Thursday, May 12, 2005

Temecula - 4 new wineries?!

A new way to rid yourself of sharpshooters: pave everything & plant houses!

They haven't yet gotten the Glassy-winged Sharpshooters (GWSS) under control, and yet the desire is to plant more vines? Aren't they just feeding the fire by providing more habitat for these pests?

You can bet your last dollar on the fact that Callaway would still be farming the 330 acres in question - if there was any money to be made on it.
The fact of the matter is that Temecula is a fading player in the California wine scene. That appellation hasn't ever sold well...and the wines don't really command much of the total market share outside of itself. The plague of Pierce's disease, exacerbated by the ideal climate for the GWSS, has been the latest nail in that coffin.

So let's see...
The homes would be nestled among 60 acres of newly planted vineyards and likely cost between $1 million and $2 million each. Stephenson said the vineyards are a key component of the development and would be farmed and managed by Ben Drake of Drake Enterprises Inc. of Temecula.
Translation:...they want to charge $1~2 mil just for the privilege of sitting on your veranda and watching the 'newly planted vineyards' wither from the sharpshooters onslaught?


The residential part of the plan ---- Temecula Vineyard Estates ---- would feature 58 5-acre home sites immediately north of Hart and Callaway wineries in a gated community with the main entry located along Butterfield Stage Road. A secondary gate would be situated along La Serena Way.
Nice...the poor farm workers making 25¢ per 40# grape lug they haul have to drive thru/past this ritzy gated community to get to the winery and vineyards to work? Ohhhh...the irony!

Lastly, the plan is for 4 new wineries to be created, each on 10 acres of it's own vineyards (which would support ~3,300 cases of production just by itself).
Wait! 4 new wineries? and each is only 'boutique' sized? How're they going to make that work when the larger wineries in that same appellation aren't doing that great in getting market share and the new players don't have a war chest to advertise with? That's the type of thing that becomes a marketing nightmare...

There's a reason Callaway isn't farming those acres anymore...and it's not because they need more wineries to increase the competition...

8 Comments:

Anonymous Christian said...

I've seen spec homes in Marin County where the developer puts a quarter acre of vines (Tompson Seedless?) in the yard to give that "Gentleman Farmer" feel. I wonder what happens when the new owners realize a vineyard is no rose garden?

May 12, 2005 8:33 AM  
Anonymous Anonymous said...

Temecula wineries have:

1. 18 million people who live within one hour's drive
2. These people are always looking to do something fun for a day

It's a daunting puzzle, isn't it?

May 24, 2005 11:21 PM  
Blogger Peter said...

There are several factual errors and omissions in this commentary that make the underlying tone of derision just seem mean spirited towards a region that has suffered serious losses that scare the heck out of wineries and vineyard owners elsewhere.

First, there is currently control of the Glassy-winged sharpshooter. It's population is a fraction of that when the disaster hit. As proof, vineyards planted from 2000 on have suffered very few vine losses. While not large scale, those plantings probably total about 300 acres, mostly in numerous plantings of twenty acres or less.

Second, Callaway, as others, suffered big losses to their vineyards. They didn't own those vineyards and were paying $2M rent annually - even without a grape crop. Replanting and paying the lease simutaneously was too much to handle and they had to find a way out. That's the true economics of their situation.

Third, that's a nice social commentary about vineyard workers that could apply in much of California, but the pickers are making about $3 per 40 pound lug. On an hourly basis they are making pretty good wages harvesting grapes in Temecula.

And lastly, wineries like Callaway do depend upon market share that smaller wineries don't achieve. Small wineries in Temecula, however have generally done well selling direct to the growing toursit trade, and that's exactly the plan for those new wineries. In fact, they can make it in Temecula, while it's Callaway which, apparently can't.

Peter

May 28, 2005 12:42 PM  
Blogger Huge said...

"...mean spirited towards a region that has suffered serious losses...?
Moi?

Peter, I’ll admit that I’ve always had a hard time understanding the benefits of Temecula as an appellation. The overall effect the wines have on me is not really different (generalization) than those wines I taste from Fresno & Bakersfield (meaning they’re serviceable but not anything that should be priced above $7/bottle – there may be exceptions to that which I haven’t had the pleasure of tasting yet). The heat and overall arid nature of the region does not, in my opinion, create the best grapes for wine.

"First, there is currently control of the Glassy-winged sharpshooter. It's population is a fraction of that when the disaster hit. As proof, vineyards planted from 2000 on have suffered very few vine losses. While not large scale, those plantings probably total about 300 acres, mostly in numerous plantings of twenty acres or less."

