Flippy, flippin flipper?

[Ken_Strauss]

@Al Osterheld

I find it somewhat curious when free market arguments are invoked in discussions about flipping wines from closed mailing lists. The flipper is more like a distributor in a state with a mandated three-tier system.

-Al

The lists are not closed. The lists are full for a few select wineries. Distributers buy with intent to sell. Many of the current flippers are just ppl who were smart, lucky or just plain liked the wines that now are in great demand. And I think most like me buy the wines to drink otherwise the prices would be lower. More supply the lower the price.y

[Brian_Tuite]

@Ken Strauss

@Al Osterheld

I find it somewhat curious when free market arguments are invoked in discussions about flipping wines from closed mailing lists. The flipper is more like a distributor in a state with a mandated three-tier system.

-Al

The lists are not closed. The lists are full for a few select wineries. Distributers buy with intent to sell. Many of the current flippers are just ppl who were smart, lucky or just plain liked the wines that now are in great demand. And I think most like me buy the wines to drink otherwise the prices would be lower. More supply the lower the price.y

You can say that again!

@Ken Strauss

@Al Osterheld

I find it somewhat curious when free market arguments are invoked in discussions about flipping wines from closed mailing lists. The flipper is more like a distributor in a state with a mandated three-tier system.

-Al

The lists are not closed. The lists are full for a few select wineries. Distributers buy with intent to sell. Many of the current flippers are just ppl who were smart, lucky or just plain liked the wines that now are in great demand. And I think most like me buy the wines to drink otherwise the prices would be lower. More supply the lower the price.y

[Robert_Kenney]

@Todd L

This is a brief model for the cost of a good wine in Napa from a single vineyard:

It takes 16 tons of Cabernet Sauvignon to make 1,000 cases. Assuming a selling price of $8,500/ton, that translates to $136 per case in grapes. Conservatively, add another $75/case for winemaking, new French barrels, bottles, corks, and foils, and the total cost of producing a case is around $212 or $17/bottle. Using the established Napa model, this wine should sell for 85.00 per bottle.
This is also for a label buying it’s fruit with no vineyard costs.

Was posted on eBob by Russell on 5/16/14:

"Thank you for the kind words folks, Bevan Cellars is a dream come true for Victoria and me. We started as wine enthusiasts, went all in financing it with a second on our home, our 401k’s and by keeping our day jobs until just last year.

We are incredibly sensitive to pricing and hated to raise our prices, this is our first in nine years, but the economics in Napa at this point make it almost impossible for new wineries to get going unless they start with a crazy level of funding.

Here is an example of one of our wines economics.

$30,000 per ton and we get 480 bottles per ton, so we start with a cost of $62+ per bottle.
$4.50 per bottle for barrels
$6 for facility
$2.23 per cork
$7.87 bottling and packaging
This is before wages, vineyard consultant, vehicle costs, interest, accounting, legal, compliance consultant, debt service, credit card processing, case good storage, travel, marketing, something for us, etc…
We have wines that we lose money on when we sell through distribution. Is that the case for all of our wines, or course not, but to think that we are making a high percentage of return is not the case.

To further the situation, competition in the Napa Valley for premium fruit is now at an all time high. Growers with special sites are inundated with people looking for fruit. I have lost out on over 20 vineyards in the past two years and spend a huge amount of time searching for the right combination of vineyard location, quality of farming and dirt and I don’t know when it will get any better as god isn’t making any more.

Because of this we have bought fruit from many sites hoping to find magic, but much of the time the wine ends up somewhere else, because if it has our name on it it will be a wine that my palate believes is worthy of your hard earned dollars.

It is crazy, but it is what we choose to do.

Eat, drink and be merry,
Russell Bevan"


Best,

Kenney

[Joe_B]

@Ken Strauss

@Al Osterheld

I find it somewhat curious when free market arguments are invoked in discussions about flipping wines from closed mailing lists. The flipper is more like a distributor in a state with a mandated three-tier system.

