Wednesday, August 11, 2010

Give the Wineries a Break

Truth in blogging statement: I belong to the Washington Association of Wine Grape Growers. (WAWGG). These comments do not necessarily (hah, not at all) reflect those of WAWGG or other members.

The WAWGG suggested price list and estimate crop size just came out. Since this is a confidential publication for members only, I cannot divulge the contents, but I will comment on trends.

If you follow this blog, you already know that the pipeline is backing up for wineries, many of which are downsizing or going away. Many wineries are still trying to sell the 2005 vintage. I doubt if they want to buy a lot of grapes to sell in 2015 - or later.

Wineries must crush something to keep their small producer credit, so everyone who plans to stay in business must crush a couple hundred pounds. Get it: a couple hundred pounds, not a couple hundred tons.

So, with wineries cutting back on production, it looks like the crop is predicted to be up a modest 4%. This translates into about 375,000 cases more wine to sell (not counting the cutback). I assume the Washington Wine Commission is working hard on selling it in Tokyo for $36 per case - that is what we have been offered for export wine.

Many suggested prices remain the same, although a few have gone down slightly - Pinot Gris is down over 5%. Cabernet Sauvignon continues to climb, up by over 3%.

At the current price, a winery must get $10 for a bottle of cabernet sauvignon, just to make a minimum profit. Through the three-tier system, that puts the wine on the shelf at $20 - a price point that isn't moving very fast these days.

It seems like in this market, where the world is dumping its wine on Washington consumers, that the WAWGG would take a more, uh, conservative view to pricing. But, I already know of urban wineries who have signed contracts for grapes at prices way above WAWGG. God, we love those suckers over here in eastern WA. They don't have a clue. They only know what they read in Paul Gregutt's book. Everyone over here knows where you can find good grapes for a good price. I had a winery friend who paid 50% of WAWGG on delivery and the balance to state average when the final figures came out in January. In years of glut like this, he made out like a bandit. State average tends to be about 70% of WAWGG.

WAWGG pricing is merely a suggested price, although many contracts use it as the standard. I know when we were buying grapes - before becoming an estate winery - we agreed to pay WAWGG prices. Of course Ste Mickeys doesn't pay WAWGG, but you have a contract with them it is worth real money year-in year-out - and if you have a lot of grapes, only Ste. Mickeys can use a lot of grapes. Garagistes use, at most, ten tons. It's hardly worth the hassle - well, unless you con them into $3000 a ton.

My advice to urban wineries and wannabes, negotiate a fair price, but if you need some grapes at WAWGG prices, I have some to spare. Just email me for availability. We'll even through in a custom crush.

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