The [Sometimes Slow] March of the Kiwi Terroirists

slowhorseLast week’s column looked back to the concerns about terroir and geographical designations a few years ago when Sue and I visited New Zealand to gather material for my book about globalization, Globaloney. There was frustration and anxiety about how to delimit the Kiwi vineyards and concern that things weren’t moving fast enough.

The people in Hawkes Bay were so frustrated that they took  matters in their own hands, creating and trademarking the Gimblett Gravels region! Well, the good news is that progress is at last about to be made on the policy front although the promise of progress hasn’t stopped winemakers from trying to speed things along through their own branding strategies. Here’s a quick report.

The Slow Horse Theory

My friend Woody says that justice rides a slow horse and, if that’s true, then the new Kiwi geographical indicator policy must be just indeed. It certainly has been slow in coming!

I was struck by a recent Decanter article about New Zealand geographical indicators for wine.  “Ministers said …that they would put into practice the Geographical Indications (Wine and Spirits) Registration Act – first passed as long ago as 2006 but yet to enter into force.” The  reason for the rush to get the law implemented is a concern over international competitiveness.

‘The act will set up a registration scheme for wine and spirit geographical indications, similar to the trademark registration scheme,’ said New Zealand Trade Minister Tim Groser.

‘Being able to register wines and spirits geographical indications here will make it easier for their users to enforce them in New Zealand.
‘It will also make it easier for our exporters to protect their geographical indications in some overseas markets.’

Since the New Zealand industry is very dependent on exports, it makes good sense to bring Kiwi practices into line with the global rules of the game.

The move was ‘warmly welcomed’ by generic body New Zealand Winegrowers, whose CEO Philip Gregan said: ‘It will equip the industry with the tools to protect its premium brand from misappropriation or misuse, as well as help secure market access in some regions.

‘It’s a big step forward for the industry.’

A Bill to amend the Act will be introduced to New Zealand’s Parliament later this year, and the Act is expected to be passed by the end of 2015.

Paul Goldsmith, New Zealand’s Commerce and Consumer Affairs Minister, noted that some consumers are prepared to pay a significant premium for wines from certain New Zealand geographic regions.

“The reputation of New Zealand wines must be jealously guarded if we are to continue growing our wine exports.

“The ability to register geographical indications under the new Act will help our wine industry promote and protect its premium brand from misappropriation or misuse by overseas producers, as well as secure access in certain markets which require government-recognised geographical indications.”

Good idea. But what took so long?  I found an analysis of the situation on the Baldwins intellectual property law website which provided useful background. Apparently passing the geographic indicator act back in 2006 wasn’t enough — it is also necessary for the Governor General to issue an Order in Council, which was not done (as was the case with a previous geographical indicator act from 1994).

I have not been following this situation, so perhaps there have been very good reasons for the long delay in implementing the GI act. As I noted last week, some think that it might be premature to set down strict boundaries or worry that appellations in general have gotten out of control.  But clearly the NZ wine export sector’s needs are now being given priority. With a little luck they can begin to use the new system next year. Slow justice I suppose. I’d appreciate comments from those in New Zealand who are directly affected by the change. Are there issues here that don’t show up in the news stories?

Marlborough Pioneer Brancott Estate

I hope the geographical indicator law, when it is finally implemented, will provide New Zealand producers with the protections and processes that they need. But in the meantime terroir grows in importance every day in the global market as upscale consumers look for markers of integrity and authenticity in everything they buy. Wines of origin designations don’t guarantee these qualities, but they are a way to signal intent to buyers.

Smart Kiwi producers are doing their best to exploit terroir both in bottle and as brands, a fact that was clear when we were invited to participate in a digital wine tasting of Marlborough Sauvignon Blanc organized by Pernod Ricard’s Brancott Estate.

Brancott Estate is the pioneer Marlborough Sauvignon Blanc producer. The photo at right shows Frank Yukich planting the first Marlborough Sauvignon Blanc vine at the Brancott vineyard in Marlborough in 1975. If  you look closely you can see he is “fertilizing” the vine with a silver coin and irrigating it with Champagne.

The Yukich family’s company, Montana Wines, eventually changed hands and current owner Pernod Ricard rebranded it globally as Brancott Estate a few years ago. I suppose the Montana brand wine was never going to be an easy sell here in the U.S. where a wine from Montana can have more than one meaning, but Brancott Estate is a hit, hence our digital tasting.

P1090870There were five wines in the tasting flight, starting with a low alcohol Sauvignon Blanc called Flight Song and moving on to the mainstream Brancott Estate wine that is widely distributed here in the U.S. Then we climbed up the wine ladder from Stoneleigh Latitude (Stoneleigh is a sister winery to Brancott) to Brancott Estate Letter Series and ending with the Brancott Estate Chosen Rows (tiny production — not currently available in the U.S. market).

