Valpolicella & Prosecco: The Pendulum Swings to Premiumization in the Veneto

Sue and I recently returned from a week in Northern Italy as guests of the Valpolicella Consorzio. We joined a small group of multinational wine bloggers to test out a nifty new wine tourism app (available as free download for Android and Apple mobile devices) and visit a number of wineries and winemakers. We had a great experience (thanks so much to the Consorzio, our guide Federica Schir and to the winemakers) and learned a lot.

We accepted a generous invitation from my wine economist colleague Prof. Luigi Galletto to visit the Conegliano Valdobbiadene region, meet with officials of their Consorzio, tour the famous Wine School in Conegliano and visit Prosecco makers.

We capped the trip with a visit to Venissa, the vineyard and winery on the island of Mazzorbo in the Venetian Lagoon, to taste both the wines of this special place and the sparkling wines made by the Bisol family who created the Venissa project. I’ll be reporting on our trip over the next few weeks. Here is a brief introduction to the series.

Contrasts: The Red and the White

The visit was full of contrasts, some more obvious than others, starting with red and white. Valpolicella is home to many powerful red wines while Prosecco is known for its crisp sparkling whites. And the Conegliano-Valdobbiadene vineyards are sometimes so steep that they make the more rolling hills of Valpolicella seem like tabletops (which they definitely are not!).P1090025

But the biggest contrast was about shifting market focus, not color or geography. Not so long ago the Veneto (which also includes the major regions of Soave and Bardolino) was all about quantity not quality. Vast lakes of undistinguished wine were produced here, something that challenged the reputations of the quality producers back then and to a certain degree colors market perception today.

But the pendulum has swung from quantity towards quality and, while there are still undistinguished wines produced here, the focus is clearly on what we call today “premiumization” and a race to the top is under way to make better wines and to draw consumers towards more precisely defined premium products. We saw evidence of much new investment in the wine sector here. It’s a brave new world for Valpolicella — not without challenges, of course (since this is wine), but poised to grasp new market opportunities.

The swinging pendulum takes different paths in different regions. Besides rising quality in general in Valpolicella, for example, there is growing emphasis on the premium Amarone and Ripasso wines as well as distinctive wines that do not play by the DOC or DOCG rules, qualifying only for the less prestigious IGT geographical designation.

Some of these IGTs — such as the Dedicatum from Terre di Leone — were among the most interesting wines we tasted here. Dedicatum is made from a blend of 14 grape varieties — some of them rare heritage varieties — grown on the estate’s terraced hillside vineyard. Delicious and distinctive — good enough stand tall with the winery’s other fine wines — it is one of several notable and innovative IGT wines we encountered.P1090240

Prosecco is moving upmarket in its own way, with special emphasis on the premium Conegliano Valdobbiadene zone, then on “grand cru” hillside vineyards (“Rive” in the local dialect) with the luxurous Cartizze at the top of the pyramid. The “IGT” phenomenon is at work here, too, with wineries producing attention-grabbing new wines (different grapes, different winemaking methods) alongside their DOC and DOCG products.

Venissa is a special case in every way, but it can be seen as the ultimate premiumization play — distinctive terroir and innovative winemaking closely tied to Venetian history wrapped in a luxurious combination that includes wine, lodging, gourmet food and lifestyle — the complete package. Can’t wait to tell you all about it!

Discoveries: Three New Grape Varieties

The movement towards quality and innovation is only part of the  story of our Veneto visit. We were also able to add three grape varieties to our lifetime list. At Venissa we tasted the white wine made from the Dorona grape found on the lagoon vineyard. In Valpolicella we discovered Oselata vines at Villabella and tasted the very concentrated wines that the tiny red grapes produce both at Villabella and at Zýmé. A very intense experience!

Finally, we were able to sample wine made from the Manzoni Bianco grape made by the team at the Conegliano Wine School where Prof. Luigi Manzoni taught. Manzoni experimented with several grape crossings (much as Luther Burbank did with different crops in the U.S.) and the Incrocio Manzoni 6.0.13 that we tasted is a cross of Riesling and Pinot Bianco (or maybe Chardonnay based on DNA analysis, according to Ian D’Agata’s excellent book Native Wine Grapes of Italy).

