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Regional Report Triad May 2008

TRIAD

Wineries Cork Costs With Higher Prices 

Even the most ardent fans of wines produced in the Yadkin Valley have to admit they’re not cheap. Critics will point out that they cost nearly twice as much as comparable wines from California, Chile, South Africa or Australia.

Margo Metzger, executive director of the North Carolina Wine and Grape Council, admits that consumers can find cheaper wines than Tar Heel varieties. “Most of the wineries are young, so we’re talking about recovering real costs.” One of those costs is the most basic — grapes. “The price of grapes here is about $1,100 a ton, about twice as much as in California.”

Charlie Shelton, co-owner of Shelton Vineyards in Dobson, sells his wines for $16 to $40 a bottle, depending on the vintage. “Our winemakers taste wines that we feel are comparable and competition to us. Everything is priced to be competitive. Sometimes you even have to price some products below costs.”

Lena Hobson, co-owner of RagApple Lassie in Boonville, calls pricing an inexact science and says most vintners in the Yadkin Valley American Viticultural Area are still paying off startup costs. “When we were writing a business plan, we looked at price ranges in North Carolina to see if that’s something we can live with and still remain in business.”

RagApple Lassie wines sell for $14 to $17 a bottle, and the company produced about 6,000 cases last year. By contrast, Duplin Winery in Rose Hill, the largest and oldest winery in the state, produced nearly 200,000 cases last year. The Eastern North Carolina winery uses native muscadine grapes rather than European ones grown in the Yadkin Valley AVA, and most bottles sell for $7.50 to $12.

Mark Friszolowski, general manager and winemaker at Childress Vineyards in Lexington, says his pricing formula is simple. “We want to make wines at a profit, even if it’s a small one. We’re OK with our wine costing a little bit more money.” Childress wines range from $11 to $60 a bottle.

Some even suggest that the wineries pump up their prices to avoid the notion that the product is, well, cheap. Hobson says she’s seen that sort of thing during her days of volunteering with nonprofits. “If you give something away, people do not attach a value to it.” But artificially inflating prices is risky, she says.

Metzger pooh-poohs the notion. “There may be instances of that in the world of wine, but I haven’t seen it here in North Carolina.” Says Shelton, “There are some recipes for disaster out there, and that is one of them.”

Friszolowski isn’t so sure. “There might be a few isolated instances. There’s a lot of ego in this business, particularly when someone’s name is on the bottle. But most people will charge because they need to.”

 

GREENSBORO — RF Micro Devices, which makes cell-phone parts and employs about 1,900 here, bought England-based Filtronic Compound Semiconductors for $24.8 million, adding about 300 employees. The move will delay construction here of a $100 million, 300-worker factory planned for this year.

WINSTON-SALEM — New Krispy Kreme Doughnuts CEO James Morgan will get an annual salary of $650,000 and stock options worth an estimated $578,000. He also is eligible for a bonus of up to $455,000. Predecessor Darryl Brewster’s $2.6 million pay package in fiscal 2007 included a salary of $634,487.

TRINITY — David McIlquham, 53, resigned as chairman and CEO of mattress maker Sealy. Larry Rogers, 59, president of Sealy North America, is interim CEO.

WINSTON-SALEM — Novant Health, which owns nine hospitals in North Carolina, paid $300 million to buy a 27% stake in seven hospitals in the Carolinas from Naples, Fla.-based Health Management Associates. Four of the hospitals are in North Carolina: Davis Regional Medical Center in Statesville, Lake Norman Regional Medical Center in Mooresville, Franklin Regional Medical Center in Louisburg and Sandhills Regional Medical Center in Hamlet.

GREENSBORO — Columbus, Ohio-based Skybus Airlines blamed high fuel costs and poor economic conditions for its shutdown in early April. Earlier this year, the discount carrier opened a hub at Piedmont Triad International Airport. It employed about 80 and was making 16 daily flights from PTIA at the time it closed. The move cleared the way for another discount airline, Las Vegas-based Allegiant Air, to stay at the airport. It had announced plans to discontinue flights there May 31. It will keep service to Orlando and St. Petersburg, Fla., and resume service to Fort Lauderdale.

GREENSBORO — Houston-based Continental Airlines added two daily nonstop flights between Greensboro and Cleveland, giving it 10 daily flights at Piedmont Triad International Airport.

WINSTON-SALEM — Apparel maker Hanesbrands plans to build its first factory in China. The plant in Nanjing will cost at least $100 million and employ about 1,000 when it opens in 2009.

HIGH POINT — Two subsidiaries of St. Louis-based Furniture Brands International that shared offices here plan to move their headquarters. Drexel Heritage will go to Thomasville, taking about 40 jobs. Henredon will move to another building here.

WINSTON-SALEM — Forsyth Medical Center and Wake Forest University Baptist Medical Center appealed the state’s rejections of competing plans to open hospitals four miles apart. Forsyth wants to open a 50-bed hospital in Clemmons; Baptist, an 81-bed hospital in Advance.

GREENSBORO — Textile maker Unifi sold a vacant plant and land in Dillon, S.C. Paterson, N.J.-based 1019 Realty paid $4 million for the 536,000-square-foot plant and 63 acres.

MOUNT AIRY — Bodet & Horst, which makes knitted fire barriers for mattress manufacturers, spent about $1.5 million to open a factory here that employs 10. The German com- pany also employs 65 at a factory in High Point, where it has operated since 2004.

WINSTON-SALEM — Liberty Hardware, part of Taylor, Mich.-based Masco, plans to add 526,000 square feet to its 690,000-square-foot headquarters and distribution center. Liberty, which employs 350 making decorative hardware, isn’t sure how many workers it will add.

WINSTON-SALEM — Forsyth County won approval from the National Steeplechase Association to resume the Tanglewood Steeplechase next year. Commissioner Ted Kaplan says the race, which ended six years ago because it lost corporate sponsorship, could be a tourism magnet. It drew 20,000 spectators a year to Tanglewood park in the 1980s.

WINSTON-SALEM — Wake Forest University Baptist Medical Center launched a five-year study aimed at reducing complications in diabetic patients after heart surgery. It will be paid for by a $3.6 million grant from the National Institutes of Health.

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