Argentinean Wine & Restaurants: Reflections on a Catena Asado

Sue and I and our friends Ron and Mary recently attended a sold-out Bodega Catena Zapata wine dinner at Asado Cucina Argentina in Tacoma.  Some people came for the wine, which Daniel McKeown of Catena importer Winebow carefully explained to each table of guests. Others came for the music and dancing, which was simply spectacular. Everyone enjoyed the wonderful food — the menu is shown at the bottom of this post.

Most of the guests were already familiar with Argentinean wine, but I think some were surprised by the range of wines we sampled, including sparking pink  Malbec (the only non-Catena product), Chardonnay, a Malbec from Vista Flores, a gutsy Malbec blended with a bit of Petit Verdot, and a Cabernet Sauvignon that was served with the chocolate course.

Although Argentina is known for Malbec, its signature grape variety, it is not and should not be defined by it. When we visited Argentina a few years ago our friend Andrés Rosberg made a point of showing us just how much the country has to offer beyond Malbec. You can read about our experience here.

The diners clearly enjoyed themselves and I think we all learned a lot. Hopefully this event and others like it will help interest in and sales of Argentinean wine to continue to grow.

The Gaucho Effect: How Malbec Conquered Britain

Restaurants are an important wine sales vector, of course, particularly for wines that need to be hand sold because consumers are not familiar with them. When diners try and enjoy a new wine at the sommelier’s suggestion they may become both continuing customers and also brand ambassadors. That’s why there is so much competition to get on a popular restaurant’s wine list.

But sometimes restaurants can have an even bigger impact. Some say that the rising British interest in Argentinean wines in general and Malbec in particular is due to the efforts of a single restaurant group. For the English to embrace the wines of Argentina is a remarkable event given the turbulent history of relations between the countries in the last century, including the Falklands / Malvinas War and the 1986 “Hand of God” World Cup soccer match.

So I think it was quite a bold move to open an Argentinean steak house in London, but that’s what Gaucho did and now they have 14 restaurants in Britain, have invested in Sucre, a popular eatery in Buenos Aires and opened a Gaucho outpost in Dubai. The Gaucho wine list includes more than 200 different wines from Argentina and is said to be the largest such collection outside of that country.

I haven’t dined at a Gaucho restaurant yet, but I hope to remedy that when I’m in London in November. Gaucho seems to succeed by embracing the whole Argentinean experience — the food, wine, people, culture, history — drawing British diners into the story. Irresistible! And great for Argentina’s wine industry.

But wait — there’s more. They have also opened a specialist wine shop in London, Cavas de Gaucho, to promote the wines of Argentina. They purchased a small vineyard with 80-year old vines in Lunlunta, Mendoza and started their own winery, Viña Patricia, which supplies the restaurant group.  Gaucho also sponsors a widely publicized winemaker award in association with Wines of Argentina.

The total “Gaucho Effect” is very important — it shows the story-telling (and selling!) power of restaurants that bring together wine, food and culture in a way that captures consumer imagination.

Argentina’s Upbeat Future

I used the occasion of the Catena wine dinner to contact Laura Catena, who was just back from Florence and shared a nice story, which was appropriately set in a restaurant. She was dining with some members of the Italian wine industry, enjoying fine Italian food and wine, when she brought out a bottle of Nicolas Catena Zapata 2002 — her winery’s flagship Cabernet – Malbec blend. The Italians were blown away by the wine, she wrote — completely unprepared for the idea that a wine of such elegance could come from far-away Argentina.

I asked Laura about the state of the Argentinean wine industry and she was very upbeat. There are problems, of course, especially with domestic politics and the economy, but all of the elements are there for success, especially in export markets now that the Peso has weakened a bit. Former Central Bank chief Alfonso Prat Gay recently proposed that Argentina would rapidly emerge from its malaise once a new government is elected in October 2015. “Short pain, long gain,” he said, which would be good news for Argentinean wine.

I hope that Laura Catena and  Alfonso Prat Gay are right — Argentina could certainly use some good economic news. Once the country’s political and economic policies are on track, the wine industry seems poised to advance.  Argentina has distinctive terroirs, which many wineries including especially Catena are now highlighting in their wines. And as Laura said,  Malbec continues to be hugely popular because it tastes so good. And then there is diversity …

There are many other varietals that do well in Argentina – chardonnay (we recently received 96 points from Parker for our white Stones Catena Zapata chardonnay), syrah, red blends, torrontes, bonarda, cabernet sauvignon +++ (many Argentines prefer cab to malbec or the blend) and the future holds all these new varieties as well as consumers discovering the high end, the ageability, collectibility (our Estiba Reservada Catena Zapata was recently ranked by wine searcher as one of the 50 most expensive wines in the world.)

Sustaining the Boom

I love Malbec and I am one of those who thinks that Cabernet and Cab-Malbec blends (and Syrah, too) have great potential in Argentina. Argentina remains a hot wine category in the United States (along with New Zealand).

How do you sustain such a boom? Obviously quality and value must be present in each glass, but you must also tell the right stories in the right ways to engage consumers and renew their interest.  Wine dinners like the one we attended at Asado (and Laura’s dinner in Florence and the Gaucho Effect in Britain) are an important part of this process.

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Stein’s Law and the Coming Crisis in Argentinean Wine

Stein’s Law, named for famed economist Herbert Stein, holds that if something cannot go on forever it will stop.  Unsustainable trends ultimately yield to the inevitable in one way or another.

Stein’s Law seems to be simply stating the obvious, but you would be surprised how many people find a way to ignore the obvious when it is in their interest to do so.  As Upton Sinclair wrote, “It is difficult to get a man to understand something if his salary depends on his not understanding it.”

Argentina’s Inflation Problem

And so we consider the case of the Argentinean wine industry. It’s not just the wine sector, of course, it’s the whole Argentinean economy, but wine is especially affected.  Something’s going to happen according to Stein’s Law, because it can’t go on forever as it has up to now, but it is hard to know exactly what.