Aromatic, crisp and refreshing — like a lighter style of Riesling — not something I remember tasting before. but perhaps I am wrong since D’Agata says that it is a widely planted variety in the Italian Northeast. Great to taste it at the source (the “6.0.13” designation is an index of the original plant’s location in the test vineyard we visited).

We were also able to try sweet but balanced Recioto wines, both red (in Valpolicella) and white (from the Garganega grape), made from air-dried grapes. Not everyone in our group enjoyed these wines as much as I did — the fashion against residual sugar is very strong — but I found the best of them to be very much worth seeking out.  Recioto della Valpolicella is underappreciated these days, we were told, and the only market is local, which is a shame because without Recioto the world would  not have Amarone and it is good to be able to taste them both.

Airline Wine: Code-Share Conundrum

I’ll end this rambling introductory column with report on the importance, from a wine consumer standpoint, of reading the airline code-share details carefully. Our journey from Seattle to the Veneto and back presented two distinctly different 35,000 foot wine experiences.

The outbound Lufthansa flight provided industry standard international quality in our economy cabin, with decent complementary red and white wines poured from the bottle — we liked the Riesling best.  Almost everyone had wine with dinner — why wouldn’t they? — and there was even a little Cognac (but, alas, no Port) after the meal. Not luxurious — the usual plastic glasses, etc. — but welcome and civilized and what we have come to expect from international air travel.

The flight back was on Lufthansa’s code-share partner United Airlines, home to the “Friendly Skies” but not very friendly when it came to wine in the economy cabin. Little bottles were offered for sale at $7.99 each. No one had wine with dinner — why would they? — and the flight attendant seemed a little bit surprised when I ordered and paid just to see what it was (a decent Sauvignon Blanc from the Pays D’Oc as I recall). Can you guess which code-share partner I will look for on our next trip if faced with the same choice?

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Here is a list of the wineries we visited during our Valpolicella and Prosecco tour

Wineries we visited in Valpolicella:

Valentina Cubi, Fumani

Scriani, Fumani

San Rustico, Valgatara

Terre di Leone, Marano di Valpolicella

Villa Cordevigo and Villabella, Cavaion Veronese

Casa Vinicola Sartori, S. Maria di Negrar

Cantina Valpolicella Negrar, Negrar

Monteci, Pescantina

Cesari, Cavaion Veronese

Zýmé, San Pietro in Cariano

Santa Sofia, Pedemonte

Secondo Marco, Fumane

Salvaterra, San Pietro in Cariano

Wineries we visited in Conegliano Valdobbiadene

Scuola Enologica Conegliano, Conegliano

Mionetto, Valdobbiadene

Sorrelle Bronca, Colbertaldo di Vidor

and in the Venetian lagoon, 

Venissa, Isola Mazzorbo, Venice

 

Get Ready for the Wine Industry Financial Symposium

Sue and I have just returned from a week in Northern Italy as guests of the Valpolicella Consorzio (look for a series of industry reports on Valpolicella and Prosecco in the coming weeks) and now we are getting ready to head to Napa, California for the Wine Industry Financial Symposium that will be held there on September 22 and 23.

The theme of the symposium is “Let the Good Times Roll,” which will strike some as a bit off-key since the California headlines this year have been dominated by bad news — first drought and then the recent Napa earthquake. The program (see below) doesn’t sidestep the challenges, but seeks to put them into the context of a rising tide in the U.S. market. It should be an interesting couple of days!

Monday’s program features workshops that focus on specific issues of interest to wine industry professionals including the Hispanic wine market in the U.S., the rise of craft beer, the emerging talent gap in the wine industry, tax issues and vineyard finance.  Lots of interesting topics and great speakers — something for everyone.

The Tuesday morning program accentuates the positive, beginning with David Freed’s industry overview and ending just before lunch with Carolyn Wente and the celebration of 130 years of Wente Vineyards. In between Dr. Robert Smiley will present the results of his annual survey of wine industry CEOs and John Ciatti will report on U.S. and global harvest trends.

