production five-fold during a time of exceptional, extended drought, with multiple interests clamoring for a limited water supply, is hard to fathom.

Could they buy other vineyards, or outside grapes? Possibly, but drought will drive up demand for those, too, and thus either acquisition will be expensive, increasing risk and squeezing margins.

Pride goeth before a fall.

[Walter_Nissen]

@Edward H. Earles

An elephant in the room, that has gone unmentioned, is drought. How anyone in California expects to increase production five-fold during a time of exceptional, extended drought, with multiple interests clamoring for a limited water supply, is hard to fathom.

Could they buy other vineyards, or outside grapes? Possibly, but drought will drive up demand for those, too, and thus either acquisition will be expensive, increasing risk and squeezing margins.

Pride goeth before a fall.

The fact is that most of the water in California goes to develop crops of low value. There are unbelievable quantities of
raisins and grape juice that sell for a few hundred bucks a ton. Tomatoes at less than $100 per ton. Given that water flows
uphill toward money, Napa Cabernet at $5,000 a ton is not going to be plowed under so the water can be used for tomatoes…

[ATaylor]

@Walter Nissen

@Edward H. Earles

An elephant in the room, that has gone unmentioned, is drought. How anyone in California expects to increase production five-fold during a time of exceptional, extended drought, with multiple interests clamoring for a limited water supply, is hard to fathom.

Could they buy other vineyards, or outside grapes? Possibly, but drought will drive up demand for those, too, and thus either acquisition will be expensive, increasing risk and squeezing margins.

Pride goeth before a fall.

The fact is that most of the water in California goes to develop crops of low value. There are unbelievable quantities of
raisins and grape juice that sell for a few hundred bucks a ton. Tomatoes at less than $100 per ton. Given that water flows
uphill toward money, Napa Cabernet at $5,000 a ton is not going to be plowed under so the water can be used for tomatoes…

The vines will not be plowed under and the vines will still produce fruit without drip irrigation, just much lower yields. However you can be sure that if it came to a real push they would cut the wineries off from water long before the tomato or table grape growers. Food supply would come first…always.

[Brian_Gilp]

@ATaylor

. However you can be sure that if it came to a real push they would cut the wineries off from water long before the tomato or table grape growers. Food supply would come first…always.

Not sure that I agree with that statement. Politicians are very interested in tax revenue and I am confident that in almost all cases, wine grapes generate more tax revenue per acre-foot per acre of irrigation water than do tomatoes or table grapes and probably anything else being grown with irrigation. Cutting off the wine grape growers will have the most direct impact on the politicians off all farming so assuming that the food supply would come first is not a given.

[Gary_Schulte]

If the investors want to sky-rocket the output they will probably be able to find resources in California to do that. In fact if I remember Scheid is not far from Eberle and they have a large capacity custom-work winery. Hopefully when Eberle grows they will preserve a quality estate lineup.

[Nick_Ryan]

@ATaylor

The vines will not be plowed under and the vines will still produce fruit without drip irrigation, just much lower yields. However you can be sure that if it came to a real push they would cut the wineries off from water long before the tomato or table grape growers. Food supply would come first…always.

But if the water table drops low enough even those old vines with deep roots can die, right? There’s already speculation that huge swaths of trees could die for the same reason if this goes on (turning into a 1000 or 10,000 year drought event). Also not to be forgotten is the enormous revenue impact of wine tourism, surely in the billions. I don’t buy arguments about food supply either; we’re still turning midwestern corn into fuel, for Christ’s sake.

[Edward_H_Earles]

Tree ring studies show that, during the Holocene period, the southwestern part of the U.S. is occasionally stricken with severe droughts that last 50 years or more. We are only into the third year of drought in California, but what if it lasts much longer? The need for drinking water will trump any agricultural claim.

I don’t mean to sound gloomy here, but our country hasn’t planned well for severe, extended drought. California is overpopulated, relative to its long-term water-supplying capacity. Barring any advance in energy-production technology which makes large-scale desalination feasible, something will have to give.

This line of reasoning, of course, gives me a good rationale for stocking up on wines from Paso and Napa…

[Andrew_Kaufman]

@Gary Schulte

If the investors want to sky-rocket the output they will probably be able to find resources in California to do that. In fact if I remember Scheid is not far from Eberle and they have a large capacity custom-work winery. Hopefully when Eberle grows they will preserve a quality estate lineup.

Scheid is close to Eberle?

[b_castner]

@TomHill

He’s one of JoePaterno’s products.
That counts for quite a lot. Gary would be on the phone w/ JoePa right now…were that a posibility.
Tom

Maybe best that it’s a phone call that can’t be made…

[Bob_Foster]

I saw Gary last night at the judges’ dinner for the Winemaker’s Challenge competition held in San Diego. He remains upset (understandably) about what has happened.