The problem begins with Argentina’s high inflation rate. The official statistic puts the annual increase in consumer prices at around 10%, but this number is viewed with disbelief by the international economic community. The Economist magazine quit publishing the official figure in 2012, saying “Don’t lie to me, Argentina” to the officials there. The most commonly cited estimate of the actual inflation rate is 25% per year.

Inflation is a sensitive political issue in Argentina as it is in every country that has ever experienced a hyperinflation crisis (think Germany, for example). Some in Argentina go to great lengths to deny the obvious reality of inflation.

The story (which may be true) is told about a McDonalds restaurant in Buenos Aires that displayed all the usual products on its big backlit menu board except the signature Big Mac. Where’s the Big Mac? Oh, we have that price hidden around the corner so that no one will see it — especially the people from The Economist magazine who use it to estimate the purchasing power of the peso in their Burgernomics index!

Inflationary Squeeze

As a recent article on The Drinks Business website suggests, high inflation is putting the squeeze on Argentina’s wine producers. (The squeeze is made worse,  I understand, by government policies that restrict imports of products used in wine production as part of a general policy to control foreign exchange reserves). Production costs (grapes, labor, etc.) may have doubled over the past four years, putting a squeeze on margins.

It is difficult to pass these peso costs along to consumers in the U.S., Canada, the U.K. and Brazil, the main export markets. Consumers are price sensitive and while the average export price of  varietal Cabernet and Merlot wines have risen by 7.2% and 24.8% respectively in the past year, this provides only limited relief from rising costs since Malbec takes the lion’s share of the export market and its dollar export price has risen by just 1% in the last year and by an average of only 2.8% per year since 2009.

Purchasing Power Inaction

The textbook remedy to this situation is for the foreign exchange value of the peso to fall to achieve what economists call Purchasing Power Parity. In a system of market determined exchange rates, according to the PPP theory, a 25% fall in the domestic purchasing power of the peso due to inflation should result in a 25% decrease in its foreign exchange value.

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And indeed the peso has depreciated, but not by nearly enough to overcome the inflation difference between Argentina and the four main export markets. The peso has fallen in value by about 20% in the last two years, if we look at the official exchange rate, so each dollar of export earnings brings in more pesos,  but inflation-driven peso costs have increased by much more.  That puts a real squeeze on margins. This can’t go on forever — something has to give.

[I'm told that the black market exchange rate is 8 pesos per U.S. dollar, far below the official rate of about 5 per dollar. Such a big differential is often an indicator of crisis to come.]

Something’s Gotta Give

What happens when a country gets itself caught in a squeeze like this? Well, the conventional wisdom is there needs to be a sharp currency devaluation followed by monetary tightening to control inflation. This is a painful process and Argentina has been through it before. What if the government ignores the conventional wisdom? Internal adjustment must eventually take place to restore competitiveness if external adjustment through the exchange rate is ruled out.

A recent Wall Street Journal article about real estate prices in Buenos Aires shows one pattern of adjustment. The dollar prices of luxury apartments have tumbled as owners seek to cash out of their real estate investments and buy into the more credible U.S. currency.  The WSJ reports that

In May last year, Argentine President Christina Kirchner strictly limited access to U.S. dollars and other foreign currencies in a bid to stem capital flight. With the Argentine peso facing about 25% annual inflation (government figures, widely discredited, set the rate much lower), and an unofficial exchange rate that has effectively devalued the peso sharply, demand is high for dollars.

These days, the main feature that foreign buyers say they look for in a Buenos Aires property has nothing to do with closet space or a wide terrace. It is a seller with a bank account outside Argentina to which they can legally wire funds. This is a way to get around having to convert any dollars wired into Argentina into pesos at the official rate, after which it is nearly impossible to convert back into dollars at the official rate.

Something will have to give in the wine industry, too, if the exchange rate doesn’t adjust and the currency controls continue. In the meantime, I think every effort is being made to control costs and to keep margins out of the red. But, as Herb Stein might say, this can’t go on forever so somehow it will stop.

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Herbert Stein may be best known today as father of Ben Stein, the actor, law professor, and columnist, but he was ever so much more famous in his day as a chairman of the president’s council of economic advisers

Little known fact: the Pabst beer company held an economics competition in 1944 (the year of the Bretton Woods conference)  for the best plan to sustain high employment in the post-war era. Herb Stein’s plan was named the winner from among the more than 36,000 entries. He was 28 years old and the prize was $25,000 — the equivalent of $330,000 today.

Boom Varietal: Film Festival Update

Boom Varietal: The Rise of Argentine Malbec, a documentary film produced by Kirk Ermisch and directed by Sky Pinnick, had its world premier last fall and has been on the independent film festival circuit since then, where it has earned several awards.

Boom Varietal is coming to the Seattle-Tacoma area in October as part of the Tacoma Film Festival. Local wine enthusiasts should make plans to attend the screening at 2pm on Saturday October 6 at the grand old Grand Cinema in Tacoma.

Boom Varietal is one of those films that seems to stimulate all your senses (and Kirk aims to make this literally true with a Malbec tasting and discussion after the film). It is certainly visually stunning with a beautiful soundtrack by Franchot Tone. And the story line should appeal to Wine Economist readers, too.

The tale of Malbec’s rise is about nature, history, people, passion and of course business — and that’s where I come in. I appear at several points in the film to sort of connect the dots. I was quite surprised by the amount of screen time I had when I first saw the film, but I guess it is an indication of how important economics is the world of wine today and how money connects people almost as well as wine!

I’ll be at the screening on October 6 — hope to see you there! Cheers!

