XChateau Wine Podcast

Latest Episodes:

Crushing Custom Crush w/ Robert Morris, Grand Cru Custom Crush Jul 20, 2022

Show notes

Operating your own winery is expensive. The custom crush business model enables small wineries to solve this. Robert Morris, the founder of Grand Cru Custom Crush in Sonoma County, explains the benefits of the custom crush model, how it works, and how Grand Cru has changed the custom crush game.

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Detailed Show Notes:

Robert’s background

A Mechanical engineer by training worked at HP
Became partner at Copain Custom Crush (renamed Punchdown Cellars)
2016 - founded Grand Cru Custom Crush (“GCCC”)

Custom crush (“cc”) definition(s):

Grower w/ extra grapes that are crushed into a finished product
People who source grapes and have a private label
Operate in a custom crush facility b/c operations are too small to have its own facility (where GCCC operates)

Custom crush vs. own winery

High startup costs (location, permits, winery equipment)
Winery equipment utilization is low - own facility ~10 days/year; cc - ~2.5 months
High utilization requires a diverse client base (e.g., sparkling wines to big Napa Cabernets = spread out crush times)
CC has expertise in maintaining winery equipment
CC can do aggregated sourcing for winery supplies (e.g., argon, acid) but does not do sourcing for packaging (a more personal choice)
CC has more knowledge sharing

GGCC

Combines custom crush and hospitality space (differentiator)
Has a strict set of procedures and protocols for operations

CC business models

1) A la carte - separate pricing for each operation (e.g., pressing, punchdowns, racking, etc.,)
2) Per ton fee, all-inclusive - covers everything from grape reception until bottling
Crush fees - Sonoma - ~$2,700-3,300/ton (~$38-45/case); Napa costs 2x Sonoma
GCCC fee ~$3,300/ton, including use of hospitality area
Overvintaging - ~$300-400/ton extra
Other fees/costs - winemaking (if using GCCC’s), filtration, bottling (believes hard to justify bottling line investment until ~100,000 cases)

Visitation

Consistently busy Thursday-Monday
Uses Tock to manage reservations - integrated into clients and GCCC websites
Clients can hold events at the facility

CC trends

CC market is still growing (e.g., Red Custom Crush keeps expanding), growth mainly on the larger production side
Has seen overvintaging (where wines are aged in barrel over 1 year) increase from ~25-30% 10-15 years ago to ~70% now = takes up more floor space
Sees wine conversion ~51-53 cases/ton for premium production vs. 60+ for lower quality (e.g., pressing harder)

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Navigating La Place w/ Rebekah Wineburg & Diego Garay, Quintessa Jul 13, 2022

Show notes

Building a global brand takes a lot of effort and investment. Even with the network of >400 negociants on La Place de Bordeaux, wineries have to make significant investments in brand building and press. Rebekah Wineburg, Winemaker, and Diego Garay, Director of Exports for Quintessa in Napa Valley, discuss their journey towards selling in 50 countries in 3 years through the La Place system.

Detailed Show Notes:

Rebekah’s background

She wanted to be a winemaker at 16
Worked in Italy, New Zealand, Australia, and mainly in CA
At Quintessa for 7 years

Diego’s background

Worked on exports for Sena and Almaviva in Chile, who export ~98-99% of production
Director of Export for all Huneeus wines

Quintessa

Estate winery in Rutherford, Napa
160 acres of vineyards and make 1 red wine (Quintessa) - ~8-12k cases/year
Until recently, it mostly sold domestically - ~50% DTC, ~50% US wholesale

La Place de Bordeaux Overview

A marketplace where most Bordeaux wines are traded, often futures
3-tier system - chateaux sell to negociants, who sell to international trade
Criteria to be on La Place - brand pedigree (e.g., high scores) and a well-known brand
Wineries need to build demand for negociants w/o the help of importers, as they are not brand builders
New world wines have only been selling through La Place for the last 15-20 years
Courtiers (brokers that find negociants) - some specialize in new world wines
>400 negociants on La Place
Non-exclusive system

