Wednesday, July 13, 2016

Remembering our Roots – Pamela J. Tefft


Ray McKee reads a eulogy to his mother at the memorial service


Pamela J. Tefft passed away June 28, 2016. Shirley and I got to know Pam while she was the bookkeeper at Stewart Winery in Granger, Washington. We were just starting Bonair Winery in 1985 and she helped us with our ATF reports. She later went on to cofound Tefft Cellars Winery in Outlook, Washington with her husband Joel Tefft in 1991.
A memorial service was held Sunday July 10, 2016 at Bonair Winery. It was attended by family and the staff and owners of local wineries. Her son, Ray, who is the red winemaker for Ch. Ste. Michelle, led the service.
The founders of the Washington wine industry are long forgotten as everyone is focused on what’s new and hot or what's old and stale. As Winston Churchill once said, “A nation that forgets its past has no future.” Maybe a wine industry that forgets its past has not future either. As the Washington Wine Commission keeps telling the same old stories, it misses much of the history of the industry. I guess our problem is we have never produced a Robert Mondavi or a Georges de Latour or even a Fred Franzia.
Ron Irving and Dr. Walter Clore actually told the story in 1998, but I’m sure none of the staff at the Wine Omission has read it. The book is out of print, but you can still find it on Amazon.com.

Wednesday, July 6, 2016

The Wrath of Grapes



I just finished reading 'The Wrath of Grapes - The coming wine industry shakeout and how to take advantage of it' by Lewis Perdue. The book was written in the late '90s so much of the information is out of date but the theme of the book still seems to make sense and is a good read for anyone wanting to invest in vineyards, wineries, or even, for God sake, wine.
His basic premise is to invest in wine and wineries 'for the love not the money.' He outlines many of the problems of the wine industry that still exist today.

  •        The industry does not adequately promote itself. He primarily picked on the California Wine Institute, but we could easily add the Washington Wine Commission to this list. It has the same structural problems. (When do you stop making love to an 800 pound gorilla? When the gorilla is damn good and ready.
  •       The industry does not cooperate within itself. I belong to the Rattlesnake Hills Wine Trail. Getting member wineries to participate in events that benefit everyone is impossible. We have an annual picnic for the public, a meet the owners and winemakers affair. Only about half the wineries participate. Some don't even send the lowest tasting room employee. Others have been known to give their ticket away to friends. It's hard to make a premiere event when you don't have 'premium' members who give a shit.
  •        The industry continues the snob approach to wine. It needs to promote wine as a healthful food that accompanies all meals, not a beverage that 'I spent $100 on this bottle that Parker awarded a 96.' Remember, there isn't much difference between a connoisseur and a city sewer. They are both full of shit.
  •      We are still fighting the neo-dries, the WCTU of the 21st century. The latest attack on wine comes in the form of finding minute amounts of glyphosate in wine. Remember the 'chromium in wine' scare from using stainless steel tanks? Probably not, just before the press release, the CSPI discovered that the American diet is low in chromium and wine is a good source of the nutrient. But they were trying.
  •       The industry needs to fund research. Actually, this may be one area where the Washington Wine Commission is on track.

Grocery stores are filling store shelves with store brands - bulk wine bottled by large wineries that may not even have a brand of their own. Some may be good, but those sold by Costco, for example, are awful and not much of a bargain for the price. Trader Joe's two-buck chuck. Well, you get what you pay for. Gallo's Hardly Burgundy in a four-liter jug is just as good.
The wine industry is small potatoes in the world of business. It has never made a billionaire and very few millionaires. Since the book was written, the number of wineries (and competition) has increase three or four fold. (The exact increase is not important - just a lot.) Most of these new wineries are people investing for the love of wine. The ones who did a quick spreadsheet (1000 cases X $1200 per case =$1.2 million) are finding it hard work with unrealistic returns and are dropping much faster than those who really love the land and wine. Maybe the shakeout will eventually come - hopefully before I die.

