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Napa County Cabernet Sauvignon Update

Napa County Caberent Update - Another Tally in the W Column

In 2013, Napa County Cabernet Sauvignon sold for an average of $5498.50 per ton. I had predicted that average price per ton would rise to $5818.82 in 2014. In fact, it rose even higher, to $5923.36, which is an increase of $424.85 or about 7.7%. This price hike occurred despite a 5.7% increase in supply, which was close to 70,000 tons. Average Brix levels fell from 26.3 degrees in 2013 to 26.0 degrees in 2014, despite the drought. I’m not sure how much of the yield increase would be explained by decreased dehydration, but it has got to be a part of it. So, how did my price prediction fare?

How Close Was the Prediction?

Actual average price was 1.76% lower than VFA’s predicted price. I like to see my predictions fall within 2% and worry about the model if the prediction is more than 2.5% off, so this one goes in the Win column.

Where Did Actual Numbers Fall in VFA’s Probability Distribution

As you know if you read this blog regularly, 68% of predictions should fall within one standard deviation of the prediction. This prediction was off by .33 standard deviations, a good number. That means that my model predicted a 37% chance that prices would be at this level or higher and a 63% chance they would be at this level or lower. The model also predicted a roughly 99% chance that prices would rise, which they did. Obviously, I would have been concerned if a prediction of this certainty did not pan out and prices fell. Of course, if that happened our industry would be more concerned about the tragic rash of exploding heads taking our best and brightest. As with the other predictions I’ve reviewed in the wake of the final Crush Report's release, if these numbers were used for scenario analysis, they would have fallen well within the 60% probability range that I use as my narrowest range estimate.

Anyways, I’m satisfied with this model and its predictions. I’ll plan to check back in tomorrow with a look at another variety-district analysis. Cheers.

Album played during the creation of this blog post:

“The Reckoning”, by Asaf Avidan and the Mojos

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