Watch for Boom Varietal at these upcoming film festivals

Montana CINE International Film Festival 10/17-23
Rivers Edge International Film Festival 11/1-4
Napa Valley Film Festival 11/7-11

Story Hour at the Wine Bloggers’ Conference

We are just back from the 2012 Wine Bloggers’ Conference, which was held this year in Portland, Oregon. It was a big event, with a sell-out 350 registered participants and about 40 more on the wait list hoping to get in. Randall Grahm gave one of the keynote addresses and Rex Pickett (author of Sideways and Vertical) gave the other. I was a moderator in a wine blogging workshop.

It was great to meet so many wine bloggers and to get a personal sense of the vast virtual community of wine enthusiasts who read, write and comment on the web.

Beyond Hegemony?

The conventional wisdom is that the days of traditional media’s hegemony in the world of wine are numbered (if not already passed) and that younger wine enthusiasts will increasingly draw their influences from social media (blogs, Facebook, Twitter and so on) and not Robert Parker or Wine Spectator.  The future of wine media might not be blogging, according to this viewpoint,  but wine blogs are part of the evolutionary process.

No one really knows if this is true or not, of course, and many wine bloggers secretly suspect that their readership is made up mainly of other wine bloggers. But the theory is just plausible enough to make wine blogging and a big conference like this difficult for the wine industry to ignore. So I was interested to see who would show up to try to develop relationships with the wine bloggers and how they’d go about it.

The list of wine industry groups in Portland is quite long. Here, for example, is a list of the official sponsors. And then there were other industry groups, wine producers, public relations firms and individual  Oregon wineries who had hospitality suites or organized pre- or post-conference events.

Grand Sponsors

Premier Sponsors

International Wine Night

Event Sponsors

Partners

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Story Hour: High Oregon Art

Why did all these industry groups converge around the bloggers? Well, people might think that the wine business is about bottles and corks (and it is to be sure), but it is really about relationships and, more than that, it’s about story-telling. The wineries, wine businesses and regional wine groups were in Portland to tell their stories to the story-tellers and then hope that the message would spread. The fact that they would invest not insignificant resources to be at the conference says something about the importance of relationships and narratives in the wine business.

There are lots of ways to tell a story and some were certainly more successful than others. The Oregon wine industry did an excellent job by embedding their wines firmly in the culture of the region, giving the bloggers a sense of the values that the wines are meant to represent.

I’ve inserted above the short video that King Estate produced to be shown at the awards banquet, which they sponsored. It gives a good impression of the Oregon story generally as well as the particular philosophy of the King Estate family. Take this as an example of the high art of wine story telling (even though the wine itself plays only a cameo role in the video).

You can only imagine how effective it was when the video, which introduced the faces, places and values, was followed by the actual food and wine and the real people who made them. It and the other messages that Oregon producers and the Oregon Wine Board scripted cannot but have left a strong impression on the attendees. Bravo.

Rich Narratives: Wine Story Tasting Notes

Winebow, an important wine importer and distributor, also showed great story telling skills. Winebow’s sessions showed off two faces of their import portfolio very effectively.

The first program focused on the wines of Argentina (they import several brands including Bodega Catena Zapata and Bodegas Nieto Senetiner). Each wine was paired with a tasty bite and a story about the wine and food of the region. The variety of Argentinean wine was showcased along with the food and even the culture (we were treated to Tango dancers). The combination encouraged us to slow down and listen, think and talk about the wines and the country. If the story is that yes, Argentina is Malbec and steak (and this is a wonderful combination), but it is also much more, then I think it was told very well indeed.

The second Winebow session was about “Off the Beaten Path” wines and it showed off the depth of Winebow’s portfolio. I think it was my favorite part of the conference. Sheri Sauter Morano MW led us in a tasting of  seven wines that most of us had never tasted before and that many consumers would hesitate to try because of their unfamiliar names or place of origin. As I have written before, wine is ironically one of the least transparent everyday products and the uncertainty about what is in the bottle is a limiting factor in wine sales and wine enjoyment.

Sheri focused on the story-telling aspect. She had us taste the wines “blind” and asked us to think about how we would describe them and tell their stories to readers. What reference points (in terms of more familiar wines or other qualities) could we use and how might we distinguish their signal qualities? The “reveal” provided additional information about each wine and challenged us: How could we tell the wines’ stories in a way that would resonate with readers and allow them to have the same interesting and enjoyable wine experience? I thought this was a brilliant approach and I hope some of the bloggers embrace it to introduce their readers to new wine varieties and regions.

Food Truck Wine?

Wines of Chile is another skilled story-teller. I have worked with them on several projects and have always been impressed with their commitment to developing their brand message and their focus on social media strategies. They invited us to a participate in a pre-conference tasting that was a sort of moveable feast. About 20 of us boarded a double-decker London bus and visited three local venues (including an iconic Portland gourmet food truck cluster) where small plates of food were paired with particular Chilean wines. It was a very effective way to feature the wines and an opportunity  to provide detailed and relevant information.

Taking all of the events together, including pre- and post-conference events and the chaotic “live-blogging” tasting events, I think most  New World and Old World wine regions were represented in one way or another. Who has missing? I’m not sure I saw any wines or literature from either Austria or South Africa but I admit they could have been there and I just missed them. And of course if would be impossible for all the different wine regions of France, Italy  or Spain to be present, but the national industries were well represented by the groups that did attend.

Bloggers need stories to tell and the wine industry needs story-tellers. No wonder everyone got on so well together at this conference.

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Thanks to all the sponsors who made the Wine Bloggers’ Conference possible. For more information I recommend Tom Wark’s  assessment of the conference. I agree with Tom about most things, especially the value of real person-to-person face-time versus Facebook and Twitter.

Malbec & Maradona: Wine and History in Argentina

Ian Mount, The Vineyard at the End of the World: Maverick Winemakers and the Rebirth of Malbec. Norton: 2011.