I will talk about “Lessons from the Global Wine Wars,” with an overview of important global market trends, focusing on two that I think are particularly relevant for the U.S. industry today: the “premiumization” of the wine market and the surge in “disintermediation” in the wine industry.

Tuesday afternoon features sessions on social media marketing, “next generation” consumers and wine distribution. Looking forward to hearing the speakers and seeing everyone in Napa next week. Here’s the complete program. Cheers!

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Wine Industry Financial Symposium

Monday Workshops – September 22, 2014

Session I: 1:30 p.m. – 3:00 p.m. – Choose One

1. NEW DIRECT TO CONSUMER TRENDS
Examine new ways to relate to consumers through the direct to consumer channel. Speaker-moderator Craig Root will present several new tips designed to enhance your operation. Featured speaker Norman Stolzoff, President of Ethnographic Insight, will offer a detailed look at ethnographic research. This important field uses anthropological insights to solve real-world problems. Ethnography helps better serve customers, leading to profitable results.
Craig Root, Visitor Management Resources
Norman Stolzoff, PhD, President, Ethnographic Insight Inc.

2. TRANSACTIONS: WHO ARE THE BUYERS AND WHO ARE THE SELLERS?
John Mackie,
Partner, Carle, Mackie, Power & Ross, LLP, Moderator
Tony Correia, Owner, The Correia Company
Matt Franklin, Principal, Zepponi & Company
Josh Grace, Managing Director, International Wine Associates

3. THE HISPANIC WINE CONSUMER
What does it mean to the wine industry and what do we do to make wine the beverage of choice?
Steve Rannekleiv, Executive Director, Research, Rabobank International
Natalia Velikova, PhD., Texas Tech University

4. THE EMERGING TALENT GAP POSES RISKS FOR THE WINE INDUSTRY
Ray Johnson, Director of Wine Business Institute, Sonoma State University
Carol O’Hara, Partner, Burr, Pilger & Mayer, Moderator
Tom O’Brien, Director of Human Resources, Trinchero Family Estates
Larry Smith, Senior Vice President, Human Resources, Jackson Family Wines
Dawn Wofford, Managing Partner, Benchmark Consulting

Session II: 3:30 p.m. – 5:00 p.m. – Choose One

5. EQUITY AND DEBT MARKETS: CURRENT TRENDS AND FUTURE OUTLOOK
David Freed, Chairman, The Silverado Group
William Beyer, Principal, Prudential Agricultural Investments
Hal Forcey
, American AgAppraisal
Perry F. Deluca, Senior Vice President, Wine Industry Team Leader, Wells Fargo Bank

6. WHO IS THE COMPETITION? WILL CRAFT BEER AND CRAFT SPIRITS HURT WINE SALES, OR SHOULD YOU JUST JOIN THEM?
Bill Leigon, President, Jamieson Ranch Vineyards
Mark Crisler, CS, Founder & Chief Everything Officer, Trellis Wine Group
Jesus Ceja, Ceja Winery / Carneros Brewing Company

7. USE PERMITS: CURRENT ISSUES AND FUTURE TRENDS
Phillip Kalsched, Partner, Carle, Mackie, Power, Ross, LLP, Moderator
Dean Parsons, Project Review Manager, Sonoma County Permit & Resource Management Department
Jeff Redding, Principal, Land Use Environmental Planning Service
Beth Painter, Principal, Balance Planning

8. COMMON TAX ISSUES FOR VINEYARDS AND WINERIES
Federal Income Tax Updates, State Income Tax Updates, Sales Tax Updates and Estate Tax/Valuations
David Pardes, Tax Director, PricewaterhouseCoopers
George Famalett, Tax Partner, PricewaterhouseCoopers
Joan Armenta Roberts, Managing Director, PricewaterhouseCoopers
Eric W. Nath, ASA, Principal, Eric Nath & Associates
Thomas Garigliano, Tax Partner, Burr, Pilger & Mayer


