Issue link: http://winesandvines.uberflip.com/i/766392
44 WINES&VINES January 2017 WINEMAKING For something that provides solely quality improvements, you must look at the long-term ramifications of the decision. "It may or may not allow you to sell that vintage for more, but it changes your benchmarks. Ask yourself, 'Are you increasing quality so much that you change your benchmarks and take your wine into a new price point?' Quality is linked to brand position- ing." In other words, you need to adjust your brand's positioning at the same time you con- sider acquiring quality-improving equipment. In addition to the insights from Brock, Ryan and Duhameau, I have a few thoughts to share. Take a test drive: You probably have the ability to "test drive" someone else's equip- ment. For example, a winery down the road may have the latest press or optical-sorting technology. You can send a lot (maybe just 1 or 2 tons) to their facility and have it run on the equipment you are considering. Or you can bring in a service provider. Cross-flow filters are a big-ticket item, but several companies will bring a unit to your winery. You can then compare quality of the cross-flow filtered wine to your current diatomaceous earth or pad filtration. Depending on the piece of equip- ment, the supplier may have a demonstration unit available for use at little or no cost. If the technology is new, try to at least observe it in action at an early adopter winery. Smart equip- ment suppliers often arrange this, so get on their invitation list. Payback for quality: Duhameau is cor- rect that improving quality is part of a brand- repositioning program. A payback analysis needs to cover both the equipment expense and other potential expenses (e.g., new French oak barrels, upscale bottles, labels, etc.). You can do a payback analysis, but you'll need to shift your assumptions toward the expected added value and away from cost savings or yield improvements. For example, optically sorted fruit should improve wine quality and therefore average selling price. So make an estimate of the incremental value. The added value will be the increase in average selling price per case times cases produced with the new technology. If you think you'll get $12 more per case and you use the equipment on 4,000 cases worth of grapes, then the expected incremental value is $48,000 per year. Start early, do your research, attend trade shows, test drive, talk to your fellow winemak- ers, come up with numbers (even for improved quality) and consider installation time. In short, make a plan. Andy Starr, founder of StarrGreen (starr green.com), is an entrepreneur, marketing manager and winemaker who provides strategy, management and business develop- ment consulting services. A resident of Napa Valley, Calif., he holds a bachelor's degree in fermentation science from the University of California, Davis, and an MBA from UCLA. Ask yourself if you are increasing quality so much that you change your benchmarks and take your wine into a new price point. —Thomas Duhameau, Hahn Estate