How Wine is Grown & Made
We've taste a lot of wine and backed into where it's from, and I feel like we have a pretty good idea at this point of how to do that right. We've talked about context, talked about method, used that to evaluate wines and back into where they're from. So we're gonna look at it from the producer's point of view and figure out how they dio to get us what we've got in the glass. So we talk about how understanding how wine is grown and made and then shipped and sold. So let's This is actually this has become my business. I went from, as I told you, blowing off geology in law into the Somali A profession and have now gone from so many a private freshen into rang about wine but also, um, producing wine. And so now, 11 12 years into the winemaking itself. And so we need some fictional examples to show you how the thing actually operates. When you buy a bottle of wine, where is that money actually go, which I think is actually pretty interesting? Um, we're gonna use the fictional example of a ...
Napa Valley cabernet and asked lots of questions Any you want to know about it, we're gonna total transparency, Which, which is rare on this on this end of of of wine production. So how do you make wine? We know that we need winning Grapes right was made from grapes, generally speaking, and grapes have what in them that matters sugar. Right? And we know that yeast eat sugar and they make two things. One of them's alcohol and the others carbon dioxide, like you just found in the reasoning, right? So where we grow those grapes is a huge first step. So let's just say seven of us are gonna are going to get into the wine business and we decide we're gonna make a wine together. Where do we want to do it? That's, you know, that's a big decision. You can do it in the Napa Valley, which is the decision we've taken today. Or you might do it in some place, Um, maybe like Argentina, where lands perhaps cheaper. But you have other things to deal with. You know, you gotta buy plane tickets to get down there. So on and so forth you've got import the wind back. Maybe the Argentinean wines don't carry the reputation that Napa does. And you're like, Oh, no, I want to jump into the NAFTA Frey and make a trophy cabinet. So let's assume that that's their decision and we're gonna look at that. So starting with NAFTA cab, we need grapes as we've talked about. And we're gonna assume that we're gonna start this business without owning either land or a winery, right? We're gonna We're gonna do the toe in the water approach like they want to see if this works and it be really easy to go up there and, you know, spend millions of dollars and buy an estate and build a monument to yourself and do all of that. But but that's not the useful exercise for this purpose, right? We want to say there's plenty of great farmers up there, so we're gonna buy grapes from those guys, and that means they're responsible for the farming for the whole year. So it's their land. Their their vines will have some input into how we want these things farmed on describe to them what we want. The Picts and so on and so forth. But it's their work. It's their labor and is there costs associated with doing that until they pick him and deliver him to us. And at which point we buy them for a cost, right? Same with the winery. We're going to use a custom crush facility, so you know, they're solutions for everything. Right there. You can have a pod show up your house. It takes away all your extra cluttering. It's out of your life forever. Think so? Just like that. You like? You know what? I can't afford to build a wandering now, but I can I can lease space or higher expertise. So on and so forth. So that's the second assumption we're gonna make night. So grapes. The first ingredient we have here are the grapes, and we're going to an economic model. We're gonna say we're buying very fancy cabernet grapes. Um, and this I think that's a pretty fair price range. Actually, it's 10 grand a ton. So that's how it's measured by the ton. And their general yield can be considered 60 cases of 12 per ton. Do you feel me so far? Okay, so we're gonna buy one ton, we're gonna make 60 cases of one which is basically, you know, it's hard to do. You need a little bit more than a ton ti to fill a fermenter. But for the for the sake of the math, we're going to say one time and then the custom crush. Right? So we've made the contract with the guy and the grower, and we've paid attention or grapes all summer, and he's formed executive we wanted. And now time comes picket. He picks him and they come in a t. Been in a big plastic bin. Where we gonna have those things delivered? Okay, so we're gonna have them delivered to the crust. Um, custom crush facility. Um, I use one of these actually down in Santa Barbara for some of the ones we work on, but that generally, the way you can think about budgeting that is that there is a price that includes the processing. So they received the grapes. They take care of in whatever way you want to have done. Um, and they handle them all the way through bottling. So that includes the crush itself, the fermenting backing off the gross lees at the end, getting into barrel, taking care of all the work that has to happen in barrel. In the case of Naftali Cabernet, it's gonna be about 24 months of work in the barrel and then into bottle, and that that work that package of work is roughly 30 bucks a case. So now we're gonna add 1800 bucks to our to our bottom line department to our costs. Then oak, Right? So I talked about we're gonna put it in a barrel. Those liberals are expensive. We talked about this morning, you know, anywhere from 12 to 1500 bucks bottle for a really good new French oak barrel, of which our $10,000 a tonne Napa Valley cabernet grapes are very worthy. So if each barrel holds cases for our 60 cases via one ton of grapes, we're gonna need 2.4 barrels. Of course, you can't buy 0. of a barrel, but for the sake of the math, that's what what you need. So we need to shell out another almost three grand for the wood, then the dry goods. 