Sunday, June 28, 2015

Bargain Pinot Noir?

Birth of a Wine Blogger has been in hibernation for a while, a bit like our dormant vines. 
Recently I was woken from my slumber by a colleague in the industry sending me a link to a Facebook post he had published. He was making the point that a certain Pinot Noir (see link) is on promotion in supermarkets for just $10 a bottle. He went on to say that it must be made from wine at the lower end of the spectrum, sourced from the countries featured on the label, to retail at that price.  He asked, in a world of commoditised, characterless wines, is this something we really need?

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What concerns me about this, as a dedicated Pinot producer, is that Kiwi consumers will buy this wine thinking it is a bargain, try it, may not have a great experience, think all Pinot Noir is the same, and be turned off the variety forever. 
Why did he conclude that the wine must come from the "lower end of the spectrum"? 
Let's dissect the $10 and see where he is coming from. Of the ten dollars, the government collects $3.66 (the ALAC levy of about 3 cents, plus $2.13 excise duty and $1.50 GST); pretty good return for the government! 
Then, assuming the retailer takes a 30% margin ($3) and the distributor a 20% margin ($2), that leaves $1.34 for the winemaking! Let's be conservative though and say the winery sells direct to the retailer, so no fee for the distributor. In that case the remaining sum is $3.34. Let's see where we end up if we consider that.
What's left to cover the wine component after allowing for bottling costs, freight and distribution, warehousing, marketing and other related expenses? Say these add up to $1.80 per bottle. That leaves $1.54 for the wine. Say my analysis is too tough. Add another $1 back to cover that. That leaves me to ponder the quality of wine you might buy at $2.54 per bottle? 
Contrast that with the cost per litre of our 2015 Pinot Noir. That was over $13 per litre, before bottling, taxes, etc. So even if my costs are high, we can safely assume it is not top quality, hand-picked Martinborough Pinot Noir in the wine we are discussing. 
Disclaimer: I have not yet tasted this wine. I will as soon as I can get a bottle though, then I'll report back. If I have wronged a good product I will admit that. However, my comments above are based on experience and general principles. I can say with confidence is that I have learned in my 30 years in the wine industry is that it would be an absolutely amazing achievement to deliver a 'Premium Pinot Noir' (which is what the label claims) for $10, let alone $2.54. 

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