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p r a c t i c a l w i n e r y & v i n e ya r d n O v e M B e r 2 0 1 4 101 w i n e b u s i n e s s The craft beer and craft spirits business looks a lot more like the wine business today. The wine business is starting to look like the spirits business where there is consolidation of players and crop. We do see some blurring, and the consumer is very interested in finding authentic brands that are handcrafted. We are going to continue to provide those sorts of experi- ences for people. ■ Fashionable, hot things, trends go up and down on these new innovations and, not that we are sticking our heads in the sand, but we are seeing wine as a constant. It has had a good steady growth and will continue to do so. Craft beer actually ex- pands the market for us and offers an opportunity for millennial exploration and entry into the market, which then will progress up to wine. ■ From our perspective it looks a lot like beer trying to mimic wine because wine is the original kind of craft, right? Every vintage is different, every blend is differ- ent. Everything is a little bit unique and crafty. We have just said, "Look, we are the original crafters" and we are going to continue to compete with that. We just have to make sure we are sharp enough with new innovation, new lifeblood in terms of brands all the time, because you are going to have more and more options for the consumer to pick from. The addition of craft beers in and of itself does not dramatically increase the choices that the consumer has beyond the wine category (already incredibly wide- spread and fragmented). It increases the confusion level; whether there is a lot of swapping between wine and beer remains to be seen. We are definitely going to see the beer consumer start to face the same confusion as the wine consumer faces. Q: What is your view on raising your wine prices to match increasing grape and input costs? What is your strategy on owning/leasing vineyards, import- ing foreign bulk wine? ■ We continue to raise prices. We will, in our long-term strategic plan and view, continue to raise prices to move to dif- ferent tiers among our tier set in Napa Valley. As you reside in Napa Valley and you are estate-driven, where we will bottle our wines because of the property that we have here, to be sustainable you need to have a great financial model. That re- ally requires raising prices. ■ Every year for the last 10 years we have raised prices. It is only because, first of all you have to have respect for your brand, so part of it is respect for your brand versus just the margin. The reality is, in some markets like Napa, even dur- ing some of the economic downturns, grape prices continue to go up. ■ We have raised our prices fairly signifi- cantly over the past three years. We had gone seven years without real price in- creases and realized this is crazy! We are either going to get paid for our wine or we should not be making it. ■ We are getting out of the recession. The consumer is more accepting of price in- creases. It was really hard for a while, it is still fairly hard. It is probably more difficult at the value price-point range than at the premium or ultra-premium price-point range. Anything $12 and below is kind of tough. Whereas $12 to $20 is a little bit easier and above $20 is a lot easier. $12 is tough because of import competi- tion, but also competition in general. You are dealing with a less sophisticated consumer, and they are buying on price, and whoever is running the most aggres- sive promotion at the time might win the vote at the cash register of a less sophis- ticated consumer. ■ On the nationally distributed brands, we are really working hard on a strategy Liquid Nitrogen Dosing Systems: Key Benefi ts: Flushes oxygen out of bottle head space Keeps the fruit in every pour Best "locks in" FSO 2 levels 800.371.3303 www.chartdosers.com Dosing The World One Drop At A Time