Sharpshooter populations may have been reduced overall since the recent outbreak (it's been a recurring problem since the end of the 19th century), but I don’t think it’s under control. The complacency that your statement implies is disturbing. Sharpshooters were the most likely suspects in the scourge of Pierce's disease of the 1880's in that area, and I don't think they've ever been under control [Winkler reported in his seminal work General Viticulture (University of California Press, 1965) that between 1880 and 1886 “thousands of acres of vines in southern California, especially around Anaheim, were destroyed by the “California vine disease” – a malady mysterious at that time, but now known to be Pierce’s disease, caused by a virus.” (actually by the bacterium Xylella fastidiosa, and not a virus /huge)]

-excerpt:
"Spraying is a short-term answer to the problem," said Dr. Nick Toscano, an entomologist at UC Riverside. An expert on insecticides and insecticide resistance, he's been actively working with Drake and Poole and other valley grapegrowers. "And we had it under pretty good control. But ... you're always going to have something slip through." (notice the use of the past tense /huge)

"And, indeed, this past year, more than the usual number of GWSS have [been seen /huge]. There was a significant increase in the sharpshooter population this year, for the first time since spraying began."

"We had a hot spring," Toscano said. "We probably had greater egg-laying and greater survival."
(from Wines & Vines, Dec 2004)
http://www.findarticles.com/p/articles/mi_m3488/is_12_85/ai_n8592308
-end excerpt

"Second, Callaway, as others, suffered big losses to their vineyards. They didn't own those vineyards and were paying $2M rent annually - even without a grape crop. Replanting and paying the lease simutaneously [sic] was too much to handle and they had to find a way out. That's the true economics of their situation."

So…you’re saying Callaway would still be farming those acres if there was any money to be made on it?

"Third, that's a nice social commentary about vineyard workers that could apply in much of California, but the pickers are making about $3 per 40 pound lug. On an hourly basis they are making pretty good wages harvesting grapes in Temecula."

Yeah, and that's with zero benefits (health, dental, retirement, etc)…so that ‘pretty good wage’ is pretty much shot before they cash the check, what with covering their rent [doubtful they’re paying mortgages with that wage] and food costs. And you’re right, it does apply across California and not just to Temecula, though the irony of juxtaposing workers making that wage right next to the 58 new $1.5 Mil (each) houses that pop up like mushrooms is – as the MasterCard ad’s state – “priceless”.

"And lastly, wineries like Callaway do depend upon market share that smaller wineries don't achieve. Small wineries in Temecula, however have generally done well selling direct to the growing tourist trade, and that's exactly the plan for those new wineries. In fact, they can make it in Temecula, while it's Callaway which, apparently can't."

So it’s 4 ‘boutique’ wineries. Hmmm…I thought that’s what I said. And I’m sure I would have heard if Callaway was on the market right now, which I haven’t, so they are apparently still able to make it. But it doesn’t alter the fact that Temecula as it stands is a local phenomenon, and really doesn’t draw people from anything farther than say L.A. northward, Yuma eastward, and Tijuana to the south…not that there isn’t a sizeable population and pool of disposable income within that range.

Callaway has, if my information's correct, changed many of it's wines (if not all) to appelations outside of Temecula (aren't they now called "Callaway Coastal"?). Almost all of them sport "California" as the appellation (at least the larger bottlings available - they may still have wines from the local grapes in the tasting room, I'm not sure of that). I think what that implies is that wines from Temecula grapes don't have that much draw outside of the occasional tourists who stop by. Wineries looking to sell outside of it are sourcing grapes from other than the local growers.

I’m still struggling to see how these 4 new wineries would justify their differences. Will they argue over which ‘terroir’ is superior? Shall it boil down to “our land has 27 more grains of sand per acre, and that makes all the difference”? How many of these new cellars are going to continue the Temecula tradition of offering oddball items such as Pineapple wines..? (And does the fact that King Kamehameha once ate that fruit qualify it for “noble” variety status?)

/huge

June 06, 2005 8:29 AM  
Anonymous Anonymous said...

"They haven't yet gotten the Glassy-winged Sharpshooters (GWSS) under control, and yet the desire is to plant more vines? Aren't they just feeding the fire by providing more habitat for these pests?"

The GWSS has more than 200 host plants and trees that harbor xyllela. Look it up. Should they all be taken out to get rid of habitat?

"You can bet your last dollar on the fact that Callaway would still be farming the 330 acres in question - if there was any money to be made on it."

