There’s a couple of others that have really hiked their prices, too. Seems like an odd thing to do in a downturning market, but maybe they’re on that ride and can’t go back without losing face. At some point volume decreases more than the price increase intake. It seems like many must be at that point from a casual observer, but I of course have no idea.
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I would call it more like price escalation rather than inflation in the economic sense any way. In a metaphor sense it is spot on, inflated like a balloon. As Adam notes, when does it backfire and blow up in your face
But I’m sure price taking is a sound business strategy just a little tougher to do a backward dance in the perceived premiere branded wine category
As Yogi once said, no body buys their wine anymore. They are always sold out
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Not sure if you are speaking from experience or just offering an opinion. If the latter, it would appear to be somewhat uninformed other than that their visits/tasting are on the high end of $$ - and at the top for WV wineries. But they are much different than just showing up and tasting a selection of their wines as many who have turned tastings into profit centers do. I suspect their profit margin relative to what they are opening is modest - certainly compared to those only tasting their own products.
If you are just commenting on places that charge higher $$ for tastings/visits in general, they are that. But the details matter and lumping everyone together offers an incomplete comparison.
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The only things that a trip to Mexico and a trip to Napa have in common is that they’re both vacations.
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and a lot of alcohol is typically consumed at both!
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There’s also a hidden factor. The numbers from overcharging can look good and seem to justify it. But, what about the customer take away? They may have still loved the experience and thought it worth the splurge, but it didn’t used to be a splurge. How likely are they to come back? Long time customers might decide that was enough. For first timers, it’s a one-and-done. I would guess there would be a strong correlation with club sign ups. Like, if people aren’t signing up like they used to your perceived value has dropped and your return visitors and recommendations will drop accordingly, and a storm is a-comin’.
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That relates to something I’ve said before (I think in this thread). How often are local customers going to visit your tasting room? Like, if the wines are the same until the next release. Once or twice a year, probably. Once or twice a year, for your local loyal customers? (And wtf? I’ve seen this with local wine bars. You’re pouring flights, allegedly to introduce your customers to new wines, then don’t change the limited list for months. Do you hate repeat business?) So, if that plays to your business model, be creative, mix things up, create a locals scene, whatever, to keep those folks you already won over coming back. That’s so much easier than having to constantly attract new people, or have 180 times as many local loyal customers. Isn’t that more fun for the owners and staff, too?
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It would interesting to see all of the numbers together. I’m guessing most of “these businesses” got free PPP money; CA as a whole had the most PPP loans, most amount of loans > $1M (buy a lot), so how big a hit was it? Most of the food, gasoline, etc., companies are recording record profits in spite of high inflation and I suspect salaries/bonuses in the executive suite have not suffered.
There’s no doubt the pessimism is real and that is no surprise given the headlines constantly trumpet the doom/gloom/“highest inflation ever” numbers but rarely give the same visibility to the good news. And corporate media won’t highlight the point above about who is profiting off of this rather than helping improve the situation. I don’t live in a high-income area, yet restaurants are packed, Costco is packed, the drive-through at Mickey D’s is backed up every morning, Chick fil-A drive-through is backed up seemingly every time I pass one, so it doesn’t seem like people are that worried about spending.
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The economics aren’t in returning customers - they’re in sales, particularly wine club memberships.
Prices are going up because hospitality programs are really expensive, staffing is hard to come by, and there is so much completion, you need to offer something memorable.
Generally, these programs aren’t material profit centers - usually they’re lucky to break even. It’s all about securing and maintaining the membership, and making that customer feel part of something.
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Excellent point. The longest I last in a wine club is usually 2 years. The bottles pile up and then we need to stop.
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I’ve spoken to a few winemakers that moved from an allocation list model to a regular wine club and they all say that the wine club generates more cash. Question is, does it retain your customers long term? I think the attrition level is high with that model and it seems like you almost have to have a tasting room where you can replace members faster…
When I look at my membership email list, very few unsubscribe during a release. They might not buy, but at least they’re interested enough about the releases to stay on the list. I’ll take that as a positive! 
My question is - what if you spent the $10000K/month (or whatever a tasting room would cost) on advertising? What would that yield? It’s a rhetoric question of course, because I don’t think it can be quantified in an easy way. But would be really interesting to know.
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You seem to be caught up the first sentence, while ignoring the entirety of what I said.
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Well, apologies if I’m misunderstanding your point, but you made the same point to Casey Hartlip about returning customers. And the rest of the paragraph I quoted talks about return visitors. So I’m not ignoring what you said.
If your point is indeed not that tasting rooms should be finding ways to attract people to come back, then please clarify.
