Doing the Math

My apologies for the lack of entries latley but with the holiday, a birthday, and about a million people in town from all corners of the globe I've been a bit pre-occupied.

Here goes:

Rex Hill sues over bad corks

The long and short of it is that the fine folks over at Rex Hill bought in to the whole 'No Cork, No Problem' mentality and as it turns out, there were some problems. From the article:

"Newberg's Rex Hill Vineyards has filed a civil suit against a maker of synthetic corks, claiming the product failed to seal properly, causing thousands of bottles of Pinot Gris, Sauvignon Blanc and Chardonnay to spoil."

In and of itself, probably not all the surprising or unusual, althoug I'm sure the folks at Supreme Corq would like you to believe otherwise. The real curiousity comes in the form of the numbers provided by the article:

"The suit seeks $1.4 million in damages...spoiling 370,000 bottles corked with the Supreme Corq product... It is seeking $434,000 in actual damages and $1 million in punitive damages."

So let's run the numbers, shall we? The punitive damages amount is really just that, punitive, right? So a million clams for time and effort wasted by way of faulty 'corks'. The actual damages number paints a bit of a different picture. $434K/370K Bottles = $1.17 per bottle. So is it safe to assume that this is the actual value of the wine per bottle? I must think so. And I would hope that that number includes not only the price of the grape and processing them but the cost of the bottle itself along with label, boxes, shipping, etc...

If so, that is pretty damn impressive. And according to their website (which sucks), the 2001 Pinot Gris had a suggested retail of $14.00. Let's work backwards. At 14 bucks that would generally make the wholesale cost of said bottle somewhere around $10.76. Assuming the distributor is making 'decent' money, that bring their cost down to around $8.28 per bottle.

So Rex Hill makes a bottle of wine for $1.17 and sells it off at $8.28?!? That's a profit $7.11.

Good God.

Maybe this is why every jack-hole wants to own a winery.