Category: General

Stefania and I went and picked up our taxes today. It’s a big giant stack of forms. We can’t manage them on our own, we have to take them to our CPA. Besides personal, and business, there’s an entire subsection of special stuff to do with farming. All in all I think we have to submit about 20-25 different ‘schedules’.

Leaving the office reminded me of a normal Spring routine I have.

To all our C.P.A friends – YES you can send in your allocation form to us after April 15th, it’s not too late. Every year I stash away a little bit of wine in the ‘CPA corner’ for orders that come in after tax season. It’s something I’ve been doing since our very first Spring release.

Saturday morning we were back in the winery with two tasks to do. First we had to rack and sulfur our 2009 Haut Tubee. This was the last of our red wines to go through this process. We left a little bit of the Haut Tubee in a 5 gallon glass carboy to give everyone an idea of the gunk that we’re racking off of when we do this.

I racked the carboy below leaving just the lees at the bottom of the bottle. The wine above was clear. This is the stuff that builds up in the bottom of each barrel.

Then it was on to the Chardonnay. Cold stabilization is the process of chilling down a white wine to remove any tartaric crystals in the wine. The crystals will bind to the side of the tank as we chill the wine. That will prevent them from forming in the bottle.

One step we have to do is wrap the tank in additional insulation so that it will get cold enough. We then turn on the chiller and cool the tank down. The wine is racked into the tank and off of the lees. I use an attachment on the hose so that we leave the gunk in the bottom of the barrel and just get clear wine. The wine will now stay in tank for about 3 weeks.

Stefania cleans out the barrels after we are done. Hot water and high pressure will get them clean. We will then let them dry and sulfur them to prevent infection.

Some of the lees and water coming out after a first rinse. The barrels will be rinsed until the water runs out clean.

Everything went very smoothly and we were out of the winery in time to join some friends for Afghan food that night.

continued…..

There has been some good news lately. Sales in the $25-$40 category, that’s 80% of our production, are projected to be up 12% in Q1 2010 from Q1 2009 across the industry. The speculation is that consumers are ‘trading up’ again. For the past two years the only sector that’s seen growth is the $6-$12 range, and experts think those people are now trading up to the $25-$40 range.

Personally I think that’s wrong. I think what we’re actually seeing is people reentering the market who had left, and they are reentering at a much lower price point. To me it seems that the people who were in the $75+ market simply stopped buying wine in 2009 and waited out the meltdown in that sector, only jumping in for extreme bargains.

Now they are reentering the market, but in the $25-$40 range. Points from a critic and price sticker prestige seem much less important to that group now. It’s more about finding wine they can enjoy and cellar that won’t break the bank. The practice of ‘flipping’ – buying rare wine and selling it right away for a profit – has largely disappeared. Now almost every wine can be had at the release price. That takes a lot of the glamour and value out of high priced wines.

I know a lot of people were happy to pay $250 a bottle each for 6 bottles of wine. It was a simple equation for them. Shell out $1500, then flip 3 bottles for $500 each, and walk away with the other three bottles for ‘free’. Now that’s just not possible and I think that’s the group now buying in the $25-$40 range.

Stefania has just closed out the books on our Q1. It was our best quarter ever. Our sales were up 43% over Q4 2009 and 49% over Q1 of 2009. I know there are some people reading this in the wine industry who just spit their coffee on their screen. That is four times better than the average in our sector.

We’ve been lucky though, we have a great group of loyal customers who we think of foremost as friends. They’ve held us through. Last year as our wholesale (restaurant and retail) sales fell 52%, they were there to pick up the slack. Direct sales were up 15% which netted us out at a 4% overall gain.

Maybe the most encouraging thing for us is that both direct and wholesale sales in Q1 were the highest we’ve ever had in a Q1. We are still going to be conservative though. I know that ‘tidal wave’ is out there and we will be fighting against it over the next few years. We are going to wait until we close out Q2 before we make any commitments on expanding our production in 2010. We’re also going to focus on reducing our L.O.C. and equipment loans so we have more liquidity to use against that ‘tidal wave’.

This is the unglamorous stuff. Stefania and I sitting at our computers at night pouring over numbers, working on budgets, sorting through invoices and doing all the things to keep a business running. It takes up a lot of our time. We easily spend as much time on this stuff as we do in the winery. We’re hopeful though now that we’re seeing a breakthrough. We’re also so grateful to all our supporters.

Tomorrow we get to go back into the winery and get our Chardonnay ready for bottling. It will be nice to be out of the office and worrying about the wine for a while.

There has been a lot of talk lately in the news and on wine boards about how hard it is in the wine industry right now. One article mentioned that as many as 20-25 wineries in Napa might fail or be sold in distress this year. Our friends at Eaglepoint Ranch have decided to stop making wine and just sell grapes. The hardest hit wines have been those over $75. Even wines that get 100 points from critics are not selling out now.

It’s been hard times. Most people in the wine business don’t want to talk about it. Everyone has been impacted. For us we’ve had two really big impacts. The first really had more to do with the low yield harvest in 2008. The low yields meant we had about $30,000 in expenses (mostly barrels) that we had already committed to and ended up not using. It also meant that we came up about $25,000 short in grapes we were selling.

That was a double whammy. One was supposed to pay for the other. All of a sudden we were in the hole $25,000 we were not expecting. That was all happening the very same month the stock market melted down, and yes 10% of our customers are in New York City. But we adjusted our budget, reduced plans for 2009 and cut back on all but the essentials to make wine. It’s been a long haul but as we enter Q2 2010, we have no outstanding invoices, just our regular monthly expenses. That’s the first time since the Fall of 2008.

