Our last post on Dutch Henry Winery drew a comment from Dutch Henry owner and winemaker Scott Chafen. We mentioned in the post that we thought the Dutch Henry wines were priced on the high side. Scott responded by saying, “organically farmed, hand picked, barrel aged, and hillside grown all has its price.”
This leads to the subject of wine pricing in the Napa Valley or in any wine country. How is the price of wine set by a winery? Is there a set formula that takes into account the cost of wine production, how much profit to make, and other factors? Or, is the process totally subjective?
We occasionally ask a vintner, when the opportunity is right, how he or she figures out how much to charge for a bottle of wine. The only really straight answer we have ever received in our small sampling came from George Hendry of Hendry Wines. George simply stated, “Whatever the market will bear.” Maybe Joe Heitz started this idea back in the early days of the Napa Valley. James Conaway in his book, Napa, The Story of an American Eden, tells of the time Joe Heitz impulsively opened a bottle of his $12 Cabernet, “drinking Cabernet off the hood of a local’s pickup, laughing and laughing at the absurdly high price.” The absurdly high price didn’t stop people from buying his Cabernet. And even today, there are several “cult” wines going for an absurdly high price of $200 and higher.
We wonder how many Napa Valley vintners have adopted this price point strategy. The price of Napa wines just seems to be shooting up despite the economy. Apparently, there are enough folks out there with plenty of money who are not affected by gasoline prices or the high cost of groceries, who want to buy wine regardless of the price. Napa’s big advantage is its reputation; wineries there can charge more for their wine simply because the wine came from the Napa Valley. It is true that it costs more to set up shop in the Napa Valley vs. Paso Robles or the Sierra Foothills. But some wineries in the Napa Valley have been there for ages, since the time when land was inexpensive. Do those wineries charge less because their overhead is lower?
For us, we travel often to the Napa Valley. We love the beauty, the food, and the whole experience of being in one of the world’s most famous wine regions. We are always searching for value wines in the Napa Valley and elsewhere. We love it when we find a good red for less than $20, a good white for less than $15. But this is so much easier to accomplish in the wine regions of the Russian River of Sonoma County, Mendocino, the Sierra Foothills, and Paso Robles.