-Al

The lists are not closed. The lists are full for a few select wineries. Distributers buy with intent to sell. Many of the current flippers are just ppl who were smart, lucky or just plain liked the wines that now are in great demand. And I think most like me buy the wines to drink otherwise the prices would be lower. More supply the lower the price.y

Im sure a lot of that us true but when Screaming Eagle started out a single bottle was about $100. While at that time, i am sure it was a lot of money, many of those on the list never could afford $1250 per. But i would bet quite a few are still there buying tgeir case allotment, flipping ten bottles and drinking two for free.

Yup, that list is full and it probably wont be accepting a ton of new blood anytime soon.

Jmho

[Joe_B]

@Robert Kenney

@Todd L

This is a brief model for the cost of a good wine in Napa from a single vineyard:

It takes 16 tons of Cabernet Sauvignon to make 1,000 cases. Assuming a selling price of $8,500/ton, that translates to $136 per case in grapes. Conservatively, add another $75/case for winemaking, new French barrels, bottles, corks, and foils, and the total cost of producing a case is around $212 or $17/bottle. Using the established Napa model, this wine should sell for 85.00 per bottle.
This is also for a label buying it’s fruit with no vineyard costs.

Was posted on eBob by Russell on 5/16/14:

"Thank you for the kind words folks, Bevan Cellars is a dream come true for Victoria and me. We started as wine enthusiasts, went all in financing it with a second on our home, our 401k’s and by keeping our day jobs until just last year.

We are incredibly sensitive to pricing and hated to raise our prices, this is our first in nine years, but the economics in Napa at this point make it almost impossible for new wineries to get going unless they start with a crazy level of funding.

Here is an example of one of our wines economics.

$30,000 per ton and we get 480 bottles per ton, so we start with a cost of $62+ per bottle.
$4.50 per bottle for barrels
$6 for facility
$2.23 per cork
$7.87 bottling and packaging
This is before wages, vineyard consultant, vehicle costs, interest, accounting, legal, compliance consultant, debt service, credit card processing, case good storage, travel, marketing, something for us, etc…
We have wines that we lose money on when we sell through distribution. Is that the case for all of our wines, or course not, but to think that we are making a high percentage of return is not the case.

To further the situation, competition in the Napa Valley for premium fruit is now at an all time high. Growers with special sites are inundated with people looking for fruit. I have lost out on over 20 vineyards in the past two years and spend a huge amount of time searching for the right combination of vineyard location, quality of farming and dirt and I don’t know when it will get any better as god isn’t making any more.

Because of this we have bought fruit from many sites hoping to find magic, but much of the time the wine ends up somewhere else, because if it has our name on it it will be a wine that my palate believes is worthy of your hard earned dollars.

It is crazy, but it is what we choose to do.

Eat, drink and be merry,
Russell Bevan"


Best,

Kenney

Once you remove the grapes per ton, you have to wonder how anybody can sell a bottle for less than $20

[Brian_Tuite]

@Joe B

@Robert Kenney

@Todd L

This is a brief model for the cost of a good wine in Napa from a single vineyard:

It takes 16 tons of Cabernet Sauvignon to make 1,000 cases. Assuming a selling price of $8,500/ton, that translates to $136 per case in grapes. Conservatively, add another $75/case for winemaking, new French barrels, bottles, corks, and foils, and the total cost of producing a case is around $212 or $17/bottle. Using the established Napa model, this wine should sell for 85.00 per bottle.
This is also for a label buying it’s fruit with no vineyard costs.

Was posted on eBob by Russell on 5/16/14:

"Thank you for the kind words folks, Bevan Cellars is a dream come true for Victoria and me. We started as wine enthusiasts, went all in financing it with a second on our home, our 401k’s and by keeping our day jobs until just last year.

We are incredibly sensitive to pricing and hated to raise our prices, this is our first in nine years, but the economics in Napa at this point make it almost impossible for new wineries to get going unless they start with a crazy level of funding.

Here is an example of one of our wines economics.

$30,000 per ton and we get 480 bottles per ton, so we start with a cost of $62+ per bottle.
$4.50 per bottle for barrels
$6 for facility
$2.23 per cork
$7.87 bottling and packaging
This is before wages, vineyard consultant, vehicle costs, interest, accounting, legal, compliance consultant, debt service, credit card processing, case good storage, travel, marketing, something for us, etc…
We have wines that we lose money on when we sell through distribution. Is that the case for all of our wines, or course not, but to think that we are making a high percentage of return is not the case.

