Cost to produce Oregon PN

In the Jan Spec there is a Q&A with Josh Bergstrom where he states:

The way I farm, my cost is $37 a bottle; it has to sell for $65 at retail When we make lower priced wines they are loss leaders to make friends.

While its impossible to know what is included in his estimated $37 a bottle his words are to lead one to believe that it is his farming methods that are driving the cost and not his accounting for capital cost. At 5 bottles per gallon and 15 pounds of grapes per gallon that works out to be a little over $12 per pound of grapes and assuming yields of only 2 tons per acre almost $50K per acre. Since the article states that there are 3 acres totaling 36 acres that would put production cost at just over $1.75M per year. If yields are 3T production cost jumps to $2.65M.

Maybe I don't understand the yearly operating cost of a winery but this seems outlandishly high. I have to assume that a large portion of the $37 per bottle (if accurate) is accounting for the land and winery facility. Otherwise, how can anyone believe this to be a real business model. Can one really expect to sell Oregon PN at $65 for the long-term.

For the costs, I would stick with 1.5 to 2 tons/acre. Hand sorting out unacceptable fruit (green berries, botrytis, etc., which can plague PN) can cut this in half. New French oak barrels, used once, cost $600 + per 59 gallons or $10 per gallon. Custom designed, heavy bottles could add $2-3 per bottle. That still doesn't come up to $65/bottle. but making a truly top quality bottle of wine isn't cheap.

I agree with you Howie. That part that gets me is the implication that it is manner in which he farms that drives the cost. Bottles, barrels, tanks, and hand sorting are not farming cost. Well maybe sorting but its a stretch.

When I think of farming cost I am thinking the stuff done in the field to promote healthy vines and fruit. Stuff like pruning, fertilizer, fungicides, shoot positioning, dropping fruit, etc.

Either way, it's bs used to attempt to justify the price he wants to charge.

I think he has figured in what his desired profit per bottle amounts to, and then put a thumb on the scale.

I agree with Hoke. And, further, I am not a particular fan of his expensive wines. And I think their tasting fees are something like $20.00.

the cost of grapes is usually given per ton. do i remember that the rule of thumb is to move the decimal point two places to get the selling price? $1500/ton = $15/bottle.

Oh what the heck. I'll resurrect this old chestnut from David Coffaro. Prices aren't what they were ten years ago, but it's still somewhat instructive, coming from a guy in the Dry Creek Valley. Or maybe it's just entertainment at this point...

Oh what the heck. I'll resurrect this old chestnut from David Coffaro. Prices aren't what they were ten years ago, but it's still somewhat instructive, coming from a guy in the Dry Creek Valley. Or maybe it's just entertainment at this point...

That is what I am talking about. In 2007 the average cost per ton of Oregon PN was still below $2500. (http://www.nass.usda.gov/Statistics_by_State/Oregon/Publications/Vineyard_and_Winery/YDWINE.txt)
I am willing to accept that Bergstrom's farming cost are well above the average price per ton. The pictures I have seen of his vineyard look like he is working with low trained, high density vines which should cost more to produce. But as Coffaro points out that is still only a small portion of the total production cost.

I honestly don't care if any winery chooses to price their wine at $65 a bottle but don't try to explain that price as being driven by farming methods.

We visited the Corison Winery a few years ago. While we were in the tasting room someone asked one of the managers what made up the $80 bottle price. He pondered for a second, and then said "Lots of stuff, but mainly taste". I appreciated the honesty.

I read this in Spectator and wondered how long until someone noticed the numbers - Hmmm, Whatever works I suppose in marketing and justifying costs. BUT, this sounds like a BIG stretch - what kind of farming costs that much ? Farming in a Hummer, sipping First Growths listening to Bon Jovi - LIVE in your vineyard while you "farm" ?
L

I read this in Spectator and wondered how long until someone noticed the numbers - Hmmm, Whatever works I suppose in marketing and justifying costs. BUT, this sounds like a BIG stretch - what kind of farming costs that much ? Farming in a Hummer, sipping First Growths listening to Bon Jovi - LIVE in your vineyard while you "farm" ?
L

Guess that winery will not be on the WillCool itinerary.
'Winger

Nope Bill, that winery didn't make the list
We (Chef and I) will be posting something soon about Wil-Cool, but it should be great fun !

Wil-Cool??


I like the sound of that.

I'm guessing that amortization, utilities, marketing/travel/per diem, his salary (before profit), his staff, etc. might make the $37 cost true. He'd have no reason to fib, but he'd have no reason to reveal his personal expenses.