Extreme Wine South Africa: The International Connection

One of the issues I wanted to explore during my visit to South Africa was the nature of international investment, partnerships and strategic alliances in that country.  There is so much about South African wine that is very old and traditional that I wondered how it was  dealing with the new and global. Here’s some of what I found out.

[This is part of a series of posts reflecting on my recent visit to South Africa.  Click here to see all the posts in this series.]

The International Connection

I am interested in international economic connections in particular because they have proved to be so important elsewhere in the Southern Hemisphere wine world. The modern wine boom in New Zealand really took off when the international wine trade was opened up, for example, along with opportunities for inward investment. Now the export-focused NZ wine business is largely foreign owned,  part of the Faustian bargain that generated New Zealand’s great success.

International investment, partnerships and strategic alliances have been important in Argentina, too, with European, American and Chilean relationships exerting strong influence.  Chile and Australia also have important stories to tell in this regard, too, but as they say on Facebook “it’s complicated” for these two countries — too complicated to be included here.

The Screaming Eagle Connection

What’s the story in South Africa, I wondered as I walked into CapeWine 2012? I didn’t have to wait long to find out. The opening general session featured remarks by Charles Banks, former managing partner of California cult winery Screaming Eagle,  and Troy Christensen, CEO of Accolade Wines, which is the phoenix that has risen from the ashes left behind when Constellation Brands offloaded their wine assets in Australia and Europe. Banks and Christensen were seen as leading indicators of international interest in the South African wine industry.

Banks received special attention, which probably isn’t surprising given his Screaming Eagle background. He is CEO of Terroir Capital, an investment group whose international holdings now include Mulderbosch Vineyard and Fable Wines in South Africa. He is very positive about South Africa’s wine future and obviously purchased assets there with an eye towards taking them to the next level.

Mulderbosch was already a global brand, he told the international audience, and he saw potential to increase quality and expand scale. With Fable Wines Banks intends to take a highly-regarded existing South African winery (Tulbagh Mountain Vineyard) and rename (to make it more pronounceable, Banks said), rebrand and re-position it in international markets. The focus is on old bush vine Chenin Blanc and red Rhone varietal wines.

So clearly South Africa is on the wine investment radar, I concluded, despite what American investor Bill Foley told Lettie Teague in a recent Wall Street Journal article. But how deep does the interest go?

A Half Dozen Answers

I got my answer and more at a seminar the next day that was organized and led by Mike Ratcliffe, the managing director of Warwick Wine Estate. Mike wanted to showcase international investment in the South African industry and he decided to do it through a tasting of the six wines shown in the photo at the top of this post and listed below. Each wine had a different international story to tell and together I think they give an idea of the variety of actors, interests and motivation.

 # Wine & Vintage
1 Waterkloof Circle of Life White 2011
2 Delaire Graff Botmaskop 2009
3 Glenelley Lady May 2009
4 Anwilka 2008
5 Fable Bobbejaan 2010
6 Vilafonte Series M 2009

-

Waterkloof  Wines is the creation of UK wine executive Paul Boutinot, whose title is listed as “Custodian” on the website, which suggests that he is in this for the long run.  Boutinot, his UK business, is an ambitious and successful enterprise that produces, imports and sells wine; it was named Sommelier Wine Awards “Wine Merchant of the Year” four years in a row. The South African winery is a personal investment that reflects Boutinot’s passion for wine and sincere interest in terroir. I expect it will also benefit from his business background and distribution experience.

Delaire Graff Estate is the project of Englishman Laurence Graff, Chairman of Graff Diamonds International and I think you can see the luxury lifestyle influence in the video and on the website. The intention was to create more than a winery — Delaire is a destination resort that includes the winery of course, but also luxury lodges, a “destination Spa,” and two restaurants in an atmosphere filled with art and natural beauty.


Madame May de Lencqauesaing is the proprietor of Glenelley Estate and you are correct if you guess that she is French. She was born in Bordeaux and managed her family estate Chateau Pichon Longueville Comtesse de Lalande until its sale to the Roederer Champagne house in 2007.  Since then she’s focused on her South African estate, which makes “South African wine with a French Touch” according to the website.

