Saw this report this morning. Unsure if it has been posted prior. Apologies if so.
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Thanks for posting. It’s interesting, but like 42% of the number is wages, which, sure, regs mandate minimum wages, but, to me, that’s a very different category of compliance. And, health insurance requirements for larger are 30%. Again, sure, but that’s a cost of hiring people in the US with how we’ve structured health insurance.
Also, I may have missed it, but there’s nothing much about how those costs have changed over time, how they compare to other counties, etc. Are the costs high? Low? Just right? How do they compare to other regulated industries? (There’s a little bit about other ag, but what about beyond)
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This struck me as odd, too. Is the cost of labor really a “regulatory cost” or just part of the cost of doing business.
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Cross posted from the wine text from Wine Library and the Bedrock threads. Bedrock wines show up at retail but rarely do you see a Dolinsek at basically mailing list price.
I didn’t scrutinize the report that closely. In haste, perhaps the sentiment is that paying labor what you want to pay them (and what they have to accept in order to work) is cost of labor. Having to pay the employees more (and make them employees in a more binding sense) is the result of Californian law. Interpreted by the authors as a regulatory cost.
The argument may be similar to that about a minimum wage for restaurant workers. As always, I am not offering a personal opinion. Trying put myself briefly in the authors’ shoes.
I found a related article which might shed light.
A while back we were talking about producers using smaller form factor bottles, or something different like cans and bags. Specifically noting that it would take a few reputable higher end producers embracing the change to shift consumer expectations about bagged/canned wine. I woke up to an email from matthiasson releasing a bagged rose for earth day. Seems like it was made in limited quantities since it’s sold out already, but I thought this was kinda neat!
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Down year so far. First it was dry January . Then an unexpected number giving up alcohol for Lent. Now we have people not eating starches, or alcohol to get into their clothes ( swimsuits) for summer! Hopefully this all passes soon!!
When imaginary restaurants that normally out perform restaurants in the real world aren’t doing well, you know there are issues in the market. Even the prowess of their imaginary buyer can’t improve their balance sheet. Tough times.
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It’s about the “ITB” tag on the profile.
I think it was awarded by FIFA.
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Received an email from Wendy at Crawford this morning. They’ve closed the tasting room in Solvang and shutting down the winery.
Looks like their wines are pretty heavily discounted right now too Crawford Family Wines - Wines
Do folks who like California Cab like them? I have a friend who would buy at that price if recommended, but I don’t like Cal Cab so not in a position to comment myself.
I can’t help but think when I read a lot of the articles about the current state of the market that the core problem isn’t that costs have gone way up (though they’ve risen significantly) or that people are drinking less (though they seem to be, plus exporting has gotten harder/more costly), its that places like Napa were viewed as places for rampant speculation. I struggle with the idea that regulatory costs are the primary issue or that there’s too many grapes when you have a ton of owners who don’t actually farm or make wine. Whenever you start baking in middlemen, your investment gets less profitable. Sad that the conclusion is “well, might as well just rip out the vines at $5k/acre” rather than “Maybe investing in farmland when I don’t actually want to farm or make wine was a bad idea, I should probably sell this to someone who’s actually going to use the vineyard”.
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Late to seeing this, but digging through, seems like there was a significant amount of costs that, because they were mandated, were counted as regulatory costs, even though a responsible vineyard owner and farmer would be doing them anyway. Obviously some costs, like permits, are entirely additional costs, but having someone keep an eye on your burn pile of vines you’ve replaced that year seems like something you’d (hopefully) be doing regardless of regulation? Just so you don’t burn your own house/vineyard (or your neighbor’s) down? Same like providing water and someplace to use the bathroom for your vineyard workers. I get that’s not really the point of the exercise for the professors, but I’d be curious to talk to the small vineyard owner and brake down what out of those calculations they’d consider actual additional costs (like time spent on reporting, the swapping of trucks to comply with emissions rules, etc) v. stuff that they’d be doing (or at least saying they’re doing) anyway because its just good practice (like fuel tank maintenance, because you probably don’t want to leak/spill stuff that’ll contaminate your own well and costs $5/gallon or whatnot).
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Through the years that I’ve been making wine, there have been plenty of wineries, and custom crush labels, where the cost of goods are eye-poppingly high. If you jump in by buying fruit from the most recognized vineyards, hire a highly recognized consultant, and pay custom crush fees of $50-150/case, it’s really hard to price the resulting wines aanywhere but the elite tier. The problem with that, is that then you need a fully developed sales and marketing staff as well. National sales manager, dtc manager, social media person, etc.
At one point, I ran into someone who was spending nearly $48/bottle to get the wine into the bottle. For Willamette Valley Pinot Noir at the time, that was a common retail pricepoint for upper tier wines. There were also a lot of very, very good $35 bottles around. The proprietor wasn’t worried as they had $80 as their chosen pricepoint. The project didn’t last long in a much better market than we have right now.
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I can’t help but regale a story from my label printer (forgive me if I have bored you with it before):
Picture Texan tycoon, buys Napa winery estate and lets wife start the new vanity project. Expensive winemaker, heavy bottles, the lot.
They finally get the proofs from my printer and when she gets the quote, she’s incensed because she thinks they’re cutting corners and not giving her the best stuff. She wants the most premium paper, ink, printer, you know, and my buddy says: “that is the quote for the most premium paper, all the gold foil and embossing tools etc”. She yells at him one the phone: “This is a $750 dollar Cabernet, you’re obviously not the right printer for me!”, or something to that effect.
Nobody knows them form a hole in the wall, but the wines start at $750…
Oh, how nice it must have been to be there during the heydays…
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While I am sympathetic to earnest winemakers who are getting hurt in this wine industry downturn, a correction to the pricing of wine and of winery visits was long overdue.
To give a rough parallel, in Austin TX, real estate prices went up multiples of times until a couple years ago, and now they’re down like 25% from the peak. It’s not that I lack sympathy for people who bought at peak prices and are underwater now, but I also have sympathy for people who can maybe afford a small house today when they couldn’t afford one in 2024. There are winners and losers when prices are rising, but also when they are falling.
Hopefully, we will gravitate down to a sustainable pricing and quantity in the California and Oregon wine industries, and good winemakers and vineyards will still be able to shine at those adjusted levels.
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Nice perspective. There’s an old, problematic but true saying from the financial industry which is apropos to the topic with a little reflection: “Bulls make money, bears make money, but pigs get slaughtered.”
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