Malbec and Maradona

The most stunningly creative student paper I’ve received in more than 30 years as a college professor was written by a first year student enrolled in my introductory International Political Economy class. We were studying Argentina’s latest financial crisis and she analyzed the situation not just through facts and figures but rather by telling the story of Diego Maradona, the legendary soccer player who achieved great success on the global stage but succumbed to the pressures, stresses and temptations that came with it.

Maradona is always measured against Pele, the Brazilian star who is often proclaimed the greatest soccer player in history, and every talented young Argentinean forward is compared to  him (Messi is only the latest “next Maradona”). But an air of tragedy is unmistakable despite Maradona’s heroic achievements. This same air, my student wrote, hangs over Argentina’s politics and economy, and then she proceeded to analyze Argentina’s political economy history in detail in  terms of the Maradona story. It was, in both conception and execution, a brilliant analysis.

Ian Mount’s new book on Argentinean wine, The Vineyard at the End of the World, is also brilliant and in much the same way. Like my student’s paper, it can be read at several levels. It is, first and foremost, a history of the Argentinean wine industry from its roots with the Spanish explorers to its current spectacular flowering.

Although Argentina has been a major wine producer for literally centuries, it has only arrived on the global stage in the last ten years. Within Argentina its long history is heavy baggage that sometimes weighs it down. For the rest of the world, however, Argentina is a new discovery and the lack of prior experience of and attitudes toward its wines has arguably been an advantage.

Mount fills us in on the history and serious readers will appreciate the added depth this gives to the appreciation of the wines themselves. It also provides an interesting contrast to neighboring Chile and its wines, whose history is perhaps better known. But that’s only the beginning.

 Lucky Survivors

Malbec is a second theme, which is understandable because Malbec is king in Argentina right now. Malbec from Argentina has been one of the hottest product categories in the U.S. wine market is the past few years. But today’s Malbec (like Maradona) is a lucky survivor of Argentina’s booms and busts – a lot of Malbec was grubbed up during the market swings and swirls. It makes me appreciate wines (like one of our favorites, Mendel Malbec) that are made from the surviving old vine blocks.

More than anything, however, this is a history of Argentina itself told through wine, making this a book that deserves a very broad readership. Based on my previous research, I knew that Argentina’s politics and economics were reflected in the wine industry, but I didn’t know how much. Come for the Malbec, stay for the politics, economics and personal stories of those who succeeded or failed (or did both) and try to understand the country and people of Argentina.

Significantly, the book ends with a sort of Maradona moment. In terms of wine, Argentina has won the World Cup with Malbec, although the country must share the glory with international consultants (like Paul Hobbs and Michel Rolland) and foreign investors and partners (too numerous to mention). But for all its strengths the industry is still somewhat fragile, struggling to overcome the problems of the domestic wine market that it still depends upon and the domestic economy in which it is embedded.

After decades of “crisis and glory,” Mount sees a  bright future for both Malbec and Argentina. Let’s hope he’s right and the Maradona moment passes.

Ian Mount’s new book is a valuable addition to any wine enthusiast’s library. Mount provides a strong sense of the land and people of Argentina and the flow of history that connects them. Argentina is unique, as Mount notes early on, in that it is an Old World wine country (in terms of the nature of its wine culture) set in the New World, so that its history is broadly relevant and deeply interesting.

I studied the Argentina industry before going there last year, but Mount taught me things I didn’t know in every chapter. I love Laura Catena’s Vino Argentino for its account of the history of wine in Argentina told through the Catena family story and now I’m glad to also have The Vineyard at the End of the World for its broad sweep and detailed analysis. They are must reading for anyone with an interest in Argentina and its wines.

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Another Malbec-Maradona connection: Diego Maradona is most famous for a play that has gone down in soccer history as “the Hand of God” goal.  It was in a 1986 World Cup quarterfinal match that Maradona illegally struck the ball with his hand and scored the winning goal – an offense that was clearly visible to everyone in the stadium except the officials. Must have been the Hand of God, not Maradona, I guess.

Now (or very soon depending upon the release date) there is  Hand of God wine. We tasted Hand of God from the barrel when we were in Mendoza earlier in the year and we enjoyed the wine even if Maradona had nothing to do with making it. I suppose the name honors the importance of wine and soccer to Argentinean society and the struggles that both have endured. (Maradona’s team beat England in that famous game, so I wouldn’t look for big Hand of God wine sales in the U.K. market. Just saying …)

Special thanks to Jon Staenberg (proprietor of  Hand of God) and Santiago Achaval for letting us sample this wine!

Malbec: The Film! [A World Premier]

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Boom Varietal: The Rise of Argentine Malbec. A film by Sky Pinnick (Kirk Ermisch, executive producer). “Southern Wine Group presents a Rage Productions documentary,” 2011.

We are just back from the BendFilm Festival in Bend, Oregon — an unlikely trip for a guy who sees about one new movie a year. The special occasion? The world premier of a documentary about the Malbec boom, Boom Varietal by filmmaker Sky Pinnick.

Simply Irresistible?

A film? About wine?. How could I resist?

Well, actually I might have been able to resist driving 6 hours from Tacoma to Bend for the premier since the track record for wine films is so mixed. Mondovino is a classic, of course, but it sure is long (or does it just seem that way while you’re watching it?) and it’s kinda annoying, too? So damn earnest! (“Le vin est mort” and all that.)

Then there’s Bottleshock, the film that’s loosely based on the famous “Judgment of Paris” tasting of French versus California wines in 1976. The film is a lot of fun (the opposite of Mondo?) but just as annoying since almost every single detail is distorted for dramatic effect or commercial purpose. The best way to watch Bottleshock is to forget that there really was a Paris tasting and enjoy the pure theater of the thing.

A Feast for the Senses

So which way would Boom Varietal go — earnest but annoying like Mondo or annoyingly commercial like Bottleshock?

Well, incredibly it is not annoying at all. In fact, it is completely enchanting. The first five minutes are a feast for the senses. The film captivated me, drawing me into the world of Malbec and the people and places associated with it.