Anwilka is a multinational partnership between South Africa’s Lowell Jooste of Klein Constantia, Hubert de Bouard, co-owner of Chateau Angelus in Bordeaux and Bruno Prats, former owner of another Bordeaux property, Chateau Clos d’Estournel. The bulk of Anwilka’s production of its Syrah-Cab-Merlot blend is exported, according to a Wine Advocate note, and sold through the Bordeaux marketplace.

The fifth wine was the Bobbejaan from Fable Wines , which I’ve already discussed. It added an American name to the mix and was the perfect prelude to the final glass.

Mike Ratcliffe saved his own project for the last act, but it was worth waiting for. Vilafonté  is an ambitious collaboration between South Africa, represented by Ratcliffe, and America in the form of head winemaker Zelma Long and head winegrower Dr. Phillip Freese. Long is legendary in California for her work at Robert Mondavi, Simi and her own family winery, Long Vineyards. Freese was head of winegrowing for Mondavi for 13 years and designed the first Opus One vineyards.  He has consulted with several South African wineries including Warwick. Like the other wines in the tasting, Vilafonté was a South African wine made to international standards and positioned for export.

These wines will be good ambassadors for South Africa, I believe, and represent intelligent (and generally delicious) international initiatives and collaborations. Each international investment brings something useful to the South African wine table while highlighting the best of what’s already here.

I know that there are other international investments in South Africa (Donald Hess’s investment in Glen Carlou springs to mind)  and I know that all of them have not worked out as well as the ones showcased here (I won’t name names). It’s too soon to tell how the story will turn out in the end, but on balance it seems to be a healthy collaboration so far.

>>><<<

This is the last post in my series on South African wine, but look for the topic to come up again in other contexts. Thanks to Mike Ratcliffe for organizing the seminar and encouraging me to attend.

I hope you don’t mind the videos that I’ve inserted in the post. I found them on YouTube and I think they add something to the story.

Blue Nun Gets a Makeover


Blue Nun wine reinvented itself a few years ago — I wrote about it in a chapter in Wine Wars called “The Curse of the Blue Nun.” It stopped being that rather mediocre sweetish German white wine that some of us remember from the 1970s (along with Matteus Rosé) and became something a bit different.

The classic Blue Nun

The classic Blue Nun white wine got better. It became Riesling, not a Liebfraumilch blend, for example. And the brand became more global, with Blue Nun wines in many different varieties (Cabernet, Pinot Grigio, Rosé) sourced from several countries. There was an alcohol-free “lite” Blue Nun and a bubbly wine with tiny sparkly, floaty golden bits to brighten your day.

Blue Nun became a brand with the same sort of broad portfolio of wines that, say, Barefoot Cellars offers. This approach is very successful in today’s market and, as the promotional video above indicates, Blue Nun is back (if it ever really went away).

One key to the transformation was the Blue Nun herself. She was perhaps the one constant. Marketers saw the gentle, friendly nun on the label as a key marketing tool — memorable and and maybe especially appealing to women, who are a target market.

More Than Skin Deep

I was prowling the Wine Wall recently and I noticed that Blue Nun has had a makeover — and it’s more than just skin deep! The surface change is significant, however. The bottle is still blue, of course (but not for all the varieties – see images here). But the blue nun is now only a shadow of her former self — a small golden cameo medallion.

Blue Nun Makeover

The gold highlights a smaller gold seal that I thought must be a wine competition award of some sort (all the Barefoot bottles feature them), but turns out to be a seal of “Sichel Superior Vinification.” Good to know!

I guess the sleek modern look and gold accents must now be seen as a more powerful image than the kindly nun. But the change goes deeper than the label.

I was puzzled to see “Rivaner” on the label. “Now made from the classic Rivaner grape, it has more balance, softness and depth of fruit flavor.” That’s what it says on the back. More than Riesling? Really?

More Appetizing?

I wasn’t sure that I’d ever had a Rivaner wine before, so I rushed home to check out my copy of Jancis Robinson’s Oxford Companion to Wine:

Rivaner: another name for müller-thurgau, used in Luxembourg, where it is the most planted grape variety, and, increasingly, elsewhere. Rivaner sounds more appetizing.

And I suppose it does sound more appealing — or maybe just easier for a novice to pronounce. Am I the only wine veteran who didn’t know that  Müller-Thurgau is now Rivaner?

Blue Nun Delicate is another interesting innovation. With just 5.5% alcohol by volume, it rides the Moscato-powered low alcohol  wave (just fyi the Rivaner is only 10% abv).

