California and GAN EDEN

[Craig Winchell]

I was speaking recently with a couple of distributors on the east coast who are both big in kosher wine, trying to ascertain how much value the GAN EDEN name still has in terms of brand recognition and quality perception, and also to come up with a potential pricing strategy. One feels that GAN EDEN is still a very valuable name, so much so that I should only use it for the very best of wines, priced like other top-of-the-line wines in the kosher market, and that otherwise I will be diminishing the brand's potential value. He also believes that California has a reputation for quality in the perception of kosher consumers. The other distributor believes that GAN EDEN is still a very valuable name, but that while there are very expensive high end wine on the market, they don't sell, in his opinion, and that whatever I do should, no matter what brand, come in at a relatively low price relative to the market, believing that small quantities and exclusivity have little real meaning in the marketplace aside for a few people of the type to be found on this forum. He also said the California, while once a quality leader, now has a reputation for uninspiring quality and mass-market wines. Personally, I don't believe any wine is worth more than $50/bottle from the standpoint of wine quality- other considerations could force it higher, such as interesting label, exclusivity, brand perception, etc. But to me, California presents the epitome of quality and excitement, and at the same time the boredom of mass-market commodity wine. As to GAN EDEN and the value of the name, I won't venture publicly. The wine could be sold under GAN EDEN or other brand name, so aside from considerations of diminishing the brand from too low a price, it's mostly how much market propulsion will the brand contribute in the marketplace?

[Isaac C]

I think people have a very positive opinion of Gan Eden wines and it would definitely be an advantage to sell under that label. Is there any reason you wouldn't want to use the Gan Eden brand? As far as where to price the wine, if you make a great wine for $20 or $30, it will not diminish the name at all, if anything it will make the wine much more popular. Everyone loves a great wine that is affordable. I don't see why you should charge $50 for a wine just to make it seem higher quality. Quality will be recognized in the wine itself. And if you end up expanding and start making wines that require a much higher price then you can always make another name while still using the Gan Eden name (Limited Edition, Special Reserve, or something original like Hagafen Prixe).

[Craig Winchell]

This distributor seemed to believe that quality kosher wine really began at the $30 price point, and that the most sought-after wines began at about $70-$75 per bottle retail (without factoring in cute labels and micro-supplies and lots of marketing hype), and that GAN EDEN should start in the $75-$80 range. I believe I have access to a $50 Cab, so he believed that it was too low to place the GAN EDEN brand. Realize, please, that I will probably never have access to more than a few hundred cases of each wine under the most optimistic future (as opposed to my '86 Cab, of which I had 3000+ cases, or my '97 LR Cab, of which I had 5000 cases). So he could have a point, as I can never envision GAN EDEN as being mass market (from a CA perspective, 5000 cases is a tiny production, and 200 cases, fugedabowdit).

[Isaac C]

That may be true that most quality wines start at $30 but that doesn't mean they should start at $30 - there are also many kosher wines that are $30+ that aren't even worth $20. It's not like there are no quality wines below that price and hopefully that will continue to change as there is more competition. There are plenty of cheaper wines that are quality wines. Much of the Dalton line, Yarden series, Yiron, Recanati Reserve, Capcanes Peraj Petita, just to name a few. This has been a frequent topic on the forum and I believe you were always in the camp of people feeling that kosher wines are overpriced and that they have a terrible QPR (especially compared to non-kosher wines). I definitely don't think it hurts the image of the wine if it is a great QPR, if anything that would make it extremely popular. Will this make you more money? Well that depends on where you go from there. If you plan on making the same limited amount, with no plans of expansion, and you can sell all the wine for double the price, of course that will make you more money now. But if you can expand and make larger volumes of great QPR wine, that would be so much better (at least for us consumers!)

[Craig Winchell]

What I am mostly trying to do is to quantify the value of the GAN EDEN brand, and to get a handle on where the market is, and where it is going. Not where it should be going.

