New Year’s Resolution: De-Alcoholized Wine

December 28, 2011 By Mike Veseth in wine markets 4 Comments

I’ve made a New Year’s Resolution: De-Alcoholized Wine. I’ve resolved to study this misunderestimated wine market niche. Heck, I might even drink some!

My resolution is provoked by a friend who had a bad bicycling accident. She’s going to be OK, but she suffered a serious head injury and her doctor says no alcohol while her brain recovers from the shock.

No Wine? No Way!

No alcohol? Well, that’s easy enough. But no wine? No way! Wine is more than just alcohol — it’s civilization. And so she’s exploring the possibilities of de-alcoholized products as a way to enjoy wine without having to deal with the negative effects of alcohol. And she is not alone.

A lot of people are interested in alcohol-free beverages — you see non-alcoholic beer all the time at summer picnics, for example, and I think every holiday party features non-alcoholic alternatives like sparkling cider and fruit juices. Less alcohol means fewer calories, another advantage. No reason why wine shouldn’t be added to this mix.

In fact there might be particular reasons to consider wine, since it famously features health benefits. Many supermarkets feature gourmet grape juice as a health product and growers like Draper Valley Vineyards bottle unfermented juice of Riesling, Pinot Noir and other wine grape varieties. These juices are delicious, but they don’t taste like wine. In fact I have my students taste them so they can see how much different wine is from its juice.

With only a couple of exceptions (I think Moscato might be one of them), wine grape juice does not taste like the corresponding wine. The magic of fermentation does more than produce alcohol, it changes things in a good way. So making the wine then removing the alcohol is the way to go.

Haven’t Tried It? Yes You Have!

Have you ever tried de-alcoholized wine? I’ll bet you have and don’t know it!

That’s because a lot of today’s wine is actually partially de-alcoholized. Some but not all the alcohol’s been removed (don’t look on the label — the info isn’t there). It is not uncommon for wineries to take a portion of their wine and have the alcohol removed, with the resulting liquid blended back into the original vat, lowering the average alcohol level by a percent or two. Why do they do it? To correct the taste or style. And sometimes to bring the alcohol level below the 14 percent threshold where higher federal tax rates kick in.

No one talks much about this (or about the practice of adding “jesus units” — water — to fermenting wine to accomplish more or less the same result) but I am told that it happens all the time. Imagine how much of a punch some of those big Zins and Shiraz/Syrahs would have if they weren’t tamed a bit!

My bicycling friend reports that the de-alcoholized wines she’s tried have been very satisfactory. They are clearly wine, not grape juice, she reports, and while the flavors and aromas aren’t as complex, they provide the civilized experience she seeks. “I find it a very acceptable way to feel like you’re drinking your traditional glass of wine with appetizer or dinner, especially if you have compelling reasons to avoid alcohol intake.”

Red, White and Orange?

De-alcoholized wine actually contains a tiny bit of alcohol, but can be sold as a non-alcoholic beverage so long as it contains less than 0.5 percent alcohol by volume. Amazingly, this is about the same amount of alcohol you will find in orange juice. Really!

A trip to my local upscale supermarket revealed a surprisingly good selection of de-alcoholized wines (six still wines and one sparkler) selling for about $5 (a holiday discount price) to $12. Fre (a Sutter Home brand) and Ariel (owned by J. Lohr Vineyards) are the two largest producers and accounted for all the wine I saw.

Other brands you might see here in the U.S. include Carl Jung from Germany and posssibly Vandalia from Napa Valley, the subject of a 2010 Wall Street Journal story (they’ll sell you a case of their 2002 de-alcoholized Cabernet Sauvignon for $200 if you act now). Other countries have de-alcoholized wines, too, including Wine Zero in Italy.

Interestingly, the two big U.S. brands are made in very different ways. Both begin with wine, of course. Ariel uses reverse osmosis to remove alcohol and water, resulting in a concentrated wine. The image above (from the Ariel website) shows how it works. Fresh water is added to the de-alcoholized wine concentrate before bottling.

Fre, on the other hand, uses the spinning cone method to remove alcohol and then adds back in a small amount of the unfermented juice to give the wine better body.

A Growing Market Segment?

I wrote to both companies asking for sales data but neither sent a reply. I wanted to test my hunch, which is that sales of de-alcoholized wine are growing. This might make sense since interest in wine is on the rise and concern about alcohol’s health effects is also strong. Possibly these two trends are in complete conflict, but maybe there is an overlapping niche where brands for Fre and Ariel (and the juice products, too).

Now that I am sensitive to the issue, I seem to see news reports about head trauma problems everywhere — in the international news about soldiers returned form overseas duty, for example, and in the sports pages where football, hockey and even soccer injuries are reported. I can’t help thinking that my bicycle-riding friend is not alone among head trauma patients in her desire to enjoy wine in some form during her recovery.

My New Year’s Toast: Raise a wine glass (alcohol optional) to good health. Cheers!

Holiday Wine Sales: That’s Where the Money Goes!