24 months later, after you've been sitting on all this debt that you know that you've incurred and you've done it again because it keeps happening every year, writes 24 months later, you ready to put it in bottle? But those bottles cost things. So to buy the cork here, my good cork, you're gonna make your labels. You're going Teoh by the bottle, the capsule, the cartons and printed cartons, Everything that's done there, um, this is excluding all the legal stuff. You have to get your labels approved and there's all kinds of costs were actually not putting in there of that labor, labor and time. That's another for 60 cases, another 1500 bucks. So we're getting close, right? We have wind in a bottle. Now they have to move to the way heart house. So roughly, Bucket case. Not a big deal. And here's your total right, so to make, to crush and make our single ton of $10,000 a tonne Cabernet grapes from Napa. In cases of wine, it's gonna cost us roughly 270 bucks a case to do it or 22 50 a bottle. So 22 50 to make about a line. How does that strike you other any other? So you mentioned legal fees are their fees. You have to pay because it's alcohol. Yes. And a lot of times there'll be fees associated with actual facility. So, uh, that facility will pay a fee, and that will likely be wrapped into your custom crush V when we sell it later. Pay fees on that end. Yeah. Yep. Um, Teoh mean this You're going to do a whole lot of running around with the dry goods, right? So we didn't build anything for your time. We're gonna come to that next slide. Um, and there is a process of approval for your labels. Like we can't just say anything you want to say on the label. Like I one time named a Wine that we made in Australia the chronic after a popular hip hop song of the era and the major label and we had a contemporary artist do It is really beautiful. And the government said no. You have to submit for approval cause it's on booze. It said, No, you can't. He's the word chronic. Like why? And they said, Well implies an addiction, and we don't feel like that's appropriate for alcohol. Um, so I spelled it in French and they don't speak French, so us it became crony. But it's that that process is that back and forth, that you have to dio on that, you know? Yeah. It takes time. Okay. Other questions. I have a question. Yes, I'm how it does the farming method affect the cost on? Do you in particular have a favorite one or one that you're more pro on? Yeah. Yeah, definitely. That's a great question. And take a good deep dive into that. Um, I have. I've stood in a vineyard in South Australia that's two miles wide by five miles long. It's completely flat. Laser leveled, and it's like 100 and 25 degrees there today, actually, Probably literally his opposite seasons, Right? Um, it's right next to the Murray River, and they stick a huge six foot diameter strong like a straw. I could walk through into the Murray River, and then they flood that thing under feet and feet of water every day, and it's completely mechanized. That's how you make cheap wine. It's gross. There's no handwork that really goes on in that vineyard when it's picked, it's picked by machine. So and basically the machine just shakes the grapes off of the vines along with spiders and snakes and so on and so forth. Um, how do you keep all the other pass out while you spray it with pesticides? Or besides, whatever it is, I mean, so there's all kinds of there's, it's agribusiness, and I don't like to drink those ones. I've stood there and watched that and witness sitting like That's That's pretty gross, like, I'm not okay with that. Um, you know, on the other side of the spectrum, go all the way to biodynamic, which so you go from the really ugly case we just described to, You know, you in small increments, you can say, You know what? I'm not going to use the oversize of the pesticides, or I'm gonna pick by hand or any of those little things again. It's It's a Rubik's Cube with 1000 sides like what little piece do you want to change? And it changes the whole. So at any point, you can electively decide to move any of those pieces and and all the way up to the point where OK, maybe it's sustainable. Now where you are, you are picking by hand, you're not irrigating. It's your depending on what falls from the sky. You're not using synthetic herbicides or pesticides, things like that, and that each time you do that, you're taking more risk, right in terms of rot or disease and encourage more work. And it also means it's more expensive to do it. And that's how you end of it. You know, higher price can be one of the ways you end up a little higher price for the grapes. Um, but I think it's worth doing. And so So you go from what we saw is really gross to incrementally more and more sustainable to organic in different organic it standards apply. Are there different different countries all the way to biodynamic, which is, you know, it takes organic principles and adds all kinds of other ideas of in debatable merit. I mean, they're not always measurable, Um, and it requires a lot of belief. I tend to believe heavily, and it mightily invite an Amex. I think it really matters, Um, but it also means it's a ton of work and you engender a ton of costs. And if in this model, if we're gonna be buying grapes. We might get to the organic level with a farmer, but we're probably not gonna get him to do by dynamic for us. And it requires many, many years of work in the vineyard before it actually has all turned over and become sort of a living system that you expected to be. Yeah, yeah, For this case on the vineyard site. What, like, how many tons per acre would be for that nap? A cab versus your kind of worst case? Oh, yes. So in the case, we're gonna pay 10 grand a ton for probably, I don't know, pick a target to name names, but pick your your fancy name Vineyard on the Valley floor of Napa. Um, you know, it's probably in there. Probably advertised 2.5 to 3 tons and anchors probably closer to five tons an acre. The stuff we're talking about in South Australia, which also happens in Modesto, California, which also happens in the grave and freely in