I definitely don't think it hurts the image of the wine if it is a great QPR, if anything that would make it extremely popular. Will this make you more money? Well that depends on where you go from there. If you plan on making the same limited amount, with no plans of expansion, and you can sell all the wine for double the price, of course that will make you more money now. But if you can expand and make larger volumes of great QPR wine, that would be so much better (at least for us consumers!)

The question is, would people still purchase all of the limited production high priced juice that's out there, or would they really migrate to better QPR? I sold 4000 cases (out of 5000) of '97 LR Cab for $40/bottle, when that was close to the top of the market, and most wines of that or somewhat greater price were far more limited in quantity. Now I'm making 250 cases, similarly of real quality Cab. How can I justify to my partner that, under any scenario and any brand name, it should go for $30/bottle, or even $35, when the prices on similar wines have plowed way ahead? I can make more wine, but I cannot make more wine currently from this large but very highly stressed, super low yield single vineyard, the estate vineyard of Agua Dulce Winery. Bottled under the Agua Dulce label, it would be "Estate Bottled". Under another brand, it would be a single vineyard wine.

[Isaac C]

Point taken. So if your wine will be as good, if not better, than other $40+ kosher wines out there, I'm sure it will have no problem selling, especially considering the limited amount available. Personally, I don't purchase that many wines in that price range, but many people do, and definitely enough people to purchase 250 cases worth. And I DO think the Gan Eden label will go a long way in making people more likely to choose this wine over other similarly priced wines as opposed to a unknown name. There are plenty of people out there that have very fond memories of Gan Eden (I do and I am only 30 years old).

[YoelA]

Craig: My role in this part of the universe is as a consumerr, not a producer, wholesaler or marketer. To me it seems that prices for high-quality cabernets (whether kosher or non-kosher) bear no resemblance to anything in the real world. Prices for some syrahs seem undeservedly high, especially some of the kosher ones. And I don' care much for chardonnay. But one thing I'm sure about is (referring to one of your posts on another thread) that the word does not need yet another $ 30 zinfandel (unless it's from a very old vineyard).

[Isaac Chavel]

I would guess that the number of people who remember and value Gan Eden wines is a small section of the market, since the big growth of kosher wine drinkers is relatively recent.

Second, it seems you envision production runs to be relatively small, as you are sourcing very high quality grapes --- in the quality range of other high-end California kosher wines. In effect, it will be a "cult" wine. So it follows you are forced to charge well north of $30/bottle --- despite my and other's wishes to keep the price within our own reach. Then you may as well price it in the range of, what in your opinion are, its peers.

If, on the other hand, you envision larger production runs in the future, and you seek a larger market down the road, then the calculation is more complicated. You then have to price it to build a following among new kosher wine drinkers.

I think that the two distributors' divergent opinions somehow show the way. It seems to me that each one is speaking about his own audience. And each one is probably giving a decent account of what he sees. It just depends on the lines they are carrying. So it boils down to your target audience. I am certainly in the second. I rarely drink California kosher because it is either too poor quality or too rich price. And I certainly think there is plenty of good to excellent --- if not the highest tier --- kosher wine below $30/btl.

[Yehoshua Werth]

However this goes I am excited to see you entering the public realm of making wine again and so are many others... The brand for sure holds value yet I stumble when people start at prices Like $75...

Why not start at a mid-level and grow the brand... Instead of going for the fringe...

Alexander in Israel has wines @ $22 and Magnums @ $260.00
No one has issues with him having an award winning wine at $22 when paying $70 for Alexander the great.

No one has issues paying $110 for Herzog Clone 6 because they have a Cab for $11

Some people have a very NARROW view of the Market; you need someone with a vision of growth and promotion not of a quik score!

be careful as the market is different from the last time your wines were moving.
Any help you need on the East coast please ask...