The land and people of Argentina are the stars of this film, especially the winemakers. Executive producer Kirk Ermisch, CEO of Southern Wine Group, no doubt used his industry connections in Argentina to make the film possible, but he commendably resisted the temptation to make this a promotion piece for his business.

Typecasting? Dismal Scientist?

I went to Bend knowing that I had a bit part in the film. Sky and his wife and collaborator Shea Pinnick interviewed me me in my office last spring as they were trying to stitch together the video pieces to tell a coherent story. I’ve been writing about Argentinean Malbec for several years and obviously worrying about its future. My role, I thought, was to be the classic “dismal scientist” and wonder aloud if today’s silver lining isn’t really surrounded by a deep dark cloud. And that’s what it seemed to be when I viewed the film’s “teaser” (see above) a couple of weeks ago.

So imagine my surprise as I watched the film for the first time. I wasn’t dismal at all! Sky was able to capture my enthusiasm for Argentina and Malbec and my cautious optimism about its future in the world of wine. If Argentina’s Malbec industry falters (and that’s always  a possibility in this uncertain world) I think it will be because of factors that are beyond the control of the winemakers — especially inflation and exchange rates.

I was also surprised to see myself on the screen so frequently. I think this is because Boom Varietal tells the story of the land, the people and the markets. A wine economics story! No wonder I had such a good time at the premier.

Beyond Malbec Boom?

I enjoyed this film and even learned a few things from it, but I had to keep reminding myself that this is a film about Malbec, not Argentinean wine more generally. Although the focus on Malbec is understandable and even appropriate for a U.S. audience (Malbec represents abut 2/3 of Argentina’s wine exports to the U.S.), one thing I learned from our trip to Mendoza earlier this year is that Argentina is Malbec, but not just Malbec.

If Malbec boom becomes Malbec bust (and I’m not predicting it will), then Argentina will be glad that it produces many other fine  wines, both red and white. Search for Argentina among the Decanter World Wine Awards results and you will see what I mean. Maybe what lies beyond Malbec boom is not Malbec bust but a growing appreciate of Argentinean wine more generally.

But whatever happens I think Argentina will be thankful that Malbec vaulted them onto the world stage in the first place. An incredible story! Thanks to the makers of Boom Varietal for telling it so well.

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Thanks to Sky and Shea Pinnick and to Kirk Ermisch for their hospitality while we were in Bend and for inviting me to participate in this project in the first place. I wish them every success with their project.

Grape Transformations: Mondavi and Catena

Karl Polanyi’s classic 1944 book, The Great Transformation presented a theory of how the Industrial Revolution transformed much the world. Polanyi proposed a complex paradigm of acting (economy and technology) and reacting (politics and social movements) forces that combined to shape history.  It is a must read (but not always an easy one) if you are  looking for Big Ideas in an era of disruptive change.

This Changes Everything

I’m working on my own theory of  “Grape Transformations,” which will be an occasional series here at The Wine Economist. I’m not interested in fads and trends. I want to understand instances where a person or small group fundamentally changed the nature of wine or the way that a type of wine or wine region is perceived.

Jesus is at the top of my list, of course, since he changed water into wine, the ultimate grape transformation. And there is a reason that we call think of this as a miracle. As the always insightful Ken Bernsohn reminds me, inertia is a very strong force in the world of wine (and elsewhere). This is obviously true in the vineyard itself, where years are required to “turn the supertanker” from one grape variety to another. It is also true in the marketplace, where a visible iceberg of wine drinkers interested in trying new things sits atop an invisible bulk of consumers with preferences and habits that are frozen in place (most of them drink no wine at all).

So it really is a miracle (although not in the “fishes and loaves” class) when wine makes a big turn. What are some important examples for my Grape Transformations file?

The Julia Child of Wine

Julia and the Mondavis at the Smithsonian

Let me begin with Robert Mondavi, if only because I discuss his case at some length in Wine Wars. Here’s how the section on Mondavi begins …

I like to say that Robert Mondavi tried to do for American wine what Julia Child (public television’s “French Chef”) tried to do for American cuisine: revolutionize it by convincing Americans that they could not just imitate the French but maybe better them at their own game.

Julia Child succeeded, although not by herself of course. American cuisine was transformed by her books and The French Chef, which aired from 1963 to 1973. She changed the idea of food in America. American ingredients, French techniques. Bring them together and cooks could be chefs.

Robert Mondavi did the same thing for wine. He was convinced that American grapes and Old World techniques could produced world-class wines. And he was right. When the Robert Mondavi Winery opened in Oakville in 1966, it was the first major new investment in Napa Valley in decades and it changed everything (not by itself, of course) and paved the way for a distinctly American vision of fine wine that coexists today along with a Gallo-tinted image of mass-market wines.

Mondavi wasn’t alone and he didn’t do it by himself, but I think it is fair to associate Robert Mondavi with the Grape Transformation of American wine. Quite an accomplishment.

The Mondavi of Mendoza

I think of Nicolas Catena as the Robert Mondavi of Mendoza, although I admit that the similarities only go so far. Catena transformation of Argentina’s wine industry is perhaps even more significant because previous winemaking baseline was so low.  Laura Catena tells the story in a very personal way in her excellent book, Vino Argentino. She explains how and why Argentinean wine changed in terms of her family history.

A broader and more detailed account is due for publication in a few months — Ian Mount’s brilliant The Vineyard at the End of the World (I’ve just finished reading an advance copy — watch for a review here nearer the publication date). Placing Nicolas Catena’s accomplishments in a broader context, as Mount does, changes the Catena story a bit and raises new questions, but does not alter our view of the transformative force he helped launch.