Exporting via La Place

2022 - exports ~5-15% of production, primarily Asia, UK, Germany, Switzerland
The goal of exporting - build a world-recognized wine estate
Long-term export goals - ~30-35% of production
Prior to La Place - exported ~1% to Canada, Japan, Mexico
They started selling on La Place in 2019
Negociant reached out to Quintessa looking for new world wines
Quintessa working w/ <10 negociants directly w/o a courtier
Demand growing - negociants asking for more wines, need to start allocating them
Need to do a lot of education for global trade on what makes Quintessa unique (e.g., terroir, place), need to show the history and age-ability of wines

Benefits of La Place

It helps put wines in a global perspective (e.g., Rebekah had to start presentations with CA instead of Rutherford or Napa)
Reach high-end distribution in a short period of time - Quintessa is now in 50 countries in 3 years

Tradeoffs of La Place

Need to invest in brand building
May see discounting due to the non-exclusive system
Logistics - send all wines to Bordeaux, which are then sent on to the rest of the world (more manageable for the winery but may have extra ship lengths)
Loose control of distribution (try to get depletion reports but challenging as clientele list is the most valuable asset of negociants)

Costs of La Place and pricing

Similar to 3-tier in the US
Negociant margins are often lower than in the US due to non-exclusivity
Try to keep pricing in-line w/ US pricing
Has not seen any pushback on price

Marketing with La Place

Set up training sessions through negociants with trade
A lot of media investment (local journalists, local PR firms)
Focused on UK, Japan, S Korea for press

Advice for wineries interested in La Place

Need to know the La Place system
Need to build the brand yourself and make the investment
Need the pedigree and brand for the wines to be successful

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Quality Driven Co-op w/ Roman Horvath MW, Domäne Wachau Jul 06, 2022

Show notes

Co-operative wineries, popular throughout Europe, are generally associated with higher volume, lower quality wines. Not at Domäne Wachau, where Winery Director Roman Horvath MW has been leading the quality vision for its family growers to great success. Roman discusses how co-ops work, how they pay their growers to get to zero income, and how managing a co-op is different from other companies.

Detailed Show Notes:

Roman’s background

He started in wine in his mid-20s
Worked in restaurants, wine internships in Chile & France was a buyer/importer in Austria
Been w/ Domäne Wachau for 17 years

Co-op definition

Produces wine from grapes from grower-members
Every member has a share in the company
Each grower manages its own vineyard
Co-ops in Europe - Spain/France/Italy - >50% of production, Germany ~33%, Austria - ~15-20%
Most co-ops are volume-driven with some exceptions
Most were established in the 1920-1930s to balance the power of small farmers with strong retailers
Since the 1990s, the increase in wine quality worldwide has left many co-ops behind as they are too large and volume-driven
Crucial to separate grower function from management, which needs professional expertise

Domäne Wachau

~400ha (~1,000 acres)
~250 family growers (each family may have multiple owners)
Avg family ~1-2 ha, largest 8-10ha, 3-4ha+ for full-time growers
Small vineyards led to a deep specialization in the site
Growers must follow the co-op’s quality schemes
Precise picking plan for all growers
Up to 70-80 different wines, ~3M bottles/year (~250k cases)

Domäne Wachau vs. other co-ops

Growers can have some of their own production; most co-ops are “all in or all out”
Push for quality - driven by a strong vision, community, and communication with growers
The goal is to increase the salary/income of growers

Co-op management

Very democratic - each grower votes in the General Assembly for the board of directors (8-10)
Each grower has one vote, not weighted by vineyard size
Management driven by the management team
Not profit-driven
Pays growers technically in €/kg of grapes, but with a complex system (e.g., higher payments for terraces, hand work, Riesling vs. Gruner, sustainable/organic farming)
Payment split over the year every other month
Goal: pay as much as possible for grapes to get to $0 profit
Option to leave the co-op, generally on 3-5 year minimum contracts
Anyone can join but have strict quality qualifications
Try to increase wine pricing every year (for quality positioning and inflation)
In small harvests, have the balance sheet to balance payments between years

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Gaining Perspective on Collaborations w/ Juan Munoz-Oca, Ste Michelle Wine Estates Jun 29, 2022

Show notes

A lot can be learned through collaborating. Even how to stay calm during a pandemic when your Italian partner is in the thick of it. Calm with the perspective of 26 generations of winemaking and having survived two World Wars. Juan Munoz-Oca, Head Winemaker for Ste Michelle Wine Estates, Washington State's leading wine company, describes what he's learned and the process of collaborating with other luminaries of the wine world, including the Antinori Family, Dr Loosen, and Michel Gassier from the Rhone Valley.