We tasted the wines in the company of Sue’s parents Mike and Gert with Brancott winemaker Patrick Materman as our virtual guide via a web link. The low alcohol Flight Song, made from early-harvest grapes, was not a favorite, but the popular Brancott Estate bottling was well received with its classic Marlborough flavors and aromas. A good reference point for the wines that followed.

The Stoneleigh Latitude Sauvignon Blanc is made from vines planted in Marlborough’s “Golden Mile,” where river rocks carpet the vineyard floor capturing the sun’s heat. Stoneleigh focuses exclusively on wines made from this one vineyard area. This wine, my favorite of the flight, displayed unexpected minerality on first taste and rich fruit when re-tasted an hour later and then the next day.

The Letter Series wine came exclusively from vines in the original Brancott vineyard (and not a regional blend) while the Chosen Rows (my second favorite) was sourced from a selection of the best rows of vines from Brancott. It was noticeably more serious and elegant — and more expensive. It’s s shame that it is made is such limited quantities because it might change some minds about Marlborough Sauvignon Blanc. I hope I have an opportunity to taste it again.

Strengthening Brand Marlborough

Together these wines demonstrated, just in case anyone had doubts, that Marlborough’s particular terroirs show themselves in the wines and that Pernod Ricard and the Brancott team are committed to making these wines and telling terroirist stories to go with them.

Focusing on the vineyard level with a particular brand isn’t the only way to tell the story, but it’s one way to do it until a more formal system of geographic indicators is in place. And even when sub-regional designations are improved, the vineyard-level story will be powerful and relevant.  The time is ripe for a terroirist take on New Zealand wines and producers are ready to rock and roll.

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Here is a march to accompany the [slow] implementation of the New Zealand legislation. Perhaps you have heard it before?

Kiwi Wine Wars: Terroir and Its Discontents

When Sue and I visited New Zealand in 2004 we found a wine industry experiencing tremendous success, but worried that the good times might not last. It seemed like New Zealand’s wine production was doubling every few years — could global markets continue to absorb so much Kiwi wine?

Eleven years later the conclusion is that global consumers still love Kiwi wine, but the concern is still there for the future.

A Kiwi Variant of the Dutch Disease? 

There were lots of worries back in 2004. One was a kind of Kiwi variant of the “Dutch Disease” — the concern that tremendous success in one part of the wine industry would put a curse on the rest of it. Would the triumph of Marlborough Sauvignon Blanc crowd out other regions and winegrape varieties and leave New Zealand uncomfortably reliant on a single type of wine?

But that wasn’t the only problem people saw then. Ironically, we met with one very successful Marlborough producer who was worried about Pinot Noir messing up Sauvignon Blanc. New Zealand’s brand is Marlborough Sauvignon Blanc, he told us. Giving more attention to Pinot Noir risks confusing consumers about the Kiwi wine identity and killing the goose that lays the golden egg.  Put all the chips on Marlborough Sauvignon Blanc and make sure that very successful and profitable wine doesn’t fade away, he advised.

Eleven years later I think the concern about reliance on Sauvignon Blanc is  still around, but I’m not hearing much talk about Pinot Noir getting too much attention for the industry’s good. And that producer who wanted to deemphasize Pinot is now proud to make some highly-regarded Marlborough Pinot Noir in addition to his Sauvignon Blanc!  So a lot has changed even if some things stay the same.

 It’s Terroir Time

One concern that is still on the agenda is terroir and its importance in marketing the wine by telling an authentic terroirist story. As I have suggested in previous columns, terroir designations have morphed from a protective tool in Europe (an attempt to control fraud, for example, and protect geographical trademarks) and a brand issue here in the U.S. (brand Napa Valley) to an indicator of authenticity in the story-telling necessary to effectively sell wine today.

It’s terroir time in wine world. Upscale consumers want to have authentic stories to go with the products they buy — this is true for wine and other products — and a specific geographic designation is one way (but not the only way) for winemakers to tell that story.

Some of the people we talked with in Marlborough back in 2004 were thinking in terms of protection and brands and they were worried by New Zealand’s lack of a stronger geographic indicator system for wine. Marlborough is a very large designation, one producer told me, and it is a powerful brand for Sauvignon Blanc. But it is such a big and diverse area, he said, and the wines are so diverse in terms of style and quality.

He was afraid that as production was ramped up the lack of consistency would undermine Marlborough’s credibility. Private efforts to stress particularly excellent sub-regions did not seem to be getting traction and official actions looked slow in coming. Would Marlborough’s success ultimately undermine its credibility? That’s the pattern that I called “the Curse of the Blue Nun” in Wine Wars.

NZ-based wine writer Rebecca Gibb recently wrote about the movement to identify key Marlborough zones for Pinot Noir, concluding that as appealing as the idea is it might be premature. Maybe Kiwi winemakers are still learning where the the best places are to grow particular varieties, Gibb says. If she’s right then it was certainly too soon back in 2004, when the zones might have been crafted with SB, not Pinot, in mind. And Jamie Goode has recently cautioned about the movement to adopt geographical indicators in general.