Tuesday General Session – September 23, 2014
7:45 – 8:15 a.m.
COFFEE & REGISTRATION

8:15 – 8:20 a.m.
WELCOME & INTRODUCTIONS
Lisa Adams Walter, Director of Programs, Wine Industry Symposium Group

8:20 – 8:30 a.m.
WINE INDUSTRY OVERVIEW
David Freed, Chairman, The Silverado Group

8:30 – 9:15 a.m.
WHAT WINE INDUSTRY LEADERS THINK IS IMPORTANT FOR THE FUTURE
Robert Smiley, PhD, Dean and Professor Emeritus, Director of Wine
Graduate School of Management, University of California, Davis

9:15 – 10:00 a.m.
LESSONS FROM THE GLOBAL WINE WARS
Mike Veseth, Editor, The Wine Economist Blog

10:00 – 10:30 a.m.
GET – ACQUAINTED BREAK

10:30 – 11:15 a.m.
THE CALIFORNIA AND GLOBAL HARVEST UPDATE
John Ciatti, Broker, Ciatti Company LLC

11:15 a.m. – 12:00 noon
WENTE VINEYARDS CELEBRATES 130 YEARS
Carolyn Wente, CEO, Wente Vineyards

12:00 – 1:15 p.m.
NETWORKING LUNCHEON

1:15 – 2:15 p.m.
HOW SKILLFUL USAGE OF DIGITAL MARKETING AND SOCIAL MEDIA
NEED TO BE INTEGRATED IN THE BIGGER PICTURE OF BRAND BUILDING AND POSITIONING
John Gillespie, President, Wine Market Council and CEO, Wine Opinions
Karena Breslin, VP Digital Marketing, Constellation Brands
Alisa Joseph, Vice President, Business Development, The Nielsen Company
Mark Gordon, Digital Marketing Manager, Jackson Family Wines
Mike Osborn, Founder and VP Merchandising, Wine.com

2:15 – 3:00 p.m.
NEXT GENERATION WINE
Liz Thach, PhD, MW, Professor of Management and Wine Business, Sonoma State University
Judd Finkelstein, Judd’s Hill Winery
Lisa Broman Augustine, Broman Cellars
Nicole Bacigalupi Dericco, Bacigalupi Vineyards

3:00 – 4:00 p.m.
WINE AND DISTRIBUTION
Jonathan Pey, Principal, TEXTBOOK Napa Valley
Jon Moramarco, Principal, BW 166 LLC
Dan Grunbeck, EVP Corporate Business Development & Strategy, Youngs Market

4:00 – 5:00 p.m.
FINANCIAL SPONSOR FINALE
WINETASTING & RECEPTION – Hosted by WIFS Sponsors

 

Wine in Context: Wine Vision Probes the Sensory Experience

Sue and I are in the Valpolicella region today investigating the wine and wine tourist industries and trying to understand the challenges and opportunities the Veneto will confront in the future. Look for our reports in the coming weeks.

Context-Sensitive Experiences

In the meantime I have been giving some thought to how context shapes our perception of wine (one of the topics that I examine in my next book — working title Money, Taste and Wine: A Complicated Relationship).  The way we experience wine depends upon the physical and emotional setting, the food, wine and other products that are involved and the information that we have about the wine’s story and its price. Change any one of these elements you change the wine!

If context matters in wine — and I am quite sure it does since it matters in most aspects of the human experience — then it seems to me that it makes a difference not only in terms of how we actually taste wine when we drink it but also how it is priced, marketed, served and even how we think about critic ratings.  Context-sensitivity isn’t just about those menus that pop up when you right click in Windows,  it at the heart of the wine world.

I was pleased to see that context will be on the agenda at Wine Vision 2014, the CEO-level wine industry conference that is set for London in November. It’s a small part of my talk which will focus on shifting market forces and, somewhat surprisingly, the central element of what you might call the “social program” — the after-hours events that are typically devoted to sip and swirly, grip and grin.

