Monday, February 5, 2007

The problem with Pinot

The Oregon wine industry is having another booming business year and our flagship red wine, Pinot Noir, is doing better than ever! What began, as I originally thought, as an off shoot success due to the popular flick Sideways is fastly becoming a Pinot problem of staggering proportions.

The Pinot problem stems from the way we make wine traditionally: Once a year... One harvest, one season, one crush per year is our only chance to make Pinot Noir or any other wine for that matter. What also makes it tough? The fact that with Pinot it sits in a barrel for 9 months , and then in the bottle for another 6 months (if you're lucky). If we were in the beer business, we would just buy more hops or barley and make more beer. Many times a year if neccessary. Wine doesn't work that way, sadly. So, every year around October we not only harvest the grapes on our small 17 acre plot but we try to make an educated guess at what will happen with sales of our wines for the next year and then buy grapes accordingly.

This is...in a word, difficult. Let's go with two words here: very difficult. Let's just imagine that the only wine we make is Pinot Noir. This only makes the quandry a tad easier and of course a total fallacy. So, now that we've taken the problem into the realm of fantasy let's look at the factors of the decision making process.

First, I have to think about the market in the current year and the past several years whilst remembering that wine making, like farming, is a very cyclical business which means we go up for a few years and then inevitably down for a few years. Other than the farming aspect, you could have various outside factors (i.e. Sideways 2, The Willamette Valley) that swing the demand one way or another almost instantaneously.

Just because your demand is up does not mean you're in a good overall position. Case in point, in 2004 we knew that Sideways was affecting the demand for Pinot but we couldn't make more wine fast enough and so we struggled through 2005-2006 with 1,100 cases of our 04 Pinot Noir. We ran out in the summer time and had to go three months with no Pinot. This was bad. So, what did we do? We bought more grapes, and we made 50% more Pinot Noir in 2005. Sooo, fast forward another year and we've been out of Pinot for three months. We (and most other small Oregon wineries) release our Pinot a smidge earlier than we'd like to and hope for the best in mid-November, 2006. The wine is, in a word...great. No, wait, two words again: Really Excellent.

Now, riding a strong economy and growing Oregon Pinot Noir market we're through the first three months of sales and we're way ahead of where we should be. This is great! Right? Well, kinda. Yes, I'm very happy that our 05 Pinot is selling like hot cakes. This past weekend we took it to the first of many competitions and it won a gold medal and best in show. All very good things, right? Yes, except now I sit down with my partner and we start crunching the numbers...he says, "We're going to run out of Pinot...again". This is, of course, the problem with Pinot.

So, what do we do? Well, there's a few things you can do. One of them is to look at the most basic rules of supply and demand and raise the price. We've done this, but other Oregon wineries have done this more than us and we're still burning through the stuff.

Our distributors never like to see a mid-vintage price increase but there's not much else we can do. You see, when it comes to distriution of our wine the one thing that you don't want to ever want to do is run out. Especially in markets where you have a glass pour account. Running out means that the restaurant has to change their menu and then we'll lose the account in all likelyhood. Locally, if you have a wine club (which most wineries now have) you risk people deciding that your wine is getting too expensive.

Saturday, February 3, 2007

First festival of 2007 brings first big award!

This weekend marks the first big festival we've participated in for 2007. The Oregon Seafood & Wine Festival (OSWF) is in it's second year and held at the Oregon Convention Center (OCC) here in Portland, Oregon. We participated in the festival last year for their first year and did well. Having been with LaVelle full time since August 2006 I'm still in my first year with LaVelle Vineyards so I wasn't present at the OSWF last year.

This year is the first year the OSWF has held a wine competition. There are approximately 65 wineries at the show this year and although not all of them put wines in the competition there were lots of entries for this first annual OSWF wine competition. We entered three of our wines in the competition:
  • 2005 Vintage Select Pinot Noir
  • 2005 Vintage Select Pinot Gris
  • 2005 Crow Valley Riesling
As manager of the festival I'm the one who brings all of the wine and festival supplies up from the winery just outside of Eugene, which ends up being a two and a hald hour drive. About two hours into my drive on Thursday afternoon I called the winery to speak with my Dad. In the middle of our conversation he stopped and told me to hold a minute. When he came back he said that Diana (our office manager) just got a call from the OSWF wine competition and that two of our wines had won awards! Our 2005 Vintage Select Pinot Noir won best of show! At first I asked if that meant it was the best Pinot Noir in the competition and Dad quickly replied, No! Best in show means that our Pinot Noir was the best wine overall entered in the competition! Our 2005 Crow Valley Rieslilng also won a Silver Medal in the competition.

So, the tiny piece of bad news in all of this was that I had to drive back to Eugene that night to pick up more wine for the weekend. A small price to pay for winning best of show!!