$175+ is the new $125 in Napa, will market support ?

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Alan Eden
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Re: $175+ is the new $125 in Napa, will market support ?

#151 Post by Alan Eden » June 11th, 2019, 4:26 pm

David Crow wrote:
June 11th, 2019, 10:47 am
Ed Steinway wrote:
June 11th, 2019, 7:11 am
While there are many Napa Cabs that have had large price increases in the last few years, one can still find some very good bottles for $125 or less. Dunn Howell Mountain, Mondavi Reserve, Mayacamas, Forman, La Jota, Mt. Brave, EMH, Montelena, O'Shaughnessy, Arns, etc.
I believe most, if not all, of those wines mentioned as still being good values in Napa have owned their own vineyards for many years. Since it seems like the biggest cost driver is the increasing price of high quality grapes I wonder how much of an advantage wineries that have owned their own vineyards for many years and just have to pay for the farming costs will have over those that depend on purchased fruit in terms of maintaining reasonable prices while holding their margins. Seems like from a consumer standpoint a good value play is to go for more established estate wines where they are less dependent on grower-driven price increases.
I cant see $125 bottles as good value
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Re: $175+ is the new $125 in Napa, will market support ?

#152 Post by Gray G » June 11th, 2019, 4:37 pm

Alan Eden wrote:
June 11th, 2019, 4:26 pm
David Crow wrote:
June 11th, 2019, 10:47 am
Ed Steinway wrote:
June 11th, 2019, 7:11 am
While there are many Napa Cabs that have had large price increases in the last few years, one can still find some very good bottles for $125 or less. Dunn Howell Mountain, Mondavi Reserve, Mayacamas, Forman, La Jota, Mt. Brave, EMH, Montelena, O'Shaughnessy, Arns, etc.
I believe most, if not all, of those wines mentioned as still being good values in Napa have owned their own vineyards for many years. Since it seems like the biggest cost driver is the increasing price of high quality grapes I wonder how much of an advantage wineries that have owned their own vineyards for many years and just have to pay for the farming costs will have over those that depend on purchased fruit in terms of maintaining reasonable prices while holding their margins. Seems like from a consumer standpoint a good value play is to go for more established estate wines where they are less dependent on grower-driven price increases.
I cant see $125 bottles as good value
plus 125 :)
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Re: $175+ is the new $125 in Napa, will market support ?

#153 Post by markjchambers » June 11th, 2019, 6:05 pm

Schrader was $175 for a long time and that was a bargain. No longer.

I think it is a matter of actual scarcity, like Burgundy. Most of these cult producers make a few hundred cases. Look at the prices for grand cru burgs.
There is enough demand for most of these producers too sell their wines to their mail list customers at whatever price they want to charge. If the market was saturated, you should be able to find these wines in after market for less than the release price. I've looked for Schrader, Bevan, Hundred Acre and many others. I usually can't find them at all and certainly not for less than the release price. So I'd say cult wine is alive and well in Napa.

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Re: $175+ is the new $125 in Napa, will market support ?

#154 Post by Alan Eden » June 11th, 2019, 6:54 pm

Mark

Binnys has Bevan on sale below release price, his awful customer service has caused people to stop buying. Most of thereally expensive cults are easily available, Harlan, Bond, Bryant etc have no wait list, only SE and Scarecrow have long waits. Afew like Macdonald are impossible lists but they are in the minority.
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Re: $175+ is the new $125 in Napa, will market support ?

#155 Post by Jason Petty » June 11th, 2019, 7:05 pm

markjchambers wrote:
June 11th, 2019, 6:05 pm
I've looked for Schrader, Bevan, Hundred Acre and many others. I usually can't find them at all and certainly not for less than the release price. So I'd say cult wine is alive and well in Napa.
Not sure where you're shopping but I can find those bottles you're referring to at or below cost with ease. Sure, some cult Napa wines sell through but not all are equal. Living in the Bay area and having access to a lot of these wineries through various personal relationships, I can tell you a lot of them do not sell through. Mucho inventory of $250+ wines sitting on their shelves.

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Re: $175+ is the new $125 in Napa, will market support ?

