I have been buying wines from Frank Melia of Golden Gate Wine Cellars for a number of years now so, being in San Francisco, I decided to drop in on him. If you come into contact with Frank, whether in person or on the phone, please be sure that you have an extended period of time to invest. Frank is rather engaging and you have to bring things to head by saying something like "Hey Frank, do you have anything you want to sell me? Frank's philosophy in wine sales is what he calls a "palatable pricepoint" and a "justifiable pricepoint" and that leads him to selling wines priced between $35 and $60. His focus is on wines from, primarily, Napa artisanal wineries.
Two interesting tidbits from our conversation yesterday. He recently had a panel blind-taste six Napa Cabs/Cab-based blends to test price versus customer perception. The wines tasted were Joseph Phelps Insignia, Caymus, Opus, Inherit the Sheep, Trespass Rendezvous, and Redmond. The first three are higher- priced Cabernets while the latter three fall into Frank's justifiable-pricepoint range. The panel rated the wines in the following order of preference: Trespass, Inherit the Shep, Redmond, Insignia, Caymus, and Opus. This is another example of the maxim "high price does not necessarily equate to best quality."
In discussing Napa Valley's wine price downside stickiness (the subject of my May 31 post), Frank pointed out that there were two types of winemakers in Napa Valley: those who owned their own grapes and those who bought. Those who bought grapes in 2005 bought at higher prices and, therefore, had lower margins with which to play. The recent price decreases by Joseph Phelps Insignia and Caymus reflected the fact that they own their vineyards and, as such, controlled their own destiny. Frank expects prices to mitigate going forward as grape growers lower their prices in the face of overall lower demand.