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5 Things to Remember About Wine Grape Sales and Purchases

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Blog 16

Five things to consider when drafting a Grape Purchase Agreement between a Grape Grower and a Winery

Protecting your grape growing business means more than protecting your agricultural harvest.  You may have to work just as hard at finding a proper purchaser of your harvest as you have at growing your grapes.  Once the buyer is found you need to think about memorializing your agreement with a proper business contract so that your investment comes to full fruition.  Here are five things to think about:

1) In an ideal world, you would have a buyer for your grapes long before they are ready for harvest, possibly even years before.  Just as the grower wants predictability, so does the winery.  Long term pre-planting contracts are certainly a possibility for both grower and winery. Having a long-term contract in place could be very important to the business growth of both parties to this agreement.  If lending is in place or required to fund the ventures of either the grower or the winery, a proper contract will be of high interest to the business lender.

2) All parties want their customers to be pleased with their product.  Growers are wise to consider the winery’s concern for product quality and consistency when executing its viticulture practices.  Expectations relating to viticultural practices can be very specific in the contract and related to issues such as diseases control, production levels, irrigation, pruning, thinning, cultivation, etc.  The best practice for all concerned it to discuss and draft specific terms for viticultural practices to enhance the likelihood of contract renewal for the grower and source consistency for the winery.

3) A detailed plan for harvest and delivery should be considered in the purchase agreement. Clearly the input of all parties is important.  While the terms of this part of the agreement may need to be flexible due to the fact that grapes are an agricultural crop that is dependent in part on weather, it is still important to set out expectations relating to a projected harvest date, prior delivery schedules, labor availability, equipment needs, storage space, etc.

4) Clearly both parties want to deal with high quality product, however, the definition of a high quality grape may differ and as such, grape quality and inspection rights will be important to define.  Some contracts will set parameters for Brix, pH, and total acidity that reflect optimum levels along with minimum and maximum content levels which vary based on the type of grape.  The winery will generally want to have the right to inspect and test, but the grower will not want to be put in a position where a winery has an absolute right of rejection absent pre-defined quality standards.  It may very well be appropriate to identify an independent third party to act as an inspector should the parties disagree.

5) Pricing of the grapes is one of the most important terms of any contract.  And, there are many ways that pricing can be determined.  Per acreage price or price based on tonnage is common.  An escalator for long term contracts may be useful to pre-determine prices for future years.  Or, some growers and wineries prefer to negotiate each year.  If that is your preference, then you should establish a date in your contract by which the price shall be determined and consider language that  creates a default if the parties are unable to agree – which could be as simple as a percentage or multiplier of the price of a prior year.

These are just some of the terms that should be considered in a Grape Growers contract.  All parties stand to benefit from conversations and decisions made and set forth in writing.  Should you require any assistance with contracts of this type as a grower or a winery, feel free to contact our office.

 

 

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Dear friends in the alcoholic beverage industry,

As we as an industry, nation and planet collectively try to navigate this unprecedented period the coronavirus has brought us, We’d like you to know that we at Craft Beverage Consultants (the other CBC!) are here to answer any question you may have (or not know you have) about not just surviving this time but positioning yourself to thrive as soon as social distancing measures allow your business to function at full capacity again.

If you schedule a free 60-minute phone or video conferencing consultation with me or any of my 11 highly specialized colleagues, we’ll help you figure out any of your immediate and/or longterm business needs, or “everything but the staffing,” as we like to say. We’re not high-pressure sales kind of people, especially these days, so you don’t have to worry about fending off annoying pitches. Make an appointment on our website or Facebook page, or just call us the old-fashioned way at 314-768-0220.

Our experts have a combined 150 years in the alcoholic beverage industry, with deep knowledge in everything from sales and distribution, production, and regulatory compliance to marketing, package design, event planning, IT, (social) media, hospitality, and even values-based executive coaching. 

For example, we can coach you through this season when chain accounts have canceled their spring, in some cases, fall resets and distributors have drastically cut orders. Our director of business strategy and compliance can save you money – now – on excise taxes, caution you to avoid naming your beers in ways that risk alienating your buyers (Wuhan Wheat? Coronavirus Cream Ale? Groan. No.), and secure TTB approval for the tastefully named beers you do make. Our creative director and web team can get your e-commerce site up and running and launch a social media campaign that keeps you top of mind for current and future customers. Our director of storytelling can put you in front of the press so you can tell your story to your community. 

Once you’re ready, we can look forward together. Now is the time to talk about post-virus. We all suspect the legal landscape to look different. But how? And how do you prepare yourself in a way that positions you to charge out of the gate ready to maximize the potential and profit of whatever the “new normal” turns out to be? Please get in touch so we can talk about it. 

CBC’s roster includes local and regional clients like Epic Brewing, Logboat Brewing, Piney River Brewing, SudWerk Brewing, Waves Cider and Common Cider Company, just to name a few.  The agency was founded in 2004 by Jacob and Beth Halls, formerly known as Convergence Consulting; Rick Laxague, joined as a partner in charge of sales, marketing and distribution consulting in 2019. 

Rick hase close to 20 years of experience, a bulk of which was with Crescent Crown Distributing in Arizona. His last role there was Area Sales Manager for the dedicated craft beer division, coaching and leading a sales team to be nationally recognized. In early 2014 Rick helped take a regional brewery national as their Director of National Accounts and increase that segment of their business from 30,000 cases to almost 300,000 cases in two years, an increase that equates to $4.8 million in IRI dollar sales. 

Co-founder Jacob Halls brings 17 years of experience in regulatory compliance, business strategy, marketing and craft brand management to the company. In his former position as craft brand manager for the N.H. Scheppers Distributing Company in Columbia, Missouri, Jacob helped lead his team to winning the 2016 Distributor of the Year award from New Belgium and to a nomination for the Brewers Association’s Distributor of the Year award. Jacob is also the founder and director of the South East Craft Beer Fest and several other industry specific charitable event marketing festivities. Beth Halls is Director of Business Operations and Coordinator of Charity Operations for the festivals and events run by CBC, such as the South East Craft Beer Fest, MO Bacon & Bourbon, and many more. 

Again, please reach out to us for anything.  CBC can be reached at (314) 768-0220 or at craftbeverageconsultants.com.

We look forward to meeting/talking soon.

Sincerely,

Rick Laxague, Jacob Halls, and Beth Halls