To further the situation, competition in the Napa Valley for premium fruit is now at an all time high. Growers with special sites are inundated with people looking for fruit. I have lost out on over 20 vineyards in the past two years and spend a huge amount of time searching for the right combination of vineyard location, quality of farming and dirt and I don’t know when it will get any better as god isn’t making any more.

Because of this we have bought fruit from many sites hoping to find magic, but much of the time the wine ends up somewhere else, because if it has our name on it it will be a wine that my palate believes is worthy of your hard earned dollars.

It is crazy, but it is what we choose to do.

Eat, drink and be merry,
Russell Bevan"


Best,

Kenney

Once you remove the grapes per ton, you have to wonder how anybody can sell a bottle for less than $20

Cheap glass, cheap closures, cheap labor, cheap labels, bulk juice. If you do it cheap the cost could be quite low. Especially if you are a high volume producer. Doesn’t fit this demographic very well though.

[Dennis_Kanagie]

$4.50 per bottle cost on barrels? $2.23 each cork? How does anyone actually stay in business with numbers like that? Sounds more like somebody thinks the IRS monitors wine forums.

[Brian_Tuite]

@Dennis Kanagie

$4.50 per bottle cost on barrels? $2.23 each cork? How does anyone actually stay in business with numbers like that? Sounds more like somebody thinks the IRS monitors wine forums.

New French Barrel $1350/300 bottles=$3 .50 per bottle

Don’t talk to Tyler about this. He thinks they overcharge for Magnums.

[Clint_S_Q_U_I_E_R]

@Dennis Kanagie

$4.50 per bottle cost on barrels? $2.23 each cork? How does anyone actually stay in business with numbers like that? Sounds more like somebody thinks the IRS monitors wine forums.

I’ve seen Bevan’s barrels and have pulled plenty of their corks - those numbers don’t surprise me at all. I get the impression they spare no expenses on the inputs.

[Jim_Clary]

@Joe B

@Ken Strauss

@Al Osterheld

I find it somewhat curious when free market arguments are invoked in discussions about flipping wines from closed mailing lists. The flipper is more like a distributor in a state with a mandated three-tier system.

-Al

The lists are not closed. The lists are full for a few select wineries. Distributers buy with intent to sell. Many of the current flippers are just ppl who were smart, lucky or just plain liked the wines that now are in great demand. And I think most like me buy the wines to drink otherwise the prices would be lower. More supply the lower the price.y

Im sure a lot of that us true but when Screaming Eagle started out a single bottle was about $100. While at that time, i am sure it was a lot of money, many of those on the list never could afford $1250 per. But i would bet quite a few are still there buying tgeir case allotment, flipping ten bottles and drinking two for free.

Yup, that list is full and it probably wont be accepting a ton of new blood anytime soon.

Jmho

Screagle allocations are 3 bottle lots.

[Al_Osterheld]

@Ken Strauss

@Al Osterheld

I find it somewhat curious when free market arguments are invoked in discussions about flipping wines from closed mailing lists. The flipper is more like a distributor in a state with a mandated three-tier system.

-Al

The lists are not closed. The lists are full for a few select wineries. Distributers buy with intent to sell. Many of the current flippers are just ppl who were smart, lucky or just plain liked the wines that now are in great demand. And I think most like me buy the wines to drink otherwise the prices would be lower. More supply the lower the price.y

People buy wine from a winery with a mailing list that is full and has a long waiting list. Some of the buyers resell wine at a significant profit. This does not describe a free market situation just because the last transaction involves selling to the highest bidder. The flipper is taking advantage of the restricted original distribution system to make a profit as a middle man while adding little or no value in a similar way that a distributor like SWS takes advantage of restricted distribution systems in three-tier states to increase their profit margins.

-Al

[Dave_English]

@Robert Kenney

$30,000 per ton and we get 480 bottles per ton, so we start with a cost of $62+ per bottle.
It is crazy, but it is what we choose to do.