Gimblett Gravels: Seizing Control

We visited Hawkes Bay on the North Island in 2004 and some of the winemakers there were impatient with Kiwi geographical indicator policies. Growers in the Gimblett Gravels knew that they had special terroir and, having saved it from exploitation as a gravel quarry, wanted to both protect it and brand it. But how?

They did both in the most direct way available to them, forming an association, registering “Gimblett Gravels” as a trademark and rigorously regulating its use. In essence I guess they “privatized” their terroir designation because they were frustrated with the lack of a clear public path.

Here is an explanation from the GG association’s website.

GIMBLETT GRAVELS is the registered trademark of the Gimblett Gravels Winegrowers Association. The Association and registered brand were developed to define and then name a winegrowing district using principles that are not catered for within New Zealand’s proposed Geographic Indications Act legislation.  … The Association and designation of the area was formed at a relatively early stage in its winegrowing life to ensure that the purity and integrity of its designation was not compromised by political issues outside its control. … To the best of our knowledge this is the first viticultural appellation in the New World where its ultimate boundary is defined by a distinct soil type boundary, no compromises, no politics.

The approach taken has determined that a carefully planned and professional branding program was required to promote the Gimblett Gravels Winegrowing District as a viable sub-region within the Hawke’s Bay region. The lack of any legal Geographic Indication status for Gimblett Gravels Winegrowing District has determined this approach. The branding program has developed a strong logo and branding platform that controls the use of the name “GIMBLETT GRAVELS” and “Gimblett Gravels Winegrowing District”.

Kiwi Terroir Today

I suspect my friends here in the U.S. who are caught up in various aspects of AVA and sub-AVA politics will look at the Gimlett Gravels initiative with respect, admiration and even a bit of envy. What a bold move! And I think it has been very successful, too.

Terroir and geographical indicators have grown and changed in their significance. Where does New Zealand stand today? Come back next week for a quick look at progress on this front both in private sector branding  and in Kiwi wine policy.

Artisan Wine versus Grape-a-hol: A Rant


I’m reading a new book by Michael F. Spatt and Mark L. Feldman called Grape-a-hol: How Big Business is Subverting Artisan Winemaking and the Future of Fine Wine. The book is an extended rant about the problems of artisan winemaking (especially in New Zealand).

A rant? That sounds bad, but I don’t mean it in a negative way. I really appreciate a good rant. In fact one of my favorite television programs (CBC’s Rick Mercer Report) is built around the host’s weekly rant (see above). Nothing like a good rant to let off steam … and to make a good point!

Spratt and Feldman have a lot of steam to let off and some good points to make. They see the wine world as a spectrum with artisan winemakers at one end and “grape-a-hol” producers at the other. You can probably already guess what they mean by grape-a-hol: “an alcoholic beverage made from fermented grape juice and passed off as a substitute for fine wine.”

The Opposite of Fine Wine

Grape-a-hol is an industrial product made in mass market quantities or perhaps blended from bulk wines from various sources. It is the opposite of fine artisan wine.

At this point it helps to know that the authors are partners in Destiny Bay Vineyards on Waiheke Island, New Zealand (near Auckland) and so they know a bit about the extremes of the wine world. New Zealand certainly has its share of relatively large wineries, most of them owned by foreign multinationals like Pernod Ricard (Brancott Estate), LVMH (Cloudy Bay) and Constellation Brands (Kim Crawford). Whether you think they make wine versus Grape-a-hol is another matter, but let’s continue with the rant.

Destiny Bay Vineyards is at the artisan opposite extreme in several ways. First, in a country that is geographically remote from many of its markets, Destiny Bay is even more isolated. Sue and I remember the pleasant ferry ride from Auckland to Waiheke Island. It wasn’t very far, but it sure seemed like we were entering another world. I guess that’s part of the appeal.

The winery is small as befits an artisan establishment and the wines themselves are unexpected. No cat’s pee on a gooseberry bush Sauvignon Blanc here and no Pinot Noir, either. They aim to rival the top wines of Bordeaux, producing a Cab-strong Left Bank blend, a Merlot-led Right Bank and a third wine that drives down the center line.  Critics give the wines high marks — here is a Wine Advocate tasting note from the 2007 vintage (this wine scored 93):

The Magna Praemia 2007 has a very refined, very Right Bank bouquet with blackberry, tobacco leaf, scorched earth and wild-hedgerow. Understated but growing in intensity in the glass. The palate is full-bodied with fine tannins, very powerful and yet controlled. Harmonious towards the finish. Very polished but beautifully poised, this is a wonderful Waiheke wine. Drink 2011-2018. Tasted at the blind Waiheke Island tasting and then at the estate the following day.