I’m looking forward to twisting the cap on this bottle with a couple of my research assistants when they get back from a trip to the Northeast. Müller-Thurgau can make fine wine, but its general reputation is for quantity more than quality, especially in Germany. It is the most-planted variety is Rheinhessen, where this wine is from. In Vino Veritas, as they say. How deep is the Blue Nun’s makeover?

>>><<<
I encourage readers to use the Comments section below to report their experiences with Blue Nun, both today and in the past, and to comment generally on the transformation. You might also be interested in these cooking videos from Blue Nun.

Fat Wine: Middle Class, Middle Market, Middlebrow

The world is becoming Hot, Flat, and Crowded according to New York Times columnist Thomas Friedman’s bestselling 2008 book. Hot and crowded are easy to understand, but flat?

Yes, Friedman, said, flat as  “a metaphor for the rise of middle-class citizens, from China to India to Brazil to Russia to Eastern Europe, who are beginning to consume like Americans. That’s a blessing in so many ways–it’s a blessing for global stability and for global growth. But it has enormous resource complications ….”

Fat Not Flat

Friedman is counting on the world’s growing middle class to shake things up and he is probably right. Here in Wine World, however, I think the trend is fat more than flat, although it might amount to the same thing in the end.

“Flat” suggests to me that the gap between the top and bottom — 1% elites and 99% masses — is closing. Wine certainly isn’t getting flat in this sense, although the recent softness of Bordeaux en primeur prices argues against this a bit.

No, the floor and the ceiling aren’t getting any closer when it comes to wine — so  I think the best way to describe this trend is Fat — fat in the sense of “thick in the middle:” middle class, middle market, middlebrow.

Thick in the Middle

Wine’s recently-concluded long slack cycle (see previous post) flooded many  markets with good, reasonably priced wine. The impact of the economic crisis encouraged consumers to trade down (to cheaper wines), to trade over (to different types of wines), and trained wine drinkers to look for bargains. Many new consumers entered the wine market at the same time, bringing with them new tastes, new attitudes, and a refreshing willingness to experiment.

There are several key indicators of the degree to which wine markets have been open to new ideas. The great success of New Zealand and Argentina as wine exporters reflects both the quality and value of the products from these countries but also, I believe, their good fortune in entering the global market at this time.

Marlborough Sauvignon Blanc and Argentinean Malbec are easy to understand, easy to drink and even easy to pronounce. They are the hottest import categories in the U.S. market. Significantly, neither of these wines is especially cheap. They are generally priced in the middle market, well above Two Buck Chuck and even higher than popular brands like Barefoot. They fit my “thick in the middle” model to a “T.”

The Moscato boom is another indicator, although I won’t press this too far since there is not yet a consensus about where it came from, what it means or how long it will last (readers should feel free to correct me about this in the comments section — I’d really like to know the answers).  Moscato/Muscat sales have surged in the U.S. — up by 65% in the last year alone according to Nielsen data published in this month’s Wine Business Monthly. Moscato wines had higher dollar sales than Riesling, Syrah/Shiraz, Zinfandel or Malbec in the last year in the retail vectors that Nielsen monitors . Wow!

Now For Something Completely Different

The one thing I am sure about is that Moscato’s unexpected popularity indicates that consumers are willing to try something new. And while they look for bargains and value, they don’t seem to be focusing on the bottom shelf.  Nielsen reports that sales of wines below $6 have been essentially flat in the past year in revenue terms and spending on wines in the $6 to $8.99 range declined. Spending on wines in the $9.00 to $11.99 range, however, has actually increased by about 10%.

We’ve also seen the emergence of hot new brands in this middle market middlebrow segment. The rapid rise of brands like Gallo’s Apothic Red Blend and Ste Michelle Wine Estate’s 14 Hands suggests that consumers are focusing on this market category.

It’s not quite true that these particular wines came out of nowhere to achieve great success in the off-premises trade, but it’s not entirely wrong either. They are another sign of the thickening of the middle segment of the wine market of consumers ready and willing to try new things and not entirely constrained by old attitudes and allegiances.

