Decision Time (Help Us!)

It’s finally arrived – the moment that I’ve been dreading since we formed Bruliam Wines almost a year ago. 

What is the cause of the growing pit in my stomach and the surging bile in the back of my throat?  It’s time to actually make the big business and financial decision about the 2009 harvest.

From the time we first contemplated the business plan for Bruliam Wines, I had little concern about the financial risk of our first year’s product.  Maybe I’m overly confident, but I’m pretty sure we’re going to have no trouble selling out our 2008 pinots.  If nothing else, we’ll result to old fashion Jewish guilt and/or teenage-level peer pressure to convince all of you to buy some of our inaugural vintage.  And if it is as good as we expect, we’ll probably be successful at convincing you to buy quite a bit of it.

But now the real financial risk begins.  Now we have to decide what to do for the 2009 vintage.  Before our 2008 has finished aging, long before it is in the bottle, and at least 8-10 months before it goes to market, we now have to commit to buying our 2009 grapes.

The primary question we have to tackle is whether we want to expand our production for 2009 or leave it as it.  Our 2008 production of 600 bottles (50 cases) is pretty limited and if our 2008 vintage turns out well, we feel confident that the demand for the 2009 vintage should keep up with an increased supply.

So if we do decide to expand our production, how best to do it?  This is where the financial risk crosses with long-term business planning. 

Here are some of the options currently being contemplated:

1. Expand production from the existing vineyards- our 2008 vintage is coming from Annahala in Anderson Valley and Doctors in Santa Lucia Highlands.  This would give us more pinot to sell from the beach heads we’ve already established.
2. Add a new pinot from another area.  Great pinot options abound in California from the Sonoma Coast and Santa Rita Hills.  Having greater geographic diversity will enable us to position and sell the pinots differently.
3. Add a new varietal.  Kerith and I are passionate about pinot, but it is not all that we drink.  Expanding Bruliam to encompass different varietals will open up the business prospects to a wider client base and a range of pricing options.  Some of the varietal options are:
   1. Add a chardonnay.  The classic Burgundian counter-point to pinot noir is chardonnay.  We can source grapes from the same or similar vineyards as the pinot and work with the same winemaker.  The problem is that Kerith and I don’t really love chardonnays – even when they’re made in a Burgundian style (with limited oak and butter overtones).
   2. Add a white Rhone (viognier, marsanne/rousanne).  These are the whites that Kerith and I like to drink and that ideally that we’d like to make.  Unfortunately, the economics of doing so don’t make a lot of sense.  Even if we were to sell out these wines, we’d be lucky to break even.  That means that these would be more of a labor of love than a profitable commercial undertaking.
   3. Add another red varietal.  Neither Kerith nor I are big Zin or Syrah drinkers.  That leaves the cabernet / cabernet blend option.  From an economic standpoint, doing a high-end cab or cab blend makes all the sense in the world.  Wine drinkers will regularly spend 2x-3x on a cab blend than they will on a similarly well regarded pinot.  The issue, however, is the longer time in the barrel (20-24 months, most likely) and the need to buy more grapes than will actually be turned into bottled wine to provide for blending options.  So, while the margins are higher on cabernet than on almost any other wine, we’d be tying up capital longer.

Underlying all of this is the need to maintain a degree of consistency in our business plan.  How many producers of super premium pinot noir also make world class cabs?  In our experience, there aren’t too many.  But that shouldn’t necessarily restrict us either.

So, what are we going to do?  We’re not really sure just yet.  But, we’d like your input.  Let us know what you think we should do by voting in the poll below and by sending us your comments or e-mails.  If you can’t see the poll, please click here.

We’ll let you know of our decision in the coming weeks.