Your potential winnings may run into hundreds of millions of dollars. Tickets can be hard to come by right now but when you get the chance, it makes sense to buy them by the ton. You cannot score these precious tickets at Tip Top Liquor Warehouse in Healdsburg or Plaza Liquors in Sonoma or any other store in town.
In this game, which is the real California Lottery, you’re going to need a four-wheel drive vehicle and you’ve got to get your boots muddy. There will be two kinds of mega-winners: Growers who have used this time strategically to build relationships with the best long term homes for their grapes and brand owners who have forged relationships with key growers that will allow them to respond to growing consumer demand with an ample supply of quality wine while maintaining a healthy profit margin.
There are an incredible number of moving parts to this MegaMillions Grape Lottery. It starts with the green not of vineyards but of money. You’ve got to keep lenders and investors -- sometimes ill informed and always touchy -- mollified in the midst of economic worry.
Then there is Old Ma Nature, who stung us with frost and late rains last year and who has been stingy (until lately) with winter rain this year and who may or may not be planning some further nefarious surprises. There is the all-important consumer and the casegood market, which has improved but is still a concern during the country’s economic convalescence. International competition is always a factor -- and the U.S. market is still the prime target for global wine producers. Local competition is a huge consideration.
What are other growers and wineries doing -- and why? What does the market for wines in bulk, the best proxy available for the total inventory situation, reveal about current and projected inventories? And then there is the timeless question of time. Brand owners would like to wait for more information -- including crucial sales data and post-set crop projections. But what if you wait and the market does not wait for you?
If you have a growing brand, you’ve got to feed the monster somehow. Many growers, on the other hand, would sleep better with a signed contract with a solid buyer at a profitable price. But their sleep is troubled by dreams of prices that continue to soar. No one wants to leave money behind hanging on the trellis. And then there is the tricky question of multiple year contracts -- what multiple is the right one? Three years? Five years? Ten years?
What pricing mechanism makes sense for multiple year deals? What is going to happen to farming costs and inflation over the next ten years? What is realistic? What is fair? Is the grape buyer who offers the highest price the best choice for a grower? Or is the very fact that a certain buyer must offer substantially more than his or her competitors a sign of poor planning or other problems?
Not only is the market complicated and time sensitive, but it can seem like growers and wineries are playing completely different games. When the market shifts like it has recently, people often ask how we can represent both growers and wineries. Doesn’t the advice we give wineries conflict with the advice we give growers?