MOG Blog

Bucking the $10 and up premiumization trend

In early May, I met up with Marc Mondavi for breakfast in Calistoga. Mondavi is part owner of CK Mondavi and the son of the late Peter Mondavi. He was on a press push because the family’s national brand has undergone a packaging redesign.

Mondavi, 63, oversees grape growing and winemaking for his family’s company that includes the recently renovated Charles Krug winery near St. Helena and the national brand CK Mondavi, which underwent the redesign.

Mondavi and his brother, Peter Jr., are the sons of Peter Mondavi Sr., who died in February 2016 at the age of 101. It was the elder Peter and his brother Robert who helped convince Cesare and Rosa Mondavi to purchase the Charles Krug winery in Napa Valley in 1943 in a move that would make the Mondavi name an iconic one in the world of wine.

During a wide ranging interview, Mondavi and I discussed the CK Mondavi program, grape prices in Napa Valley, wine packaging and his work as a water witch. I’d always been curious about Mondavi’s knack for finding wells with just his dowsing wands and an uncanny sense that even he couldn’t fully explain. “There’s really no description of a feeling I can describe,” he said, “but when I’m walking I can sense before I get to the water. I can feel I’m getting close.”

He said his services are still in great demand in Napa Valley and throughout other areas of the state. Mondavi learned the skill from the legendary vineyard manager Laurie Wood through a long process of trial and error. Sometimes even if he can find water, it won’t produce a well with enough flow. “It’s fun, I make people happy, but I disappoint some people.”

Several new wineries in Napa Valley have used Mondavi’s services for finding a well and in light of the way prices have risen for Cabernet Sauvignon they’d probably also consider witchcraft to find Cabernet for less than the average of $6,000 a ton.

Even Mondavi marvels at the prices Napa Valley grapes can demand. He owns a vineyard in the Howell Mountain AVA where he also lives and said he has a waiting list for grapes costing well north of $10,000 per ton. “How high is too high?,” he said. “When is this thing going to end?”

Probably not anytime soon. Mondavi noted the recent acquisition of the Stagecoach Vineyard by E. & J. Gallo Winery and said that will keep prices high by constricting supply. He added he’s heard from Gallo that they are not done acquiring vineyards in the North Coast to secure a supply of premium grapes.

The grapes for the CK Mondavi brand come from the family’s nearly 1,000 acres of vines near Dunnigan, Calif., and the rest are purchased from other growers in or near the Lodi AVA. Most of the wines in the CK Mondavi program are California appellation except for an old-vine Lodi Zinfandel.

As we talked about grape prices and the challenge of finding grapes for a large brand, Mondavi recalled back in the late ‘90s — in a particularly short market — he agreed to pay $1,400 per ton for Lodi Chardonnay. (In comparison, the average for Sonoma County Chardonnay last year was slightly more than $2,000 and statewide it was about $800.)

About 20 years later, Mondavi still can’t believe the family paid that much, but also acknowledges that had he not agreed to that price he would not have been able to provide wine to national accounts that year and it would have restrained the brand’s growth. Providing the wine set the stage for future sales. “It really moved us up a whole other notch in the market,” he says.

Today the brand is up to 1.4 million cases and includes eight varietals and a Bordeaux blend called Scarlet Five. Unlike other lower-priced wine programs, Mondavi says sales are growing at a pace of 8% to 10% per year. CK Mondavi retails for $6.99, far below the $10 per 750 ml price point that has seen the most growth in recent years. He notes sales of 1.5L bottles have also stayed strong. In the market overall, wines priced lower than $10 in 750 ml have lagged and low-priced wines in 1.5L bottles have fared even worse.

The brand redesign by the San Francisco firm Swing including changing the name slightly to CK Mondavi and Family, in a nod to the Mondavi family heritage as well as the family sourced vineyards from which the majority of the grapes for CK Mondavi are purchased. The Mondavi name is one reason why Marc Mondavi thinks the CK Mondavi sales have stayed strong despite the wider premiumization trend.

I tried a few samples of the CK Mondavi wines and they struck me as something of a rarity among California grocery store wines. The whites are crisp and the reds aren’t overly sweet or pumped up with heavy doses of vanilla and chocolate oak notes.

Mondavi told me the wines were even drier several years ago, but bowing a bit to distributor feedback they softened them just a touch. Still, the wines I tried would pair well with food and compared favorably to the $10 and less imports from Spain, Italy or Portugal I usually turn to when I find myself in a grocery store buying wine.

The quality to price ratio, makes me wonder if more of California’s larger wine companies could produce more such wines and stay competitive at lower price points rather than just ceding the quality portion of the low price market to imports and putting out sweet cocktail wines.

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