Wine at Farmers Markets

In many of our presentations we talked about selling wine at markets, from outdoor food halls to music festivals. In reading about the laws that govern some of this commerce, I discovered that, just five years ago, California Governor Jerry Brown signed AB2488, a bill that allows farmers markets to offer tastings of wines and ciders. Of course, the bill included a few restrictions that I thought folks might find interesting:

• Wineries and cidermakers must apply for a permit through the Department of Alcoholic Beverage Control
• Wine and ciders must be produced from fruit grown and bottled by the winery and the tastings must be done by the permit holder, a family member or an employee
• Wine sellers may not sell more than 5,000 gallons of wine annually and may not serve an individual customer more than 3 ounces a day

Before this bill was passed, a "Type 02" licensed winegrower could apply for a “Certified Farmers’ Market Sales Permit” (Type 79) which would allow the winegrower to sell wine at farmers’ markets, as long as the wine was:

• produced entirely from grapes grown by the licensee
• bottled by the licensee

Though this was an exciting development, it's unfortunate that such a bill still precludes wineries who buy grapes, but otherwise produce and bottle their own wine from being able to engage directly with potential customers.

Source:

https://www.latimes.com/food/dailydish/la-dd-governor-brown-signs-off-on-wine-tastings-at-farmers-markets-20140710-story.html

https://www.dpf-law.com/blogs/lex-vini/new-california-law-allows-wine-tastings-farmers-markets/

Last Post

Ok, so I was supposed to figure out why Wine Sales spiked in 1996, but upon conducting some research, I couldnt find any compelling evidence. One potential theory I thought of was the economic recovery post the 1991 S&L crises, coupled with the explosion of the first tech boom, may have led to a huge upswing in wine sales and prices in 1996 that reflected a release of previously pent up "animal spirits". Not quite satisfactory, but a potential explanation.

So, without a good explanation, I will post quickly on two topics:

First, wine bars are a thing - I used to live by Union Larder on Union and Hyde street in San Francisco - which is a fantastic spot that serves wine by the tap. The wine was quite good and was paired with cheese plates, etc. With a broad selection available, these places may become the new yuppie bars, although unlikely to replace the dive bars and the beer. Which is why I really liked the champagne and wine on tap idea at bars, or for that matter wine in a can, as I think it is a great idea and for the younger drinkers will have mass appeal. Many of my contemporaries learned to drink liquor, like whiskey, scotch, etc., only because we werent as fond of beer (or didnt want to be associated with the brand implications) and there werent other compelling options.

Second, I just wanted to say how much I enjoyed this class, and wanted to take the time to thank all of you for making this such a fantastic experience. Learning and drinking wine with everyone in class was an unique experience. I had the pleasure of hearing from you about your love for wine and your individual motivations for taking the class. I enjoyed the probing questions for our speakers, and thought that the wide ranging discussions that incorporated not only wine, but also sales, marketing, strategy, economics, and sometimes even family politics, reflect the culture and atmosphere that comes with drinking wine. Maybe why even after thousands of years, humanity still clings to wine as its libation and social lubricant of choice. With that - I hope to see all of you around the table with a good glass of wine, and more importantly some new stories and experiences to share.

Wine Tasting on "the Island"

So most people right out of college go out to Long Island from Manhattan (and NYC) to summer in the Hamptons (or do the Christmas Stroll) and party their face off. But as we get a little older, that tends to hold less appeal. Instead, for one of my friend's 30th Birthdays last summer, we AirBnB a house on the North Fork in Greenport, NY. Greenport is much like the Hamptons was years ago - a quaint, middle states town, with fun bars, local shops, and other nifty spots. While a bit crowded, making a reservation at a restaurant or finding a spot at the cool American Beech bar, or getting into the large wharf parties at Claudio's is pretty relaxed. But even more appealing than the "scene" on the North Fork, are the wineries. As one drives out or back from Greenport (at the end of NoFo), one passes many idyllic wineries. Since it is in fact an island, and therefore gets wet, and gets very cold in the winter, the wines are not the best. Despite the wines not being as good as the wines in California (or on the West Coast generally), the relaxed nature of the vineyards provide a nice respite from the NY city life and a great place to decompress, celebrate, and drink decent wine with friends. Vineyards we visited include Sparking Pointe and Bedell Cellars for those that are curious.

The Great Hamptons Rose Shortage

Below is the link to a short article from Glamour (yes, I know), about the great shortage of Rose in the Hamptons in the summer of 2014. The Hamptons, known for their chic parties of the "who's who" of NY society has been a major consumer of the pink liquid in the last few years. That is why it became such an issue when the trendy restaurants and bars in Watermill, South Hampton, East Hampton and Montauk found their supplies of Whispering Angel, WattsUp, Domaines Ott, Summer in a Bottle, and similarly millennial-appealing names, found themselves running low.

These cleverly named Rose's not only drove an increase in instagram content but were staples of these local businesses' sales during their short summer season, helping drive the revenue that sustains these bars and restaurants for the rest of the year. Ultimately, the restaurants had to ration the pink gold and locales and people that had a hold of it commanded significant social credit, drawing customers and friends respectively. The fact that page six and glamour even ran articles about the shortage speaks to the varietal's meteoric rise and the social cache it has among the millennial cohort, and therefore its increasing importance within the wine industry.


