You already know about our ranch in Argentina. As we explained last year, it is not very productive or practical.
It is too far, too high, and too dry. It is marginal in almost every way. The cows are too thin. (They don’t have enough grass.) There’s not enough water in the seasonal rivers to irrigate much – and without water, well, it’s a desert.
It used to be marginally profitable (or at least, sustainable). Former owners used to be able to graze 2,000 head of cattle on the ranch. Eager buyers came up to bid on them for the local market.
But the weather seems to have changed over the last 20 years. Each year brings less rain… and more problems. We’re lucky if we can support 500 animals.
Now, refrigerated trucks come up from the pampas, bringing more tender beef at reasonable prices. And because of the altitude and harsh conditions, we rarely get more than 250 calves. Each one sells for barely $100. You can do the math yourself – not much money to pay for fuel, tractors, insurance, tools, vaccinations, and seven salaries.
To make matters worse, there is a political movement afoot in which local activists want to take the ranch and turn it into a reservation for the Indians. It would be a disaster for the locals, who depend on the ranch as the only employer in the valley.
That is a long story, which takes more telling than we have time for today… But it just complicates things.
Of course, we could just pack up and move out. Buying the ranch was always meant to be an adventure and a learning experience. (It has been more of both than we reckoned on!) We don’t depend on it for our livelihood. We don’t need it in our lives.
But the people who live there do.
Gustavo, Natalio, Pablo, Carlos, José – they, and their families, work on the ranch. We are the only employer within an hour’s drive. They depend on us to figure out how to keep the ranch going… or they will have to move out.
From left to right: Gustavo, Natalio, Pablo, José
Right now, we do that by subsidizing it heavily. But that can’t last forever.
Last year, many dear readers helped out by buying our wine. This year, we’re going to make an even better proposal.
Let me explain.
A Simple Experiment
When we bought the ranch, we bought a cattle operation. That was what was interesting to us. Perhaps we read too many Westerns as a boy, but we always wanted to be a cowboy. And for the last 10 years, we’ve enjoyed the round-ups, brandings, cattle drives… and all the rough life of a high-country cattle ranch.
The previous owner told us when he left that he had planted a few grapes up in the valley near Tacana as an experiment. But we paid little attention.
A few years later, however, the grapes were ready to harvest. We took them over to a neighbor (lower in the valley, there are many wineries). He made wine with them. Malbec.
No “oak.” No mixing grapes. No chemicals. Just pure Malbec grapes from what must be one of the highest, most remote, and most naturally healthy vineyards in the world.
Finally, the bottles came back. We wondered what the wine would taste like.
It was strong. Intense. Rich.
“It’s very good,” our neighbor – Raúl Dávalos – pronounced judgment. “Easily as good as mine.”
His own wine, Tacuil, has been tested by famed wine expert Robert Parker. He gave it a 93 – near the top of his rating system.
“Great,” we replied.
Crushed, Cooled, Fermented
As we would learn, there are a few reasons why our wine is exceptionally good.
First, it is so high, so dry, and so far from other vineyards that there is no need to use a lot of chemicals to kill weeds, bugs, and fungus. The valley is naturally healthy.
Second, the temperature variation between day and night is extreme. It will be very hot when the sun is out (which is almost every day). And the nights will still be cold. The grapes protect themselves with thick skins. These skins are where the flavors and sugars (the source of the alcohol) collect.
Third, the grapes are irrigated, but they get little water compared to most vines. What water they do get is absorbed into limestone rocks in the soil. As the roots pull out the water, they also get vital nutrients and minerals.
In short, the wine is exceptional because the location is exceptional. Plus, we called in an exceptional wine expert – Sebastián “El Turco” Saravia – who supervises all aspects of our wine production.
Once the grapes are picked, they go over to the neighbor’s winery. There, Raúl Dávalos, a fourth-generation winemaker, makes sure the grapes are properly crushed, cooled, fermented, and bottled.
Over the last few years, we’ve gained more experience with the wine. We had local experts taste it – “Excellent!” We had experts in the U.S. try it – same verdict. And we shipped up a whole pallet of it for our daughter’s wedding.
“People really seem to be enjoying the wedding,” said Elizabeth, about two hours into the party. “I’ve never seen your relatives so relaxed.”
Then, she realized that it was the wine. They loved it. And it was stronger than they were used to. A couple of glasses was all it took to loosen up our straight-laced cousins.
But we had to get down to business, too. We remembered the words of Donald Hess of the Hess Collection… a company that sells millions of bottles each year from all over the world.
“Anyone can produce a great wine,” he said. “All you need is the right place. But it takes a genius to sell it.”
Paying the Middleman
The problem is middlemen. You may pay $60 for a bottle of Tacuil’s RD Reserva wine in a restaurant in Buenos Aires. But the winemaker may only get nine bucks. The rest goes to the distributor, the marketer, and the restaurant.
It’s worse when wines are shipped to the U.S. It’s liquor. So everyone has to be licensed. Competition is limited. You have to go through an importer, a distributor, a warehouser, a shipper, and a sales network… not to mention the taxes! You don’t end up with much.
Our vineyard can only produce about 10,000 bottles per year. If we sell in the normal way, the wine will be offered in restaurants at maybe $79 a bottle. But by the time the middlemen are paid, little of that money will end up back at the ranch – not nearly enough to cover the costs.
Which leads me to my proposal to you…
Only 1,300 Bottles Left
Our vineyard can never be even close to profitable unless we can sell the wine directly to consumers. So here’s what we’re going to do. We’re going to sell it the only way we know how: by subscription only.
And we’re going to make you an offer that no one has ever made in the history of the wine business (as far as we know).
Last year was a good year. But our neighbor lost grapes to a flood. We promised him some of ours. This left us with only 5,800 bottles available for sale in the U.S. It won’t last long. Americans have discovered Argentine Malbec. And our dear readers have discovered Tacana.
Last year, we had even fewer bottles to sell – only 4,000. We sold out in 24 hours. And we offered a special guarantee: If you didn’t like it, we’d send your money back. As far as we know, no one in the wine business ever makes such an offer. But we had confidence in Tacana. And we knew we had to prove ourselves.
As it turned out, of all the 4,000 bottles sold… Only 11 customers asked for a refund, which we gladly paid.
Remember, it’s more intense than the wine you’re probably used to. It goes great with meat. The Argentines drink it with their big steaks, for example. We drink it with everything, every day. Other wines now taste weak in comparison.
Offer it to friends and neighbors. See what they say. If, after you’ve gone through your supply, you think that it did not live up to the promises and claims we’ve made for it, just say so. We’ll be happy to refund your money. Just as we did last year. No need to send anything back. We’ll take your word for it.
So the very worst that could happen is that you drink our wine at our expense! You can’t lose!
On Their Way to Private Cellars Across the U.S.
You missed out last year. And this year, the previous customers had first dibs on the few bottles of Reserva we had available. But we saved a few very special bottles – for you.
Remember that our stock is very limited, so don’t delay. Previous customers… including those on the waiting list… have already bought over 3,000 bottles of this year’s wine that we had available.
As for those remaining, it’s first come, first served. We only have 110 cases of Tacana 2016 available. Don’t miss out again this year, or you’ll have to wait ’til next year…
Tacana Malbec from Bill’s vineyard
So if you’d like to help us save the ranch, raise a glass and enjoy an exceptional Argentine Malbec. You can place your order right here.
Regards,
Bill
Category: Economics