The Supply Side of the Story

So far I’ve focused on the demand side of the story but supply plays an important role, too. As grape and bulk wine markets tighten up (see previous post) it is only natural that scarce wine resources will go where the margins are and where substitution is easiest. The “middle” wines I’ve just discussed are often priced at the “fat” part of the market where better margins may be found. (I say “may” because this market segment is quite competitive and competition has a way of squeezing margins.)

Some of these “middle” wines are blends, not single varietal wines, and come from broad appellations (Washington State, California). A few are non-vintage. These properties allow winemakers to more easily substitute among supplies of grapes and bulk wines to make or complete their products — the ability to substitute is important when supplies are tight and costs are rising.

Middle market wine for middle class, middlebrow consumers — is this a good thing? I guess it depends upon whether you are a Martian or a Wagnerian. I’m a Wagnerian myself, so I see this as a healthy development, even if wine loses a little of its mystery and becomes just a bit more like other everyday products. Making wine a part of everyday life is a worthy goal here in the U.S. and I don’t think the 1% wines (or even the 25% wines) have much to fear.

>>><<<

There’s one more trend on the horizon that completes this theme. Come back next week to learn about how wine has become even more “uncorked.” And I’m not just talking about screw caps!

[This is the third in a series of articles on Tight, Fat and Uncorked, the three trends I see shaping the wine industry in the near future.]

No One-Liners in Wine

King of One-Liners: Take my wine ... please!

Jon Fredrikson likes to say that there are no one-liners in wine. He isn’t saying that there aren’t any one-line jokes (take my White Zinfandel … please!) but rather that nothing in wine is cut and dry. Wine is always complicated — always this and that, too —  so generalizing is a dangerous practice.

I was reminded of this twice during our recent California expedition. The first time was by Jon Fredrickson himself, who stated the case very well in his talk at the Unified Wine and Grape Symposium in Sacramento (North America’s largest wine industry trade show and seminar series).  His dynamic analysis of how the wine market is evolving was widely reported in the press.

Winery of the Year

At the end of Jon’s report he always names a “winery of the year” and for 2011 it was DFV Wines of Manteca, California. DFV (for Delicato Family Vineyards) has its roots in the decision of Italian immigrant grape grower Gasparé Indelicato to try his hand at winemaking in early post-Prohibition California. His grandson, Chris Indelicato, has been CEO since 2004 and many other family members populate the company’s org-chart.

DFV sits in the #10 position in the Wine Business Monthly Top 30 American Wineries league table for 2011, producing more than 4.5 million cases. DFV owns more than 10,000 acres of vineyards (quite a change from Gasparé Indelicato’s first farm). But it is the business’s dramatic growth, not just its large size, that drew Jon Fredrikson’s attention and, well, everyone’s attention. “Delicato” was all that I heard in pre-announcement speculative conversations.

Gnarly and Twisted

You have probably seen Delicato wines on store shelves, but they are just the tip of the family business iceberg. Other DFV brands include Bota Box, Twisted, Gnarly Head and many more. I usually think of the DFV wine portfolio in terms of good value wines and I think this good value accounts for the company’s success.

But saying that a wine is a good value sometimes imposes a subconscious ceiling on perceived quality and distinctiveness. I admit that I tend to think of DFV wines as good, but not necessarily great. That’s because I sometimes forget Jon Fredrick’s line about one-liners. Good value doesn’t rule out distinctivenes — wine is too complicated for that.

On the Old Silverado Trail

This point was driven home to me for the second time as I stood at the tasting room bar at Black Stallion Estate Winery on Silverado Trail in Napa Valley — DFV’s newest venture, which it acquired just a couple of years ago. The winery itself resists being a one-liner as it is both historically significant (as an equestrian center) and an architectural beauty.

We drove by the winery a couple of years ago (on our way to a Stags Leap AVA event) but didn’t stop.  We were impressed with the BSEW Cab at a tasting back home (it is a larger production wine that is widely distributed), so we came back to try the small production (4000 total cases) wines sold only at the winery.

Imagine my surprise to learn that the same company that makes Botta Box also makes a $150 red blend called Bucephalus. I’m interested to see what happens as the Indelicato family’s winemaking knowledge and resources are focused on this relatively new enterprise — perhaps even more distinctive wines like the Rockpile Zinandel that was my tasting room favorite?

I expect there will be lots of interesting wines to taste and things to say as DFV and Black Stallion continue to develop. But don’t expect to hear any one-liners.