Detailed Show Notes:

Juan's background

In WA with Ste Michelle Wine Estates ("SMWE") for 21 years
Head of winemaking for the entire group

Ste Michelle Wine Estates

Based in WA state - 6 wineries (Chateau Ste Michelle ("CSM"), Columbia Crest, 14 Hands, Spring Valley, Northstar, Col Solare)
OR (Erath), CA (Stag's Leap Wine Cellars, Conn Creek, Patz & Hall)
Built the WA wine region, produces ~⅔ of the wine in the state
The largest producer of Riesling in the world

Collaborations - all w/ Chateau Ste Michelle

Col Solare - Red Mountain, Cabernet, 50/50 JV w/ the Antinori Family (Italy), planted a vineyard in the early 2000s, built a winery in 2006, started in the mid-90s
Eroica - Riesling with Ernie Loosen (Mosel, Germany) started in the 1990s
Tenet - Columbia Valley; Syrah, Grenache, Mourvedre; w/ Michel Gassier & Philippe Cambie (deceased)

What drove the collaborations?

A personal touch and relationship
WA is a young grape-growing region that only started quality winemaking in the late 90s -> wanted to bring attention to the region and gain knowledge
Ex-CEOs important to establishing collaborations - Allen Shoup (founded Longshadows Winery, which has 7 wines and 7 collaborations); Ted Baseler - was part of marketing team when Col Solare was launched and started Eroica with Ernie Loosen

Collaboration process

Winemaking - spring (taste previous vintage, blend, walk the vineyards), late summer (get a feel for the grapes, walk the vineyards), winter (taste wines - e.g., 250-300 lots of Riesling for Eroica)
Renzo (Antinori's head winemaker) comes more often due to SMWE's partnership w/ Antinori on Stag's Leap Wine Cellars
CSM winemaking team does day-to-day work
Sales & Marketing - up to the partners, SMWE salesforce sells the wine, SMWE marketing works with partners and does most of the work
SMWE imports the entire Antinori portfolio, so they have a broader collaboration

Key benefits

Enjoyment of making wine together
Getting a global perspective
Winemaking informs the rest of the portfolio's winemaking (e.g., extended lees aging for Riesling from Ernie Loosen, keeping more leaves in the canopy for Syrah from Michel Gassier)

Collaboration business models

Col Solare - 50/50 JV, including vineyards, winery, & inventory; work together closely on marketing
Eroica - 50/50 for inventory and brand, no other assets; up to 200k cases in a big year; most marketing done by SMWE, less from Loosen
Tenet - Michel Gassier gets a portion of earnings and an annual fee that covers his travel; as small as 300 cases
Have business meetings 2x/year for sales and marketing strategy

Keys to success for collaborations

Have a clearly articulated vision
Keep an open mind to learn from the other

Desired new collaborations

Sparkling wine w/ Nicolas Feuillatte (Champagne)
Argentine wine / Malbec w/ Catena Family - loves their focus on terroir

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Making Fine Wine Transparent, Efficient, & Safe w/ James Miles, Liv-ex Jun 22, 2022

Show notes

Seeing the opportunity of bringing solutions in the financial markets to fine wine, James Miles, CEO and Co-Founder of Liv-ex, launched the London International Vintners Exchange (“Liv-ex”). Through standard contracts, guaranteed trades, and a plethora of data, Liv-ex is making the fine wine market more transparent, efficient, and safe. Though the Liv-ex 100 and 1000 indices are what it may be best known for, it is an end-to-end trading platform. Listen to James explain it all as well as market trends on this episode of XChateau!