Source: https://www.glamour.com/story/rose-shortage-anniversary

Birdhorse Wines - an enlightening adventure

As you all know, we worked with Tyler and his wonderful wine making partners on Birdhorse wines for our final project. When Tyler approached us about joining his group for the final project I was very excited. I figured it would be a great experience to take all the knowledge I had gained from class discussions and apply it. What we decided to do was basically build the Birdhorse team an investor deck / board update presentation. This allowed me to think through and work the entire spectrum of items necessary to launch (what I believe will be) a successful business. I had previously seen many investor decks and board decks, but never built one from scratch. For a consumer good, a space I had never worked in before, we brainstormed go-to-market strategy, marketing strategies, product-market fit, the products themselves (which varietals might be best for future years), sales techniques like limiting allocations of certain varietals, and of course, the unit economics and building out a fully working financial model based not on made up inputs or numbers in a case, but real expenses Tyler and co. have incurred over the last year+.

I found the experience to be extremely rewarding, not just because I learned a lot about launching a wine brand, but because I felt for the first time at this school like I had a hand in the launching of a business end-to-end (with the exception of actually making the wine, I guess), something I had not done in my previous work experience or any other class to date. In doing the project I also became convinced that Birdhorse has a unique and compelling story with founders who understand the millennial mindset and can appeal to them in order to sell their wine. It doesn't hurt that the product was great too! Overall, I am convinced Birdhorse will have no problem selling out their stock, and I had a great experience in helping in a small way!

Crimson Wine Group

Crimson Wine Group (ticker: CWGL). Look it up - it is a publically traded wine company (trades OTC I believe) that is a holding company for several wineries, including in Napa, Sonoma, Oregon, Washington, and other locations on the West Coast of the U.S. The company was a spin out from Leucadia (which bought and is now Jefferies), the holding company for Joe Steinberg. The company owns some premier brands, such as Pine Ridge and others, and while it produces wines and continues to make money, the real asset of the company is in the land it holds.

As a stockholder, I attended the annual meeting in Napa last summer (anyone who holds shares can too). First, contrary to Ilana's post early this quarter, they do pay dividends in wine :) (or at least they provide several free bottles of wine, in addition to tastings, for their shareholders who attend). More important to many of the discussions we have had about owning vineyards during the quarter, however, is that several shareholders at the annual meeting asked whether or not Joe planned to sell off the land and split the vineyards up. The reason being that the land is currently held on the companies book at the value purchased, something like $50mm, whereas current market rates would place the value of the land alone at $300 - $350mm. With the stock currently trading at only $200mm, many investors have bought the stock hoping that a savvy investor, such as Joe Steinberg, plans to sell off the assets, which would create significant upside for a currently "undervalued" stock. That said, my observations from the meeting are that owning the vineyard is much more of a hobby and passion - Joe, like others, probably likes to own the vineyard for sentimental and bourgeoisie reasons, rather than as an opportunity to generate immediate value through financial engineering. While I am sure Joe, or more likely his heirs, will eventually execute the plan many investors would like to see happen to generate significant returns, it is probably not happening any time soon - making this much less likely of a stock for immediate appreciation, and more of an exercise in trying to time the market (and Joe or his heirs' whims).

Bottigleria - Heaven in Venice

First, a shout out to Taylor, who's post about living in Paris and his experience with wine inspired me to write this post.

In the summer of 2011, I was living and studying in Venice, Italy. Up to that point I had mostly drunk wine at family events (usually at least halfway decent bottles), or extremely cheap crap in my freshman year at college. My wine pallet was due for significant expansion. That summer I became familiar with some of the nicer Italian styles, which have become some of my favorite since, such as Amarone, Chianti, Sangiovese, Barolo, Barbaresco, and many more. Though I tried some of these nicer wines, the truth was I had very little money for such purchases, so I drank these wines rarely. Much more common, and to some extent much more enjoyable, were my wine excursions to the local bottigleria on the island of Giudecca, a short walk from where I lived.

Bottigleria loosely translates to bottlery if such a word existed, or more easily understood, bottle shop. The bottigleria would bring in wine by the cask and unload it at the crack of dawn from small barges straight into the shop. I would love to watch the flurry of activity in the early hours of the morning, from the fruit vendors unloading their supplies into their carts and stores, to the fisherman offloading their catch to the local merchants, to the coffee shops just opening their doors to accommodate the flurry of business men and women who would be shortly inbound for Italians' favorite morning ritual.

I digress from the wine. The bottigleria would sell us the wine straight from the cask. We would bring our 1.5L water bottles that were always with us, line them up under the tap, and open it up. Filling the water bottle only cost 2 euros when I lived there. 2 euros for 1.5L of wine, what a deal! More meaningful though was how the wine tasted. It was fresh, unaged, rough, raw, and real, it came straight from the country side. It was as if you could taste the Veneto dirt in which the vines grew. Given how much wine we drank the price was an appeal too. I often think about how great the wine was and the phenomenal memories I made while drinking wine in Venice that summer. Cin Cin!