The Wine Economist

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!

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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.

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.

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!

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.

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.

Is Moscato The Next Big Thing (TNBT) in wine? That’s the question Liza B. Zimmerman asks in an article in the March 2011 issue of Wine Business Monthly titled “A New White Zin is in the House.”

Moscato wines sales soared by 91.4 percent by dollar value according to Zimmerman’s article, compared with 4.9 percent overall market growth (Nielsen off-premises survey data for the 52 weeks ending October 16, 2010).  That’s a big surge in sales, albeit from a relatively small base.

Move Over White Zin

Some of the increase probably comes as consumers switch over from White Zin, as the article’s headline suggests. The decline in White Zinfandel sales is accelerating as measured by Nielsen, with a 7.4 percent decrease in the most recent month reported in the same issue of WBM. Since White Zin sales are huge (almost double the sales of Red Zinfandel, for example, and slightly larger than Sauvignon Blanc in the Nielsen rankings), it wouldn’t take many consumers switching from White Zin to Moscato to generate big growth numbers.

Wineries have been quick to respond to the trend. Sutter Home, the White Zin king, has a popular Moscato Alexandria. Robert Mondavi Woodbridge and Gallo’s Barefoot Cellars are in the market, too, and yesterday I saw an advertisement for a Moscato from Columbia Crest. Now that I have started to pay attention, I am seeing Moscato everywhere.

I associate Moscato with low-alcohol fizzy Moscato D’Asti wines from Italy, but Zimmerman points out that Moscato can be made in a variety of sparkling and still styles, which she sees as a plus. The fact that the wines do not typically cost an arm and a leg is an advantage, too. I will be interested to see to what extent Italian producers will benefit from the Moscato boom or if American wineries will capture much of the market growth.

TNBT Effect

Now to be honest, I don’t really care if Moscato becomes The Next Big Thing — I’m more interested in TNBT wine phenomenon itself.  Many of the winemakers and winery executives I talk with around the world display an understandable fascination with TNBT. White Zin, which once defined TNBT here in the United States, shows that fads and trends can at least sometimes develop staying power, as the huge sales figures make clear. But TNBT of today cannot afford to get too comfortable — there’s always another NBT on the horizon.

Some of my contacts in Italy worry about Pinot Grigio (PG), for example, which was TNBT for a while and continues to grow in the U.S. market. Nielsen reports sales of Pinot Grigio/Pinot Gris totalled $751 million in the sales vectors they monitor in the 52 weeds ending January 8, 2011 — much higher than White Zin’s $425 million for the same period. The Italians are glad that PG sales are growing, but they worry that their share of this market may be crowded off the shelves by U.S. PG wines (from Sutter Home, Barefoot Cellars, Columbia Crest and Woodbridge, for example).

And, of course, they are concerned that the market will swerve and TNBT will shift in some other direction entirely, leaving behind a smaller market niche.

Is Torrontés TNBT?

So when I was getting ready to visit the wine country in Argentina I found two groups interested in the question, is Torrontés TNGT?  — the hopeful Argentinean producers and fearful makers of Pinot Grigio back in Italy!

Torrontés is an interesting candidate for TNBT. Some people see it as Argentina’s signature white grape variety, ready to take its place along side Malbec in the market place. While Malbec has its roots in France (it is one of the classic Bordeaux blend varieties), Argentinean Torrontés is thought to be theirs alone –  a cross between Muscat (think Moscato) and the Criolla or Mission grapes planted by the early settlers. It is or can be intensely aromatic and some of the wines I’ve tasted (the Doña Paula, for example) seem to be all about flowers more than fruit or minerals. Distinctive, but everyone’s cup of tea.

Having read so much here in the U.S. about the amazing TNBT potential of Torrontés, I was a bit surprised at the reactions I found in Argentina. Some of the wine people we talked with were clearly enthusiastic and ready to ride the wave if and when it came, but others had doubts.

The optimists view Torrontés as the next wave of distinctive “Blue Ocean” Argentinean wines. Malbec paved the way, then Torrontés broadens the market, then Bonarda and so on each filling a unique market niche.