Detailed Show Notes:

Liv-ex background

Founded in 2000
Based on the similarities between wine and stocks, leverages financial solutions for wine
Mission - make the fine wine market more transparent, efficient, and safe
An exchange for wine - London International Vintners Exchange (Liv-ex is the acronym) - an end-to-end solution to buy and sell wine, including price discovery, trading, and logistics to ship wine globally
Customers (merchants) in 42 countries, Liv-ex doesn’t compete and sell to restaurants, hotels, or represent producers

Trading on Liv-ex

An order matching system - customers place buy and sell orders on the platform
Bids are firm, cannot cancel orders - a new concept for wine, which is usually “subject to availability”
Created standard contract for wine trading - includes condition, when to pay, and when it will be delivered
The order book is a queuing system - 1st based on price, 2nd by the time of bid, the book is always open

Wine traded on the platform

2010: £55M traded across 1,000 wines - 97% Bordeaux, top 10 Bordeauxs + DRC = 70%
2022: £100M traded across 15,000 wines - Bordeaux ~35%, Burgundy, ~25-30%, Champagne / Italy ~10%, CA growing; France still ~70-75%
Transactions are growing ~20% per year, but avg price is declining

Merchants

>580 merchants on the platform
2022 - UK ~35%, Europe ~40%, USA - ~15%, Asia ~10%
Fastest growth - USA, Europe, slowest - Asia

Provenance/condition of wines

Joining Liv-ex requires review by the membership committee - look at financials, where wines are bought, etc.
Has data-sharing initiatives with customers
Has special contract for older / rarer wines (takes into account more information)

Liv-ex Data

Liv-ex Fine Wine 100 index - tracks most traded wines, uses production and scarcity weighting vs. just price (multiplies price by # of cases and depreciates this over time; price is mid-point of bid-offer spread or last transaction price)
Liv-ex 1000 - price-weighted, top 100 wines and last 10 physical vintages, breaks down to regional indices
If no price from the platform takes price from customer listings or valuation committee
An active market in ~15,000 wines but tracks ~350k wines
Customers have ~$1.5B of wine actively marketing

Market trends

Burgundy is the big winner; Champagne & Italy did well, especially w/ US tariffs
Top increases: DRC, Roumier, Leflaive, Selosse, Salon, top Italian wines / Barolos
Everything w/ a hint of Leroy doing well (e.g., Arnoux Lachaux has risen 4x having worked for Leroy in the past)
Wine has been doing well so far against macro headwinds (e.g., Brexit, tariffs, Covid, war, inflation), and physical assets are an excellent place to be

Business model

Membership fee - based on features used and amount of data consumed
Trading fee - 2-3% commission on both sides, usually ~5% of total trade (low vs alternatives - wholesaler - 10-20%, auctions - 25-30%, importer/agent - 30%+)
Settlement fee (per unit fee) for logistics

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Reflections on the Journey: 2 years & 100 episodes of XChateau Jun 08, 2022

Show notes

After two years and over 100 episodes of XChateau, Robert and Peter reflect on how the wine industry has changed, the major themes that have popped up in the show, and some of the lessons they have learned in the process. From the changes to social media, the spectrum of fine wine to everyday wines, and the importance of social issues, XChateau has covered a broad array of critical business topics for the wine industry. Supporters on Patreon get access to the entire library of content and episodes.

Detailed Show Notes:

Social media is changing rapidly

The rise of TikTok (in the last 6 months - late 2021 and early 2022 - for wine)
Platforms are overlapping (e.g., Instagram’s Reels and IGTV)
YouTube is still the place for high production value
More than pictures now, a lot more interactivity and video -> creates a higher barrier of entry for influencers
Wine video improving - more than the historic Gary V, Wine Library YouTube; e.g., WineKing, Andre Mack (Bon Appetit), Konstantin (MW in Germany)
SommTV is paid streaming vs. advertising backed by social media (which can be tricky with alcohol), but SommTV doesn’t have the social element and interaction

CellarTracker is now expanding after over a decade, building on the community, expanding what was one of the first freemium models

XChateau covered a broad spectrum of the wine world

High end - ARENI research on fine wine consumers, wine auctions, wine investing, counterfeits
Everyday wines - 19 Crimes (A/R, celebrities), FitVine (clean, good for you wine trends), Hammeken Cellars (crafting everyday wines)
Wine investment - was hot, unclear future with the macroeconomic environment changing (higher interest rates, inflation, war in Ukraine); Burgundy still doing well currently, primarily due to limited supply
Grocery wine has seen significant shifts - re-opening has moved wine back to restaurants from grocery, will a potential recession increase grocery wine from fine wine retail?