There is good money in vinyards, to be sure, but WAY MORE money in real estate. They should be lauded for preserving open space and vineyards. The alternative is the usual SoCal urban sprawl.

"The fact of the matter is that Temecula is a fading player in the California wine scene. That appellation hasn't ever sold well...and the wines don't really command much of the total market share outside of itself. The plague of Pierce's disease, exacerbated by the ideal climate for the GWSS, has been the latest nail in that coffin."

The ideal climate is where grapes grow. Temecula had the balls to warn others. Forget market share. Local sales are very good. Not all wineries need to sell wine from store shelves or restaurants to survive. V. Sattui is a good case study.

"They want to charge $1~2 mil just for the privilege of sitting on your veranda and watching the 'newly planted vineyards' wither from the sharpshooters onslaught?"

One to two million is nothing in CA anymore. Try it in Napa, call your agent.
They can always replant a bit. The sky is not falling. You need to separate the hyperbolic rhetoric from researchers and growers (required to secure funding) from the reality. Look at the vineyards down there. They look fine, Admire helps.

"...the poor farm workers making 25¢ per 40# grape lug they haul have to drive thru/past this ritzy gated community to get to the winery and vineyards to work? Ohhhh...the irony!"

I am assuming this argument was just to add color to your post, since we all know it applies to the entire agribusiness world.

"Lastly, the plan is for 4 new wineries to be created, each on 10 acres of it's own vineyards (which would support ~3,300 cases of production just by itself).
Wait! 4 new wineries? and each is only 'boutique' sized? How're they going to make that work when the larger wineries in that same appellation aren't doing that great in getting market share and the new players don't have a war chest to advertise with? That's the type of thing that becomes a marketing nightmare..."

Wineries can buy grapes from outside sources. So the estate acreage is not a limit on production.
The wine business is not limited to a single model, in Temecula or elsewhere.
Some wineries, the likes of Callaway, mostly fight it out on supermarket shelves. Some, like Viansa, rely on direct sales and wine club sales. The latter does very little advertising. So just because Callaway is experiencing a drop in sales does not mean that the direct sales guys are suffering.
Don't forget the advantages of avoiding the shitty three tier system. There is beauty (dollar beauty) in selling directly, as a boutique, to the consumer.
I know you can do acres to bottles, but can you do acres to dollars in wine sales? Plenty of tourists are coming to the valley already so there is no need to advertise.

"There's a reason Callaway isn't farming those acres anymore...and it's not because they need more wineries to increase the competition..."

Callaway, which makes something like 300,000 cases, gets competition from the big boys, not the other boutique Temecula wineries. Allied Domecq plays against Constellation, Diagio Gallo, etc., not some boutique start-up in Temecula.
This is an ad hominem but I must:
I know your name is Huge Johnson, but you ain't no big swinging dick when it comes to the wine biz.

June 19, 2005 12:32 AM  
Blogger Huge said...

Anon,
It’s been a while since I had any Psych classes, but I think you exhibit classic symptoms of grief.

Denial shows up several times, whether in Peter’s claim that GWSS is “under control”, or in yours that that the ideal climate for GWSS is “where grapes grow” rather than accept the fact that Southern California has had a problem with this pest for the last 120 years (and if your point were true, then why wasn’t it historically present in the San Joaquin Valley of California? Or for that matter Oregon and Washington too…?). Blaming the researchers and growers for overstating the problem is demonstrative of the shock & denial phases of grief as well. This despite all the evidence to the contrary including continued viable populations of the pest, with egg masses still being exported to other parts of the state via ornamental plant shipments (certainly that’s not how I would characterize “under control” which you also imply).

The anger which underlies your post suggests that perhaps you live in that area, or are a grower elsewhere in the state, and are having a hard time adapting to this crisis (dysfunctional reactionary mode due to abnormal or “non-normative” change). The irritation you display with the “look it up”, “call your agent”, and “can you do acres to dollars in wine sales” quips come across as nothing more than petty and snide. Embarrassment and feelings of helplessness may be there as well.
I’ll grant you the ad hominem, after all I chose that moniker for it’s ‘in your face’ challenge to the pretentiousness of the wine industry…and obviously for the pun on the renown Hugh Johnson’s World of Wine.

Perhaps you’ve already moved through anger and depression to dialogue and bargaining, and have only regressed when reading my post. However it’s certain that you have quite a way to go yet towards the stage of acceptance of this crisis.

