Stephen Shelmerdine: prices influenced by the tangible and the intangible
I’d link to this story I wrote for The Australian but can’t find one. So here is the unedited version:
Take two wines from the same region, a few kilometres apart. Both are top-notch drops.
One costs $30; the other nearer $50.
Stephen Shelmerdine, managing director, Shelmerdine wines, with vineyards in Heathcote and the Yarra Valley, says it’s a marketing decision. “But it’s informed by a range of factors some of which are tangible and some intangible.”
In Heathcote, one of the hottest wine spots in Australia, Shelmerdine sells his top 2004 shiraz, for $30. The top shiraz from Jasper Hill down the road costs more than twice as much.
Ron Laughton winemaker at Jasper Hill says: “The most important determinant on the price of wine is the yield in the vineyard. How many tonnes per acre or hectolitres per hectare you obtain from that little patch of land. If you get less out, effectively it costs you more to grow them. That’s the prime determinant. Everything else is superfluous.”
Laughton’s wines have never been the cheapest. His Shiraz vineyards yield about half a tonne to the acre. It gives higher concentrations of colour and flavour. ”That means my grapes per tonne are expensive and at the top end of the price range and my wines then have to be expensive to match it.”
Jasper Hill was established in 1975 when the land cost a few hundred dollars an acre compared to a few thousand now. But the land is still relatively cheap compared to the Mornington Peninsula where a 10 acre vineyard may cost near $1 million (although the actual price for each acre of vineyard is nearer $30,000). A good 50 acre block costs $2 million.
T’Gallant, owned by Beringer, occupies this expensive real estate. Its top pinot sells for $30. Stonier, owned by Lion Nathan, and with similar real estate sells its 2004 Reserve Pinot Noir $45.
Typically, the peninsula yields up to 2 tonnes of pinot per acre, which costs a hefty $2,250 a tonne. In other regions grapes cost under $1,000 a tonne.
On the peninsula, variable weather makes it marginal for growing and ripening grapes at best. Stonier in 2002 was unable to make a Reserve Pinot Noir, as the ground was too cold during flowering. In 2003 it made one of the best ever. 2004 was a bigger crop, but not as good.
At T’Gallant, which buys in grapes for local vineyards under long-term contract, 2004 was the best in recent memory with massive yields to match.
Inevitably, the craft or philosophy of making the wine adds to the costs. Stonier uses the best oak barrels. They cost $1,200 each and may last six years. Other winemakers only take the most concentrated juice from the grapes or crush them in baskets. Hand or full body plunging into the vat costs more than machine agitation but produces a finer result.
Shelmerdine says there is also a snob factor involved. Some people just expect to – and even want to – pay over $50 for trophy wines from the Mornington Peninsula or Heathcote. Others are snobby about old vines.
Shelmerdine says: “People with old vines naturally want to push the line that these vines are producing superior fruit than a young vineyard.”
Snobbery comes with the territory. Or terroir as the French call the characteristics of a particular patch of land imparted into a grape’s flavour.
Branding values winemakers and vineyards highly as their track record builds for making consistently good drops. As Shelmerdine says: “Jasper Hill been making wine for 30 years so reputation counts there.”
Laughton says his pricing philosophy has always been what does it cost to produce plus a reasonable margin of profit. He says: “We are torn between trying to maximise our returns without being stupid about it…and I want to make it as cheaply as possible to have it accessible to as many people as possible.”
Shelmerdine, whose family established the Mitchelton winery in 1969, is re-establishing his brand after selling to Lion Nathan in 2001. He’s kept the price tag to his wine to $30. He says: “We know we could charge more for these wines but we want our wines to be drunk and enjoyed and not just talked about, sitting moulding on shelves.”
As Jasper’s Paddock’s Laughton says: “There’s the balance between the two. There’s a dichotomy there.
“There are not too many wines in any market in any part of the world, other than a few in France and one or two in Australia, that can think of a number add double it and add a zero,” he says.
ENDS
Also published on Medium.
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