Although the wine sounds lovely, I was prepared not to like this book because of the in-your-face (Big Business Subverts!) attitude of the subtitle. But it won me over. The short punchy chapters all have a point and they make it without much beating about the bush. (Rants are usually best in small doses). I learned a lot about the wine business and especially the New Zealand wine business from these anti-Grape-a-hol protesters.

A Whale of a Wine

I’ve written several Wine Economist columns about the increasing trend towards shipping wine in bulk — whale-size ocean containers filled with a 24,000 liter Flexitank bladder instead of cases and cases of bottled wine. So I was fascinated to read about this from the artisan Kiwi standpoint in Chapter 3 (The Plonk that Launched a Thousand Ships) and Chapter 4 (The Mouse that Tried to Roar).

Only about 5 percent of New Zealand wine was exported in bulk before 2008, according to the authors’ figures, but now the number approaches 50 percent. Spatt and Feldman argue that while this might make sense from the Grape-a-hol perspective, it doesn’t suit New Zealand’s particular interests very well. They especially see the loss of quality control when bottling takes place abroad as a threat to the country’s precious wine reputation.

Here is a sampling of the chapter titles to give you a sense of the book’s breadth and tone:

Brand Burning in the Supermarkets

The False Economy of Cheap Wine

Wine Competitions and the Gambler’s Fallacy

Day Traders, Dilettantes, Parasites and Pilot Fish

Harry Potter has Nothing over Biodynamics

Claptrap about Closures

Mantra or Manifesto?

The book ends with “The Mantra for the Artisan Winegrower: Authenticity, Integrity and Responsibility,” which is a sort of manifesto for wine terroirists. They call upon artisan winemakers to re-take the high ground in the wine wars by banding together locally as the Waiheke winegrowers have done in creating the Waiheke Certified Wine program. Together, they believe, the terroirist multi-local groups can mount a solid front against the multinational Grape-a-hol producers.

But it won’t be easy, they say. “Artisan winemakers are not looking for special treatment, subsidies, or protectionist trade barriers, ” they conclude. “However when tax, regulatory, and industry association policies conspire to exclude them from markets, burden them with punitive costs, and undermine the provenance on which their individual brands stand, they have a legitimate grievance.”

Yes. And a reason to go on a rant!

Good to Great: Rethinking Chilean Sauvignon Blanc

“Good wine, great value” — that’s been Chile’s wine reputation for many years. And while this isn’t a bad thing by any means, it is a bit of a self-limiting category. “Great wines” might be a more desirable label, or maybe “great values, great wines.”  But things are changing in Chile. Is it time to rethink Chilean wine?

A Tale of Two Tastings

This post is inspired by a pair of tastings of Chilean Sauvignon Blanc. The first was in London at Decanter magazine’s headquarters, where a team of four experts tasted 80 Chilean Sauvignon Blanc wines for a report just published in the June 2012 issue. The tasters included Peter Richards MW, Mel Jones MW, Juan Carlos Rincon and Annette Scarfe.

The second tasting, a much more casual affair, took place 4500 miles away at our house in Tacoma. Sue and I were joined by three of my University of Puget Sound “Idea of Wine” students for a tasting of wines supplied by Wines of Chile. We tasted five Sauvignon Blancs (see wine list below) that were sent to us along with three Chardonnays that we tasted separately.

I was very interested to hear what my students would have to say about these wines. Abby and Marina studied abroad in Chile, so they brought some regional focus to the group. Ky is a quintessential Millennial wine “newbie” with a refreshingly open and thoughtfully candid attitude. They were the perfect tasting team to balance the experienced Decanter experts.

Upward Trajectory

Sauvignon Blanc is an important factor in the Chilean wine industry, as this table from the Wines of Chile Strategic Plan 2020 makes clear. Sauvignon Blanc is now #2 in the export dollar league table behind Cabernet and ahead of Merlot and Chardonnay. Exports of Sauvignon Blanc almost tripled in dollar value between 2002 and 2009 — much faster growth than Cabernet, Merlot or Chardonnay. Why?

One theory is that Chile has ridden New Zealand’s wave. Certainly Marlborough Sauvignon Blanc has opened doors and minds to Sauvignon Blanc, to the benefit of producers in South Africa, Chile and elsewhere.

But the Decanter tasters have a better theory: the wines themselves have improved as winemaking practices have caught up to the global “best practice” standard. Decanter’s team recommends buying the most recent vintage of Chilean Sauvignon Blanc not just for freshness but because they believe the quality of the wine making is improving every year.

That said, stuff sometimes happens and the Decanter team reported a few bottles that suffered from too much sulfur or excess acidity. We had the same problem — one of our five bottles pushed acidity to the borderline in our opinion.

Common Ground

Of the 80 wines that the Decanter team judged, two earned 5-star honors, twelve received four stars and 50 were “recommended” 3-star winners. Fifteen wines were judged “good values.” Is this a good showing?