Ants, Elephants and Washington Wine

I’m just back from the Washington Association of Wine Grape Growers annual meetings where I gave a talk about Wine Wars and its implications for Washington wine. Wine Wars focuses on global wine markets and the forces that are shaping them — what insights can it offer for Washington wine growers?

The Confidence Game

Wine Wars argues that reputation (and the value of  your brand) is an increasingly important factor in today’s crowded and competitive marketplace. No one has to buy your wine (or to buy wine at all given the many liquid alternatives). You have to stand for something (your reputation) and your brand has to reflect and effectively communicate that to break through the market noise. I call it The Confidence Game and reputation is a key strategy. That my friends is the Miracle of Two Buck Chuck that I talk about in Wine Wars.

But reputation and brands are complicated — a pretty obvious lesson that I only really learned a couple of weeks ago when I was at the Unified Wine & Grape Symposium in Sacramento.  My session (on The State of the Industry) examined the wine market from the global, international, national and California perspectives. After the session I was talking with a friend who has a 50,000+ case winery in Napa Valley. I think my business is important, he told me, but I today I felt like an ant in a room full of elephants.

Life in Ant-Ville

The U.S. wine industry is very large (and California dominates it, of course) but Napa Valley is just a thin stripe at the  bottom of the wine production bar graph (compared to the bigger producers elsewhere in the state) and my friend’s winery is only a small part of that. That’s ant-ville — nearly invisible — compared with elephant-land, the domain of the large scale producers and bulk wine trade (although 50,000+ cases is not at all insignificant in an absolute sense).

Washington is ant-town, too, I told my audience. (No offence intended! Ants are great creatures. They can carry many times their own weight. A colony of ants can probably strip an elephant carcass in a few hours. Ants are powerful collectively. But individually they are pretty don’t have much clout.)

Wine world ants need all the help they can get to get their brand or reputation out there. They need to have a strong private brand, of course, but they also need a strong regional brand (Napa Valley, for example) to create a reputational wave that the winery brand can ride. That’s one reason my friend’s winery is successful, even if it is just an ant in a crowded room.

Why Elephants are Different

Elephants are different these days — and it is not entirely by choice. Elephants (wineries that produce millions of cases) need strong brands, too, but increasingly they are being forced to distance themselves from regional brands such as AVAs and rely more and more on their own reputations. The reason? The emerging wine shortages that are forcing them to search far and wide for grapes and wine to fill their massive pipelines.

Years of stagnant vineyard expansion combined with rising demand have created a growing structural shortage of certain types of wine (bad news for those of us who have gotten used to deep wine discounts in the surplus years).

This is why so many wines that used to carry regional appellations are now forced to identify themselves as “California” wines. They need to blend wine from all over the state to fill their orders. Take a look at $8-$12 Zinfandels the next time you are in the supermarket and you will see what I mean.

The Logic of American Wine

“California” is a pretty broad appellation, but I am hearing rumbles from elephant land that increased use of the previously rare “American” appellation is in the cards. And expect more bulk wine imports (legally labeled to be sure) to make their way into bottles of wines you might reasonable suppose to hold All-American wine.

Is this a good thing? Well I’m not sure that it is good or bad — it’s just necessity. And I suppose it helps the ants with their stronger regional associations to differentiate themselves from the more generic elephants. But, on the other hand, the elephants’ promotion of regional brands in the past probably strengthened them, unintentionally benefiting local ants.

Since Washington wine is a teeming ant colony, it follows that it would benefit from a stronger regional brand. What is Brand Washington? Good question. (Paul Gregutt recently suggested how Brand Washington might be better promoted — click here to read his  column.)

[At this point my talk veered into a discussion of Brand Washington compared to Oregon, Napa Valley, Argentina and Chile. This part of the talk will have to wait for future Wine Economist post.]

>>><<<

Another speaker joked that Ste Michelle Wine Estates (SMWE), which is by far Washington’s largest wine producer, is the state’s only elephant, but CEO Ted Baseler objected, citing the Wine Wars description of SMWE’s “string of pearls” (or chain-of-ants?) structure.

Who am I to disagree with Ted, especially since he was on the program to announce an exceptionally generous $1 million donation to help create a Wine Science Center on the Washington State University campus in wine country!

Thanks to WAWGG for inviting me to speak and special thanks to all the Wine Wars and Wine Economist readers I met at the conference.