Beyond Taste: Drinking with All Your Senses

The first night’s social program includes a presentation and multi-sensory experience organized by Prof Barry C. Smith, Founding Director, Centre for the Study of the Senses, University of London and Prof Charles Spence, Head of the Crossmodal Research Laboratory, Oxford University Here’s what the online program has to say.

Bring an open mind and all of your senses for a multi-sensory experience that goes beyond taste to investigate how our perception of wine is affected by what we see, smell, hear and feel. Professors Spence and Smith, experts in the field of multisensory flavour and marketing, will take us on a wine-fuelled tour of the human senses, showing how each contributes to our enjoyment and appreciation of wine. Along the way you’ll be invited to use all your senses to experience some very fine wines – and to understand the neuroscience and philosophy that determine exactly why you perceive them in quite the way that you do. You can expect to find answers to questions you’ve hardly dared to ask including:

  • Does everybody taste wine the same way I do?
  • Is wine tasting purely subjective, or are there objective measures of ‘good’?
  • Where does smell stop and taste begin?
  • Can mood music, lighting, and ambience alter the taste of a wine?
  • What do the results of blind taste tests really mean?
  • And what wines should I drink when I’m flying?

Expect to have your perceptions enhanced and your mind altered as we investigate the world of ‘gastrophysics’ – the study of how psychology, cognitive neuroscience and multi-sensory design can help us market wine in new ways to experience-hungry modern consumers.

I think you can see that each of the topics suggested here matters not just for the consumer of wine but also for those of us in the business of making and selling it. My next book includes a section on the particular problems of making and choosing wine for air travel, for example, where the context is out of the ordinary in almost every possible way. Since airline sales are a good wine market, much attention has already been devoted to this sensory context. Maybe more attention should be given to other unusual wine environments?

Wine and Chocolate

The second night’s social program features a presentation by Dominique Persoone, founder of The Chocolate Line. I have a special interest in chocolate, but it’s not what you think. I am hypersensitive to the sugar/caffeine mix in chocolate and can only tolerate it in tiny amounts. So eating chocolate is not on my agenda.

But I have used chocolate for several years to teach students how to think about taste and how to describe what they are tasting — but without tasting wine or consuming alcohol. I start by tasting Hershey’s Milk Chocolate — a taste that everyone knows and most people like. Then we slowly move up the scale to higher and higher cocoa percentages. One year we maxed out at 95% cocoa, well past the 70% level that serious chocolate tasters deem the beginning of real chocolate.  Tasters quickly realize that Hershey’s doesn’t taste much like chocolate — it is more caramel because the milk and sugar dominate over the chocolate flavor.

Tasting all these different chocolates teaches many things that are useful to someone learning about wine. First, all chocolate (and wine) isn’t the same and what your friend enjoys most may not be to your taste. So you have permission to have your own opinion. There is even a chocolate flavor wheel much like the Ann Noble’s famous wine aroma wheel, so we learn how to find words to describe what we taste.

I once asked my class what the take home message was and someone said it best. It’s about balance, professor. Wine and chocolate are complicated and each of us has to find the balance we like best. Having tasted chocolate in this way, they were ready to take on wine and visitors to my student tastings have always been surprised by how much the students were willing to think independently about their experiences whereas more seasoned adult tasting groups sometimes struggle to guess the “right answer.”

Chocolate: A Whole New World

“Chocolate: A Whole New World” is the title of Persoone’s program. Here’s the agenda:

Dominique Persoone, heralded as the most persistent innovator in the world of chocolate, will introduce you to chocolate like you’ve never tasted before; chocolate you can eat, drink, wear and even inhale. In doing so he’ll challenge us all to think about the sources of innovation – the stimuli that drive us to take a traditional product and create something deliciously, temptingly, even shockingly new. He will touch on the power of food-pairing and the complimentary nature of chocolate and wine.  It’ll be a very hands-on (and lips-on) experience. You’ll get to sample his exquisite chocolates, including his wine chocolates, Chocolate Lipstick, and see the world famous Chocolate Shooter he created especially for The Rolling Stones.