Yes, in a way Temecula did warn the rest of us…but it was in the 1880’s, and it was more passive like wondering where your travel buddy got off to, looking over and seeing nothing of him except his hat sticking out from a pit of quicksand. Those who didn’t see that quite obvious lesson from the past doomed themselves, and have now repeated it. As far as a modern warning, the GWSS effects were visible from satellite photos of the area in the late 90’s (for those of us looking). If the Chinese Govt. had been so inclined, even they could have watched the entire event unfold – without any active warning from Temecula.
And yes, Admire works well, though it’s not perfect and it obviously isn’t a “cure”, but rather alleviates some of the symptoms, much like an aspirin taken for a broken arm: the underlying cause persists unabated.
Currently Riverside County is engaged in a rather scary experiment of genetic selection, as those GWSS which do survive repeated sprayings are selected for their resistance to these chemicals.

Callaway made 300,000 cases per year back in 2000, but now sells less than 200,000 a year I believe. And Riverside has just adopted a new agricultural ordinance requiring 75% of the fruit used by wineries in the Temecula area to be from local growers, which if Callaway’s not “grandfathered” out of, will only drive it further from that area. (It has been a good draw for tourists, even if not a “boutique”…in fact it was that winery people were stopping to visit before many of the recent boutiques were even built. Potentially they’re cutting the anchor loose & setting themselves adrift.)

The complacency of your “we don’t need to advertise” line is perhaps the scariest of all. Remind me to never have you proof any business plans I’m involved with – ever. ALWAYS advertise. Always, always, always…advertise everywhere that’s appropriate for your message. Then be creative and figure appropriate new places to advertise – local music venues, local fairs, tastings, food events/competitions, wine bus, wine train, radio/TV/print/web, whatever you can find…
I really have to assume you were too angry when you wrote that…or you’ve suffered a stroke in the recent past…

Boutique wineries may not advertise the same way that larger brands do, but you’d better believe they advertise. If they don’t, then they are complacent fools.

As for Viansa, it hasn't been profitable for years, but if you want to use that as your business model, I can understand why you don't think you need to advertise. Sam and Vicki Sebastiani sold it to their children (before divorcing) about a year or so ago, and since then it’s sold off its tasting room on the Sonoma Plaza (called Lo Spuntino) where much of their Cucina Viansa food & kitchen gadgets were also sold. I can’t see any reason why they would want to do that, as the plaza property was centrally located (which the winery isn’t) and also had a nice restaurant – unless there are some other stresses on their business that aren’t yet evident – and I wouldn’t be surprised if we hear more about them in the near future based solely on that transaction.

Be well, Anon. Good luck with your stroke therapy.
/hj

June 21, 2005 2:07 PM  
Anonymous JD said...

"As for Viansa, it hasn't been profitable for years"
There's the proof: ignorance plus arrogance = huge j on the wine business

July 28, 2005 9:05 PM  
Blogger Huge said...

JD,
I think you missed the post where Viansa just sold...
http://hugejohnsonsworldofwine.blogspot.com/2005/07/viansa-sale-closes.html

Stop & look at the situation...

- you have a couple who own a winery and are having some relationship problems

- they sell the business to their seven (7) children, not all of them from the same union, and some of whom might not want to be in that business for the long term(it's also a great way to liquify the assets prior to the divorce)

- in support of the last line I submit that the shift in dynamics when going from 2 owners to seven owners, some of whom were/are employed in jobs in other industries just prior to the purchase, is not a positive one...in fact it raises concerns about long term stability and a coherent direction

- you have a wonderful second location on the Sonoma Plaza, but you sell it

- word on the streets is that you're interested in finding someone to come on board...

- you could get a sizeable sum for your winery, yet you get a couple of Million $$ less than you should (I think that also reinforces the notion that they've been looking for a while, and settled on 360 Global rather than continue the search)

There are several other factors that I won't bore you with here, because the links are a bit more tenuous...and obviously you're far too intelligent to need my tutoring.

You may not be near enough to this area or industry (as I am), however, I personally have seen the indicators for several years, it's just that most other people don't see them, or link them together.

As for arrogance - sure, I have my due share, maybe a bit more. But ignorance? Please feel free to interpret the above signs any way you want, that's your right, but at the end of the day my conclusions were spot-on.

But you can demonstrate your superiority by fully explaining why the Sebastiani kids would sell a business they were all running sucessfully?
Why did Sam & Vicki sell to the kids in the first place?
Why did they later sell the (as you might imply 'successful & profitable') tasting room and market on the plaza in Sonoma, where anyone with an open door is guaranteed to have visitors stop by?

The World awaits your sage wisdom, JD!

/huge

July 29, 2005 9:10 AM  

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