I didn’t make a point *to^ Casey. I was agreeing with him and riffing off that.
Stating “the economics”, as if there’s one proven business model is part of the problem. Very wrong headed.
The problem is a bunch of mindless lemmings copied a business model. It worked in good times. Now, in a crisis, with tasting room visits and club membership dropping the lemmings are all following the same path. What should be clear is the market doesn’t want to support that many wineries with this same cookie cutter “corporate” gouging model. If their club membership is dropping and they aren’t getting new sign ups, they should take that as a huge waving red flag things are going to get worse.
There are myriad successful winery business models. They don’t all have tasting rooms. They don’t all have clubs. But, we are talking about wineries with tasting rooms here. We’re observing terrible tasting room policy driving people away from club membership and failing to generate new membership.
If club membership is key to a winery’s profitability, it’s myopic to focus on maximizing a tasting room’s sales numbers. That’s what it looks like these also-rans are doing. They’re running around like Chicken Little “trying to recoup losses” by driving away business. Of course hotels and other parasitic businesses aren’t helping.
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I don’t disagree with most of this. You’re absolutely right that the DTC/tasting room model has been stretched to its limits and markets like Napa and Sonoma are oversaturated. There’s only so much tourist capacity for expensive, 2-3 hour sit-down tastings with food that sort of all tell the same story. Look at Healdsburg, which is a singularity of tasting rooms.
Unfortunately, the challenge for smaller, and even midsized wineries is that there are only so many ways to sell wine. Wholesale access is limited. Mailing lists are great if you can somehow attract and retain customers. So there’s a logic to offering hospitality, even if it’s a formal program of letting customers come to the warehouse and hosting quarterly open houses (the Scherrer model!). But yeah, the pricing and luxury arms race can only last so long.
I’m not sure I agree that it’s “myopic” to focus on maximizing the TR’s sales. That doesn’t need to be in a vacuum.
But I think there should be some sympathy here. Many of these are small wineries trying to figure out how to sell wine, which is really hard.
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The context of that comment directly preceded it.
It kinda seems like your “That doesn’t need to be a vacuum” comment circles back on something you were objecting to earlier. Whatever.
I work on the production side with dozens of wineries that have all sorts of business models. I previously worked in the service industry, outperforming our competitions and observing others doing so, too. You can operate successfully for years under some status quo. Then something unexpected, out of your control happens. You have to either adjust or wither and die.
Are they? It seems to me the ones in trouble had no creativity in the first place and are just sitting there wringing their fingers hoping something changes. The ones who’ve adapted, or never took the cookie cutter route in the first place, are doing fine. So, a kick in the pants is what’s warranted, not thoughts and prayers.
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Maybe our data points are just different. I can think of plenty, who I’m not gonna name out of friendship and good taste, are in exactly the situation I described. Clearly both types - the ones I describe and the ones you describe - can exist in the same timeline. The downturn hurts both the creative ones with good business models as well as the ones who just kinda stink.
There is no doubt there are way too many wineries and vineyards in this world. The romance pulls way too many in only to be rudely awakened. In that sense it’s very similar to the film industry I’m also in - draws people in like a moth to a flame - but few make it through. Yes, I was also very naive in the beginning, especially with costs/sales. I knew it would be back-breaking work, I welcomed that, but perhaps didn’t understand the full financial undertaking.
In any way, 6 years into it and the only way is through the wall, not around it!
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It also seems that people aren’t worried about keeping their money in their local economy based on that….
While McMinnville is doing reasonably well business-wise, we’ve seen enough inflation here for me to spend the last 3 days with 2 more to go cooking enough food (I hope) to last through harvest for the ourselves and crew. Over the past few years on longer days/nights we’ll get mexican food for lunch or order something for take out at dinner. I don’t support McDonald’s and we don’t have Chik-Fil-A here (I know about them primarily through college football). But while things are still busy for most businesses here, the costs of doing business are definitely up.
And while the CPI may be up 20%, many things are up much more than that. For wineries, bottles are up about 15-20%, but the cost of the pallet that the glass arrives on went from $7.50/pallet to $18. There’s a lot of that kind of crap happening, and in the end it all adds up.
Labor is one of the biggest things. Housing in the Willamette Valley continues to climb in cost, as many people move here or buy second homes here. So most of the labor force is being priced out. We increased fruit prices by roughly 25% last year to help alleviate pressure on our farmers. That’s a big shift, especially given that it’s not a great time to be increasing bottle prices (IMO).
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Reminds where I read that during the great eggflation of 2023, virgin carton prices were also at their all-time high to something like 60 cents a carton. That is like half the price of a dozen of eggs before prices skyrocketed.
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