I admit to prejudice in this matter because of the courtesy we were shown when we visited Mendoza and visited with Catena and Luca (Laura Catena’s project) winemakers. Nicolas Catena has a PhD in economics and was a visiting professor at UC Berkeley when visits to Napa winemakers (and a meeting with Mondavi) transformed his idea of what New World wine could be. It was a special treat when, during our winery visit, I was given the opportunity to browse for just a moment through Catena’s personal collection of economics texts.

No Plan B

Accept for the sake of argument that Mondavi and Catena belong on the Grape Transformations list. What can we learn generally from their two specific cases? Something, I think, but n=2 is a small sample size so we shouldn’t press too hard. Robert Mondavi and Nicolas Catena have little in common in terms of personality from what I have read. Catena seems be as pensive as Mondavi was outgoing. Both were driven, I suppose, and perhaps that’s the critical factor.

Both took big risks and that seems like an important characteristic. And I think that they both felt that they had little choice but to take risks, although for different reasons and from different perspectives. Mondavi left the family business and forged out on his own relatively late in life. He didn’t have a Plan B — his new winery had to succeed.

Nicolas Catena, on the other hand, unexpectedly ended up with the family business (ruining his plans for an academic career). But Argentina’s wine markets were in a funk — export was the only route open and he (and those who worked for and with him) had no choice but to remake the wine and the business if they were to avoid collapse. No Plan B here, either.

Finally, it is interesting that family is such as powerful theme in both stories, too, and this is something I will try to explore a bit more in future posts. In both cases the transformations that they led began as internal revolutions, dramatic changes within the family way of doing business, and rapidly spread outward.

The family theme continues today. Laura Catena is now the face of the family business even though she still maintains her “day job” as an ER doctor in the San Francisco area where her family lives.  The Mondavi sons carry on the family business tradition, but not of course the actually family business — Constellation Brands purchased the Robert Mondavi brand back in 2005.

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I have a couple of “Grape Transformation” stories in mind that I will share in future posts. In the meantime, I hope my readers will use the Comments link to give their thought on this idea and suggest names for the list of people who changed the idea of wine.

Malbec World Day 2011

The first Malbec World Day is Sunday, April 17, 2011 and we are gearing up for it here at The Wine Economist. Plans include juicy steak and fresh asparagus along with a bottle of Malbec from Argentina.

But which one? We tasted many wonderful wines during our recent trip to Argentina and each one provokes a memory. Difficult to choose.  I went down into the cellar and grabbed a handful of likely suspects and asked Sue to make the choice.

Remembering the Alamos

Wine is good, but wine and a story (if it is the right story) is much better. That’s one reason people spend time and money on wine tourism — to get the story behind the wines and meet the people involved in their creation. In the end, Sue’s selection for Malbec World Day was all about the story.

The Alamos Selection Malbec (far right in the photo) reminds us of a dinner in Buenos Aires with our friends Scott and Janice. The parrilla’s gruff waiter grew impatient with our attempts to navigate his menu, so he just threw it away and got us to tell him what we wanted. Then he sorta threw that away too and, inspired by what the grill master did best, covered the table family-style with just what we would have ordered in the first place if we only knew how to do it. He recommended the Alamos and we went with that and were not disappointed.

OK, so maybe he was not so grumpy after all.

The Alamos story is wonderful to remember, but is it our celebration wine? No. Not because of the wine, but because of the story, which is more about our grumpy but lovable waiter and the delicious experience he provided and not quite enough about Malbec wine.

Catena Zapata?

Next up is the Catena Malbec. It conjures up the memory of our visit to Bodega Catena Zapata, which Laura Catena was kind enough to arrange for us. It was a memorable experience that included tastings of both the Luca and Catena Zapata wines with their respective winemakers. The Malbecs and other wines we tasted that day were among the very best we had in Mendoza (or probably ever will have anywhere).

So is the Catena the choice? No, but only because we might rather have a Luca wine, since that is Laura Catena’s personal winery and we owe her so much for helping us with our visit. The only Luca wine in the cellar right now is the Beso de Dante, which is a Malbec blend. As good as it is, perhaps we need a pure Malbec to celebrate its world day.

Maybe Mendel?

The Mendel Malbec is a different story. Sue was originally drawn to this winery because there are Mendels in the family and she thought we might be related. No family connection, alas, but our visits with owners Anabelle Sielecki (in Buenos Aires) and Roberto de la Mota (in Mendoza) were very warm and helpful. We learned so much through them about both Mendel wines and also the economics, politics, wine and people of Argentina.

So it this Sue’s choice? No, she said. The wine is great and the meetings unforgettable, but the story is too personal for an “official” holiday like Malbec World Day. Save the Mendel for birthdays and anniversaries. Hard to argue with that sentiment.

So that leaves the Achaval-Ferrer as Sue’s Malbec Day choice — but not by default. The story of our visit to this winery is, more than any of the others, about the wine itself and so the perfect choice for this celebration.

An Intense Experience

The tasting begins: Sue took this photo of Julian, Mike, Scott & Janice at Achaval-Ferrer.

Santiago Achaval was called away to the U.S. for a marketing meeting (something we obviously understand here at The Wine Economist), so his assistant Julian organized a special tasting for us where we sampled each of their Malbec wines from both barrel and bottle and then tasted each of the component wines of the Quimera blend alongside the finished wine. Visitors stared at us in wonder as the table filled with bottles and glasses.

As a special treat, Santiago had arranged for us to taste barrel samples of the Hand of God wine that he is making in partnership with Jon Staenberg (who kindly introduced me to Santiago for the purpose of this visit). This made the visit all the more memorable.

I cannot imagine a more intense examination of Argentinean Malbec terroir, which makes the Achaval-Ferrer our perfect wine for this year’s Malbec World Day celebration!

Is Malbec Washington’s Next Big Thing?

