I was recently looking at a small production Napa Cabernet Sauvignon from a single vineyard and was struck by how tiny the production was on a year to year basis. Looking at recent vintages, production has varied consistently from 100 to 160 cases. This means this producer is making about 4 to 6 barrels of wine per vintage. The cost per 750 mL bottle: $75 for new releases.
The point here is not to pick on the producer, thus I'm not naming names. Rather, the idea is to treat this producer as a quick, crude case study. This Cabernet is the only wine this producer makes; it's really all or nothing with this cuvée. While bigger Napa producers sell Cabs in this price range that may have 5k or 10k case production, this producer needs to stay afloat on just a small fraction of that quantity.
Unfortunately, 100-160 cases is really the opposite of an economy of scale. Undoubtedly farming of a small vineyard costs more per acre than a large one since simply getting workers and equipment there at the right time is half the battle. Meanwhile, a producer like this usually needs to hire a winemaker and pay to utilize resources at a custom winemaking facility.
For a boutique producer, even several thousands cases is considered a small production, though this quantity is often spread over multiple wines. If the above Napa producer is selling through and making a sustainable profit by selling a top notch wine at the $75 asking price, there's really no critique to be made of this business model. But from a consumer perspective, I see winemakers who have built from the ground up to run a winery making and selling significantly more wine at one half or one third the price per bottle. I can't help but think micro-production wineries like the above example are saddling consumers with both their large production costs and a rather high per bottle margin simply because they aren't doing as much work as others.
Who knows, perhaps 4-6 barrels of $75 Napa Cab is simply a hobby. It certainly sounds like a quantity of wine a hobbyist could store in a garage. But I really wonder what the producer is doing to earn that price when other boutiques are doing 10 or 20 or 50 times as much work to hit a significantly lower price point. I don't believe this is the only producer pursuing this approach, and I think it will be increasingly hard for micro-production wineries to capture a share of this small market segment with consumers being more careful in their spending.
The point here is not to pick on the producer, thus I'm not naming names. Rather, the idea is to treat this producer as a quick, crude case study. This Cabernet is the only wine this producer makes; it's really all or nothing with this cuvée. While bigger Napa producers sell Cabs in this price range that may have 5k or 10k case production, this producer needs to stay afloat on just a small fraction of that quantity.
Unfortunately, 100-160 cases is really the opposite of an economy of scale. Undoubtedly farming of a small vineyard costs more per acre than a large one since simply getting workers and equipment there at the right time is half the battle. Meanwhile, a producer like this usually needs to hire a winemaker and pay to utilize resources at a custom winemaking facility.
For a boutique producer, even several thousands cases is considered a small production, though this quantity is often spread over multiple wines. If the above Napa producer is selling through and making a sustainable profit by selling a top notch wine at the $75 asking price, there's really no critique to be made of this business model. But from a consumer perspective, I see winemakers who have built from the ground up to run a winery making and selling significantly more wine at one half or one third the price per bottle. I can't help but think micro-production wineries like the above example are saddling consumers with both their large production costs and a rather high per bottle margin simply because they aren't doing as much work as others.
Who knows, perhaps 4-6 barrels of $75 Napa Cab is simply a hobby. It certainly sounds like a quantity of wine a hobbyist could store in a garage. But I really wonder what the producer is doing to earn that price when other boutiques are doing 10 or 20 or 50 times as much work to hit a significantly lower price point. I don't believe this is the only producer pursuing this approach, and I think it will be increasingly hard for micro-production wineries to capture a share of this small market segment with consumers being more careful in their spending.
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