Eat, drink and be merry,
Russell Bevan"

What grapes is he getting in?!? That is To Kalon territory. The average for CabSav is around $6000 per tonne from reading this article (​At what price, To Kalon? | JancisRobinson.com)

[Ken_Strauss]

@Al Osterheld

@Ken Strauss

@Al Osterheld

I find it somewhat curious when free market arguments are invoked in discussions about flipping wines from closed mailing lists. The flipper is more like a distributor in a state with a mandated three-tier system.

-Al

The lists are not closed. The lists are full for a few select wineries. Distributers buy with intent to sell. Many of the current flippers are just ppl who were smart, lucky or just plain liked the wines that now are in great demand. And I think most like me buy the wines to drink otherwise the prices would be lower. More supply the lower the price.y

People buy wine from a winery with a mailing list that is full and has a long waiting list. Some of the buyers resell wine at a significant profit. This does not describe a free market situation just because the last transaction involves selling to the highest bidder. The flipper is taking advantage of the restricted original distribution system to make a profit as a middle man while adding little or no value in a similar way that a distributor like SWS takes advantage of restricted distribution systems in three-tier states to increase their profit margins.



-Al

Absolutely! The flipper is taking advantage of all market conditions to his or her benefit!
The flipper is providing the service of making available wines that are not easily obtained. If I want SE I cant get it unless the flipper makes it available. Thank you flipper I get to go to the World Series!

Really not sure what point you are trying to make. I was trying to answer your curious question.

[Al_Osterheld]

With that view of things, everything is a free market and anything that does not look like a free market is just the final seller taking advantage of “market conditions” no matter what restrictions were involved in those conditions.

If SE simply auctioned off their wines, that would be a free market, anyone who really wanted the wines could obtain them, and there would be no need for the “valued added” of the flipper.

-Al

[S_Wang]

@Brian Tuite

Wineries serialize bottles these days. If you think they don’t buy their own wine on the secondary market to find which customers are flipping them you are mistaken.

I wonder if they also keep buy their own wine to keep the auction price high like what they do in the art market which is way more shady and manipulated than wine market. Not very likely, just a crazy thought.

[Ken_Strauss]

@Al Osterheld

With that view of things, everything is a free market and anything that does not look like a free market is just the final seller taking advantage of “market conditions” no matter what restrictions were involved in those conditions.

If SE simply auctioned off their wines, that would be a free market, anyone who really wanted the wines could obtain them, and there would be no need for the “valued added” of the flipper.

-Al

Totally agree!

[Ken_Strauss]

@S. Wang

@Brian Tuite

Wineries serialize bottles these days. If you think they don’t buy their own wine on the secondary market to find which customers are flipping them you are mistaken.

I wonder if they also keep buy their own wine to keep the auction price high like what they do in the art market which is way more shady and manipulated than wine market. Not very likely, just a crazy thought.

I sure hope that is not the situation.

I think just a crazy thought.

[Dave_English]

@Al Osterheld

With that view of things, everything is a free market and anything that does not look like a free market is just the final seller taking advantage of “market conditions” no matter what restrictions were involved in those conditions.

If SE simply auctioned off their wines, that would be a free market, anyone who really wanted the wines could obtain them, and there would be no need for the “valued added” of the flipper.

-Al

Now that would be fun to watch. A reverse auction like they use at the fish markets. Start from $4000 a bottle and go down in $1 increments every second until they are all gone.

[Chuck_Miller]

@Joe B

Im sure a lot of that us true but when Screaming Eagle started out a single bottle was about $100. While at that time, i am sure it was a lot of money, many of those on the list never could afford $1250 per. But i would bet quite a few are still there buying tgeir case allotment, flipping ten bottles and drinking two for free.

Yup, that list is full and it probably wont be accepting a ton of new blood anytime soon.

Jmho

The 1992 Screaming Eagle (initial release) was readily available on release for $50 (if you were in the right place at the right time). Buyers could also choose 375ml or magnum formats, no problem.

[Brian_Tuite]

@S. Wang

@Brian Tuite

Wineries serialize bottles these days. If you think they don’t buy their own wine on the secondary market to find which customers are flipping them you are mistaken.

I wonder if they also keep buy their own wine to keep the auction price high like what they do in the art market which is way more shady and manipulated than wine market. Not very likely, just a crazy thought.

What if they submitted their own wines and bought them back to inflate/maintain the secondary market value?