LVMH buys Phelps!

[K_Kladder]

The biggest negative with Phelps’s marketing in addition to the significant price increases is its widespread availability.

But think about Dom Perignon (5 million bottles annually) or Veuve Cliquot (18 million), two other LVMH brands. Even Yquem is 10,000 cases a year, and Cheval Blanc 8,000-10,000 cases – in line with many other top Bordeaux chateaus. Phelps is about 60,000 cases.

I was thinking in terms of their Cabernet and Insignia compared to other Cali wines. I remember some years ago an ad campaign that spoke of “finding a bottle of Insignia” as though that was a rare and special find. I’m only aware of their Freestone line of Pinot Noir and Chardonnay. If they have a high end line maybe someone can elaborate what that is.

They introduced their Proem line of Pinot and Chardonnay last year I think. I think it was positioned as the best of the best from their existing Pinot and Chard offering. Someone closer may have more details or correct me if I’m off base.

[Marc_Hauser]

But think about Dom Perignon (5 million bottles annually) or Veuve Cliquot (18 million), two other LVMH brands. Even Yquem is 10,000 cases a year, and Cheval Blanc 8,000-10,000 cases – in line with many other top Bordeaux chateaus. Phelps is about 60,000 cases.

I was thinking in terms of their Cabernet and Insignia compared to other Cali wines. I remember some years ago an ad campaign that spoke of “finding a bottle of Insignia” as though that was a rare and special find. I’m only aware of their Freestone line of Pinot Noir and Chardonnay. If they have a high end line maybe someone can elaborate what that is.

They introduced their Proem line of Pinot and Chardonnay last year I think. I think it was positioned as the best of the best from their existing Pinot and Chard offering. Someone closer may have more details or correct me if I’m off base.

https://shop.josephphelps.com/SHOP.AMS?LEVEL=MID&CAT=PINOT

[John_Morris]

Yup. It’s all there:

Insignia: list $315; members $252
Backus: $350/$280
Proem No. 1 and No. 2 Pinot Noirs, Freestone Estate: $225/$180
Proem No. 4 Chardonnay, Freestone Estate: $175/$140

Who knew?

It helps explain the appeal to LVMH – steep prices and volume.

[John_Morris]

I’m sorry but who the hell is paying that $ for Phelps Pinot and Chardonnay? No. Just no. Just stop. There’s enough insane BS in the world already. If that actually exists, and someone is insane enough to pay that, the only answer is powerful drugs.

The only truthful statement in all of that is Phelps treats their faithful clients like suckers and charges them through the nose for the privilege of buying a faded memory of former glory. Be on the list and pay north of $300 a bottle for Backus! They sell it to distributors for 40% less. They treated their core clients like marks for years and got away with it. Plenty of other wineries do this and it’s a damn shame. Just call it like it is.

That’s not quite fair. Members can get the Backus for $280.

[Zachary_Mancini]

This is bittersweet for me. I feel in love with wine on their terrace on my honeymoon almost 20 years ago when I tasted the 99 Insignia. Insignia was 90 bucks a bottle on pre-release pricing back then. Then came wine of the year for the 02 Insignia (still an amazing wine BTW) and Insignia pricing doubled overnight. Other prices crept up, but you could argue they were still value at times. The regular Napa cab has gotten better over the years (it’s now all estate fruit) but has more than doubled and can often be found cheaper at Costo or Safeway than the club price. Insignia and Backus are both north of 300 a bottle these days. Pinot’s over 200 a bottle, Chard over 150. The parties are a shell of what they once were (covid hasn’t helped). Then the lawsuits filed and won by the former winemaker and CEO. With Joe’s passing a few years back there was a real shift in the winery…it got way more corporate (and expensive). We had already decided to leave the club after we visit in the fall on our 20th anniversary, this seems a fitting end.

I hadn’t realized they could get such prices for their pinots and chardonnays. While no one on Berserkers talks much about Phelps post-1990 wines, plainly the brand is stronger than I realized when I posted initially.

This isn’t true. Insignia is around 230 for members. 280 for backus. Pinots are 80 and chards 60.

[Zachary_Mancini]

Yup. It’s all there:

Insignia: list $315; members $252
Backus: $350/$280
Proem No. 1 and No. 2 Pinot Noirs, Freestone Estate: $225/$180
Proem No. 4 Chardonnay, Freestone Estate: $175/$140

Who knew?