More than one person talked about the potential for Torrontés in Asia, pointing out how well it pairs with Asia food. Of course everyone in the world who makes white wine with good acidity dreams about selling their wines in Asia, so this is hardly an uncontested market. And it is also useful to remember that while you and I might like the taste of Torrontés (or Alsatian Pinot Gris) with Pad Thai or Kung Pao Chicken, most Asian consumers believe that wine should be red and that it is not necessarily meant to be consumed at meals. So caution is warranted.

Parallel (and Ambiguous) Universes

I was surprised at the number of wine people who were Torrontés sceptics. Some were concerned that Torrontés lacks the quality to be an important grape varietal. They would rather focus on quality international varietals like Chardonnay and Cabernet Sauvignon, to complete directly based on quality and price rather than trying to develop a new but possibly marginal market segment.

Torrontés is like Pinot Grigio, only it’s good, one expert told us with a grin — and  with obvious disdain for both wines.  Although Italian Pinot Grigio can be excellent, its reputation is influenced by simple basic products that flood the market and I think there is  concern that this could happen with Torrontés in Argentina.

The parallels with Italian Pinot Grigio are interesting. The best of the Torrontés and Pinot Grigiot wines come from particular geographic areas (Salta in Argentina, for example, and Alto Adige in Italy), but expanded production would probably  come from other zones where the quality is not as high.  As TNBT effect strikes, if it does, the initial quality could be undermined as output expands. The concern is that Argentina is not as established as Italy in world wine markets and its reputation might not be able to withstand a wave of mediocre wines.

But perhaps it is the nature of TNBT phenomenon that hot products simultaneously exist on many levels, simple and complex, highest quality and no-so-good. Perhaps that is the key to their success. Maybe it is the diversity (or is it ambiguity?) that allows fads or trends to evolve into TNBT.

Although wine snobs almost universally reject White Zinfandel, for example, some good wines of this type have been made, including an early vintage by Ridge Vineyards that I talk about in Wine Wars.

If this is true, then maybe Moscato and Torrontés have a chance!

Arriving at the hospitality center and Killka art museum.

We came to Bodegas Salentein because I wanted to see the state of the art in wine tourism in Argentina. Wine tourism is a big and growing business and I wanted to gauge its development here in Mendoza.

Wine tourism is increasingly important on both sides of the market. Many consumers look for ways to deepen their wine experience by visiting the places, meeting the faces and developing a personal relationship with wine. Producers have much to gain, too. Wine is a relationship business and meeting consumers, distributors and wine critics at the winery is an effective way to make or maintain these connections. Direct (and full price) cellar door sales are a priority, too, as well as the opportunity to exploit other revenue streams ranging from t-shirts and corkscrews to space rental for special events like weddings and conferences. (George Taber’s book, In Search of Bacchus, is a highly readable examination of this global industry.)

Bodegas Salentein provides the most complete wine tourism experience that we found in the Mendoza region. It is a world class operation and a tribute to the “if you build it they will come” school of thought. As you look at the photos here, imagine how empty the landscape would have appeared just a dozen short years ago and what a miracle it is that thousands of wine tourists now flock here each year to visit Salentein and the other spectacular wineries that followed in its wake.

Arrivals/Departures

You approach Salentein, located in the Valle de Uco about 90 minutes by car south of Mendoza city, by driving up the long  entry road shown above. You arrive at the main hospitality center, which contains a reception center, gift shop, restaurant and Killka, a spectacular modern art museum built to display part of the owner’s collection.  Another beautiful building, the  “Chapel of Gratitude,”  is just down the road.

The winery.

Incredibly, you have not yet arrived at the winery. To get there you pass through the reception center and walk down another dramatic lane (this time through a vineyard) to arrive at one of two wine production facilities on the property.  The photos here don’t really do justice to the experience, so I have embedded a short video below that includes some aerial footage  — scroll down to check it out.

The winery’s architecture is even more impressive than the museum’s, especially inside, where winemaking is organized around the “cathedral of wine” barrel room, laid out like a cross around a mosaic compass rose. Entering the vast space, you really do feel like you are in a cathedral.  I could hear the click, click, click of our friend Scott’s camera as he tried to capture every line and curve of the stunning building’s architecture.

Posada Salentein completes the package with a 16-room inn and gourmet restaurant that serves creative cuisine paired with estate wines. It is hard to image a better way to visit the Valle de Uco than to stay here among the vines and to exploit the restaurant menu to answer burning questions such as “how does Malbec go with fresh local trout?” (Perfectly, as it happens, based on our experience.)