Hatzlacha and love be with your family,

Yehoshua

[Pinchas L]

Craig,

In response to your question I would like to make two points. The first is that even if the Gan Eden label is still held in high esteem, creating a portfolio of strictly expensive wines is tricky and may very well backfire. From my own experience I will say that on those limited occasions that I purchase high-end, expensive wines, they tend to be from producers I already patron, and of whose wines I am fond, mixing in some expensive bottles amongst my overall purchase, which is to say that my dollar cost average of a particular producer remains reasonable. The reason I haven't become a Covenant customer, is that their product line is such that all of their wines are expensive, particularly their reds, and there is no real opportunity to get the average cost down. The second point, is that I think consumers have probably already developed some sort of brand loyalty to high-end wines, and, given their limited resources, are not keen to change their habits, experimenting with every new expensive wine hitting the market.

Much of what determines the price a wine fetches seems to be more hype than substance. I don't think that your brand will suffer from pricing your wines reasonably. Surveying the high-end kosher Californian Cabs, some, like Herzog's single vineyard releases and Covenant's releases, are priced in the stratosphere, whereas Hagafen's wines are reasonably priced, with Ernie's limited single block releases listed at $65, and with member discounts the price is substantially cheaper. Personally, $50 is a cutoff point that I cross on few occasions.

Best,
-> Pinchas

[Pinchas L]

No one has issues paying $110 for Herzog Clone 6 because they have a Cab for $11

Yehoshua, you should qualify your statement. I have gone on the record quite often criticizing Herzog's pricing of their premium wines. They are by far over priced. Only fools and the nouveau rich purchase those wines. And as a good example, you should take a close look at the price differential between BR Cohn's Cabernet and the identical wine that was sold under Herzog's label.

Best,
-> Pinchas

[Craig Winchell]

Thanks, both of you, and whoever shows up on this thread in the future. Yoel, I agree, by the way about the Zin. However, I think it's going to be there, just because it's up there for them in the nonkosher market. They sell predominantly winery direct from their tasting room and mail order. Their Cab normally sells for $38, their reserve for $60 (mine would be the only one, but it's certainly equivalent to their reserve, which I finished and bottled, but did not have anything to do with the production otherwise), Zin for $35, Syrah for $52 (called reserve, but no regular was made). That's nonkosher. Are they worth it? I don't know, but they sell under those circumstances. Of course, there are substantial discounts for 2 levels of club membership. One of the advantages to them of kosher would be that it would be outside the clubs, and not subject to those discounts. Still a substantial amount of wine is sold outside the club membership.

[Craig Winchell]

I wrote the above and thought I had posted prior to Yehoshua and Pinchas entering the fray. Thanks to them also for their participation in the thread. I can assure everyone that I am not advocating nor intend to be starting out at the $75 level, nor however, am I starting out in the $20 scene. It may not come to fruition in any case, that I have anything to do with selling this stuff or that it will be any sort of GAN EDEN product. Whether I am working for Agua Dulce in toto, or am a partner with my boss on this project, I want him to realize the most profit he can make, so that he will invest in other projects with me. And of course, I want a tidy bit of cash as well, for my troubles.

[Yehoshua Werth]

No one has issues paying $110 for Herzog Clone 6 because they have a Cab for $11

Yehoshua, you should qualify your statement. I have gone on the record quite often criticizing Herzog's pricing of their premium wines. They are by far over priced. Only fools and the nouveau rich purchase those wines. And as a good example, you should take a close look at the price differential between BR Cohn's Cabernet and the identical wine that was sold under Herzog's label.

Best,
-> Pinchas

The wine you are referring too had different barrels made by a different winemaker with longer time in the barrel and had more Hashgacha's on the bottle...

Yes same source grapes as we all know but very different wines as people will see with time...
The BR Cohn was an anomaly and SAD as I have Begged them to produce more and the answer is NO... Offered to buy 100 Cases and still NO...

The thought I had was not that something was or was not overpriced it was what Craig was asking can a company with $20 wine sell well on a $75 too and my answer is YES, Yes & Yes.