December 27, 2011 By Mike Veseth in wine markets 2 Comments

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That’s where the money goes

To buy my baby those

Crisp German Riesling wines

And Oregon Pinot Noir.

She shifts to bubbles when

Santa’s back in his den

Oh boy, that’s where my money goes.

I remember learning this tune from a Mitch Miller singalong LP years ago (click here to hear the song). I’ve written new lyrics to highlight a report from Nielsen about holiday wine and spirits sales (see chart above).

Wine sales surge around the holidays, but sales don’t increase evenly across the board. Here’s a summary of the findings, courtesy of Danny Brager, VP Beverage/Alcohol Group, Nielsen.

The U.S. consumer is much more inclined to open up their pocket books during the holidays. While overall wine sales are 67% higher in that week leading up to Christmas compared to an average week, that jumps up to 124% higher for wines priced $15-$20, and 180% higher for wines $20 and higher

And which varieties tend to really shine during the holidays? Rieslings and Pinot Noir lead the way – with sales increases compared to an average week in the year 107% and 74% higher respectively, even more of a jump than the wine category overall.

By country, wines from Germany, tied to that Riesling jump, followed by France and Italy exhibit the greatest holiday sales leap compared to an average week, while wines from Oregon pop the most when looking at major U.S. wine producing states.

Trading up for the holidays doesn’t surprise me, but I must admit that I would not have predicted surging sales for Riesling and Pinot Noir. Those are actually the wines that I recommend to my students for festive holiday meals (along with bubbles, of course). I guess the word is out!

Illusive Progress in Wine Advertising?

December 22, 2011 By Mike Veseth in wine history, wine markets 4 Comments

A lot of money, talent, and technology goes into advertising today, but is the product really better than in the past? For your consideration (and winter holiday fun) we present three television wine commercials from past and present. All feature celebrities along with increasing levels of money and technology. The wine gets better as we move along, but does the quality of the message? What do you think? Cheers!

Thunderbird: Not quite like anything I’ve ever tasted

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Paul Masson Chenin Blanc: Yummy

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Legendary wine (and acting)

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I know, I know, you were hoping for one of those famous Orson Welles commercials for Paul Masson. Well, you can find them and more on YouTube.com. Click on this link for a selection.

Is Carmenere Chile’s Next Big Thing?

December 20, 2011 By Mike Veseth in Chile, wine exports, wine history, wine markets, wine price 8 Comments

Can Carmenere be for Chile what Malbec has become for Argentina — a game-changing wine that opens up new markets and upgrade perceptions in old ones? That’s the question I asked at the end of my last post.

An Unlikely Curse

Chile has earned a reputation for good value Cabernet, Chardonnay and Sauvignon Blanc; this good reputation is ironically an anchor holding the industry back as it attempts to move upmarket. It will be quite a struggle to get consumers to pay more for established varieties of Chilean wines in the UK and US. New markets and new wine varieties may be the key to future success.

This is where Carmenere comes in. Carmenere is a variety that once produced famous wines in Bordeaux. But when vines were replanted after phylloxera, Carmenere was phased out because of its succeptability to a disease called coulure, which reduces yields. It thrived in phylloxera-free Chile, where it was mistaken for Merlot, an error only corrected in 1994. It is still unclear how many of Chile’s Merlot vines are really Carmenere.

Carmenere is a niche product here in the United States. If you take varietal Carmenere and blends together they account for about 0.2 percent of Nielsen- measured U.S. off-premises wine sales. Concha y Toro is the leading brand followed by Santa Rita and Root 1. By comparison, Chile has about a 2.7% overall share of the measured U.S. market by dollar value, so Carmenere is still quite small, but not insignificant. Total sales of all Chilean Carmenere and blends are less than the dollar value of revenues from Concha y Toro’s 1.5 liter Cabernet Sauvignon alone.

The first Chilean Carmenere that I remember seeing here in the U.S. was a line of wines called Oops, playing up the Merlot-Carmenere mix up. Here’s a nice Chilean Merlot … oops! It’s really something else! I remember trying a bottle and while the label was memorable it didn’t do much to establish Carmenere or Chile in my mind as a quality wine segment.

Carmenere Comes to Britain

Fast forward to 2010. Wines of Chile launched a big campaign in the key UK market called Carmenere: made for Curry. It was apparently quite successful, winning the prize for “generic promotion campaigns” at the International Wine Challenge Awards. The idea was to link Chilean Carmenere with Indian food (generically called “curry” in the UK), which is Britain’s most popular ethnic food category, and hope that Chicken Tikka Masala would do for Carmenere what Argentinean steak has done for Malbec.

But a big Carmenere tasting report in the July 2011 issue of Decanter raises some doubts about the quality of the wines, which is obviously a key factor in the strategy. Chilean Carmenere is a “work in progress” according to one of the panelists. Others suggested that Carmenere’s best bet is in blends (especially with Syrah), not as a varietal wine. None of the 132 wines tasted earned Decanter’s top 5-star rating and only 6 received 4 stars. Eight-six wines were “recommended” and 35 were named “good value” (Chilean good value — of course!).

