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?

Check out: http://tinyurl.com/nesvbh2

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. 

Our North and South Dinner

Well, we hosted our Martinborough vs Otago wine and food dinner at Ortega last Tuesday with a sell out crowd upstair for the dinner, and the Welsh rugby team downstairs dining as well. We were hoping for some fine Welsh songs later in the evening, but none eventuated. I personally think the guys were very focussed on being in good shape for the All Blacks on Saturday. Best of luck for them in the game too. We will certainly see a much more competitive game than Ireland was able to contribute last week for sure.

The dinner went very well; a lot of great discussion, some good-hearted disagreements, lovely food, good company and new friendships. I have to remind myself that this is actually my job too!

We thought Davey and the kitchen team at Ortega had done a good job of matching wine and food, including some that were quite a challenge to the wines, but all came through OK. The service was excellent and we can recommend the restaurant whole-heartedly. But rather than me writing some notes that may have some suspected bias, why not check out a blog posting from one of the guests?

Click this link: http://roarprawn.blogspot.com/2010/06/wine-onanist.html

The event was so successful we will do it again next week (sold out) and again in August (date to be confirmed). Think we could take the idea national too!

It's pruning time again!

Started puning this week and guess what!? After one of the very best spells of autumn weather on record, we have just had two weeks of almost solid rain, so the team are doing what they can in the few clear spells we have had. I admire their perseverance as the work solidly in the cold weather. I realise I am very lucky to have a lot of indoor work to do just now!

For me it is annual budget time for the business. It's a hard one this year, as we try to build a robust plan against a background of a global economic crisis, which seems never-ending; yesterday Greece and Spain, tomorrow who knows what. What I do know is that this crunch has had a huge impact on wine prices and has driven a shift on consumption patterns. No more $100 wines on corporate expense accounts, two $9 wines at the supermaret instead of one $20 one, and less dining out are just a few things I've noticed. Result? Less sales of premium wines, which are our main focus.

On top of that costs have increased; excise duty is about to go up to $1.95 per bottleand GST is about to increase to 15%. Think about that when you buy a $7 bottle of wine - nearly half is tax, and after the middlemen take their share, there is not a lot left for the winemaker! In addition, suppliers have increased costs of things like cartons, bottles and labels, and inputs like freight are also on the rise. Result? Slimmer margins and declining profitability.

This puts planning pressure on wineries and their budgets, and we are not immune to that.

All of which makes budgeting a challenge, particularly in a climate where banks are not that sympathetic either. All sounds a bit gloomy, but while things are tough our social media initiatives are really helping offset flat exports and slow domestic sales. Our Facebook, Twitter and Blog activities have introduced a lot of new people to Murdoch James Estate and our wines. We have shared experiences and ideas with lots of folk and made a lot of new friends. While it is hard to show with direct evidence that this contact is helping with sales, it is no coincidence that, since we embarked on our social media journey last year, our direct and internet sales have increased dramatically.

On top of that we have made great contacts to help with things like label designs, names for new wines and potential new distributors. It is all very exciting and stimulating, and certainly lift the cloud of economic gloom off our shoulders!

Murdoch James off to Vietnam

Well, vintage 2010 has started and I am reminded how I said exactly 12 months ago that I would blog every day on the 2009 vintage! Well, I'm not going to do that again this year - I learnt from bitter experience how challenging it is to publish interesting posts and still do the day job! But I will certainly continue the blog and try and post weekly.

It was easy to write this post as when I did it I was squeezed in a lovely economy seat on a flight to Vietnam. On one side of me fellow passenger is snoring loudly, while in front of me two babies are testing their lung-power. No snoring for me, so I thought "what a great opportunity to blog"......

I flew on Cathay Pacific, and when I read the newspaper on board I was a little concerned by the headlines: "Pilots hailed as hero's" which was reporting on a recent Cathay crash, but we got there safely. In fact, considering how full the flight was, and that I was in economy, I though both the cabin crew and the flight were superb. I strongly recommend them.

This basis of the trip is to go to Vietnam for two weeks to participate in the NZ Wine and Food Fairs in Ho Chi Minh City and Hanoi, and then off to Hong Kong to work with our excellent importer there (Nathan Fine Wines).

There is a very active NZ Trade and Enterprise team in Vietnam and they have organised both consumer and trade tasting events in each city. With the trade, they have invited 10 NZ wineries who have not exported to Vietnam before to participate, and they have invited wine distributors who have an interest in representing NZ wines to the tastings. On top of that, they have set up despatch of samples and promotional materials. I have been really impressed at their organisation and efforts - first class. It should all be synergistic. The NZ T&E Vietnam team are to be commended on this initiative. I will also see a number of other importers that I have set up appointments with individually too. So, it will be a busy week, and I hope to come out of it with with new business. On the personal front, I have not been to Vietnam before, so it is an exciting trip for me.

As I said, after Vietnam I fly to Hong Kong to work with our existing importer there. We have set up some staff training and sales calls, but the thing I look forward to mostly are the dinners our agent has set up with his key customers - tasting wines with food is the very best way to present the wines, so it will be a great opportunity. I saw yesterday one of the menus - a 6 course degustation menu  with each course partnered with one of our wines. I'll copy it into a future blog, just to make you all envious!