The inn and restaurant.

Bodegas Salentein hosts 25,000 to 30,000 per year according to Lorena Cepparo, who heads the Hospitality and Tourism Business Development department. Salentein is a destination winery that is high on the hit list for every Valle de Uco wine tourist (O. Fournier is another “must see”  in the area.)

Dutch Treat

The typical “day tripper” experience, according to Lorena, involves a tour, tasting of three wines and lunch at the restaurant — an appealing combination.  But the basic package is just a start and can be customized in many ways depending upon the particular interests of visitors.  International visitors come from the winery’s main export markets: the U.S., Brazil, Canada and the Netherlands.

The Netherlands? Well, yes. Lorena explained. The winery’s owner is Dutch (Salentein is the name of a Dutch estate) — click to visit Mundo Salentein, the ambitious Dutch website.  And Holland’s Princess Máxima is from Argentina, Lorena said, so the Dutch are understandably crazy about all things Argentine. Who can blame them?

It seems to me that Bodegas Salentein sets a high standard for wine tourism here in Mendoza and, as the first destination winery built in the Uco Valley, it has inspired others to try to match or exceed their facilities and services. Bórmida & Yanzó, the local architect firm that designed Salentein, has gone on to create an incredible collection facilities here (click on the link to see what I mean).  The contrast between their cutting edge architecture and the starkness of the high desert vineyards makes wine tourism here a unique experience.

But Wait … There’s More

I went to Bodegas Salentein looking for a wine tourism story and I found it. Salentein is an audacious bet on the wine tourism concept in the the relatively remote Valle de Uco.

But as I talked with Loren, COO Andrés Arena and legendary (for his work at Catena Zapata) winemaker José Antonio Galante, I began to realize there there is much much more to Salentein than the beautiful buildings and sophisticated visitor experience. Especially now that the talented Galante is on board as winemaker, Salentein’s ambition continues to soar.

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Bodegas Salentein from John Stevens on Vimeo.

Thanks to everyone at Bodegas Salentein for showing us their facilities and answering all of our questions. Special thanks to Andrés Arena, Chief Operating Office, José Antonio Galante,  Chief Winemaker and Lorena Cepparo, Chief of the Office of Hospitality and Tourism Business Development.

One of my goals in coming to Mendoza was to add to my collection of Extreme Wine stories (yes, I’m working on another book). I was thinking that the story would be the Great Malbec Boom, one of the most extreme regional wine surges in recent years.

The Malbec boom may still make my extreme wine list, but a fellow wine economist suggested a different entry: Tempus Alba‘s  ambitious project to create an extreme wine, one that uniquely captures the essence of Malbec.  Here’s the story of Vero Malbec.

One Hundred Years of Winegrowing

The Biondolillo family has been in the winegrowing business in Mendoza for more than 100 years. This means that they have lived through booms and crises, both in the wine industry and in the Argentinean economy more generally. Aldo Biondolillo, who holds a Ph.D. in Economics from the University of Minnesota, is the third generation to make a living this way. His sons Leonardo and Mariano are in the family business, too, and there is a very young fifth generation in the wings (if you look closely you can see their fingerprints on the wine label in the video above). Theirs is the kind of business that necessarily looks to the long run.

When Aldo began the Tempus Alba project in the 1990’s he was looking for a way for his family to continue the winegrowing tradition well into the future. He knew that they couldn’t live on grape sales alone and becoming a bulk wine producer would be a dead end road. Commodity pricing — of grapes or bulk wine — often puts an emphasis on cost more than quality – and there is always some one who will charge less.  Economic theory teaches that product differentiation is key to escaping the commodity trap. But how?

Aldo’s project is ambitious: to create not just another good Malbec, but a different idea of Malbec.

His method is to isolate the purest or perhaps just the best Malbec vines in the region from among the many different clones that have been planted here over the years. The goal is to identify the truest clones and, in the long run, to make them available to other wineries who could join a circle of producers making unique wines – unique in terms of the particular grape clones and then unique once again as expressions of their respective terroir.

In Malbec Veritas?