Grape Transformations: Piemonte’s Twin Tornados

This is the second in a series on people who have revolutionized the way the world thinks about wine or a particular wine region. This post takes us to Italy’s Piemonte region, famous for its Barolo and Barbaresco wines.

Two winemakers stand out here. Many of you have probably already guessed the first name: Angelo Gaja, who is associated with the transformation of Barbaresco. The second name? I’ll leave you in suspense for a few paragraphs. See if you can figure it out.

Gaga for Gaja

Angelo Gaja changed the way the world thinks about Piemonte wine (and to some extent Italian wine in general). Joe Bastianich (writing in his book Grandi Vini) says that Gaja is “the most famous Italian wine producer in the world” (this may come as news to the Antinori and Frescobaldi families, but I’m sure Joe knows what he is talking about). Barbaresco was seen as the plain little sister of sexy Barolo until Gaja changed everything.

Exactly what Gaja changed and how is a matter of opinion, although the achievement is clear. Bastianich looks to the vineyard, the development of particular vineyard sites and the production of “cru” single vineyard “terroir” wines. He also praises Gaja’s efforts to travel the world promoting his wines and the other wines of the region. The power of Gaja’s personality is clearly part of the story here.

Matt Kramer, writing in his book Making Sense of Italian Wine, tells a different story. For him Gaja’s contribution was in the cellar even more than the vineyard, where he introducing an international style to the wine by using small French oak barrels (Gaja also controversially introduced international grape varieties to the family’s vineyards).

Gaja’s second and perhaps even greater achievement, Kramer suggests, was to charge outrageous prices for his wines. “While few people know about wine, everybody’s an expert on money: Could this Gaja … really be worth that much money? The sheer chutzpah was captivating and so, too, it turned out, were the wines.”

Gaja became a role model for Piemonte and perhaps for aspiring winemakers throughout Italy.

-

Barbera, Bologna, “Braida”

As much as I admire Angelo Gaja, enjoy his wines and respect his innovations, he is not alone on the Piemonte “grape transformations” podium. The second “tornado” is someone who did for democratic Barbera what Gaja did for aristocratic Nebbiolo. The achievement may be even greater.

Nebbiolo, the noble grape that is responsible for the great Barolo, Barbaresco and Langhe Rosso wines, is far from the most planted Piemonte grape. It has the best reputation, but perhaps because it ripens so late and requires specific site characteristics to excel, it is not as widely planted as you might imagine. There is 15 times more Barbera than Nebbiolo in Piemonte.

Barbera! Making this humble everyday wine respected  and even fashionable today is a signal achievement. This is the claim to fame of the late Giacomo Bologna of “Braida” winery in Rocchetta Tanaro, just a few miles from Asti.

Barbera is not finicky like Nebbiolo — it will grow pretty much wherever you plant it in Piemonte, both where it produces outstanding grapes and where quality is not so high. There was not much of a premium for quality grapes in the early postwar era when wholesalers would buy indiscriminately and lump them all together. Giacomo Bologna thought he could do better and set out to achieve excellence beginning in the 1960s, when Gaja was also picking up steam.

The old Barbera was nothing special, but focusing on specific sites with old vines and low productivity, engaging in aggressive cap management and aging the wines in small French oak, Bologna was able to create both a new Barbera wine and a new image of Barbera wine. The top wines, including the famous Bricco dell’Uccellone, redefined the region and jumpstarted the quality wine movement.

Another “Braida” Revolution?

We visited Braida in June when were in Italy for the wine economics conference in Bolzano. Nadine Weihgold led us on a tour of the winery, pointing out the many ways that Giacomo Bologna’s vision and plans have been fulfilled since his untimely death by his wife Anna and his two children Raffaella and Giuseppe (both of whom are enologists).

We tasting the single vineyard wines and then Ai Suma, an extreme version of Bologna’s idea of Barbera that is only produced in special years. These are wines of distinction and reputation and so popular in Italy that a surprisingly small amount leaks out to the rest of the world.

Giuseppe Bologna happened to pass through on his way to the barrel room and, hearing the wine economics conversation, sat down to join us. “Is there anything else you’d like to taste?” Nadine asked? Embarrassed and apologetic, I confessed I wanted to follow these great wines with their vivacious but less prestigious little sister – La Monella, the frizzante Barbera that was the company’s first success. A simple wine, but with style and quality.  Were they offended? No, just the opposite. Grinning with obvious pleasure, Giuseppe went to work, corks started to fly and soon were we chatting away in mixed Italian and English.

