Monday, August 23, 2010

One Picture is Worth 1000 Words

Welcome to Washington Wine Country!

Woodinville looks like the place to be. I could be winery #10 and cash in on all the free publicity from the Washington Wine Commission.

I don't know about you, but I would go with the balloons or maybe even a big helium wine bottle.

Does the first guy in the morning get the sidewalk for his reader board or did he slip that in later?

Are the trucks in the background full of grapes from Walla Walla?

The sky looks gray. What is that all about?

Are the vineyards just behind the fir trees?

Woodinville wineries make hand crafted, award-winning, ultra premium wines - big deal, so does everyone else.

With a $10 tasting fee, that is a $90 visit with nothing to take home but a hangover.

With this much wine, who needs skid road. No wonder the Washington State Liquor Control Board is getting very strict about samples. Let's see, 4 one-ounce samples times 9 wineries equals…… Oh hell, who's counting?

Sunday, August 22, 2010

An Open Letter of Thanks to Robert Parker, Jr. and the Wine Spectator

Thank you for believing all that propaganda from the Washington Wine Commission and determining that great wine cannot be made in the Yakima Valley. I owe the success of Bonair Winery to you.

Why? You ask. Well, I didn't become a 'rock star' winemaker and the winery didn't gain a cult following so we didn't price ourselves out of the market. Our customers are wine drinkers, not wine snobs. They are Boeing employees - including some senior vice presidents - but all wine drinkers, not wine collectors. They are the working class people of Puget Sound who know what they like and don't have to chase some impossible-to-get overpriced jam-juice in a bottle. They don't need an expert to tell them what to drink. Thank you also to our loyal customers in Puget Sound who come back year after year to buy cases - not collector bottles.

When we planned our winery back in the early '80s, we did not plan on becoming rock stars or getting rich. I was a school administrator and tired of the rat race. I wanted to raise the kids in the country. I loved wine and making wine. No one was getting rich in the business back then. (Sebastiani and Almaden, are faint memories) We just wanted to make a simple living with a simple life-style. I only applied for jobs as an elementary school principal where I could grow wine grapes. I applied in Paso Robles, Sierra Foothills, Sonoma County, Willamette Valley, Southern Oregon, and the Yakima Valley. I was lucky to land in the Yakima Valley and especially the Rattlesnake Hills. When we started, we self-distributed Riesling in Seattle for $3 per bottle, which Pike and Western sold for $4. Leonetti cab at the time went for $12. Imagine, a bottle of Leonetti Cab for only 3X Riesling price (and I'm not talking Dr. Loosen!) Wine was much more affordable back then - before the investment bankers, Parker, Wine Spectator et. al. got involved. The only wine writer of significance was Jerry Mead - Mead on Wine.

I got a call from my friend Harry Alhadeff, founder of many Washington brands like Apex, the other day and we discussed the future of the Washington wine industry. Harry is a firm believer that the good times will again return and it is important to cut production and hold on to price point. I, on the other hand, believe the wine business in entering a new (old) reality. Winemakers will no longer be rock stars. Wineries will not have waiting lists to get on the waiting list to buy wine. And because of worldwide competition, wine prices will remain low.

I saw this ad on the web and it started me thinking. $20 to $50 bottles of wine and a $3 million dollar inventory. At $20 per bottle that is a 12,500 case inventory in a 3000-4000 case production winery. That looks like a four-year back up to me. There is no equipment or real estate listed. I'm sure no reasonable offer over the $3 million for the inventory will be refused. Reason Selling: Other interests. It seems to be easy to lose interest in owning a winery these days.

I think my neighbor up the road has lost interest in playing winery and rumor has it his winery is for sale for $1.1 million.

Remember the new economy, where you didn't have to make money, you just needed investors with lots of money? Sorry, the new economy went south and probably took a lot of overpriced wines with it. It, like overpriced wine, is not coming back.

You heard it here, folks, the new paradigm is here and it's the old paradigm. If you don't have a viable tasting room (and ones in Walla Walla and Woodinville are looking dicier each day) and you can't compete at the under $15 (preferably under $12) price point, you better not be in the business. A few cult wineries will remain, but if you aren't one already, you ain't gonna be one.

But, if you love hard work and the smell of the cellars, you can still make a decent living as a winery owner. I do.

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.

Friday, August 6, 2010

Buy Washington Wine or Else!

My dire prediction is that if the people of Washington don't start buying Washington wine, the industry will be the shadow of its former self in three years. Only one bottle in six sold in the state was made in the state. (The Washington Wine Commission is feebly working on that this month, but I haven't seen a surge in sales.) Wineries are going broke, many are for sale, and some just don't have anything to sell, so they will just quietly go away. Mike Lempriere somewhat follows the history of the Washington wine industry and here is his list of defunct wineries in the state I'm sure the list is not up to date since Mike is a busy guy, but it shows you that owning and operating a winery is not an easy business.

Okay, so the wine industry was oversold here in Washington; as well as California and probably Oregon - not sure who drinks all that expensive Pinot Noir. Everyone wanted to be the next Leonetti or Quilceda Creek. The wine market has become a lot more realistic in the past year and I'm sure those two wineries are doing fine, but the wanabees who priced their first ever, over-oaked, VA-coated, oxidized Cab at $50 a bottle because Parker just doesn't bother with reasonably-priced wines, are sucking gas. Their friends still have that $600 case in their cellar, hoping like you said, it will get better because it can't get any worse. They aren't buying any more.

Many wineries will just go away. After all, they have a few hundred cases in inventory, a bunch of amateur winemaking equipment, and a garage or rented ministorage unit. Others, like E.B. Foote with a long history, will try to sell. Olsen Estates with little history is for sale for $3.4 million which includes a nice new building in the Prosser Autopark.

Even with Paul Gregutt's new book, Walla Walla is fading away. The first question people ask at the Yakima Valley Visitors center is, "How much farther is it to Walla Walla?' When told it is another two and a half hours, most opt for staying in Yakima and visiting the Rattlesnake Hills. Sure, Walla Walla is pretty and quaint, but the AVA is nothing to write home about. It is far eclipsed as a serious growing area by the Horse Heaven Hills, Rattlesnake Hills, Wahluke Slope, and Red Mountain. The generic Columbia Valley produces most of the grapes in the state, and fine grapes they are.

Yellow Hawk is for sale. Canoe Ridge and Sagelands are up for grabs - look for those listings real soon.

Right now, the number of new wineries in the state pretty much equals the number of wineries shutting their doors, keeping the number around 700 - give or take 50 wineries on any given day.

A winemaker friend was just told by his agent that the new $9.99 wine in Seattle is now $6.99 or $3.50 a bottle to the winery. It's hard to make any money at $42 per case - especially if you are buying grapes at WAWGG price or above. I mean, you can bring out the Jesus Machine, but for only about a 10% addition. It was a miracle back in Canaan and it still works, but not enough of a miracle to sell wine at those prices.

So, I implore all you bloggers (bloggers conference people) to buy Washington wine. Help save the industry! You could do something positive for a change.