And so Aldo and family began, planting 800 different Malbec cuttings in the Mother Block. The 800 vines were narrowed in stages to 589 vines and then finally 20 by teams of experts. After 10 years of hard work, the project’s first commercial Malbec was made in 2007.

It is called Vero Malbec (vero is Italian for truth, although the letters are also the initials of Aldo’s grandchildren). The Biondolillo do not claim that it is the original Malbec brought over from France or The One True Malbec. It is their version of the truth, seen from their family’s particular 100 year perspective.

Everyone knows that I don’t rate wines or give tasting notes, but I found the Biondolillo’s version of the truth very appealing (as have a number of wine critics). It will be interesting to see how this wine develops over several vintages. It will be even more interesting if Aldo’s dream of a winemaking circle evolves, so that a group of Mendoza winemakers adopt the Tempus Alba clones and produce their own unique wines, perhaps along the lines of the Coro Mendocino project that I wrote about a while back. (Hmmm … they could call it Vero Mendocino!)

Our visit to Tempus Alba’s beautiful winery in Maipu was informative in several respects. First, It was interesting to see a project that is at once so scientifically ambitious (the labs and the clones)  and, through the winemakers’ circle idea, so socially progressive. Although there is a lot of plant science employed here, however, the work to narrow down the cuttings was done using nose and palate, not by sequencing grape  DNA.

I accused Aldo of being an empiricist in his search for true Malbec and someone in the group said, “Well of course … he’s an economist.” Aldo and I reacted in the same instant, “No, no, no!” we said in unison, shaking our fingers. We know that most economists are more comfortable with theories that with facts. (It is an old saying in economics, for example, that a theory cannot be refuted by facts – only by a more appealing theory will do the job). Wine theories are well and good, but it’s what’s in the bottle that really counts.

Stop and Think

I was also fascinated by the visitors to Tempus Alba. The other wineries we visited in Mendoza were fairly remote and sometimes difficult to find; most had guarded gates meant to restrict entry to those with pre-arranged tours. Tempus Alba’s winery is in the Maipu valley,  an area with lots of wineries and a good many backpacker hostels. The courtyard was filled with the rental bikes of the 20-somethings who travel from winery to winery as long as they can manage to stay upright. The action in the restaurant and on the deck overlooking the vineyard was young, lively and fun.

I’m not sure the 100+ per day biking visitors (a big wine tourist number by Mendoza standards) buy much wine, but they appear to have a great wine experience – almost a unique one it seems to me. The self-guided tour shows them the winery, teaches some viticultural science, and even exposes them to the family’s “dogma” or guiding principles. Then it is up to the sunny deck to taste the wines and have a bite to eat. Many will be untouched and just enjoy the good wine, food and company, but some will stop and think, and that seems to be the idea behind Tempus Alba’s whole approach.

Is Tempus Alba’s Vero Malbec really unique? I won’t judge the wine, but certainly the idea is completely different and a potentially important addition to the rich mosaic of  Mendoza wine.

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Update: Leo Biondolillo writes

“Answering your question of Is Tempus Alba’s Vero Malbec really unique? in my personal opinion, every wine is unique or every good wine must be unique… that is the magnificent wine world.”

The first thing we did when Sue and I arrived in Mendoza was to walk to the offices of Área del Vino, the group that publishes Vinos y Viñas magazine, the WineSur website and provides economic and strategic analysis to the wine industry here. We met with Javier Merino, Área del Vino director, and Gonzalo Merino, director of WineSur. They got our visit off to a flying start.

Our discussion was wide ranging. Gonzalo is working on new media projects to expand the market for Argentinean wine and reach a new generation of consumers. Javier was just back from Hong Kong and China and keen to discuss the potential new markets there. Both were happy to talk about controversial questions, such will the Malbec boom be sustained and whether Torrontés really is The Next Big Thing.

Their analysis has been very useful to me as I have met with wine-makers, winery owners and managers. Based on all these discussions I have prepared this SWOT analysis, which represents my current thinking about Argentinean wine today. This is a work in progress (and necessarily very brief), so I welcome comments that correct my thinking or re-direct my analysis.

Strengths

Argentina has many strengths. The most important may be that it has a “hot” brand, its signature Malbec. When wine enthusiasts think of Argentina they think of Malbec and vice versa — a strong identity that many wine regions envy.