Thursday, May 26, 2016

Wine Grapes: The Most Taxed Ag Product - Well Almost




Depending on what state you live in, tobacco is probably taxed more than wine grapes. But the question is, why should wine grapes  be taxed at such a high rate while HFCS is subsidized by the federal government? In case you don't know what HFCS is, it is high fructose corn sugar. The government pays subsidies to corn farmers to produce a product that is making Americans sick and obese. And don't get me started about glyphosate in wine. (Round Up - glyphosate. All that corn is Round Up ready. There must be tons of glyphosate in sugary soft drinks.) Why don't the neoprobhibs look here for a story? (Because they are fucking dumb!)
How much are wine grapes taxed? Let's start with property taxes of $77 per acre. Assuming 4 ton to the acre, this is $19.17 per ton tax. Assuming 150 gallons per ton, that is $0.17 per gallon.
Then we support the Wine Commission (locally known as the 'Good Ole Boys' Club') to the tune of $.08 per gallon and $12 per ton of grapes harvested for another $0.16 per gallon.
The Washington State Liquor and Cannabis Board wants a cut of $0.87 per gallon.
With a small producer credit of $0.90 the federal tax rate for wine under 14% is $0.17 per gallon, but if it is a big Cabernet Sauvignon (over 14%), the rate is $0.67 per gallon.
And then there is personal property tax on winery equipment. Hard to quantify by the gallon, but on a 20,000 gallon winery with its own bottling line, it would be around $200 or about $0.01 per gallon.
Add this all up and you get $1.84 per gallon in taxes. Multiply by 150 and get $276 per ton. At four tons to the acre this all adds up to $1104 taxes per acre for growing wine grapes! It appears the government doesn't want you to grow those fucking things.
I guess this money goes to corn farmers who received $4,843,815,583 (yes, that is billions) in subsidies in 2013 or about $52 per acre.
So the government pays $52 per acre to grow a crop that is causing obesity and poor health to its citizens, and terrible damage to the environment (Gulf of Mexico, Monarch butterflies, you Google it. 488,000 results), but penalizes a healthy food like wine, which when consumed in a conscientious manor is part of a healthy life-style, to the tune of $1104 per acre.
It's crazy shit like this that makes you want to vote 'NO' for all government.
As the Chad Mitchell Trio sang in 'Rhymes For The Irreverent,'
"Should I write a letter to my congressman?
Each congressman has got two ends
A sitting and a thinking end
And since his whole success depend upon on his seat
Why bother friend?
Like I've always said, we have the best government money can buy. And you ask why I am grumpy.

Saturday, May 7, 2016

$15 Wage and The Wine Industry



I assume you are expecting me to go off about how bad this idea is and how it will put the wine industry out of business. Well, I'm here for surprises. That's why you follow this blog.
So that little girl or young man behind the counter at Micky Dee's thinks their services are worth $15 per hour. They do have a high school education (equivalent to a sixth-grade education in any other country) and they are looking at paying inflated prices for a second-rate college education, majoring in medieval art and minoring in ethnic basket weaving. Give them a two-dollar bill and see if they are worth $15 per hour.
So, what's my point? We just raised the rate we pay our vineyard workers to $12 per hour. Why? Several reasons: First, all those illegal aliens that Trump talks about aren't coming to Washington State. We haven't had an illegal, err excuse me, undocumented worker  apply for work in ten years. They must be going to New York to work for Trump. (Undocumented is an oxymoron. All these people have documents. You can buy them in LA for about $100.)
Second, wages should be governed by supply and demand. The number of brain-dead high school graduates available to work at Micky Dee's is limitless. They have no skills and no work ethic. They think the world owes them a living because all through school they have certificates that say 'Participation.' They think 'participant' is synonymous with 'winner'. They should look in the mirror, there is a big 'L;' on their forehead.
There is high demand for field work right now. Huge crews are being hired by large apple companies to plant trees. Hops need to be trained. Soon the cherry harvest will start. When cherries start, there will be no workers unemployed in the state. (Notice, I said workers. There still will be people on rocking chair 'looking for work.'
Third, it is hard, back breaking, dirty work. Not to sound racist, but no white people ever apply.
There is a parable about Jesus returning to Earth. The first person he meets is a blind man with a tin cup. Jesus touches him and says, "You shall see." The man threw away his cup and responded, "The colors are so bright, the world is beautiful!"
The second person Jesus met was a cripple begging for food. Jesus touched him and declared, "You shall walk." The man jumped up and ran happily away.
The third man was standing on the corner with a sign that said 'homeless. Need money.' As Jesus approached him the man started backing away while muttering, "Hey man, don't touch me. I just got on disability."
We were lucky to get a crew to thin our grapes; but we had to pay $12 per hour. Let the market decide the wage.

Friday, April 15, 2016

PSST! Wanna Buy a Winery Cheap?




Seller orders 30% reduction to $625,000.  Bank-owned winery and vineyard in the lower Yakima Valley. (Technically, it is in the Central Yakima Valley, but most people are geographic idiots.)

Well, here is another sad story from wine country. Everybody wants to get rich in the wine business, but very few do so. The original selling price was around $2 million, but at that time the winery had some inventory as well as a good reputation. I think the bank loaned about a million and the owner carried the rest as a low interest/balloon payment scheme. My accountant told me if you accept these sales terms, be happy with the down payment, because that is all you are going to get. Since the bank has the first lien on the property, they get the property.

Making money in the wine biz is tough. They did the magical thing; they opened up a second tasting room in Woodinville. There was more overhead and apparently the magic that was Woodinville has worn off. They stopped paying suppliers. Word gets around real fast about that. When you can't get grapes, bottles, etc. you go out of business in short order.

There are about 15+ acres of land available, two houses, (one is a B&B), 9726 square feet of production area, plus some equipment like tanks, press, crusher/stemmer, and bottling equipment.

Here is your big chance to own what used to be, you guessed it, Tefft Cellars. Sealed bids due May 26, 2016.