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
In my continuing push to get people to use my free Grape Data Tool, I've made another tutorial video. This one shows how to use the AllPercentile macro to explore percentile pricing. Specifically, it focuses on how the top several percent of Cabernet Sauvignon grapes sold in each Pricing District relate to the average Cabernet Sauvignon price for the region. It also includes a bit of education on how percentile pricing works and how it can relate to grape purchase contract
So, as I have mentioned before, my worst forecast ever was a massive failure to predict the 16% jump in price for Lake County Cabernet Sauvignon between 2013 and 2014. I'm still working on stronger and stronger models for Lake County - and, for that matter, everywhere else - and have a new one to try out. Now, I know, this information isn't so useful for you now. After all, we're about to harvest and anyone on the frontlines has a pretty good idea of where prices are at -
In the last blog post, we took a look at where statewide winegrape prices are going. That analysis requires looking at many different grape types, across varieties and appellations. In this post, we’ll look at a specific case: Sonoma County zinfandel. In fact, we’ll look at a specific vineyard that I’ll use as an example (everything is kept anonymous, of course, so pardon the bad, fake names.) The projections that are used as a basis for this analysis are valid for Sonoma Cou
Stay tuned to VFA's blog to follow grape price trends and for information and advice relevant to the business of running a vineyard. You can browse articles to the left, via the pull-down archive menu or by searching for specific article tags.