[Moderator's note: The following is copied from Dave's Winemaker's Diary, elsewhere on this website.]
January 6, 1999
Wine Business Monthly
867 W. Napa St
Sonoma, CA 95476
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.