Italy, which also happens and frankly happens everywhere. It's not unique to any one country, but in that case you could be 15 tons or more per acre and that that brings up a great point. So we're talking about tons of grapes, yield per acre. It's a measure. And, um, it's a little bit of Ah, it's a flawed measure in a certain way because you're not talking about at the same time how many vines there are per acre, like if you have one vine per acre, you could say, Well, I got like, you know, 1/100 of a ton per acre Isn't that amazing? Like you're supposed to be better somehow because the less you the theory is, the less yield you get from an acre of grapes or vines. The MAWR intensity is right. The theory is that a vine only has so much to say. I only have so much to Sam divine. And I can spread out what I have to say over 10 Bunches, or I can concentrate what I have to say into five Bunches, right? And so, which is gonna be more interesting? Is that wine drinkers Probably five Bunches. I do believe there is a point of diminishing returns where if we say OK, let's take it in Khan straight into two Bunches. Well, what did we gain in going from five to maybe maybe nothing. You know, maybe it's actually now out of balance. And the vines just got all this energy and all this push and makes grapes that air, perhaps like overripe, were overdone. And so, you know, we've blown the equilibrium in the opposite direction, so you can either be to do to dilute you can be to concentrate. Where do you find the sweet spot? We actually, you know, do you have quality material with which to work? Makes sense? Yep. Cool. Other questions, Yes, when you're contracting for grapes like that, are you just getting a portion of what's out of the whole vineyard? Or do you have specific rows of buying ideally of specific rose? So then you control when they're picked with the former 100% okay, 100% and then, like a rain event comes or his forecasts. And then everybody wants their stuff picked, and then you're fighting for who's gonna get picked first and who gets the bins and who's got the trucks. And I mean, it gets very competitive, very intense, very quickly. Other questions, typically, how Maney harvest is that before the grapes are ready to be picked wine on average. That's a great question. Um, 3 to 5. So if we plant our vineyard today, it's gonna take it least three seasons before we have something. It's generally thought to be not so good. Um, five, maybe between three and five, you're at the point where, like, Okay, now we can start making wine. And the thinking is that at that point, the vines air so young, it's just about fruit and exuberance and that they haven't The roots haven't gone far enough into the soil to actually bring us all of this terroir that we've spent the whole morning talking about that sense of place because they're so young, they just haven't reached it yet. And so there was gonna be more about primary fruit than they are about sense of place and that sort of intellectual value that we've been talking about. Um, one of the things we see is that and you know, there's all kinds of conclusions we might we might draw from that. But one of the things we did way do see, is that over time yields decrease. And if we're you know, mean even if it's the fancy Napa Valley Valley for cabernet mean they there's a tendency to like this is their business. Their farmers. They're looking for yield, and by year 20 that yield starts to fall off significantly. And if that's your budget like you're not doing anything differently, you're just making less money because you're growing less grapes. If that's your business, you're probably well, you know what? At what point does it make sense to actually rip this out? Wait the three years and then we have sustained yields again or elevated yields again, right? And so there's that thing where people go to like 20 years, rip it out, plant again and go through that cycle. So maybe you actually never get the opportunity to taste. You know what would happen if the vine did get old and actually did really have something, have a real interaction and this energy with the soil upon which it grew similarly and going a little more in depth with that? How long does a plant live for? Take So long? Teoh. I'm ready for harvest. How long? Well, it's just like it's just like any of us, right? I mean, you know, hopefully we all live long, healthy, prosperous lives. But things can things happen. I mean, there for sure. The youngest fund worked in Australia. We're 88 years old and the oldest were over 100 they've been ableto live there because they're out in the middle of nowhere and they grow and sand, which means some of some of the things that threaten. I mean, there's lots of maladies that killed great finds. Amongst them is a root Laos, but that route Laos can't live in sandy, and so they've never They've never attacked, attacked these fines. So you're kind of it. That's a unique situation, or it's It's a rare situation where, UM, it's just been preserved because it's out there away from everything. Andi, that's generally not the case. I mean, things are moving around, you know, there's Ebola in West Africa, and then it's in Dallas and things move around. You know, if you that big vineyard I mentioned that we talked about the laser level thing. We ought to put on different shoes because you weren't allowed to, like, have any soil on your shoes that could have been from another vineyard and have another past and So that's the long way of saying there's lots of things that can be fall it. But if everything goes well, they can live well over 100 years. Perfect. I actually have a non line question. I had a couple votes on this one, but they're asking, Could Richard give us a source of all characteristics of the different types of grapes? The source? Yeah. Okay. So, like, chardonnay is equal to grass and kind of so on. So I know Jancis Robinson wrote a really good book Vines, grapes and wines. And that's a great book for that sort of thing. And you can just since, like, all the different graves and go through it. Yeah. Perfect. Yeah.