The second was we allocated a fair amount of wine to be sold at restaurants and retail in 2008 and 2009. That sector has been hit the hardest. I could probably write a novel about the ‘middle tier’ in the wine business, but I’ll just say I feel let down, and I’m much more cautious now about allocating anything to distributors or brokers. We’ve managed to kick start those sales, but it’s turned out to be 100% our own effort and initiative.

That second item is really what the title of this posting is about. Most of the comments from wine lovers about the crisis have been that they hope their favorite wineries will make it through and offering reasons for hope. In response one winery owner said:

“I think that even if you survive the downturn, you are also going to be swimming against a tidal wave of accumulated inventory being liquidated by those that didn’t survive.”

Now that’s the thing I fear the most. I see it every day, wine being discounted 50% or more, 2 for 1 offers, anything to move inventory. People have a limited amount of money to spend on wine and this ‘tidal wave’ is going to be the hardest thing for us over the next two years.

This has gotten long, so I’ll do a ‘part two’ tomorrow. In the mean time here’s something lighter, a picture of my favorite flower the California Wild Poppy from a hike Stefania and I went on Sunday.

The temperature this morning was in the upper 40’s and we had a light rain overnight. The air is crisp and bright and full sun, so far. We’re expecting more wet weather in the next day or so.

After seeing Paul off to work, I grabbed the camera and took some quick shots to show you how the Mourvedre and Syrah vines are doing. We are well into bud break now with just a couple of Syrah plants lagging behind.

For those of you that know me, the burst of color in the front yard is of no surprise. I don’t have a bland color palette inside the house either. The lupine is blue, the clover is bright red, the daisies are bursting in yellow, and the lavender just bloomed the other day in deep rich purple. It’s festive, cheery, and happy right now. The objective is to have all this color erase the memory of the very ugly brown dirt patch that is the vineyard over winter. As the blooms fade and the wildflowers die off, we’ll be left with bright vibrant green growth of the vines to fill in the gaps. In theory.

The wildflower mix actually worked pretty well at keeping the noxious dandelions out. There were a lot that came in but I yanked those out of the soggy ground before too long. I saw a couple this morning that I missed, but they are deep enough in the mix that I can’t reach them without trampling the clover, so they live, this time.

The orange tree is in full bloom and the lemon tree is getting ready to go (the last two pics).

With the start of bud break at home it was a good idea to get out this weekend and check on the other vineyards to see how they are doing.

We stopped by the Sesson vineyard and Crimson Clover. Both are still dormant, with no bud break yet. There’s some fine tuning we’ll need to do on the pruning. Stefania will likely go out this week or next to get that done. Just a few plants with cordons that are too long or too weak and need to be taken back.

The Sesson vineyard will need a mowing before we can work on the pruning there. The Crimson Clover vineyard had just been mowed and looked really great.

The big news for us was a new vineyard resident at Crimson Clover. As I was walking the rows I noticed that there was very little gopher activity. Just a few mounds in one spot. When I got over to the final row we saw why:

You can’t really see much except for a little debris hanging out of the box, but someone has moved in to the owl box we installed. Easily a highlight of the weekend in the vineyards for us.

I also got to check on Chaine d’Or. The Cabernet Sauvignon there is still dormant, but the Chardonnay has just started to bud. Jerry mowed the vineyard on Thursday and it looks really great. We will probably have to mow one more time this season, but for now it’s in great shape.

On Saturday March 27th from 11am until 3pm we will have the winery open for our Spring Open House and Pick Up Day. This is one of just 3 times per year we will have the winery open for visitors!

We will be pouring our latest releases and select wines from our older releases. Paul will also host a vineyard tour at Noon and a Cellar Tour at 1:30. Stefania will be cooking snacks (Paul wants hot dogs, Stefania wants dim sum so we will probably have both.) We will also have barrel samples of some of our 2008 and 2009 wines available.

If you placed an order in our Spring Release, your wine will be available for pick up. Directions are at:

http://www.chainedor.com/directions.html

As always there is no charge for visiting and sampling wine. If you would like an email invitation and have not yet received one, please drop us a note.

On Saturday we were back in the winery to finish up on racking two more 2009 red wines. First stop is usually the bathroom after the long drive and I took this picture walking back to the cellar. It was a beautiful day at Chaine d’Or.

We had two wines in tank that needed to go back into barrel. The first racking is critical for the way we make wine. I like to get a decent sulfur amount into the wine so that we don’t have to add more than a little at a time for the rest of the wines stay in barrel. It also gives us a chance to let more of the ‘gunk’ settle out of the wine.

Here is our assistant winemaker getting her gloves on and getting ready to get started.

We had our 2009 Split Rail Vineyard Syrah and our 2009 Crimson Clover Cabernet Sauvignon to get into barrel. As usual we were very busy during the racking process and I didn’t take any pictures. A big part of that is I have to carefully watch the barrels fill up and stop the pump at just the right moment to not over run the barrel.

It’s harder than it seems, especially when you reach the bottom of the tank and air starts to get into the hose. That air then burbles out in the barrel and makes judging the last inch or two very difficult.

The last step is clean up. I clean the pump and we both do the hoses. I also get all the equipment away and everything picked up. My shoulders don’t fit through the tank opening so Stefania gets the job of cleaning the inside of the tank.

The tank has to be rinsed then she scrubs and disinfects the inside. There’s just no way to not get wet so Stef always brings extra shoes.
Then we are done. We leave all the valves and seals open so the tank can’t retain water. That might lead to mold. Next up we’ll do the 2009 Haut Tubee and then start prepping the 2009 Chardonnay for bottling.