I have been seeing a significant amount of discourse around new wine brands popping up that have a connection with a significant vineyard source, a former winemaker, etc. I was curious to get some thoughts about why some of these wines come out of the gates at the same price point or higher than then wines they appear to be emulating. I imagine there is some strategy that cannot be reduced to cost of inputs. Do any of these brands consider a model of coming out being a great value and then slowly build the brand equity to be in the same league as their stalwart peers?
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Hard Sell on the FOMO.
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Long term speculative value does makes a lot of sense as a price component.
When you are buying grapes and paying for winemaking the price of the wine is basically determined. Of course you could sell it at a loss.
I prefer to support wineries like MacDonald and Beta / Jasud because they price their wines fairly because they either own the vineyards and/or do the winemaking themselves.
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If they lead off with a $300 price, it makes it seem more palatable when WTSO or LBW end up hawking it for $100 (compare at $300!!!).
My sense is that a fair number of them don’t really have a good enough understanding of how the industry works, the economics, the challenge of sales, the competition, the problem of distribution, the capital needs, everything. To be fair, these are hard things to diligence - the business is opaque and not sophisticated, and lacks deep information flow. And this isn’t everyone, of course,
I respectfully disagree when it comes to pricing. Roy Piper did a video and laid it out. It is not hard to do a spreadsheet and add up cost of grapes, bottle, label, cork, consulting winemaking, etc.
To your point understanding how hard it is to sell a $300 new wine is another story. I agree with you.
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Fair point. To clarify, I think that there are those who enter this business thinking that what’s on that spreadsheet is enough knowledge about the economics of the business to make it work, and make a profit.
Yes I completely agree and that was what I was getting at with my second point. And I would add how the costs continue to increase, especially in a hyper inflation environment.
It is amazing how many winemakers I meet who think signing up a distributor(s) is all you need to do to sell your wine. The don’t realize distributors are 90% logistics and maybe 10% marketing / sales. You need to do all of the hard work yourself.
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