It helps explain the appeal to LVMH – steep prices and volume.

Not fair as normal Pinots are 80 and Chard 60. Proem is relatively new and BBS essentially.

[Mel_Knox]

Joe’s kids are at retirement age for most people and then there are grandchildren. At that point things get difficult to manage. Very few American wine companies get past the third generation.
Louis Martini, Robert Mondavi, Sebastiani and Seghesio all come to mind. I have no idea how the Gallos have survived.

LVMH sold Simi decades ago. Then they bought into Newton and Colgin. I don’t know how the Newton brand is doing but they were damaged physically during the Glass fire. With all the Phelps vineyards they can funnel grapes to Colgin and Newton and work on marketing the Freestone program.

Insignia might be the biggest expensive wine brand in Napa…20,000 cases??

LVMH knows how to market luxury.

[John_Morris]

Yup. It’s all there:

Insignia: list $315; members $252
Backus: $350/$280
Proem No. 1 and No. 2 Pinot Noirs, Freestone Estate: $225/$180
Proem No. 4 Chardonnay, Freestone Estate: $175/$140

Who knew?

It helps explain the appeal to LVMH – steep prices and volume.

Not fair as normal Pinots are 80 and Chard 60. Proem is relatively new and BBS essentially.

Perfectly fair, and relevant, since the discussion here has focused on the luxury angle and the value of the Phelps brand. Yes, they sell cheaper wines (including cabs), but the measure of the brand power is the prices for the expensive stuff.

[R_Gilbane]

Yup. It’s all there:

Insignia: list $315; members $252
Backus: $350/$280
Proem No. 1 and No. 2 Pinot Noirs, Freestone Estate: $225/$180
Proem No. 4 Chardonnay, Freestone Estate: $175/$140

Who knew?

It helps explain the appeal to LVMH – steep prices and volume.

Not fair as normal Pinots are 80 and Chard 60. Proem is relatively new and BBS essentially.

Perfectly fair, and relevant, since the discussion here has focused on the luxury angle and the value of the Phelps brand. Yes, they sell cheaper wines (including cabs), but the measure of the brand power is the prices for the expensive stuff.

“Not fair”. Come now. No one is attacking anyone. They just sold the company for $300m or whatever so I think they, and the family ego, is doing just fine. Strikes me as a fairly analytical convo (my comments excepted but for the old Backus vintages being fucking legend cuz they are and that’s a fact jack). An open discussion about pricing models and quality of product is fairly germane to core purpose of this website.

[Michael_S_Monie]

Think what they would have gotten if they had purchasd Eisele years ago!

[Stephen_Pepe]

With family businesses, after the founder passes the issue is how to distribute the value to the second and third generations while still controlling the business. The Gallos have successfully done that. Rumor is they have used their glass plant and a special tax legislation to pass the value down to the third, fourth and fifth generations.

[Tim_Heaton]

Phelps is just one of many that will get purchased by LVMH. I think Isole e Olena is happening, too. I’m either very right, or very wrong, I don’t care except to say if it’s being sold, I’ll forever tip my hat to Paolo and Marta as I pass by.

I’m too lazy to start a new thread.

[Zachary_Mancini]

Yup. It’s all there:

Insignia: list $315; members $252
Backus: $350/$280
Proem No. 1 and No. 2 Pinot Noirs, Freestone Estate: $225/$180
Proem No. 4 Chardonnay, Freestone Estate: $175/$140

Who knew?

It helps explain the appeal to LVMH – steep prices and volume.

Not fair as normal Pinots are 80 and Chard 60. Proem is relatively new and BBS essentially.

Perfectly fair, and relevant, since the discussion here has focused on the luxury angle and the value of the Phelps brand. Yes, they sell cheaper wines (including cabs), but the measure of the brand power is the prices for the expensive stuff.

Still don’t agree as they have quite a few products under 100 that are fantastic.

[Ian_Dorin]

lol a CNBC announcement probably isn’t hearsay.

It makes sense. It’s an iconic property in need of stewardship. I view it as a known quantity at this point, it will be interesting to see if they can innovate or if they wish to maintain the status quo.

Sales price of $300m is hearsay.

I heard that number late last year though, so not sure how off base it was.

I was surprised that Gallo wasn’t the buyer to be honest. Or Constellation. Both are looking for strong DTC wineries.

