Earlier I posted a Grape Data Tool tutorial video that showed how to use the tool to evaluate Cabernet Sauvignon in Mendocino, Lake, Sonoma and Napa Counties by price level. Over the next week or so, I will post my findings from exploring that topic. Today’s post will focus on Mendocino County Cabernet Sauvignon.
In 2017, roughly 10% of all Mendocino County sold for $2,058.34 cents per ton. This is more than were sold at any other price level. This was the 2016 average price. It is $138.48 less than the 2017 average. I counsel my clients against contracts like this. In general, prices rise, so pegging directly to last year will generally cost you money. There are a few ways to deal with this issue:
You can contact me to forecast grape prices for you;
You can ask for a premium to the previous year’s price, either additive or multiplicative – I can help you figure out what this should be;
You can ask for the vintage year’s price, as long as you’re willing to wait for the crush report to be released to get your final payment.
Most of Mendocino County’s Cabernet Sauvignon contracts, however, are not indexed, judging from how much tonnage sells at a rounded price. I estimate that just under 40% of Mendocino County Cabernet Sauvignon sells at a price that is linked to reported prices or the rate of inflation. This may indicate that Mendocino County Cabernet Sauvignon sells primarily through short-term contracts.
It pays to produce the top 1% or 2% of Mendocino County Cabernet Sauvignon, in terms of price/quality. The 99th percentile price is roughly $1,000 higher than the 98th percentile price! ($3,853.98 vs. $2,850)
To view the chart, you may want to zoom in and/or switch to Google Chrome, which displays my blog better than Firefox, or you can pull up a quality copy here. As you can see in the chart, the premium that Mendocino County’s top Cabernet Sauvignon has been able to command has ebbed and flowed, in relation to the district average. As of right now, the trend looks to be a partial convergence, as the district average rises steadily and the 94th to 97th percentiles continue a long-term downward trend in inflation-adjusted terms. The top couple percent of grapes are an exception, however. The 99th percentile price has been gaining in the long-term with some rapid price acceleration over the past several years. Still, none of the price levels have reached their 2001 highs in inflation-adjusted terms.