Yes! A review of 121 Argentinean Malbecs in the same issue produced three 5-star wines, sixteen with 4-stars and 55 “recommended” 3-star wines. Twenty were declared good values.  Adjusting for the number of wines sampled, I think you’d have to declare it just about a dead heat between Argentina and Chile (a statement that is likely to provoke a response on both sides of the Andes!).

We enjoyed the wines and commented upon the French stylistic influence which made them a change from the New Zealand wines we often drink. How did they compare to the wines you drank with your homestay families in Chile, we asked Marina (upper photo) and Abby (shown with Ky in the lower photo)? We didn’t drink white wines, they both replied. Always red.

Good to Great

“At the top end, I think New Zealand is still ahead of Chile, because the experience it has counts for so much,” according to one of the Decanter reviewers. “But the very best Chilean Sauvignon Blancs are fantastic wines that can more than hold their own in a global context. Chilean Sauvignon Blanc is a fantastic value for money next to New Zealand, South Africa and the Loire, and that is its forte”.

Overall these wines were very good — we will certainly enjoy them with summer meals — and our ranking of individual wines matched very well to Decanter’s point scores. Yet we a little disappointed. Good, no question, but not great.

Or not yet great. If quality continues its upward trajectory, “great wines, great values” may soon be within Chilean wine’s grasp.

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Thanks to Wine of Chile for supplying wine, olive oil and spices for the tasting. Here is a list of the Sauvingon Blancs we tasted along with their U.S. suggested retail prices.

Casa Silva Cool Coast Sauvignon Blanc 2011 Colchagua Valley ($25.00)

 Los Vascos Sauvignon Blanc 2011 Casablanca Valley ($13.99)

 Cono Sur Visión Single Vineyard Sauvignon Blanc 2011 Casablanca Valley ($14.99)

 Viña Casablanca Nimbus Single Vineyard Sauvignon Blanc 2011 Casablanca Valley ($12.99)

 Veramonte Ritual Sauvignon Blanc 2011 Casablanca Valley ($18.00)

In Vino Veritas: Surprising New Zealand Wine

A different wine tasting ...

The invitation was impossible to resist.

In association with Wine Channel TV we’re celebrating Waitangi Day (NZ’s National holiday) with a virtual wine tasting and cooking demonstration – and you’re invited to ‘come along’! With a NZ winemakers in attendance and online, and a live audience in Chicago, you’ll have the opportunity to message in questions as you sip along with us from the comfort of your living room. Gather up a group of friends, register, and tune in with fellow-wine lovers from around the globe for this fun, social way to taste and learn about New Zealand’s finest wines!
Winemaker Sarah Burton of Cloudy Bay will be co-hosting the wine tasting, while Chef Bill Kim of Urban Belly will be preparing mouthwatering dishes with Cervena Natural Tender Venison and New Zealand King Salmon.
Be sure to stock up with a few bottles of our featured wines at a participating retailer beforehand. To stay up-to-date with #nzwineday news including competitions, participating retailers and restaurants, like us on Facebook and follow us on Twitter.
See you online!   – The Complexity Team

 I’ve written a good deal about New Zealand wines and did research fieldwork there a few years ago, so what could be more interesting than to catch up with developments via a virtual tasting? Complexity, I learned, represents 21 of New Zealand’s best wineries and was the organizer of the  Waitangi Day tasting.  I signed up for the program and lined up some research assistants to help out with the heavy lifting.

As the big day drew closer I began to wonder what the program’s theme would be?  Yes, tastings are always about the wines (and Complexity would be sure to showcase its clients’ best products), but the wines need to be part of a larger narrative. What message would we find in the bottles? Looking at the list of wines we would be tasting (see below) I could imagine several possible story lines.

Beyond Marlborough

Mike and Ron

New Zealand wines have been very successful in the U.S. market in recent years — Marlborough Sauvignon Blanc and Argentinean Malbec are the fastest growing import segments.  Perhaps the tasting would argue that there is more to New Zealand than Marlborough?

This theory was backed by the inclusion of wines from Auckland, Gisborne, Hawkes Bay and Martinborough on the North Island and Central Otago and Nelson in the South. New Zealand is a surprisingly large and diverse country in terms of wine terroirs and the tasting’s theme could easily be “Marlborough … and Beyond.”

Beyond Sauvignon Blanc?

You could say the same thing about Sauvignon Blanc. Despite the success of NZ Pinot Noir, Sauvignon Blanc is still the defining factor for the New Zealand export brand. And that’s a good thing I suppose given the huge amount of it that is now produced and must find markets abroad.

There is some comfort in having one of the world’s most successful regional wine brands, but there is also some anxiety. Mark Twain famously advised that his readers should put all their eggs in one basket — and then watch that basket! — but diversification remains the conventional wisdom.  Sauvignon Blanc, yes. But Chardonnay, Pinot Noir, Riesling, Cab, Syrah and more — that might be a useful message.

Avoiding the Shiraz Trap?