Celebrate! April 17 is Malbec World Day

Every year Seattle magazine publishes a list of Washington’s top wines and wineries and identifies an “emerging” wine variety to highlight and promote. This year it was Grenache and there are some great Grenache and Southern Rhone-style Grenache-blend wines made in Washington state, so I think this was a good choice. The wines we sampled at the Taste Washington Grenache seminar were delicious (see list at the end of the post).

The Big Freeze

But Grenache, as good as it can be here, is probably pretty far down the list in the search for The Next Big Thing in Washington wine. There is only a tiny bit of it planted and I don’t think there are any “old vines” left (old vine Grenache is said to produce more complex wines). Grenache was more widely planted in Washington wine’s early days, but the vines didn’t survive the hard winters that strike the Columbia Valley every few years. Now, with greater attention to vineyard location and management practices, Grenache is making a welcome comeback.

Grenache is an up-and-comer and there are great wines being made already,  but as it is probably best viewed as the Next Next or Next Next Next Big Thing until more and older vines are on line.

But what about Malbec?

When you say Malbec everyone thinks Argentina and, since I’ve recently returned from doing fieldwork in Mendoza, naturally so do I. But what about Washington Malbec? Seattle magazine named it their hot wine variety in 2009 and so I decided to use this year’s Taste Washington event to evaluate the Malbec status quo. (Click here to view a video of last year’s Taste Washington Malbec seminar.)

Mendoza del Norte?

Argentina makes distinctive Malbec wine and there is good reason to think Malbec might do well here in Washington, too. Mendoza and the Columbia Valley are both basically deserts (the Andes and Cascade mountains respectively provide rain shadow effects) where irrigation is a necessity. Both areas get plenty of sunlight although I think vineyard elevations are higher down south.

There are many patches of Malbec planted in AVAs from Lake Chelan to Yakima Valley to Snipes Mountain, Red Mountain and Walla Walla. Statistically Malbec is the fifth most-planted black grape variety after Cabernet Sauvignon, Merlot, Syrah and Cab Franc and ahead of Sangiovese, Pinot Noir and Lemberger (according to Washington Wine Commission data).

The vines are relatively young, reflecting Washington’s comparative youth as a quality wine producer. Most of the wines I tasted were made with grapes from roughly 10 year old vines, but I know there have been recent plantings that should begin to appear in forthcoming wine releases.  Argentina has some old vine Malbec (80 years and more) in Luján de Cujo, but a lot of the vineyards (especially those in the Uco Valley) are about the same age as Washington’s.

When I ask Washington winemakers why they started making varietal Malbec they usually say that it was because the wine was too good to hide in a blend and, while I don’t dispute this, I suspect Argentinean Malbec’s market success did not unnoticed.

Malbec was originally planted here to use as a blending grape — Malbec is one of the five classic Bordeaux varietals along with Cabernet Sauvignon, Merlot, Cab Franc and Petit Verdot. Seven Hills released a what I think was the first varietal Malbec (from very young vines) in 2001, but most other makers restricted it to blends until more recently.

Price and Cost Differences

If Washington and Argentina share certain aspects of geography, they differ tremendously in terms of production cost and retail price. There are precious few Washington Malbecs below the $20 price point. The most frequently observed Malbec price at Taste Washington was $28 and many more were priced above than below this figure. Reininger’s 2007 Walla Walla bottling was the highest priced Malbec on the published listing at $51 and I think that the Eliseo Silva was the cheapest at a listed $10.

Argentinean Malbecs can be found at all price points from about $10 up, but they are biggest in the sub-$20 arena. In other words, Washington and Mendoza compete in the Malbec market, but exactly not head-to-head.

Cost differences account for some of the price difference. Malbec is in short supply at the moment in Washington (only 1100 tons were crushed in 2010 compared with 31,900 of Cab Sauv). Malbec is Washington’s most expensive wine grape according to USDA average price data. Malbec cost $1,540 per ton on average in 2010, putting it ahead of Cab Franc ($1,325) and Cabernet Sauvignon ($1,297).

Malbec is in short supply in Argentina, too, but land and labor costs are a lot less there. High quality Malbec costs 5-6 pesos per kilo in Argentina these days and good quality costs 4 pesos (both figures have risen significantly in the last two years).  At an exchange rate of 4 pesos per dollar and figuring 5 pesos per kilo, that converts to about $1100+ per ton, a lot less than in Washington.

Taste Washington Malbec

There was a lot of Malbec at Taste Washington, mostly from small producers.  Nineteen wineries listed Malbec on the program but I think there may be nearly 100 different Malbecs made in this state by the 700+ large and small registered wineries.

I am not an expert wine taster (which is why you won’t find wine ratings on this website), but I sampled enough quality Malbec in Argentina to begin to understand it a little. In general I found the Malbecs at Taste Washington to be very good representations of the varietal, with well integrated oak in most cases, and able to reflect the different vineyard terroirs. I think they compete very well with the Mendoza wines in the same price ranges, which is a high complement.

My favorites, for what it is worth, were from Fidelitas, Gamache, Hamilton Cellars, Nefarious, Reininger, Saviah and William Church. Special marks go to Hamilton Cellars for making Malbec in three styles: Rose, straight Malbec and a Malbec-heavy Bordeaux blend.

So is Malbec Washington’s Next Big Thing? Not yet — not until there are more vines on line and Chateau Ste. Michelle or  Columbia Crest get into the market and help develop it. Interestingly, Columbia Crest’s newly-appointed chief winemaker, Juan Muñoz Oca,  is Argentinean and Columbia Crest recently released it’s first Malbec — maybe that’s a sign! I’m looking forward to finding out.

Cost is still a big issue and perhaps Washington cannot compete with Argentina at the key price points. But in terms of quality? Yes, it could happen. Malbec could be Washington’s NBT.

[Thanks to Sean Sullivan and Guillermo Banfi for help tracking down Malbec grape prices in Washington and Argentina respectively.