As you can see, Persoone also uses chocolate to think about wine and I’m sure this will be a popular and informative session. I’m looking forward to it, even if I have to take tiny tastes.

I think I’m going to like wine chocolates and Chocolate Lipstick, but I’m not sure what to think about the Chocolate Shooter. When I first saw the name I figured it would be something served in a shot glass like an oyster shooter. Sounded pretty good. But instead it is something that is shot up your nose! Yikes. I wonder how Persoone got the idea that the Rolling Stones would want to snort chocolate? Here’s a brief video to show you what’s involved. Enjoy!

Wine and Identity: Branding, Heritage and Terroir — a review

Matt Harvey, Leanne White and Warwick Frost (editors), Wine and Identity: Branding, heritage, terroir. Routledge, 2014.

The premise of this interesting collection of academic papers is that the global wine market is highly competitive and rapidly changing and, in this dynamic environment, identity has become an increasingly important factor in the way that wine is thought about, experienced and especially how it is marketed.

Harvey, White and Frost, Australian professors of law, marketing and tourism respectively, analyze wine and identity in terms of heritage, branding and terroir — three flexible but useful “created” concepts.

You might think that heritage and terroir are historical and natural phenomena whereas brands are manufactured by marketers, but when you think about it heritage and terroir are subject to the same story-telling factors as commercial brands and are perhaps more powerful because unlike a created brand they bring with them a sense of authenticity.

Like many others, I see story-telling and identity as key to wine in the 21st century, so I was excited to receive this volume and I find it well-written, interesting and wholly worthwhile. I think anyone who wants to understand wine a bit better will find something useful here.

Each of the 18 chapters presents a relatively brief introduction to an interesting topic — enough to whet the appetite for more research and raise some thoughtful questions. Chapters that I found interesting include a comparison of wine heritage in California and Victoria (Australia), two regions with a great deal in common besides their wine, a comparison of wine in the “emerging” markets of Malaysia and the United States that made me rethink what I thought I knew about the U.S., and heritage and tourism in the Barossa Valley examined through case studies of Penfolds and Jacobs Creek, two wineries now owned by multinational firms.

I also enjoyed chapters on identity as expressed through winery architecture and an unexpected analysis of online “terroir.” There was something to like in every chapter, although as with every collected papers volume some parts will be more interesting to any given reader than others and the heritage-branding-terroir theme sometimes gets lost.

The authors of the chapters are appropriately multinational — Australia, New Zealand, France, Canada, Brazil, Georgia, Slovenia, the UK and South Africa are represented. Well worth reading. Part of the Routledge series on gastronomy, food and drink.

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Note: Since I am an economist, I have to mention cost. Academic books like this are expensive for personal purchases. You might see if your local library has a copy or can borrow one for you.

 

Argentinean Wine & Restaurants: Reflections on a Catena Asado

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

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

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

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

The Gaucho Effect: How Malbec Conquered Britain

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

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

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

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

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

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

Argentina’s Upbeat Future

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

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

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

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

Sustaining the Boom

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

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

asado

 

 

Like a Tax Cut for Wine Producers: ShipCompliant’s New AutoFile

I used to complain that the federal income tax is really three taxes in one. First comes the actual tax dollars that you have to pay. The time and trouble of record-keeping and so forth is the second tax and the third is the cost of preparing and filing the returns (or having others do that for you).

The Tax Tax Tax

I used to do everything by hand and sometimes the opportunity cost of the time I spent was almost as large as the check I wrote. Then came tax preparation software such as Turbo Tax and that cut the time cost quite a bit. Then the ability to import financial data directly into the tax program made things  better. Finally, free and efficient electronic tax filing arrived — modified rapture!

I’m still not a very happy guy when I am doing my income taxes, but I appreciate the fact that the process is more efficient now so that I can spend my time doing other productive things like writing this blog.

The Wine Regulation Tax

Imagine if you still had to do your taxes by hand, but that you had to do them for 40 different tax systems! The combined compliance costs would be an enormous drain on productivity. It would be tax tax tax forty times over. Yikes!