Evolution of the wine critic was a popular series - guests (e.g., William Kelly, Jeb Dunnuck, Esther Mobley) were very candid and open

Social issues were an important topic - diversity, gender equality, climate change

Diversity and inclusion is a potential pathway to bridge the gap in the wine industry from a smaller Gen X cohort
Things like Tablas Creek’s $95 bag-in-a-box wine as a solution for environmental impact

Topics to tackle next:

Global wine markets and trends
Different business models (e.g., co-ops, custom crush facilities)
Understanding the wine buying journey of collectors and wine consumers

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Cork Consistency w/ Francois Margot, Diam Corks Jun 01, 2022

Show notes

As the winemaker’s last choice before wines go in the bottle, cork has played an important role in wine ever since bottles could be made with consistent necks. The consistency of corks is another challenge that Diam is tackling. Francois Margot, Director of Sales, North America describes how Diam is creating corks with choices and consistency for aging, oxygen transfer, and initial oxygen release.

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Detailed Show Notes:

Diam Corks

Cork was originally used for wine bottles when glass could be made with regular necks, chosen because it’s elastic to close the bottle
Elasticity goes down slowly over time
Regular corks are not consistent, Diam developed them to provide consistency
Consistency with structure and oxygen ingress - granulates corks (granulation spreads contamination everywhere) and then cleaned them (w/ supercritical CO2)
Cleaned to be undetectable by gas chromatography (down to 0.3 nanograms/liter)
Clean more than TCA, but all anisole molecules (150+ compounds)
Can choose the aging potential and amount of O2 ingress for wine needs

Cost of closures

Punch corks - different prices based on looks of closures (no impact on consistency)
Diam - 10-80 cents/cork

Value proposition of Diam

#1 - consistency – both in aging and oxygen transfer
#2 - Not tainting wine – if ~3% of wines are tainted, recover the full value; can detect TCA as low as 1 nanogram/liter, not 1 case of TCA in 20 years
Other producers sort corks
#3 – winemaker choice – able to choose closures based on desired evolution of the wine
Brand value – avoided destruction of brand value from tainted corks
No additional bottling line setup – e.g. – screwcaps require setting up a different bottling line with different components
Diam is not as sensitive to humidity vs. regular corks
Building the ROI – look at claims and returned bottles that will be avoided

Range of Diam products

Range based on aging capacity – 5-30 years
Range of OTRs (oxygen transfer rates) and OIRs (oxygen initial release) – 3 options of OTR and OIR
Oxygen ingress from corks in non-linear – initial oxygen enters wine from cork in the first 6 months (OIR), and then some oxygen passes through cork (OTR)
Wines for long aging may desire higher initial oxygen ingress (OIR), but lower long-term oxygen levels (OTR)
Began differentiating OTR and OIR 3 years ago

2 main patents

Cleaning process – removes 150+ compounds from cork
Re-building process – ensures elasticity of cork, contains 3 ingredients – cork (~95%), binding agents, beeswax/plastic microspheres which fill in holes and prevent moisture in the cork
Can use any thickness of cork, including thinner blocks, buys from the same producers as regular corks
Removes woody part of cork (lignin), which is up to 20-40% of bark, and uses it to burn for electricity; keeps suberin part, which is the elastic part

Burgundy premox issues – Diam has helped but the issue is not just the closure

Diam for sparkling wine

Regular corks are 24mm in diameter, Champagne corks 30-31mm in diameter
“Mytic” brand of Diam corks – same structure as regular Diam corks, but bigger diameter
Diam has ~30% market share for sparkling wine
CIVC doing research into O2 into wine
Coming out with cork for tirage next year to provide options vs crown caps, which give consistent OTR

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Library Release - The Global Cork Market w/ Carlos de Jesus, Amorim Corks May 25, 2022

Show notes

Interview with Carlos de Jesus, Director of Marketing and Communications for Amorim Corks in Portugal, the largest cork company in the world, which celebrated its 150th anniversary in 2020. We discussed the various uses of cork, the differences between corks and other closures, and how the business of cork has evolved over the decades.

