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Big Gains for Napa Valley Vintners at Premiere Napa Valley

But what does the record-setting auction mean for nearly priced-out consumers?
Photo by: Greg Gorman

Posted: Feb 26, 2014 12:50pm ET

If you need a perspective on Premiere Napa Valley, the Napa Valley Vintners' trade-only tasting and auction, consider the sports world: Sports fans are keenly aware of what a team's popularity brings. It usually means the team is improved, and that usually translates to higher ticket prices.

This past weekend, the Premiere Napa Valley auction nearly doubled its 2012 record, with $5.9 million in winning bids, or $283 per bottle. The top lot, 5 cases of 2012 Scarecrow Cabernet, sold for $260,000.

In the case of Premiere Napa Valley, the sky-high prices paid for the most expensive auctioned lots this past Saturday won't necessarily mean you'll pay more for, say, Scarecrow or Schrader or Shafer, the three top lots. They're already among the highest priced and scarcest wines in Napa. But the demand for their wines reflected in bids certainly won't hurt. It's gratifying for any vintner to see their efforts rewarded by hard cash and frenzied demand.

Of course, it's not the same for consumers. We're in a different boat. Most fans of Napa Valley wines already think prices are plenty high. Many vintners I've talked with in the past few months say they're holding prices anyway. Sure, some know they can charge more, but they also run the risk of seeming greedy and alienating customers who've been loyal supporters.

There is also the reality that 2012 and 2013 vintages produced prodigious crops, and some vintners have told me they have far more great wine in barrel than ever before. Moving those wines through distribution channels will in some instances require creative marketing plans, i.e. wheeling and dealing.

By the way, donating wines that they would otherwise sell to their customers doesn't exactly thrill many vintners. The wines sold at Premiere are one-of-a-kind cuvées made in small quantities and sold to members of the wine trade, mostly retailers and distributors. They in turn sell the wines to their preferred customers.

The accompanying barrel tasting held at the Culinary Institute of America in St. Helena is a shoulder-to-shoulder affair that gives attendees a sneak preview of what's in barrel, in this instance wines from 2012.

Premiere Napa Valley, unlike Auction Napa Valley, which raises money for Napa's health organizations, benefits the Napa Valley Vintners. Proceeds from the auction are recycled into the coffers of the trade group to further promote its image, wines and appellations as well as educate people about what makes Napa special. NVV is an incredibly powerful and effective marketing organization. Few regional wine groups are anywhere near as influential, successful or savvy.

There was a time when Bordeaux ruled the wine market, and it still has plenty of clout. By sheer volume, Bordeaux still makes more great wine than any other region its size. But Bordeaux is facing a huge crisis. Its wines are prohibitively expensive and wine drinkers have turned their attention elsewhere. Worse, Bordeaux hasn't been in vogue for some time. If you want to apply the sports analogy to Bordeaux, its franchise is in shambles and it needs to rebuild most of its team and convince fans to pay to see them play.

Napa Valley has been hugely successful at marketing its wines. But there are plenty of vintners who've been around long enough to remember when the times weren't this good, and they're wise enough to realize that what happened to Bordeaux vis-à-vis pricing and popularity could happen to them.

Media who champion Premiere Napa Valley's results seemingly lose sight that what's good for Napa Valley Vintners isn't necessarily good for consumers.

Troy Peterson
Burbank, CA —  February 26, 2014 10:33pm ET
Wow, that Scarecrow lot equals over $4k per bottle! Someone was quite generous. I agree that Napa vintners need to keep the greed in check lest they suffer the fate of the top-notch Bordelaise. I'm looking forward to getting my hands on the 2012/13 vintages.
Ted V Phillips
Glen Ellyn, IL, USA —  February 27, 2014 12:50pm ET
I do not understand why the word greedy is even in this conversation. In a so-called free capitalistic society, the market will sort itself out. Witness the comments on Bordeaux. The world is awash in great wines with plenty of choices. How many people can sit in a sky box at Cowboy's stadium in Dallas. That experience is coveted, so probably only corporate customers and the affluent can afford it. So what! I do not hear Dallas fans calling Jerry Jones greedy, they just want a great team. But then Texas is not California.
Kc Tucker
San Diego, CA —  February 27, 2014 9:57pm ET
Bordeaux on the low end ($17 or under) is making some terrific wines that are selling like crazy in our store. On the other hand, California wines in that same price point are not that great. But the 2012 Cab lots I tasted at Premiere were terrific.

Jim Kern
Holiday Wine Cellar
Ken Chapman
Avondale, Pa.,USA —  March 3, 2014 6:37pm ET
James, Always enjoy and appreciate your position in your articles. I have always found you to be very fair and even handed. Your take on the Premiere Napa Valley Vintners action was spot on. Always helps to look over your shoulder to see what the future can bring. Thanks for your vision.

Ken Chapman
Robert Duncan
Sunnyvale, CA —  March 4, 2014 4:26pm ET
James can respond himself if he chooses but he did say "seeming", not being; greedy. Certainly, greed exists in Napa, Bordeaux and beyond as it does in most profitable enterprises.

Typically, this occurs in wine making when singular focus is placed upon what a wine can make rather than what significant rewards can be achieved by quality wine making.
Greed however, is not always a function of a high price. A knowingly poor quality wine retailing for $50 bottle can be exceedingly greedy compared to an average one selling for $100.

Quite often, as in real estate, equity markets, venture capital and wine making; greed is exactly what the free market corrects.
Pam Strayer
Oakland CA —  March 5, 2014 11:47pm ET
I would also add, having attended Premiere Napa Valley, that many wines sold for no more than $150-175 a bottle - "normal" in many Napa circles.

There was no lot, aside from the one from Scarecrow, that sold for more $200,000 and only a very, very few that sold for more than $100,000. The vast majority of lots (5-20 cases) were in the $10-20,000 range.

Wines like Ovid - which sell for $350-400 a bottle- went for $1,000 a bottle - or 2.5x.

Wine from Long Meadow Ranch - which usually sells in the $85 range for its highest priced wine - went for $166 a bottle at the auction.

A Chappellet lot went for $216 a bottle. An Inglenook lot went for $266 a bottle. Neither was much above what it costs to buy the estate Chappellet Cab or Inglenook Rubicon.

A number of buyers - including the one who bought the Scarecrow - said they plan to resell some of their wine at charity auctions.

I was surprised to learn that only 4% was bought by overseas buyers.

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