Ai Suma might be literally the summit of Giacomo Bologna’s mountain, but his son Giuseppe has his own dreams and plans — and they include Pinot Noir. Pinot is a blending grape in this part of Italy, but Giuseppe has hopes that it might some day learn to stand on its own as Barbera has. He called for a barrel sample and the wine was very interesting — not an imitation of Burgundy, Oregon or New Zealand, but something different, still developing, full of potential.

Pinot Noir in Barolo-ville? Giuseppe Bologna must be nuts. But then they probably said that about Giacomo Bologna and Angelo Gaja back in the day.

-

This video has nice images of Giacomo Bologna and family and tells the winery’s history very well (I think you can catch the gist even if your Italian is a little rusty). The first video features Angelo Gaja telling his own story. Cheers!

Reimagining Chile’s Wine Identity

What do you think of when you think of Italian wine? Many people think first of Italy — the place, the art, the people, the culture and the food (OK, especially the food). The romantic idea of Italy sells Italian wine. Brand Italy is stronger, it is said, than any Italian wine brand and Italian winemakers have profited from this fact.

Changing Places

The relationship between country and wine image is reversed for Chile, or at least that’s the theory I found in a recent report called the Wines of Chile Strategic Plan 2020.  The wines of Chile are the nation’s ambassadors to the rest of the world, the report asserts. The wines of Chile have a more distinct image than Chile itself (although of course the two are related) and so when people think of Chile they think first of its wines.

I am not sure that I completely agree with this idea — “Chile” conjures up many images and associations for me — but I am willing to consider it for the sake of argument. Certainly how we think about the wines of Chile has some impact on our attitudes towards this country more generally. Chile’s wine identity, as important as it is to people in the wine industry, may have an even broader significance in terms of international investment, export sales, tourism and so forth.

Good and Good Value

So what is Chile’s wine identity? Well, for most of the last 50 years Chilean wine has been synonymous with “good value for the money.” As I wrote in a previous post, Chile has been trapped in a vicious cycle of rising expectations that has made it difficult for them to increase price even as the quality of their wines has continued to improve.

Is this a bad thing? Yes, I know that it is better to be known for good value than for bad value, but in today’s very competitive global market it is also good to have products that consumers are willing to pay a bit more for. The average FOB export price of Chilean wine hovers around USD 2 per liter or less than USD 20 per case. The appreciation of the Chilean peso in 2010 combined with the difficulty of raising the USD price has really put the squeeze on Chilean wine producers.

Chile is the most trade dependent of the top wine producing countries, according to the Wines of Chile report, exporting nearly 70 percent of their production.  Wine accounts for over 2.5% of Chile’s total export earnings. So enhancing the image of Chilean wine abroad by moving it upmarket is important.

There are several ways to define a country’s wine identity and this video illustrates the current theme, Wines of Chile: The Natural Choice. As you can see the theme connects the dots of factors contributing to Chile’s complex terroir and stresses the fact that that its phylloxera-free vines grow on their own rootstocks — a  nice “natural” connection.

But broad messages like this have their limitations since by definition they cannot thoroughly take into account detailed factors that may be important to understanding and promoting the wine.  The New Zealand wine tagline is “Pure Discovery,” for example, and here in Washington the motto is “The Perfect Climate for Wine.” None of these tag lines is especially stirring or sharply defining, although the key words — Natural, Pure, Perfect — have obvious appeal.

Is Carmenere the New Malbec?

Another way to think about wine identity is in terms of grape varieties, although this has limitations, too. If you think Burgundy  you think Pinot Noir and Chardonnay, for example. And Napa Valley is Cabernet Sauvignon. There is much more to the wine from these regions than type of grape, of course, but the iconic varieties are straightforward identifiers that confused New World consumers can easily understand.

Wine in Chile is really about three varieties: Cabernet Sauvignon, Sauvignon Blanc and Carmenere. Cab Sauv and Sauv Blanc together account for more than two-thirds of all wine grape plantings in Chile. These wines can be very good, but it must be said that they are cursed with that “good value” label that will be hard to shake no matter how many Wine Spectator Top 100 awards they receive.