Or maybe, I thought, the theme would be complexity (is that too obvious for an event organized by a company called Complexity?). Wine regions sometimes fall into a stylistic trap — a popular and successful type and style of wine emerges and pretty soon everyone is making a stereotype version of it. Individual differences disappear and a certain sameness settles in. It has been said that this was part of the downfall of Australian Shiraz. It would be easy for Marlborough Sauvignon Blanc to fall into this kind of trap and maybe NZ Pinot Noir, too. Some people say it has already happened, at least at the lower price points.

It would make sense that you might choose wines for the tasting that are really distinctive that would reinforce the idea that New Zealand is many things, not just one, and that the different wine regions and makers offer a complex pallet for the adventurous wine drinker’s palate.

In Vino Veritas!

So which message did we find when we pulled the corks (2 bottles) and twisted the screw caps (4 bottles)? Well, actually I never learned what the scripted message was because technical difficulties prevented many of us online from viewing the video feed and interacting with the studio guests until the tasting was almost over.  Whatever message was there was lost on us.

That left only the wines to speak for themselves and In Vino Veritas, as they say. So my team focused on them and here’s what we think they have to say:

Surprise!

All three of the possible story lines just mentioned emerged from our tasting of six bottles of wine, but a bigger theme surfaced: surprise! Although we all know New Zealand wines pretty well and enjoy them, these wines surprised us and made us rethink them.

The Saint Clair Sauvignon Blanc was the essence of what we expected — the classic wine taken to its logical extreme so it made us think about what we really look for in Marlborough SB. Then we sampled the Cloudy Bay Te Koko and wow was it something completely different! Is this a New Zealand wine? Is it even a Sauvignon Blanc? Quite a long discussion took place as we tried to make sense of two wines so different along such different dimensions.

The two Pinot Noirs (from Escarpment and Seresin) went in opposite directions, too, and personal favorites changed and changed back as the wines developed in the glass.

The Craggy Range Syrah that ended the tasting for us was another stunner — a distinctive interpretation of the Gimblett Gravels terroir that encouraged both conversation and introspection. A real stereotype-breaker.

The wines really did speak for themselves in this case and, if they told the truth, then maybe it is time to reconsider what we think we know about New Zealand wine.

Full of surprises

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 Thanks to the folks at Complexity for inviting us to participate in this interesting event. Thanks to Mary, Ron (and Coco) and Sue for their work decoding the NZ wine message. Here is the list of wines we tasted.

WINE LIST (the wines we tasted are marked with *)

Flight 1

Quartz Reef, Methode Traditionelle NV, Central Otago

Nautilus Estate Sauvignon Blanc, Marlborough

Cloudy Bay Te Koko Sauvignon Blanc, Marlborough*

Saint Clair Wairau Reserve Sauvignon Blanc, Marlborough*

Ata Rangi Sauvignon Blanc, Martinborough

Flight 2

Kumeu River Estate Chardonnay, Auckland*

Pegasus Bay Semillon Sauvignon Blanc, Waipara

Neudorf Moutere Riesling, Nelson

Spy Valley Envoy Pinot Gris, Marlborough

Vinoptima Gewürztraminer, Gisborne

Flight 3

Seresin Rachel Pinot Noir, Marlborough*

Vavasour Awatere Valley Pinot Noir, Marlborough

Escarpment Pinot Noir, Martinborough*

Palliser Pinot Noir, Martinborough

Craggy Range ‘Le Sol’ Syrah, Gimblett Gravels, Hawkes Bay*

Flight 4

Felton Road Bannockburn Pinot Noir, Central Otago

Mt Difficulty Pinot Noir, Central Otago

Amisfield Pinot Noir, Central Otago

Villa Maria Reserve Cabernet Sauvignon Merlot, Gimblett Gravels, Hawkes Bay

Trinity Hill ‘The Gimblett’, Gimblett Gravels, Hawkes Bay

The Paradox of [Wine] Choice

I always look forward to the week between the Christmas and New Year holidays because that’s when the pace seems to slow down a bit and I can settle in to read The Economist‘s special double issue.

Of particular interest this year is the essay on page 123 called “Tyranny of Choice: You Choose.” The main point is simple, but the implications are quite broad, with particular relevance for today’s wine markets.

Good — Up to a Point

The simple point? Choice is good, but only to a certain degree. Too much choice is, well, too much and can sometimes stop decision-making dead in its tracks. I say that this is a simple point because we have all suffered from the problem of too many options overloading our preference systems. Or am I the only one who sometimes has trouble ordering coffee at Starbucks or a sandwich at Subway?

Government is a good example of this Paradox of Choice. One party rule is notoriously problematic.  Multiple parties provide useful competition. But at some point more political choice is really less –particularly less in terms of stability.  Fragile, shifting multi-party coalitions mean short governmental half-lives with no one looking after the whole since everyone’s focused on their own tiny slice of the electoral pie.