#156 Post by Seth V. » June 12th, 2019, 10:40 am

Ed Steinway wrote:
June 11th, 2019, 7:11 am
While there are many Napa Cabs that have had large price increases in the last few years, one can still find some very good bottles for $125 or less. Dunn Howell Mountain, Mondavi Reserve, Mayacamas, Forman, La Jota, Mt. Brave, EMH, Montelena, O'Shaughnessy, Arns, etc. And for many of these, back-filling is often less expensive if one is willing to take the risk with bottle condition. Whether or not they scratch the itch for one who is looking for a cult-wine is another matter. IMO, the market will continue to rise as long as the economy is strong. If the economy slows, the Napa Cab market may change.

Ed
I’d add Drinkward Perschon, Lewelling, and Berhrens to the list of good Napa cabs less than $125. Also Calluna.
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Re: $175+ is the new $125 in Napa, will market support ?

#157 Post by Rboinski » June 12th, 2019, 1:40 pm

Calluna
Seth V. wrote:
June 12th, 2019, 10:40 am
Ed Steinway wrote:
June 11th, 2019, 7:11 am
While there are many Napa Cabs that have had large price increases in the last few years, one can still find some very good bottles for $125 or less. Dunn Howell Mountain, Mondavi Reserve, Mayacamas, Forman, La Jota, Mt. Brave, EMH, Montelena, O'Shaughnessy, Arns, etc. And for many of these, back-filling is often less expensive if one is willing to take the risk with bottle condition. Whether or not they scratch the itch for one who is looking for a cult-wine is another matter. IMO, the market will continue to rise as long as the economy is strong. If the economy slows, the Napa Cab market may change.

Ed
I’d add Drinkward Perschon, Lewelling, and Berhrens to the list of good Napa cabs less than $125. Also Calluna.
Calluna is great! But it is in Chalk Hill / Sonoma
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Re: $175+ is the new $125 in Napa, will market support ?

#158 Post by Scott Brunson » June 13th, 2019, 9:53 am

Perschon? [berserker.gif]
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Re: $175+ is the new $125 in Napa, will market support ?

#159 Post by Seth V. » June 13th, 2019, 6:25 pm

Scott Brunson wrote:
June 13th, 2019, 9:53 am
Perschon? [berserker.gif]
I also spelled Behrens wrong. So I really screwed that one up in every aspect.
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Re: $175+ is the new $125 in Napa, will market support ?

#160 Post by GregT » June 14th, 2019, 12:34 pm

I believe most, if not all, of those wines mentioned as still being good values in Napa have owned their own vineyards for many years. Since it seems like the biggest cost driver is the increasing price of high quality grapes I wonder how much of an advantage wineries that have owned their own vineyards for many years and just have to pay for the farming costs will have over those that depend on purchased fruit in terms of maintaining reasonable prices while holding their margins. Seems like from a consumer standpoint a good value play is to go for more established estate wines where they are less dependent on grower-driven price increases.
The twist is that many of those wineries that started years ago are being bought out and the new owners, paying today's prices, are going to have to increase prices.

But your general point is true around the world and it is one reason that you can find good wines from Europe at a fraction of what they would cost to produce in the US, especially in Napa. Good land in Napa may be a million dollars an acre. If you're wealthy and you buy some of that land, you probably aren't a guy or gal who grew up picking fruit. You have money made elsewhere, like the owners of every "cult" winery. So you hire a vineyard manager, you hire a consultant and maybe a second one, and you hire advertising people and you hire laborers and groundskeepers and a social media person and you buy expensive bottles and corks and labels (they all come at various prices) and you see if you can get a connection to some critic you'll wine and dine and hope to get a good score.

And you put your wine on the market at $200 or so because after all, you want all your friends to know that you're making premium stuff and you're not making sufficient quantities to amortize your costs at much less than that anyway.

People who can't afford to do all that either have land that their parents or grandparents bought, or they buy grapes from other people and are consequently at the mercy of the growers and the market. Small communities may have handshake agreements but bigger operations have more formal contracts and those may even include price requirements.

