Letter to the Wine Business Monthly
    David Coffaro, January 6, 1999

    [Moderator's note: The following is copied from Dave's Winemaker's Diary, elsewhere on this website.]

    I got sidetracked yesterday cleaning up my "Wine Business Monthly" magazines for the last few years. I am sure most, if not all of you, have never heard of this publication. As the title implies, it is about our business. They have a website at http://smartwine.com (no www. - why is that?). They send this to me as a courtesy every month and occasionally, I glance through it. Since I had had two years' worth of issues to look at, I started throwing  them out at random, but one caught my eye. The front page story was "Premium Wine Prices Soar with Economy--No Glut at High End of Market." It just happened to be the most recent issue, January 1999. I glanced through it and found statements that I had to respond to. Now you must understand, I have a lot of income tax work that needs to be taken care of this month, but this was so outrageous to me that it took precedence over the tax work. As many of you know, I feel wine prices are way too high and most of the owners of these wineries are probably already very wealthy. It is perhaps prestigious for them to sell wine at high prices and gain a certain reputation and recognition. What follows is a copy of the letter I sent to this publication.

    January 6, 1999

    Abigail Sawyer
    Wine Business Monthly
    867 W. Napa St
    Sonoma, CA  95476

    Dear Abigail,

    Shame, shame on you. I was very disappointed in your article "Premium Wine Prices Soar with Economy". I have grown grapes as my only livelihood until 1994 when I started my 3000 case winery on Dry Creek Rd in Sonoma County Ė maybe you have heard of me. I am a maverickóI am unconventional---I only sell "futures". I could sell my wine for much higher prices, but will not do it as do Bill McIver and Al Brounstein. As far as I am concerned they are ripping off the public and apparently you.

    In your section titled "Higher costs a factor in Higher Prices" you state that wine grapes are coming in at $1500 to $1800 a ton. Where have you been?? Those prices have not existed for years. As a matter of fact prices are more like $3000 a ton. Now, you may say well that is another reason for the high prices of wine!! Well they sure have you fooled!! $3000 a ton equates to $4 a bottle. Mondavi years ago tried to relate their Sauv Blanc to the price of grapes. Every $100 in the price of grapes was suggested to equate to $1 per bottle. I think every winery charging high prices has conveniently forgotten that (Mondavi is one of them).  Letís see, that would equate to $10,000 per ton.

     Now letís break this down! One ton of grapes produces about 62.5 cases of wine. Or 750 bottles. Or $75,000 gross at $100 a bottle. If you assume they are paying $10,000 a ton for their grapes (I am sure they are paying more like $3000 to $4000 a ton), that leaves $65,000. It costs them no more than $150 (20 cents / btl) to bottle. If they are using 200% new French oak (I use 20%--I donít want my wine to taste like a 2X4), that would amount to $4000. They could be paying as much as 10 cents per labelóanother $75. Gee letís see? I guess they could be paying as much as 12 cents for their capsules--$90. Gosh could they be paying $2 for their glass ( I pay 50 cents and the most expensive bottles are about $1.50)ó$1500 more. If we total this up it amounts to $15,815. That leaves them with $59,185. I am sure I forgot something? Maybe it takes many employees to handle this bottle? Maybe their distributor is making a bundle. Maybe they need a new Ferrari, or jet?

    Letís be realistic, their costs are probably well under $15 a bottle including replanting and all the other overblown expenses ( I would love to go into more detail with you). If they sell all their wine through a distributor at $50 per bottle and none at retail, they are still making a profit of over $35 per bottle.

    Sincerely,
    David Coffaro