Long-term grape contracts require a mechanism to dictate price throughout the term of the contract. These mechanisms can make an enormous difference in the profitability of the contract for both sides. The chart below is an illustrative case study. It assumes a three-year contract was signed for District 11 (Lodi) Zinfandel that was priced at $900 in 2015. Six types of escalators/indexes are examined: Inflation: Some contracts index to inflation, which I typically define a
I recently had the great honor of presenting to the California Association of Wine Growers at their annual summer seminar. My topic was a somewhat wide ranging discussion of how grape growers could use the Crush Report and Acreage Report to better their business decisions, negotiations and strategy. One topic I presented was the difference between median prices and mean/average prices. Grape buyers and sellers sometimes like to argue over whether they should index or price
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