So how is it that you get this kind of value from premier AVAâs like stagâs leap for so cheap?
They do it with other areas too, like Bordeaux and CdP. Partly itâs because they guarantee that theyâll take a certain amount every year and that helps wineries with cash flow. Sometimes theyâll put the winery on the back, so the winery gets a bit of publicity. They can also cut a deal with an AVA association because by putting the wine out with the AVA prominently displayed, they get people to try it who might not have otherwise.
It can be a good deal for the winery, a bit like selling futures for commodities - you take a guarantee today against future risk. You probably get less money overall, but itâs guaranteed.
Iâm not completely certain about the sources but I think Frogâs Leap makes wine for Shake Shack, Girard made the wine for Smith and Wollensky steakhouses and I think they make the Napa wine for Costco. Au Bon Climat makes some private labels, King Estate in Oregon makes wine for Amazon, Michael Mondavi makes wine for Hyatt called Canvas Wines, Marquis Phillips made Shiraz for a few, and a lot of other producers make various private label wines. There are producers in Argentina, Italy, Chile and elsewhere who are happy to produce for Total, BevMo, Costco, etc.
The general production method involves a lot of tasting by the buyers to get a wine that they like and think will have broad appeal - seems like their Cab did the trick. Itâs the same model that a lot of British supermarkets use - lots of house brands from different areas.
Costco is also a more traditional negociant in that they sell a lot of wine thatâs not really their own brand, but blended for them by wineries. That works really well for some of the smaller ones, because an order from Costco is a fairly large order for them, although for Costco itâs not all that big. Costco will sell it out and it will disappear from their shelves until they replace it with something else. That keeps the inventory turning in the Costco stores, and they rely on their shopperâs loyalty to pick up whatever they have on the shelf next visit.
Remember, while people on this board like to imagine a world of artisans and picturesque peasants driven to create excellence in the glass, at the end of the day the wine business is all about cash flow. So while big places like Costco, Total Wine, etc., are shunned by some, they do actually help a lot of producers.