In a previous post, I put up a new Grape Data Tool tutorial video explaining how to use the tool to evaluate Cabernet Sauvignon prices by percentile. The tutorial focused on Mendocino, Lake, Sonoma and Napa Counties. In previous blog posts, I shared some findings on Cabernet Sauvignon from Lake, Mendocino and Sonoma Counties. This post will look at the economics of District 4 (Napa County) Cabernet Sauvignon pricing by percentile level. Sorry, by the way, to anyone who has been waiting for this. It's been a busy summer, with a lovely camping trip to Stillwater Cove and a great time at the Kate Wolf Music Festival, among other diversions from work.
Napa County Cabernet Sauvignon prices have little concentration near any specific price point. Whereas the mode price for the Lake, Mendocino and Sonoma Counties represents 8-10% of all sales, in Napa County, roughly 4% of Cabernet Sauvignon grapes sold at $5,500 per ton and another roughly 4% at $6,600 per ton. The price spread is large and relatively gradual (at least until the top few percentiles.)
Unlike Lake and Mendocino Counties, Napa County Cabernet Sauvignon prices are mostly sold through indexed contracts (probably between 45-50%). This likely indicates that more of the market is locked up in long-term contracts, although it is not as high as the 55% figure I estimate for Sonoma County.
Prices climb steadily through the percentile levels until the 95th percentile, when the rate of price escalation through percentiles starts to accelerate. Unsurprisingly, but still a bit astounding, a buyer needs to spend nearly $4,400 additional dollars per ton to buy 99th percentile grapes, instead of 98th percentile ($21,616 vs. $17,235.51).
As in Sonoma County, higher-end grapes have been able to consistently increase their price differentiation, in relation to average prices. Not only are the most expensive grapes just that, they have also shown greater price growth. In fact, there looks to be a relatively reliable positive correlation between price and price growth at the percentile level.
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.