But, as I will explain in future posts, Argentina is not just Malbec (or even just Malbec and Torrontés as some writers propose).  Quality extends across a broad spectrum of wine varieties, styles and price points, which is a very good thing.

Weaknesses

That said, the industry is very dependent upon exports of Malbec to three main markets, the United States, Brazil and Canada.  There would be trouble if Malbec exports to these markets were to falter due to either a decline in demand to a shift to some other “hot” variety.

The domestic market for wine is very substantial, but it is still dominated by low-price basic wines — another weakness. The Argentinean industry would be much stronger if a larger domestic market for quality wines could be developed.

Water is also an issue here as it is in many wine regions. Not an issue today, Javier told me, but for the future. And of course the future is fast approaching.

Threats

There are a number of very serious economic threats that cloud the short term outlook. Domestic inflation is high in Argentina. The government estimate is about 10%, but I failed to find anyone who thinks that it is less than 25%.  Production costs are rising rapidly– labor, grapes and other inputs are increasingly expensive. Land prices for new vineyard projects seem to be growing exponentially.

Revenues are not increasing at the same rate, with the result that margins are being squeezed.  In fact, the pressure is on to cut prices in the competitive U.S. market. It is not clear how long the current combination of rising costs and falling revenues (or soft revenue growth) can be sustained.

I visited several wineries that were clearly focused on increasing efficiency in an attempt to claw back margin without sacrificing quality.  But I also heard rumors of wineries that were taking the perhaps desperate move to source lower cost grapes from other regions to stay in business. The concern was that quality would suffer and The Brand undermined.

Opportunities

There are many opportunities and they fall into two categories: new wines and new markets. By new wines I mean a movement to expand Brand Argentina beyond value Malbec, both into the higher reaches of the wine wall and into other varietals. I’ll be writing more about this in future posts.

I’ve already written about the new markets. As I listened to Javier discuss the great potential in countries like Brazil, with large and growing populations and fast economic growth I knew just what he was talking about: The BRICs (and the New BRICs). Javier believes that the BRIC-like markets  are the key to the next stage of Argentina’s export growth. Because geography still matters in both wine and economics, Brazil is a particularly attractive target, but both Hong Kong and China are high on the list.

Argentina’s China card is that its wines could fill an open market niche. Not cheap bulk wines like those from Chile and Australia. And not overpriced prestige labels like those from France. Quality Malbec from Argentina would be more affordable (and in most cases better) than the French and of course much better than the bulk wines. Distinctive, too, on several dimensions.

But China’s a tough market to break into, as I have said before.  China will require patience and good luck as well as good wine.

The new market with the greatest potential for Argentinean wines may be Argentina itself.  Nearly everyone I talked with said that the best thing that could happen would be for the domestic market for quality wine to expand, making the industry less dependent on exports and less vulnerable to inflation and exchange rate changes.

Bottom Line Analysis

So what’s the bottom line? Well, of course, I believe that the long run opportunities are important, but it seems to me that the short term threats are on everyone’s mind right now, in particular, the inflation-exchange rate squeeze. If inflation continues at high rates and the U.S. dollar – peso exchange rate stays stuck at about 4 pesos per dollar, some producers here will be squeezed out of the U.S. market. Perhaps they can sell to Brazil or on the domestic market, but the prospects are not good if everyone tries to shift focus at once.

What is keeping the exchange rate stuck at an over-valued level? Politics and fear, I suppose. There’s a presidential election in the fall and everything here has taken on a political significance, so it is no wonder that holding the line on the exchange rate (and denying that an inflation problem exists) would be political, too.

And then there is the fear.  Argentina has experienced inflation-devaluation vicious cycles in the past. Inflation leads to a falling currency, which adds to inflation pressures, which forces the currency down even more. Etc, etc.  There’s a worry here that lowering the exchange rate would set the cycle off once again and nobody wants that.

Fear and politics are powerful forces. Argentinean wine, for all its strengths and opportunities, is caught in the squeeze.

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Thanks to Javier Merino, Área del Vino director, and Gonzalo Merino, director of WineSur for meeting with us in Mendoza and to everyone who has talked with us about wine economics in Argentina during our stay here.  Watch for future posts that examine particular elements of the Argentina wine story in more detail.