Message in a Bottle? The 2007 Wine Star Awards

Wine Enthusiast has announced the winners of their 2007 Wine Star Awards and I find the selections pretty interesting. Usually wine magazine awards go to famous winemakers like Robert Mondavi or Paul Draper the “philosopher/winemaker” at Ridge. But Wine Enthusiast positions itself as more of an industry publication than an enthusiast mag, so these awards are a bit different — they honor exceptional achievement in an increasingly complex global wine market and send a message to those who pay attention about how the global market is evolving.

The top award — Man of the Year (yes, they really call it man of the year) — goes to Ray Chadwick, who is not a household name unless your house is pretty deeply involved in the wine business. Chadwick has an MBA from the University of Chicago instead of a oenology degree from Davis. He runs the Chateau & Estate group of Diageo, one of the world’s largest drinks companies. His achievement was to build a successful global brand portfolio of premium wines. The citation for the award says in part

Chadwick has overseen tremendous growth at DC&E, launching new brands from California, Australia, New Zealand and France, growing its wine portfolio from three brands to 21, and focusing on premium wines. DC&E’s strong California portfolio includes Beaulieu Vineyard, Sterling Vineyards, Acacia and Chalone. In the last year, it launched Newharbor (NZ), B&G Bistro (France), Beauzeaux (CA) and A by Acacia (CA). Under Ray’s leadership, DC&E began fiscal 2007 as the No. 4 premium wine company in the United States (8.7% market share), and finished the year at No. 3, with a 9% market share. With sales of 5 million cases a year, at a retail value of $1 billion, DC&E is one of the 10 biggest U.S. wine companies. But beyond the astonishing numbers, Chadwick has helped build an engaged and dedicated team. As an insightful strategist and superb administrator, he has repeatedly met and mastered an enormous challenge: to bring together different corporate cultures, successfully merging Diageo, Seagram’s, and finally Chalone, providing a collaborative and winning environment.

This says a lot about what the wine industry in the U.S. and the world. First, the award stresses the importance of marketing and distribution in today’s market environment. Second, although the trend towards consolidation continues, the premium wine segment is still pretty open — the third largest firm has just 9% of market share. Third, it stresses that fact that having a diversified international portfolio of premium wines is of growing importance. Retailers like to deal with a small number of suppliers, so successful distributors must have products that will fill a lot of different spots on the wine rack. And finally, the stress on team building reminds us that this is still a people business. Personal relationships and trust are necessary in a business where you don’t always know what’s in the bottle you are selling.

Several of the other awards also make interesting statements about the wine business today. The Importer of the Year is Gallo, which we all think of as company deeply rooted in California’s Central Valley (and now Sonoma, too, of course). But wine is a global business and so Gallo has become global, too. The citation explains

The importing side of the business began in 1997 with Ecco Domani Pinot Grigio from Italy, a company which Gallo started from scratch. It was one of Ernest Gallo’s ideas, and a fairly radical one, considering the company’s exclusive focus up to that point on California wines. The company currently imports 15 brands from 11 wineries in nine countries: France, Italy, Spain, Germany, Chile, Argentina, Australia, New Zealand, and South Africa. Of these, seven were created, while the other eight represent partnerships.

Gallo is a master of brand management. Gallo’s emphasis on expanding its imports (and exports, too, although that’s another topic) underlines the point that a diversified portfolio of international brands is the dominant competitive strategy today.

But global markets don’t necessary spell the end of regional family wine firms. They can survive and even thrive, but they have to evolve along with the market. Two other Wine Star awards recognize achievements in this vein.

DFV Wines (Delicato Family Vineyards) was named the American Winery of the Year for its successful portfolio of California brands. The citation reads

DFV Wines is a family-owned winery committed to its 80-plus-year wine heritage in California. Three generations of the Indelicato family have overseen vineyard operations and winemaking, and produce a portfolio of wine brands from their various properties. Originally a top quality supplier of grapes and bulk wine, in the 1990s they moved into bottled varietals; they currently offer 9 different brands, which appeal to a wide range of consumers. In the late 1980s, the family purchased the 12,000-acre San Bernabé Vineyard in Monterey, and in the 1990s they added Clay Station vineyard in Lodi, and North Coast vineyards in Napa and Sonoma. The Indelicato family has earned a reputation for maintaining the highest standards in farming, with an unwavering dedication to environmentally sensitive winegrowing practices and economically sustainable business practices. Individual wines that have gained recognition in recent years include Gnarly Head Zinfandel, Clay Station Viognier, Irony Pinot Noir and Chardonnay, 337 Cabernet Sauvignon and Delicato Shiraz. DFV Wines answers consumer demand for great tasting, mindfully grown, intelligently vinified wines for every occasion

The New World Winery of the Year is one of my personal favorites, Villa Maria. The citation reads

Villa Maria is one of New Zealand’s leading wineries. It was founded in 1961 by its current owner and Managing Director, George Fistonich, and is 100-percent New Zealand—and family—owned. The company’s primary focus is on the vineyards themselves,to produce the highest possible grape quality, while respecting the importance of regional differences. Astute site selection is followed by superior vineyard management and then complemented by expert winemaking. Villa Maria is also known for its innovations in its native country: a tiered system of payment for grape growers based on the fruit quality and the creation of reserve and single-vineyard wines. Under Fistonich’s leadership, Villa Maria also became the first major wine company in the world to declare its wineries “cork free,” opting for screw cap closures on all of its wines. Through his ceaseless pursuit of quality, Fistonich and Villa Maria have made outstanding contributions not only to New Zealand wines, but also to the wine world in general.

Villa Maria shows that it is possible for a family-owned winery in what must still be considered an “emerging” wine region to achieve international success without a huge brand portfolio or multinational money — through a stubborn and consistent commitment to quality. Villa Maria’s success comes from a combination of good old-fashioned winegrowing (a strong focus on grapes, vineyards and growers) and an openness to innovations like the screw cap.

Congratulations to all the winners of the 2007 Wine Star Awards. And thanks to Wine Enthusiast for using these awards to highlight important characteristics of the contemporary wine market.

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