What makes The Economist article interesting is that it ties together so many elements of this dilemma, from literature to academic research and from potato chips to human reproduction.

Rollerblading Monstromart

Super-abundant choice is a fact of modern life. The Economist suggests that you …

Wheel a trolley down the aisle of any modern Western hypermarket, and the choice of all sorts is dazzling. The average American supermarket now carries 48,750 items, according to the Food Marketing Institute, more than five times the number in 1975. Britain’s Tesco stocks 91 different shampoos, 93 varieties of toothpaste and 115 of household cleaner. Carrefour’s hypermarket in the Paris suburb of Montesson, a hangar-like place filled with everything from mountain bikes to foie gras, is so vast that staff circulate on rollerblades.

One cost of this embarrassment of riches is confusion or, put another way, higher transactions costs. Making a choice means comparing the qualities and value of different options, which is difficult enough when there are only two brands of breakfast cereal, but mighty time-consuming and complicated when there are 200.

The Economist explores several dimensions of this problem, citing a Nobel Prize winning economist (Daniel McFadden), an Italian novelist (Italo Calvino) and cartoon character Marge Simpson!

Expectations have been inflated to such an extent that people think the perfect choice exists, argues Renata Salecl in her book “Choice”. … In one episode of “The Simpsons”, Marge takes Apu shopping in a new supermarket, Monstromart, whose cheery advertising slogan is “where shopping is a baffling ordeal”. “How is it”, muses Ms Salecl, “that in the developed world this increase in choice, through which we can supposedly customise our lives and make them perfect leads not to more satisfaction but rather to greater anxiety, and greater feelings of inadequacy and guilt?” A 2010 study by researchers at the University of Bristol found that 47% of respondents thought life was more confusing than it was ten years ago, and 42% reported lying awake at night trying to resolve problems.

Greater choice first delights us, then overwhelms us, then it can sometimes drive us crazy. There must be a “best” among all the rest. Which is it? And how will I know? The quest for the best can sometimes destroy the pleasure of the very good by introducing an unwanted but unshakable sense of doubt.

The Age of Anxiety

Which brings us to wine. It does seem like the problems of exaggerated choice apply especially to wine. Of those 48,000 items on the upscale supermarket shelves, chances are that 1500 or more are bottles of wine. Wine is the largest choice space in the modern grocery store, ten times richer in terms of the number of options than the #2 area (breakfast cereals) and much more complex.

Wine buyers have never had it better in terms of the number of choices available from around the world. And we’ve never had it worse regarding the possibility of confusion and the pressure to find our perfect wine. It’s the Age of Anxiety for wine.

I find it interesting that some of  the hottest products in the wine market seem to simplify wine just a bit and perhaps unintentionally  address this anxiety. Gallo’s inexpensive Barefoot brand wines have very done well in the last few years; most people view this as a price thing — the result of trading down. But Barefoot also offers consumers a more casual idea of wine that would appeal to anyone who wants to get out of “perfection” rat race and just enjoy wine without over-thinking it. (And every Barefoot bottle features a “Gold Medal” from a wine competition, giving buyers the security of a sense of quality.)

The hottest wine sectors today are Marlborough Sauvignon Blanc and Argentinean Malbec; is it a coincidence that these wines are easy to understand, with many good producers at various price points? The problem of choice still exists for buyers of these wines, of course, but perhaps more of the pleasure of choosing survives.

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Several people have asked about the series on BRIC wines.  Fear not — it will resume in a few days with a report on Russia,

Retail Wine Sales: Big versus Hot (Hot Hot)


I thought it would be interesting to take a look at what’s “big” in the wine market (where the most consumer dollars are going) versus what’s  “hot” (or “hot hot hot” as in the video above), showing the fastest growth.  I’m using U.S. off-premises wine sales data from Nielsen for the 52 weeks ending 9/18/2010 taken from the December 2010 issue of Wine Business Monthly.

Baseline information: Off-premises wine sales in the U.S. totaled $9,172 million in the period covered here according to the Nielsen report, with an overall growth rate of 3.2%.

Which product categories are the largest in absolute terms and which are growing the fastest? I’m going to break down the data by wine varietal, country of origin (for imported wines) and price category. Take a minute and write down what wines/countries/price points you think will be at the top in each category and see if you’re right. Here goes

Chardonnay Leads the Way

Forget what you thought you knew about Chardonnay being so yesterday and Pinot Noir kicking Merlot’s butt. In terms of the overall retail market sales, the giants (or are they dinosaurs?) still dominate.

BIG varietals

Varietal $ million
Chardonnay $1,996
Cabernet Sauvignon $1,347
Merlot $911
Pinot Gris/Grigio $734
Pinot Noir $526
White Zinfandel $427

American wine drinkers are nothing if not traditional, reaching again and again for familiar varietals, so the usual suspects come top of the table. Pinot Noir has indeed surged in the post-Sideways era, but its lead over wounded White Zin is not large and it still lags far behind arch nemesis Merlot.

