Issue link: http://read.dmtmag.com/i/100792
Don & Sons executive director Donny Sebastiani described how the company has adapted to market conditions. It does not follow a pure negociant business model for each brand. ���We buy grapes, we process grapes and wine, we have long-term contracts with growers, and we have long-term and midterm contracts for bulk wine, and our contracts are staggered for when they come up for renewal,��� he explained. ���We diversify how we bring in supply, and we think we are more efficient and more flexible than other operations.��� He said the company also operates on a slightly tighter margin than others. ���We have a heavy focus on California appellation wine, but we also buy wines from Italy and Chile, and in the past from France and Australia,��� he added. ���We���re buying more wines from Chile that are very competitive with wines from the Central Valley.��� Chilean cabernet sauvignon and pinot noir are being bottled under the Pepperwood Grove label. Sebastiani had a different perspective on the supply market trend, at least for the short term. Noting that the 2012 North Coast crop came in larger than expected, Sebastiani said, ���We saw a market shift toward surplus, and we���re seeing a clear downsizing in prices ��� not to where they were three or four years ago, but down compared with 2011 prices and down compared with spring and summer of 2012.��� He also indicated that pricing pressure was keeping prices down or stable at the retail level. RED BLEND TRENDS Red blends of several different varieties are a growing category that reflects the tighter supply market, and an option that has allowed negociants to maintain affordable pricing. ���Red blends are a hot category, but it depends on the pricepoint,��� Sebastiani said. ���They are a reaction to the market, driven in part to give producers more flexibility in their sourcing and blending.��� Recent releases from Don & Sons include a 2010 Red Wine 74 V I N E YARD & WINERY MANAGEMENT | Blend under its Project Paso label that includes nine varieties; a 2009 Smoking Loon Sweet Red Wine made with four varieties; and a Pepperwood Grove Sweet Red Wine made of 55% Lodi syrah and 45% Clarksburg pinot noir. Other recent releases are a B Side 2010 Red Wine Blend and a 2011 The Crusher Red Wine Blend. The Three Thieves 2010 Red Wine in a 1.5 L bottle is a California appellation wine of four different varieties, including 54% merlot, sourced from different coastal, Lodi and Delta vineyards. Cameron Hughes has three ���California Field Blend��� releases within the brand���s Lot Series that are red blends of four to six different varieties, each priced at $13 per bottle. PRIVATE LABELS ADAPT Private-label brands could also face supply issues, although that hasn���t been a problem for the 30-plus private-label clients served by Terravant Wine Company, based in Santa Barbara County. ���We buy both grapes and bulk wine, but we contracted in advance with longterm contracts at lower prices than were paid in the 2012 market,��� said Randy Pace, Terravant���s general manager for private-label sourcing. The full-service company has contracts with suppliers for the next three years, and each contract has an option to roll over into one more year. ���We planned ahead, so we can continue to operate with business as usual,��� Pace said. Bottle prices could go up for Terravant���s clients, depending on the market. ���There is presently some upward pressure to raise prices, and people will always raise retail prices if they can,��� Pace said. ���But it depends on how tight the rest of the market is at the retail level.��� Terravant buys grapes from all over California, sourcing as far north as Lake County, but has an emphasis on Central Coast fruit. Pace said 2012 yields in Santa Barbara County and Paso Robles did not spike above expectations, as was reported in some North Coast locations. But even assuming an above-aver- Jan - Feb 2013 age statewide yield in California, Pace said, ���In the overall world market, it���s not significant in terms of changing the supply picture.��� Fredricks at Turrentine observed that California���s 2012 harvest yields enabled some spot-market activity and resulted in some shortterm price softening on the bulk market. In spite of that, Fredricks said, ���New acreage is being planted, but not at a rate necessary to keep up with demand. As long as consumer demand and sales continue to grow, the same long-term trend of a tight supply market will continue.��� Ted Rieger , CSW, is a writer and photographer based in Sacramento, Calif., and has been a contributing editor for V&WM since 1990. Comments? Please e-mail us at feedback@vwmmedia.com. 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