I worked in Napa last week and drove past some of the most well known vineyards loaded with fruit almost ready for harvest. I also drove past vineyards south of the city of Napa that appear to be setup for machine harvesting and are across the road from a lumberyard and tool rental place. This got me thinking about the differences in wines and what separates great wine from just well made, clean wine.

How much of this difference is due to the decisions of winemakers in the cellar and how much is due to the vineyard practices and place they are grown?

Terroir has long been part of the mythology of wine marketing. But is there really a difference between Cabernet grown at Martha’s Vineyard and the vineyards in American Canyon? Would we be able to taste the difference if both vineyards were made into wine by Heidi Barrett?

From my experience I’d say yes, but it would be interesting to see what some of the best winemakers would make from more humbly grown grapes. Alas, I don’t ever think we will see this in reality but it’s interesting to see what folks like August Briggs are doing at Castle Rock and his eponymous winery.

In the end, place matters but how much is open for debate. As with all luxury goods, scarcity and reputation drives wine prices but quality can be another story altogether.

Note: This is a cross-post of my “weekly” article at Good Grape. I’ll be posting there a couple times a week to catch up this month.

I’ve been doing some work recently that got me thinking about how much a wine’s price is determined by the actual quality of the wine in the bottle and how much by the demand created through marketing. Aside from a few very rare exceptions, wine needs to be marketed to be sold. This is normally done through retail stores, the winery tasting room, to wine clubs and increasingly through online wine merchants. All these add to the costs a winery has to pay in order to get their wines to the customer but they are not the main cost driver; the grapes are.

If you are Fred Franzia making his famous “Two-buck Chuck” you are paying about $100 a ton for your over-cropped Central Valley Cabernet Sauvignon. The yield per ton is probably something like 7 tons per acre which doesn’t produce the most concentrated fruit. That ton of fruit will make around 60 cases or 720 standard bottles so Fred’s got around 14 cents per bottle in fruit costs. Now you can start to see how he can make money selling it for $1.99 at Trader Joe’s. Contrast that with the premium producer in Napa Valley who spends $6,000 a ton on fruit and up. There the yield is between 3 and 4 tons per acre that will produce a more concentrated, complex wine. Assuming the same 60 cases are made, the Napa Valley producer has around $8.30 in fruit costs. Not too bad if the wine will be selling for $50 or $60 a bottle but still 60 times more costly than Mr.Franzia’s wine. But this post is not intended to be a forensic dissection of the wine cost structure, for that, visit my friend Vini.

So getting back to the wine in the bottle, the basic difference is in the quality of the fruit and cellar treatment (i.e. new oak barrels vs. chips, aging time, etc.). For producers making the finest wines they tend to spend a lot more on these items but in the final analysis the most extravagant producer might have something like $30 of cost in each bottle produced. Since distributors buy at an average of 40% off retail, this wine would sell for a minimum of $57 a bottle assuming a 10% winery profit. But what if this wine is priced at $150 or $500 a bottle? Well, the profit margin is certainly higher but there are probably higher marketing costs, as well.

As I learned last week, there seems to be a point where price and quality diverge. The reputation of a winery, bolstered by glossy treatment in the wine magazines and 95+ Parker scores also help to push the demand, and price, for these wines. But are they the best example of a certain wine region or variety? Well that, my friends, is in the eye, and palate, of the beholder. You might think Screaming Eagle is the zenith of Napa Cabernet while I prefer what Ladera is doing for a lot less. Preferences aside, there are many great quality wines from all over the world that compete for our hard earned wine dollar. What really separates them is not the quality of what’s in the bottle but the demand that is created for those bottles. That, in a nutshell, is the essence of marketing… at least in my book.

Note: This is a cross-post from my weekly entry at Good Grape. Since I’m behind again, I’ll post another article on Sunday.

As a wine marketer, I’m always on the lookout for new and innovative strategies to sell more wine. As the first wine podcaster, I feel a certain responsibility to keep current on the genre by subscribing to every new wine podcast (for a while anyway). When these two things meet, I take notice.

So it was with great interest that I discovered today that Trinchero Family Estates has started to podcast. This is the conglomerate that white Zinfandel has built with the best known brand being Sutter Home. Their podcasts are focused not on consumers like first entrant Goosecross Cellars (disclosure: I work with Goosecross) but on the trade. Kudos to whomever at Trinchero came up with this idea as I’ve always thought that business-to-business podcasting is as compelling as business-to-consumer. It’s somewhat perplexing why this is not the first thing large wineries would think about in this medium as distributors, retailers and restaurants are naturals for regular communication in forms that can be consumed on the go. But that’s where this effort falls a bit short in my opinion. Instead of providing RSS feeds for listeners to subscribe to, they make the user download each podcast individually. This can be easily fixed and I’ll bet someone will take care of this shortly. My impressions of the first few shows I listened to are, well, sort of dry and basic but it’s a start.

I’m hoping other large wineries (and I’m talking to you, Gallo!) will follow Trinchero’s lead here and address their podcasts to the trade and maybe even the consumer, too. It’s inexpensive and very effective.