Napa Merlot Update

March 24, 2015

Napa County Merlot Update

 

In 2013, Napa County Merlot sold for an average of $2791.97 per ton.  I had predicted that average price per ton would rise to $2812.71 in 2014.  In fact, it rose quite a bit higher, to $2977.06, which is an increase of $185.09 or about 6.6%.  Supply was down over 9% from 2013 to 18,923 tons.  So, how did my price prediction fare?

 

How Close Was the Prediction?

Actual average price was 5.8% higher than VFA’s predicted price.  The prediction was unequivocally wrong.  In fact, it is the worst I’ve done except for my Lake County Cabernet prediction for this year. 

 

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 1.79 standard deviations, indicating that the model predicted less than a 5% chance that prices would rise this high or higher and a 95% chance that they would be at this level or lower. 

I’d be lying if I said that I wasn’t bummed. 

 

This prediction wasn’t so bad.  If this was my biggest failure, it would have fallen well within the predicted distribution of outcomes.  Back-tested, though, the only time it performed worse than this (or nearly as poorly), was the year after Sideways came out.  So, the model may need to be re-engineered or it may be a blip.  I’m guessing it’s the latter, but I’ll be watching it.  It’s just a bummer that of those predictions I chose to make public, I posted my two worst ever.  But that’s better than having actually given any advice based on the predictions. 

 

 

 

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