This is more or less the situation for any winery that is trying to do direct-to-consumer business in the 40 states that allow this activity. Each state has its own rules and regulation and each requires regular reporting , payment and so forth.  Although most of us imagine that the logistics of shipping are the main barrier to direct-to-consumer wine sales, the compliance costs are significant business barriers. They are like a tax on direct wine shipments and sometimes high enough to discourage wineries from entering the inter-state direct-to-consumer business at all or to limit it to just a few states.

Like a Tax Cut?

Which is why I was interested when ShipCompliant introduced its new AutoFile product yesterday. AutoFile has the potential to vastly reduced the amount of staff time devoted to multi-state direct-to-consumer wine sales compliance and to make multi-state operations more feasible. ShipCompliant estimates that a medium-sized winery shipping to all 40 states would need to file about 600-800 annual, quarterly, bi-monthly and monthly regulatory reports and tax filings in the course of a year, costing hundreds of staff hours. Their program does for compliance what Turbo Tax, account downloads and e-File did for my income tax experience.

You still have to pay the taxes and fees, of course, but reducing the costs of record-keeping and filing almost seems like a tax cut to me. AutoFile and products and services like it are small but import steps to make the dysfunctional US direct-to-consumer wine market a bit more efficient, which benefits both wine producers and consumers.

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Thanks to Tom Wark for letting me about this product.

Wine Innovation: Lessons from Portugal

Innovation is a hot topic in the wine industry these days. While some wine brands can depend upon their traditional markets, messages and products, many producers find themselves under increasing attack from “the crafts” — craft beer, craft cider and craft spirits.

One advantage that these alcoholic alternatives seem to possess is the heightened ability to adapt, evolve and excite — to innovate in various ways that keep customers coming back to see what’s new.

How wine got in this situation is a long story that I will tell another time and whether wine should even enter the innovation wars is something that is hotly debated. Some new wine products have been criticized as “pop wines” that debase and therefore threaten the whole product category — not a view that I endorse, but I can understand the concern behind it.

So I was very interested in looking at innovation during my visit to Portugal and I found it in many different forms. I thought you might be interested in a little of what I discovered.

Port: No Wine Before Its Time

Port, which is arguably Portugal’s signature wine, is an example of a wine category that is both timeless and highly innovative.  Timeless in the sense that Port wines have in many ways remained much the same for several centuries. White Ports, Ruby Ports, Tawny Ports — in fundamental respects these are the same today as they were 100 or 200 years ago. Almost nothing is as traditional as Port, with its stenciled bottles and historic brands.

This is a plus and also a minus. The plus of course is brand recognition — only Champagne was a stronger brand than Port from a name recognition standpoint. But it’s a minus, too, because that brand, like Sherry, is wrongly associated with one-note sweet wines. Like Rodney Dangerfield, they sometimes don’t get the respect they deserve.

And it is a minus because the traditional Port wine styles are exercises in patience in a very impatient world. Tawny Ports must be held by the maker until they are mature in 10, 20 or even 40 years. That’s a lot of time to wait with the investment time clock running. Vintage Ports need time, too, but this time the buyer is expected to patiently wait for the wine to mature.

Time is Port’s friend because of what they do together in terms of the quality of the final product but, from an economic and market standpoint, time is also an inconvenient enemy and seemed to limit Port’s potential in the postwar years.

The answer to the time problem was an innovation that appeared in 1970, when Taylor Fladgate released their  1965 Late Bottled Vintage (LBV) Port.  LBV has the character of Vintage Port but is ready to drink when released, not 20 years later. It was not quite the Chateau Cash Flow killer app of the wine world, but it certainly breathed new life into the Port market at a moment when this was especially welcome. Some say that LBV saved the Port industry and I think this might be true.

Colorful Port

Red and white are the traditional colors of Port, but recently some makers have innovated to try to get the attention of younger consumers who have as little interest in their notion of grandfather’s Port as they do in their stereotype of granny’s Cream Sherry. Croft Pink Port and Quinta de Noval Black Port are examples of this innovative trend.