Compare to a family in Italy or Spain whose family was part of a co-op, selling grapes to the co-op for indifferent table wine. One day you decide to make a bit on your own. You're not amortizing costs of over a million dollars an acre so you start out with a huge advantage, and you know the vines in your vineyard intimately, and maybe you spent some time working in other wineries around the world to pick up some knowledge that you can bring back to your own family. You don't have the money to spend on all the high end consultants and products so you act as your own consultant and maybe get your bottles as part of the order put in by the co-op. You have friends help out at harvest and you find an importer to take your product and you can undercut just about anyone in California with a product that's as good.

But you weren't growing Cabernet Sauvignon! So you're trying to sell some blend or monovarietal bottlings of Garnacha, Carinena, Bobal, Nebbiolo, Grillo, Monastrell, Arien, Pinot Blanco or whatever.

Somewhere in between are people in CA who don't walk in with a billion dollars but who either were able to purchase a few acres themselves and plant Cab or get some good Cab from someone. They may not have the cash to hire expensive consultants, etc., but they want to make a product that's good. They need to pay pickers when harvest comes around and pay for a custom crush facility unless they have someone to let them crush for free. They need to buy all of their bottles, labels, corks, boxes, etc., out of pocket and sell the wine at a price that's going to leave them something to live on and enough to pay for next year.

That is harder to do in Napa, because Cab grapes are costly because Cab pretty much rules because people are willing to pay more for a Cab than for a wine made from another grape, whether or not it's as good or even "better" - as you can see from the posts on this thread regarding Zin.

So it's easy to see how the cost of a bottle of Cab from Napa can start heading north of $100. Where exactly it stops is determined by the market. If you can build some hype, you can price pretty high, but that doesn't always work either. And if you can't get some buzz but you produce a wine for $150 and nobody buys it, you end up putting it on clearance and you're not in business the next year. You don't want to leave too much money on the table but you don't want to price yourself entirely out of consideration.

Then it's up to the market and that's driven by fashion. While in relative terms the difference between $125 and $175 is considerable, those wines aren't sold to people who save up for weeks to buy a bottle. As long as people are willing to spend $175 or $200 or $300 for a bottle, bottles at those prices will continue appearing. I don't know where the actual cost is - Roy had a breakdown at one point and it was very interesting. For producers selling closer to their cost basis, the increases are going to matter a lot more than they will for people who have a large margin built in and who can sell for a premium.
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Re: $175+ is the new $125 in Napa, will market support ?

#161 Post by Craig G » June 14th, 2019, 10:38 pm

Scott Brunson wrote:
June 13th, 2019, 9:53 am
Perschon? [berserker.gif]
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Re: $175+ is the new $125 in Napa, will market support ?

#162 Post by Merrill Lindquist » June 15th, 2019, 7:56 am

Gray G wrote:
June 10th, 2019, 7:00 am
David Glasser wrote:
June 10th, 2019, 4:38 am
Knowing the percentage of $100-200 Napa Cabernet that is sold to restaurants, through traditional retail, and direct to consumers would add some perspective to this discussion.

yes, a Napa Cabernet list of what's out there with price points would be interesting
I sell my classic Cabernet for $100/bottle. They are offered to the mailing list - or whoever jumps on the website - for a limited time- for less. Special Selections are $125. Single barrels are $150. Super low inventory wines such as 2009SS and 2007 cost more. Supply and demand. All include shipping. 90% or more of my wine is sold direct to consumer.
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Re: $175+ is the new $125 in Napa, will market support ?

#163 Post by Robert.A.Jr. » June 15th, 2019, 8:25 am

Merrill Lindquist wrote:
June 15th, 2019, 7:56 am
Gray G wrote:
June 10th, 2019, 7:00 am
David Glasser wrote:
June 10th, 2019, 4:38 am
Knowing the percentage of $100-200 Napa Cabernet that is sold to restaurants, through traditional retail, and direct to consumers would add some perspective to this discussion.

yes, a Napa Cabernet list of what's out there with price points would be interesting
I sell my classic Cabernet for $100/bottle. They are offered to the mailing list - or whoever jumps on the website - for a limited time- for less. Special Selections are $125. Single barrels are $150. Super low inventory wines such as 2009SS and 2007 cost more. Supply and demand. All include shipping. 90% or more of my wine is sold direct to consumer.
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