Carmenere represents only 7 percent of vineyard plantings now, but it is seen by many as the breakthrough wine of the future, a uniquely Chilean wine that has the potential to do for Chile what Malbec has done for Argentina. The Wines of Chile report has high hopes for Carmenere both as an export product and as a tool to redefine Chile’s wine identity. But it warns against cutting corners to capture low price sales. Carmenere needs to be a premium brand if it is to serve its useful symbolic function.

Blogger Wine Tasting

Which brings us to Syrah and Pinot Noir — not grape varieties that you usually associate with Chile. They were the focus of a recent tasting organized by Wines of Chile that brought together, if that is the right phrase, a virtual group of U.S. wine bloggers including members of The Wine Economist staff. The idea was to use new media to get out the message about Chilean wine’s new directions and to help establish its wine identity among younger tech-savvy consumers. We were sent wines to sample, literature to read and provided with online access to Chilean winemakers for interactive Q&A.

Are wines like these the way forward for Chile? Syrah and Pinot Noir are high value bottled wine exports (FOB prices of $4.66 and $4.08 per liter respectively in 2009 compared with $3.37 for Cab Sauv and $2.79 for Sauv Blanc) and so they may be useful tools in this task of getting consumers to rethink the wines of Chile and what they might be willing to pay for them.

(Math note: Chile receives only about $2 per liter on average for its wine exports because lower priced bulk wine sales drag the average down while higher priced bottled wine exports try to hold it up.)

I asked the winemakers to comment on the potential for these wines on the international markets. How can Chilean Pinot Noir differentiate itself from New World Pinots from Oregon and New Zealand? And how can Chilean Syrah succeed in the U.S., where Syrah sales are slumping?

Wine Economist volunteer tasting staff: Scott, Janice, Kevin and Jeni

Their responses were not very enlightening, but I blame the online environment for that, with the group of winemakers in a boardroom in Chile trying to answer questions submitted from thousands of miles away by faceless bloggers. Anyone who has been on a conference call knows the problem. But, like conference calls, this internet session facilitated a great deal of interaction even if it wasn’t completely satisfying and so the pluses outweigh the minuses. I’ll just need to follow up, that’s all.

Tasting Notes? From the Wine Economist?

No one comes to The Wine Economist to read tasting notes, but I thought you might be interested in the team’s reactions to the wines. On the whole we liked the Pinots a bit better than the Syrahs — we just found more complexity in the glass and more to talk about. That said, I noticed that when everyone was given the opportunity to take home a partial bottle, it was the Syrahs that disappeared. Interesting.

The Syrahs were better with food, which in our case included tasty empanadas purchased from Pampeana Empanadas here in Tacoma and bruschetta with Fontina and  Huerto Azul Myrtleberry Chutney with Merken, a Chilean product that was provided by Wines of Chile along with the wines and is available from puro-gourmet.com.

I was especially interested in how college students Jeni and Kevin reacted to the tasting since young consumers are a key wine marketing target and new media initiatives like this are often organized with them in mind. Jeni said that she had never purchased a bottle of wine from Chile — her image of Chilean wine was pretty much a blank canvas —  but that the tasting put Chile on the wine map for her and she was more likely to try these wines in the future. Jeni’s image of Chilean wine changed from invisible to positive — a good sign.

Kevin had tasted Chilean Pinots before — he comes from the Willamette Valley in Oregon and is friends with many winemaker families. In Oregon, the aim is to be Burgundian, he said, and he was surprised by a couple of these Chilean Pinots. They weren’t exactly what he was expecting, which made him want to taste more to try to understand the Casablanca Valley terroir and the winemaker styles a bit better. Another good sign

Overall I would say it was a successful tasting that answered some questions and raised many more. The question of the future of Chile’s wine identity remains to be answered, however, so I’ll come back to it in an upcoming post.

>>><<<

Thanks to Wines of Chile for inviting us to participate in the blogger tasting and to Amber Gallaty of the thomas collective for making the arrangements. Special thanks to Sue Veseth, Janice Brevik, Scott Hogman, Jeni Oppenheimer and Kevin Chambers for their insights on the wines and the virtual tasting process. The photos are by Sue and Scott.

Here are the wines featured in the April 2011 blogger tasting

Follow

Get every new post delivered to your Inbox.

Join 1,828 other followers