[Craig Winchell]

Yehoshua, you bring up a fascinating facet we might do well to discuss, that of multiple hashgachos. I was speaking with Shai Ghermezian, and he told me how important he considers multiple hashgachos. I don't consider them important at all. In my 20 years of experience producing and selling kosher wine, I cannot remember anyone worthwhile who failed to purchase my wine because it only had an OU on the label. Many said it was because I was the one producing it. Yet, they didn't know me. They may have heard of me 2nd or 3rd or 4th hand, but they didn't know me personally. I am sure they went by the hashgocha and the fact that my rav was renowned posek, but he is also a posek for the OU. So why would they not want my wine? do they hold by him, but not the OU? They are basically one and the same. Hold by me? I follow his rulings. People need only call me and ask questions about how the wine is made, and I'll provide accurate answers. Now I know that there are hashgachas who, for a fee, will rubber stamp just about anything after the fact. Why would I want one of those? And there are those who would be there before-the-fact to supervise, but if it was the same mashgiach as the OU, why would that be better? And if they required a different mashgiach, expensive. So I'm sticking with the OU, or if we switch, the new one, but 1 and only 1 hechsher. You wanna know about my tartaric acid, just ask me.

[Adam M]

Craig - your fabulous wines pre-date me. This echoes comments above, and should be a confirmation that the brand will resonate with only a very tiny minority. If I may be brutally honest, the name "Gan Eden" to me is a cheesy name and has connotations of "Jewish wine" which is generally thought of as very much I unappealing to serious wine consumers. This makes the barrier to purchase even that much higher.

So I would make the name more generic. I think Covenant has the same problem. But they love their name so more power to them.

Rather than focusing on a high end blockbuster wine, I would suggest that you concentrate your efforts on making a very very solid mid-term reasonably priced wine, say, in the $20-$25 range. Once you gain notoriety for this, it always easy to leverage from this and introduce premium labels. Psychologically, people will say "wow, I love Craig's existing label, it's such a great value (they'll possibly even use the term "QPR"), his new premium wine must also be a must try."

My 2 cents...

[Allen S]

Hi Craig. I think the best approach for you really depends on how ambitious you are. If you will be satisfied making a few hundred cases, there likely is a market for that limited quantity of premium Cabernet and you should sell it for the highest price you can. However, if you want to have larger production, you'd probably be better off starting with a quality wine in the $20-$25 range. There is currently no worthwhile American red wine available for under $25 (that would be the Herzog Alexander Valley Cab), which I think is a huge hole in the marketplace, just waiting to be filled. Either way, best of luck.

[Craig Winchell]

That's all well and good, but I'll have to do that going forward, with purchased fruit. For now, I've crushed 3 years of fruit from the existing vineyard, and it will be higher than that price range. I hear ya, though. But I can't ever believe I can do that range, even in this winery. Probably need to pull a Royal and produce the volume juice elsewhere.

In any case, it sounds as if the best thing is to avoid GAN EDEN and use a different brand name. thanks all. Funny thing, though... we had a large crossover to the non-kosher oriented market.

[Adam M]

Craig - whatever you decide, you can count me in for a couple of cases

[Craig Winchell]

Wow, already taking advantage of the 10% case discount. But what if there's another 10% off 5 cases? Could I count on you for 5 cases? And if you act now, a Ginsu. In Japan, the hand can be used like a knife... but not with a tomato. The Ginsu- it slices, it dices... But wait, there's more.

I think you'll be happy. I was surprised at some of the fruit. The Merlot, especially, is really something, if I don't screw it up. Overall, judging historically, I'd say Zin is just OK, as is Sangiovese and Chard. However, 2010 through 2012 vintages have had extremely high quality for all the reds, and in 2012, even the Chard was good. In 2010, though, only Zin, Cab and Syrah were cruhed kosher, the others were crushed before we got hashgacha.

[Elie Poltorak]

I strongly disagree with the criticism of the Gan Eden name. I believe that negative associations with kosher wine among the cognoscenti are a thing of the past (and you're not aiming for the mass non-kosher market). The Gan Eden name carries a great deal of good-will among kosher consumers. Don't forget that Gan Eden wines were still around until around 5 years ago, so even with the recent explosion in the premium kosher wine market, there is a significant percentage of consumers who know and love the Gan Eden brand. And those who don't will hear about it from their friends, who will be hyped up about Gan Eden's return.