This episode originally aired in September of 2020. To access the rest of our library and support the show via Patreon!

Detailed Show Notes:

Amorim - 150-year history, largest cork company in the world, produces 5.5 billion stoppers per year, over 18,000 winery clients globally, most small

Sources cork from 1,000s of property owners, mainly in Portugal and Spain

Uses of cork: wine, footwear, fishing, aerospace, flooring, and sports

Differences between cork and other closures: technical, sustainability, and additional value add

Technical differences

Oxygen transfer rate (OTR) - plastic (lets in too much oxygen), screwcap (lets in too little), cork (“just right”)
Average cork has 800 million cells in it
TCA - “we have defeated TCA” - mitigated to the point where cork is now gaining market share
Consistency of corks - not an issue for technical stoppers (micro agglomerates, twin top), a technology used to help with natural corks

Sustainability - people, planet, profits

CO2 - a single cork can have up to 562 g CO2 sink per stopper
Cork harvesting one of the best paid agricultural jobs, ~€125-135 / day for three months/year
Cork forests are 1 of 36 hot spots for biodiversity in the world
Cork forests help prevent forest fires, regulate water cycles, and trees live 200-250 years
Corks are both compostable and recyclable (e.g., ReCORK America)

Additional value add = the happy sound of a cork popping

Of the 100 most sold brands in the US (data from Nielson), the average price of wine with cork is consistently higher than other closures

Closure market

19.5B closures per year
12.5B closed with cork (~70%)
1.8-1.9B single-use plastic stoppers

The price of cork ranges from €0.04 - 3.00 per cork

Screwcaps (the lowest price), plastic, cork
Cork can now sometimes undercut the price of plastic

Supply and demand for cork

2.2M hectares of cork forests in the Western Mediterranean - lots of trees to supply the current industry
It takes 43 years for a cork tree to supply cork for a wine closure -> new research with micro-irrigation is reducing the first harvest from 25 years to 10-12 years

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Farming for the Next Generation w/ Jean-Baptiste Lécaillon, Champagne Roederer & Xavier Barlier, MMD May 18, 2022

Show notes

As a 7th generation family-owned and run company, being sustainable means building towards the future for the next generations. That’s the philosophy that has led Champagne Louis Roederer to move towards organic farming with biodynamic and permaculture principles since 2000. With 100% of its historic estate (50% of total vineyard holdings) certified organic, this process has had a significant impact on the quality of the fruit and wines as well as the bottom line. Jean-Baptiste Lecaillon, EVP and Chef du Cave at Champagne Louis Roederer and Xavier Barlier, SVP of Marketing and Communications of Maison Marques & Domaines USA (Roederer’s import arm), tell us about this transition, strategy, and its market positioning.

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Detailed Show Notes:

Beginning in 2000, started moving farming towards organic, including some biodynamic and permaculture philosophies

Organic is just stopping the use of herbicides and pesticides, but that’s it

Biodynamic practices for JBL are less about Rudolph Steiner’s philosophy but more about paying attention to the land and ecosystem, aligned more with the permaculture movement

About adding life back into the soil and building fertility, which comes with decreased use of copper and sulfur that are used in organic farming

We can do this at Roederer because it’s a family-owned business with 7 generations, building for the next generation and the future

Roederer does its own massale selection, own rootstocks, and compost

Impact on growers

Impacts more the future generation of growers, need to educate them
Roederer single-vineyard ferments everything and tastes the growers on their own vineyards
Assigned a Roederer enologist dedicated to grower relations