Pink Port is made in a Rosé style, with less skin contact and therefore fewer grippy tannins than Ruby Port. The Croft website is fully of cocktail ideas so perhaps this is a Pink Martini killer wine? Richard Hemmings, writing on the JancisRobinson.com website, makes the wine sound like an excellent option for the many Moscato lovers in your life.

97g/l RS, 4.2g/l TA. Raspberry juice, bubblegum, pink apples and fresh strawberries. Sweet and full on the palate, good concentration. Well balanced and smooth, creamy texture with a mouth-watering burst of fruit on the finish. Very good, not massively complex but a worthy product. (RH)

Noval Black is more traditional in style and color, with more of the tannins than the Pink. Less complex than my favorite LBVs, but interesting. I agree with the website’s chocolate pairing suggestions, although I haven’t tried any of the cocktail-type recipes. Here is Hemmings’ take on Noval Black:

Ruby reserve in style, with an average age of 2-3 years old. Aimed at younger consumers, as the flashy website attests! Fruity, jammy, figs and dates. Sweet and supple, with a glacé cherry flavour and a simple, satisfying style. (RH)

Product versus Process Innovation

So far I have focused on product innovation but I haven’t mentioned process innovation and that is a mistake ,as I learned from a winemaker during my stay in Porto.

George Sandeman of the famous Port & Sherry family invited me to taste through the Ferreira line of wines and Ports and of course the Sandeman Ports. How could I resist? Even better, we would be joined by Luis Sottomayor, Porto Ferreira’s award-winning winemaker.

The bottles and glassware filled the big table as we began to taste through the Casa Ferreirinha wines then the Ferreira and Sandeman Ports. The wines were eye-opening. From the most basic wines selling for just a few Euro on up to the super-premium products they were well-balance, distinctive and delicious. Not all the Portuguese wines that make it to the US market have these qualities.

I have a star in my notebook next to the entry for the Casa Ferreirinha Vinha Grande Red 2010, for example. A blend of classic Portuguese grape varieties from two Douro regions, it spent twelve months in second the third use oak. Easy drinking, soft tannins, nice finish, classy, well-made. Cost? About Euro 10. in the home market or $19.99 in the US.

“Delicious” I wrote next to the note for the Casa Ferreirinha Quita Da Leda Red, which comes from an estate vineyard just 1 kilometer from the Spanish border. It is the product of a small winery located within the company’s larger facility. Spectacular wine, special terroir, I wrote. US price is $64.99 and worth it.

As we tasted through the Ports I started to talk about innovation — Pink, Black and so on. Sottomayor stopped me in my tracks. If you want to really understand innovation in Portugal, he said, you have to look beyond new products to the work that is being done to improve the process in the vineyard and the cellar. This is where the real gains are, as seen in the table wines I had just tasted and the Ports I was about to sample.

Taste this LBV, Sottomayor said. The LBVs we make today are of the same quality as the Vintage Ports we made 15 years ago. And the Vintage Ports are that much better, too.  New products are part of the story of Portuguese wine innovation, but improved winegrowing and winemaking are just as important now and probably more important in the long run. Lesson learned!

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I came away from the tasting described above both richer and poorer. Richer because Sottomayor’s lesson about innovation will save me some money — as much as I enjoy Vintage Port and will continue to buy it, I now have LBV centered on my radar screen and it sells for a good deal less.

And poorer? Well, Sandeman and Sottomayor set up a little experiment for me, first letting me taste their 10-year old Tawny Ports and then the 20-year-olds. We like the 20s, George Sandeman said, because you can taste where they’ve been (the 10-year old wines) and also where they are going  (the 40-year old Tawny that I tasted next). The tension between youth and old age makes the 20-year old Tawny particularly interesting, he said.

And I am sad to say that I could taste exactly what he was describing. Sad? Yes, because 20-year old Tawny costs a good deal more than the 10 and for the rest of my life I am going to be paying that extra sum!

Congratulations to George and Luis on the great ratings that their 2011 Vintage Ports have received! And thanks to them and to Joana Pais for their help and hospitality.

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