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Taste Washington Seminars: Washington’s Emerging Varieties: Grenache Panache
Presented by Seattle Magazine

The rising popularity of this new-to-the-Washington-scene grape variety in recent times is a boon for wine drinkers.  Seattle Magazine recognizes that Washington State’s offerings with this amazing grape are truly delicious, having awarded it Best Emerging Varietal in their 2010 Best of Washington Wine Awards. Bob Betz MW, an admitted Grenache fiend, will join Seattle Mag’s wine columnist Shannon Borg and an esteemed panel as they help you discover why our region’s Grenache offerings are fast becoming some of the New World’s most distinctive and respected.

Moderator:
Bob Betz MW (Betz Family Winery)
Panelists:
Shannon Borg (Seattle Magazine)
Brian Carter (Brian Carter Cellars)
Sara Schneider (Sunset Magazine)
Sean Sullivan (Washington Wine Report)
Wines:
2008 Milbrandt Vineyards “The Estates” Grenache, WS $25
2009 Maison Bleue “La Montagnette – Upland Vineyard” Grenache, SM $35
2008 Darby Winery “Stillwater Creek Vineyard” Grenache, CV $45
2009 Betz Family Winery “Besoleil” Grenache, YV $50
2007 Brian Carter Cellars “Byzance” Red Wine, CV $30
2008 Syncline Wine Cellars “Cuvée Elena” Red Wine, Columbia Valley $35
2008 Rôtie Cellars “Southern Blend” Red Wine, WA $35

Argentinean Wine: Striking a Balance

Old and New at Mendel Wines

Balance is the key to great wine (and profitable wine business, too). I was reminded of this truth many times during our visit to Mendoza, where wine makers are trying to chart a course between and among several extremes:

  • Competitive export sales versus the challenging domestic market;
  • Reliable value wine sales versus potentially more profitable premium products;
  • Popular and successful Malbec versus TNGT — The (speculative and uncertain) Next Big Thing.

The key to long term success involves finding the right balance in this complex economic environment.

Thinking Global: Anabelle Sielecki

I want to use this post to consider three types of balance that I think are particularly interesting in Mendoza – the balance between crisis and opportunity,  local and international winemaking influences and the simple tension between the old and the new.  We learned about all three dimensions during our brief visit to Mendel Wines in Lujan de Cuyo.

Crisis and Opportunity

Mendel is both very old and quite new.  The vineyards are old, planted in 1928. Somehow these Malbec vines survived the ups and downs of the Argentinean economy. The winery is almost as old and has a certain decaying charm. It stands in stark contrast to Salentein, O. Fournier, the Catena Zapata pyramid and the many other starkly modernist structures that have sprung up in this part of the world.

The winery project is quite new. Mendel is a partnership between Anabelle Sielecki and Roberto de la Mota and is the result of a balance between crisis and opportunity. When economic crisis struck Argentina ten years ago, opportunities were created for those with vision and entrepreneurial spirit. Anabelle and Roberto seized the moment and purchased these old vines and well-worn structures for their new super premium winery project.

That their impulse was timely and wise may not have been obvious at the time (crises are like that), but it is perfectly clear now. Wine Advocate named Mendel one of nine “Best of the Best” Argentinean wineries in a recent issue.[1]

Old and New

The winemaking that goes on in Mendel is also a combination of old and new. The technology is modern, of course, with stainless steel and French oak very visible. The setting, however, constantly reminds you of the past and the vineyard’s and winery’s history. Walking through the winery, for example, I was struck by the big concrete (or were they adobe?) fermenting tanks – a blast from the past for sure.

No, we don’t use them to ferment the wines anymore, Cecilia Albino told us, but we put them to good use. Peek inside. Sure enough, the tanks were filled with oak barrels full of wine aging quietly in the cool environment.

[Interestingly, I saw concrete tanks again during our visit to Achaval Ferrer.  Roberto Cipresso, the winemaker there, built the tanks because he uses them at his winery in Montalcino.]

Mendel also illustrates the balance between local and global that characterizes wine in Argentina, where much of the capital and many of the winemakers come from abroad.  Roberto de la Mota, partner and chief winemaker at Mendel, personifies this balance. Roberto is the son of  Raúl de la Mota, who is sometimes said to be Argentina’s “winemaker of the century” so important was his work in developing quality wine in this country.

Roberto naturally grew up in the wine business both here and in France, where he sought advanced training on the advice of Emile Peynaud. He was the winemaker at Terrazas, Chandon’s still wine project in Mendoza, and then at Cheval des Andes, a winery with connections to Château Cheval Blanc. I think it is fair to say that Roberto’s resume represents a balance between local and global, between deep understanding of Mendoza terroir and knowledge that perhaps only international influences can provide.

Acting Local: Roberto de la Mota

Local and Global

I asked Roberto if it was important that Mendel is an Argentinean project and not owned by a foreign multinational. Yes of course, he said, but he hesitated a bit and I think I see why. Many of the influences and markets are international, but people, vines and inspiration are  purely local. Not one or another, but intertwined, balanced.

And this thirst for a complex balance defines the future. Talking with Anabelle over coffee in Buenos Aires, she was ambitious to break into new markets – Hong Kong, China, and so forth. Anabelle is an architect — another field where global and local intersect.  She is married to Héctor Timmerman, Argentina’s Foreign Minister and former Ambassador to the United States, so her international interest comes naturally.

Meeting with Roberto at the winery in Mendoza, he was interested in learning even more about his vines and terroir so as to better develop their potential. And to bring more of the classic Bordeaux grape varieties (like Petit Verdot) into the mix.

Mendel has charted its balanced course quickly, purposefully and well.  It is a perfect illustration of both the tensions that define wine in Argentina and the potential for success if a clear but balanced path is boldly taken.


[1] The other “Best of the Best” wineries in Wine Advocate issue 192 are Achaval Ferrer, Alta Vista, Catena Zapata, Viña Cobos, Colomé Reserva, Luca, Tikal and Yacochuya.

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