Obvious Chardonnay is the consumer default with a 50% lead on Cabernet and double the sales of Merlot. Pinot Grigio, the #2 white varietal, lags far behind.

I find the varietal “hot list” below quite interesting. The fastest growing wine varietals  are Riesling, Pinot Noir (of course), Sangiovese and Sauvignon Blanc. (Interestingly, varietal Sangiovese is rising while Chianti is a shrinking category in the Nielsen league table.)

HOT varietals

Varietal Increase
Riesling 9.4%
Pinot Noir 8.9%
Sangiovese 8.7%
Sauvignon Blanc 8.5%

It seems to me that while the “big” varietals are wines that many consumers purchase to drink on their own (because of their high alcohol levels and for other reasons), the “hot varietals” are a bit more likely to be food wines. I wonder if that’s a trend?

World Wine Web

Most of the table wines that Americans drink are American — there is a very strong home country preference. Domestic wine sales totaled $6,524 million for the period covered here while imports accounted for $2,648 million. What countries supply the most imported wine as measured by total expenditures? Here’s the Big list:

BIG import countries

Country of Origin $ million
Italy $804
Australia $771
Chile $243
France $228
Argentina $187
New Zealand $125

As the table shows, Italy and Australia are #1 and #2 respectively in off-premises sales. It is interesting that France has fallen to #4 behind Chile. Argentina and New Zealand make the cut here (Spain did not!) as you might expect, but bear in mind that Italy still sells more wine in the U.S. than Chile, France, Argentina and the Kiwis combined. The concentration ratio in this market is very high: Italy and Australia may be struggling at the moment, but they are in a league of their own.

Italy and Australia will not be over-taken soon, but the market momentum seems to have has passed. Look at the big growth numbers that Argentina and New Zealand are putting up below! Wow. Annual growth rates of more than 20%!

HOT import countries

Country of Origin Increase
Argentina 27.6%
New Zealand 21.1%
Germany 4.4%
Chile 1.7%
Spain 0.6%
Portugal 0.3%

Now look at the gap between the really hot ones and the rest! Germany comes in at #3 on hot list, but with a low 4.4% increase for the year. Sales of most wine imports (including Italy and Australia) have actually fallen in the last year. Spain and Portugal squeeze onto the list at #5 and #6 by simply avoiding utter collapse. The import wine segment is slumping badly, with Argentina and New Zealand the only significant exceptions.

The Price is Right

Finally, let’s look at the market in terms of price points.  What are the biggest and hottest parts of the wine wall in terms of price?

BIG price points

Price Segment $ million
$3.00 – $5.99 $2,688
$6.00 – $8.99 $1,903
$9.00 – $11.99 $1,868
$12.00 – $14.99 $910
$0 – $2.99 $794
$15.00 – $19.99 $557
$20+ $446

You can see from the data why Gallo is having a good year (or probably having a good year, since they are a private company and don’t release data so I can only guess). Their brand portfolio is aimed at the heart of the market, from $3.00 to $11.99. Lots of good targets there!

You can also see why Constellation Brands is probably finding this a challenging year. They reconfigured their brand portfolio to take advantage of what they saw as upmarket opportunities.  They moved up the wine wall a bit but the market changed directions and went downmarket, leaving them in a less competitive position.

HOT price points

Price segment Increase
$9.00 – $11.99 9.1%
$20+ 7.4%
$12.00 – $14.99 5.0%
$3.00 – $5.99 4.5%
$15.00 – $19.99 2.5%
$0 – $2.99 (0.1)%
$6.00 – $8.99 (4.0)%

But Constellation’s upmarket bet may yet pay off. The hot price segments are all in the wine wall’s upper strata.

The Old Elasticity Trap

The rise in spending in the super-premium + categories is an encouraging sign, but I think some caution is necessary in interpreting the data. Many observers see the big increase in expenditures on $20+ wines and conclude that consumers are coming back to this segment strongly — that the demand curve has shifted. But I suspect that there is a lot of bargain hunting taking place and that margins are falling – bad news. Maybe we are just following discounted prices down the demand curve.

For many of today’s buyers a $20+ retail wine is a highly discretionary purchase and so the demand curve may be quite elastic. Econ 101 students will remember that total expenditure increases when price falls for a product with an elastic demand.

The large percentage expenditure increases we seen in the data could result from discounting — $30 wines being sold off for $25 and so on — rather than an actual increase in demand or shift in the demand curve.  The increased revenues are good and inspire optimism, but they may disguise the bad news of shrinking margins.

(As I am writing this, the neighborhood Safeway is offering an extra 20% off any wine selling for $20 or more. I suspect sales revenue will increase at the lower retail markup.)

Overall conclusions? I’d rather not, thanks. These data are interesting more for the questions they raise than the answers they provide. But the questions about how the U.S. wine market is changing are worth pondering (hopefully over a nice glass of wine). Cheers.

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