Organic trends in Champagne

20 years ago - <1%
10 years ago - 2.5%
Last year (2021) - ~8-9%
A result of the new generation coming into viticulture

More expensive to farm organically/biodynamically

More labor-intensive - need to be available 7 days/week
Increased workforce by 15% due to more labor needs

Yield has decreased due to new farming

Up to 30% yield reduction in some years
The 10-year average is ~5-10% reduction in yield

Marketing organics - plays into desires to support the environment

Roederer began organics in 2000 with 6ha -> in 2020, 125ha (50% of estate)

Organically certified vineyards are 100% of the historic estate
Organic vineyards are the Cristal and Vintage wines

The future of Champagne - maybe more of all 7 permitted varieties will play a role, with more of a focus on the genetic material of the vines

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Exploring American Sparkling Wine w/ Michael Cruse, Ultramarine & Cruse Wine Co May 11, 2022

Show notes

Sparkling wine is trending at the moment and no brand best embodies the trend more than cult California sparkling wine producer Ultramarine. Michael Cruse, the founder of Ultramarine and Cruse Wine Co, explains how he developed a passion for sparkling wine that led to his accidental success. He covers how Ultramarine took off, techniques and production practices that have business implications he took from Champagne, pricing, and his view on sales channels.

Detailed Show Notes:

Ultramarine

Started in 2008, 1st real vintage was 2010
Sparkling wine in CA that focuses on coastal single vineyards, high acid, single vintage
Precise production style - not copying Champagne, but taking some techniques and applying them to CA
Harvest ~1,000 cases/year, ~500-750 cases make the cut for release
Limited ability to grow (due to lack of suitable fruit sources), target ~1,200-1,500 case range

Cruse Wine Co

Started in 2013, supposed to be a custom crush facility
Initially not for sparkling wine, an interest in Valdiguie
Later realized his passion was in sparkling wine - does pet nats, more experimental, more oxidative styles
Focus on CA as a whole vs. coastal vineyards of Ultramarine
~7,000 cases/year (2018 was peak ~8,500 cases)

The capital intensity of producing sparkling

Cruse Tradition takes ~40 months to make which means 3 vintages must be paid for before selling any wine (e.g. - fruit, glass ($2+/bottle), etc…) - this limits growth
Ultramarine spends 38-48 months en tirage, found this to be its sweet spot

Sparkling wine equipment

Bought own equipment vs. doing custom crush at Rack & Riddle - partially due to using a bottle that they would not take
Follows many Champagne producers - they may use co-op press, but do own elevage and disgorgement
Uses a gyropalette, which requires some bentonite (riddling aid)

Long term relationship with growers is important -> growing sparkling is different than still wine grapes

Varietal impact on winemaking

Chardonnay - less fruit, more minerality - be more reductive to preserve fruit
Pinot Noir - more fruit, less minerality - be more oxidative to get more minerality

Pricing

Value spaces (~$20-25/bottle), e.g. - Gloria Ferrer, Roederer Estate, Cruse doesn’t have the scale or capital to compete here
Doesn’t think he can sell 10,000 cases @ $70/bottle
Believes he can sell 5-10,000 cases @ $45-55/bottle
Unclear how Champagne price inflation will impact market opportunity for domestic sparkling
Ultramarine secondary pricing - goes for 3x release price; believes it’s only ~30 bottles/year @ $200/bottle, could not sell entire production at that price point

Sales channels

Cruse - ⅓ DTC, ⅓ domestic wholesale, ⅓ export (Asia - Japan, Singapore strong)
Ultramarine - 90-95% DTC - believes sweet spot is ~80% DTC to get more into restaurants

Ultramarine mailing list

Big supporters early on propelled the brand (e.g. - the NYC crew of Patrick Cappiello, Levi Dalton, and Pascaline Lepeltier)
Instagram helped to fuel growth
Took 3 releases (2012 release) to get a waiting list
Wine Berserkers also helped

Cruse launch plan

No real plan initially focused on friends & family
Hardy Wallace helped get wines in front of distributors

Relationships with certain wine critics help

The website is unintentionally sparse but does longer allocation emails

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