3.1 -3.3: Estates, Growers, and Grower-Producers

Question 1

What are the main disadvantages of estate producers?

Answer 1

• cost of managing the vineyard and equipping and running the winery, may need to rent (costly)
• difficult vintage leads to small volume, must raise prices

Question 2

What are the main advantages of being a grower?

Answer 2

• particularly attractive to owners of small vineyards who cannot justify the cost of buying or hiring expensive winery equipment and do not want to have to market and sell their wine
• generates better cash-flow because payment is due when the grapes are sold rather than when the wine is made or sold

Question 3

Name a successful grower.

Answer 3

• Andy Beckstoffer and Beckstoffer Vineyards

- grow Cabernet Sauvignon on prime sites in Napa Valley and elsewhere in California

Question 4

What is a risk of being a grower?

Answer 4

• vintage variation

- fluctuations in supply and demand

Question 5

What is required in a grower contract?

Answer 5

• contracts specify that grapes must meet required quality standard or specification (e.g. minimum potential alcohol)
• if not met, contract will be rejected or a lower price will be payable

Question 6

What the benefits of a longer term grower contract?

Answer 6

• strong working relationship between grower and merchant
• work together for best quality fruit
• gives the grower some certainty that they will be able to sell their grapes at a given price

Question 7

What are the downsides of a longer term grower contract?

Answer 7

It’s not unheard of for producers or merchants simply to terminate such contracts and source grapes elsewhere