[Ian_Dorin]

Phelps is just one of many that will get purchased by LVMH. I think Isole e Olena is happening, too. I’m either very right, or very wrong, I don’t care except to say if it’s being sold, I’ll forever tip my hat to Paolo and Marta as I pass by.

I’m too lazy to start a new thread.

Wait, Isole is being bought by LVMH? That makes no sense.

[Ian_Dorin]

They also make Dom, Krug, Ch Cheval Blanc, and Ch d’Yquem. I don’t hear anyone complaining about those brands.

Really? I hear people complain all the time about the pricing of those brands. Just look at the board. Complaints (or lack of) about quality of those brands is an entirely different story as it would take a tremendously jaded person to take that position.

At the end of the day it’s a luxury good and LVMH is as good or better as any other company in the space of selling that product. I’m sure they will increase quality. I am also sure they will increase pricing. And lastly, I am sure I will be very happy to try the fruits of their investment/labor when someone else opens a bottle for me to try. Just won’t be on my dime.

The people complain about the price of 4 of the most iconic wines in the world need to get a life. or a better job that makes them more money and keeps them busier so they don’t sound like whiny babies.

[John_Morris]

Not fair as normal Pinots are 80 and Chard 60. Proem is relatively new and BBS essentially.

Perfectly fair, and relevant, since the discussion here has focused on the luxury angle and the value of the Phelps brand. Yes, they sell cheaper wines (including cabs), but the measure of the brand power is the prices for the expensive stuff.

Still don’t agree as they have quite a few products under 100 that are fantastic.

You’re missing the point. LVMH specializes in luxury products, so the appeal has to be wines that have enough cachet to command $250 (or whatever), not $60 chardonnays. The point is that Phelps has some of those very high-end wines, which shows the brand is quite valuable.

[Ian_Dorin]

The biggest negative with Phelps’s marketing in addition to the significant price increases is its widespread availability.

But think about Dom Perignon (5 million bottles annually) or Veuve Cliquot (18 million), two other LVMH brands. Even Yquem is 10,000 cases a year, and Cheval Blanc 8,000-10,000 cases – in line with many other top Bordeaux chateaus. Phelps is about 60,000 cases.

Your numbers on Yquem and Cheval are way off. Yquem is about 80,000 bottles, and pretty sure Cheval is 60-70K bottles. Both are well below that in 2021 too.

Some Dom vintages reach higher too, like double that.

[Ian_Dorin]

Joe’s kids are at retirement age for most people and then there are grandchildren. At that point things get difficult to manage. Very few American wine companies get past the third generation.
Louis Martini, Robert Mondavi, Sebastiani and Seghesio all come to mind. I have no idea how the Gallos have survived.

LVMH sold Simi decades ago. Then they bought into Newton and Colgin. I don’t know how the Newton brand is doing but they were damaged physically during the Glass fire. With all the Phelps vineyards they can funnel grapes to Colgin and Newton and work on marketing the Freestone program.

Insignia might be the biggest expensive wine brand in Napa…20,000 cases??

LVMH knows how to market luxury.

Insignia is around 10K cases. One vintage was 12K, but only once.

LVMH has really been pushing Newton the last few years (even pre-fire), so my guess is that they are struggling at least a little bit.

[John_Morris]

The biggest negative with Phelps’s marketing in addition to the significant price increases is its widespread availability.

But think about Dom Perignon (5 million bottles annually) or Veuve Cliquot (18 million), two other LVMH brands. Even Yquem is 10,000 cases a year, and Cheval Blanc 8,000-10,000 cases – in line with many other top Bordeaux chateaus. Phelps is about 60,000 cases.

Your numbers on Yquem and Cheval are way off. Yquem is about 80,000 bottles, and pretty sure Cheval is 60-70K bottles. Both are well below that in 2021 too.

Some Dom vintages reach higher too, like double that.

I was quoting cases for Yquem and Cheval Blanc, not bottles, so we’re not far off from each other. Decanter puts Yquem at 100,000 bottles, also in the same ball park. Decanter says 8,000 cases for Cheval Blanc. Other websites have somewhat different figures for these properties, but on the same scale.

Of Dom Perignon, Decanter says, “Although numbers are never officially published, it is thought that upwards of a million bottles are produced per vintage.” Wikipedia cites figures ranging from 2-5 million bottles.