As for price, it's hard to say as generally, the QPR of kosher California wines has fallen WAY behind Israel, Spain, and South America/Australia (on the low-end side of the market). In fact, with the introduction of Vignobles David, even France--which has always offered the worst QPR with really crappy inexpensive wines and stratospheric prices for better quality--has a far better QPR offering than anything on the market from California.

I don't think it would be smart to copy Covenant, as Covenant came to market at a time when big Nappa cabs were all the rage and he was basically the only game in town. Now that he's established a loyal customer base, he's able to sell those bottles despite the high prices.

Four Gates doesn't offer much assistance either as he only makes ~400 cases a year, doesn't want to expand, only sells directly, and has a loyal following that buys up everything he produces faster than hot cakes.

Hagafen has been around forever and has a loyal following, but I don't think it sells that well at the retail level. I wonder what percentage of his wines are sold direct or through restaurants (where they're a staple due to their mevu status). In any event, his prices cover the full range, so I don't think you can learn much as to where your sweet spot is in reentering the market.

Herzog is of course the 800lb gorilla, with decent but uninspired low-priced table wine, a lineup of reserve wines that are usually good, but rarely great at mid to high prices, and some really great wines at insane prices. Herzog is able to get away with it because their muscle assures them prime placing on store shelves and restaurant wine lists. Also, their name recognition makes them a go-to wine for the masses when looking for a "nice bottle" to bring over to a shabos host.

That leaves Shirah, with which you are of course intimately familiar. I think Shira has done a good job pricing their wines as exclusive but not insanely overpriced. They've added lower-priced offerings as they've ramped up production and begun retail distribution. Assuming your wine is as good as theirs (which I have every reason to believe given your track record), I think your best bet is to follow their pricing model and come in at the $30-60 bracket. It helps that you're focusing on different varietals/styles, so you're not competing with Shirah head on.

Once you expand, I really hope you can make some very good Cali wine for the $15-30 bracket, as it's a gaping hole in the world of Kosher wine. Although you mentioned the LR Cab, which you sold for $40, I seem to remember some amazing Gan Eden wines at around $20 or so.

As for devaluing the Gan Eden name, anyone who tells you that a great $50 Cab would devalue the brand is simply an idiot.

[David Raccah]

Elie - no comment on your opinion, just do not diss my man Jon and Brobdignagian - just because you have not tasted or bought his wines. Yeah yeah, you send him emails - etc. I get it, but man up and call him - LOL!!!

[Elie Poltorak]

Elie - no comment on your opinion, just do not diss my man Jon and Brobdignagian - just because you have not tasted or bought his wines. Yeah yeah, you send him emails - etc. I get it, but man up and call him - LOL!!!

Will do! Thanks for the encouragement!

[Craig Winchell]

I believe I said before that the sweet spot is around $25/bottle average and 14,000 cases, at least at this time. This assumes purchased fruit and 100%distribution rather than direct sales ($12.50 per bottle return to the wine company). 14,000 cases at that price allows adequate pay to workers, with good salaries to winemaking and marketing teams, and good returns to investors, and more than enough marketing and sales budget to sell that much wine. Of course, one always hopes for full price direct sales, but it's a worst case scenario. It works out to around 25% profit on $2 Million in sales, after factoring in all costs. No wonder people like the wine biz. That's a nice, tiny winery by CA standards. Since it's an average, it allows wines below $20, and of course, above $30 or even way more. But it does mean making a concerted and continuous effort at sales. People like the Weiss boys do the micro production and high prices because they can have little investment and still make enough in distributions to make significant parnassa above their day jobs, but it doesn't pencil out for real investors who want regular cash flows generated from an initial investment, as well as capital appreciation. If I had had the investors, I'd have started from scratch doing things the right way. I had potential investors, but not enough money to do things right. Thus, the boobie prize of working for someone else. But it allowed me to identify a potential opportunity that could get me some semblance of independence.