[By comparison, a June 2010 Decanter tasting of 255 Argentinean Malbecs produced four 5-star, twenty-one 4-star and 131 three-star “recommended” ratings.]

Interestingly, the panel suggested that the “overt, oaky, alcoholic, heavy-bottle wines” were made to appeal to the U.S. and South American markets and lacked the balance they’d need to find favor in the U.K. The tone of the review was not as dark as I am probably painting it here, but the conclusion was clear: there was nothing revealed in those 132 bottles that would fundamentally alter Chile’s reputation.

Curry and Carmenere in the U.S.A.

The Curry and Carmenere campaign was so successful in the UK that Wines of Chile brought it to the U.S. earlier this fall and we were invited to participate in a blogger tasting. Sue and I asked two of my “Idea of Wine” students, Marina Balleria and Mike Knape, to join us. Marina and Mike both studied abroad in Chile and brought local wine knowledge to the table as well as excellent critical thinking (and tasting) skills.

We concluded that Curry and Carmenere is not a ridiculous idea (Mike reported a “perfect” bite with one of the wines and an onion empanada with a curry sauce), but not all the matches were equally successful. In any case, curry doesn’t have the same significance here in the U.S. that is does in the U.K. Even if Carmenere hit a home run with curry that wouldn’t automatically open up a very large U.S. wine market segment.

We found the alcohol and oak that the Decanter tasters noted, but Marina suggested that oak is part of what she expects from Chilean red wine, so this was a positive feature for her — a defining style. One of the bottles was heavy indeed — 1084 grams according to our scale, the heaviest bottle I’ve encountered since I started keeping track. Not exactly in keeping with the “Chile is good for you” environmental theme. Most of the wines were more interesting when re-tasted the next day.

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So what did we decide about the critical question — is Carmenere the special one that will lead Chile into the next phase of its wine market evolution? Not yet — I think that’s the answer. We didn’t find the distinctive style and consistent quality that we were looking for although there were some we really liked (and — sorry! — thought were good values).

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Project Carmenere is still under construction. When will it be finished? This is hard to say. Malbec wasn’t built in a day, although the Malbec boom, when it came, developed very quickly. Carmenere’s story may be the same — or maybe the time has passed when hot new red varieties can make wine drinkers swoon.

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Either way I think it will be tough for Chile to achieve its 2020 goals but I think they need to try. Carmenere may be Chile’s best bet and I look forward to tracking its progress.

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Here are the wines we tasted for the Curry and Carmenere event. Thanks to Wines of Chile for inviting us to participate and thanks to Mike and Marina (see photos above) for their insights.

Blogger Tasting Wine List

1- Emiliana Natura Carmenere 2010 / Colchagua Valley 100% Carmenere SRP: $16.99

2- Casa Silva Los Lingues Gran Reserva Carmenere 2008 / Colchagua Valley 100% Carmenere SRP: $22

3- Santa Rita Medalla Real Gran Reserva Carmenere 2008 / Colchagua Valley 100% Carmenere SRP: $19.99

4- Montes Alpha Carmenere 2008 / Colchagua Valley 90% Carmenere, 10% Cabernet Sauvignon SRP: $24.00

5- Carmen Gran Reserva Carmenere 2009 / Apalta Valley 100% Carmenere SRP: $16.99

6- Santa Carolina Reserva de Familia Carmenere 2009 / Rapel Valley 100% Carmenere SRP: $19.99

7- Concha y Toro Marques de Casa Concha Carmenere 2009 / Peumo Vineyard, Rapel Valley 100% Carmenere SRP: $20.00

8- Haras de Pirque Cabernet Sauvignon / Carmenere 2007 / Maipo Valley 40% Cab. Sauv., 37% Carmenere, 13% Cab. Franc, 10% Syrah SRP: $13.00

Chilean Wine at the Crossroads

December 13, 2011 By Mike Veseth in Australian wine, brands, Chilean wines, emerging wine regions, Oz Clarke, wine exports, wine price, wine research 7 Comments

When Oz Clarke spoke at the Wines of Chile Awards seminar earlier this year, his theme was simple and clear: Chilean wine is at a crossroads and it was up to the people in that room to decide which direction to go. Would they make the same mistakes as winemakers in Australia, for example, or choose another path? Oz, who was a stage and film actor in a previous life, is a dramatic speaker, but if you watch the video I think you will agree with me that his message is even more powerful than the delivery.

Preaching to the Choir

Oz Clarke is not alone in this view and to a certain extent I’m sure he was “preaching to the choir.” Wines of Chile released its ambitious Strategic Plan 2020 about a year ago (you can download a pdf of the full report here). The plans calls for Chile to become the #1 New World producer of “sustainable and diverse” premium wines by 2020.

The carefully devised Plan projects an average annual growth rate of 9.2% and is based on strengthening the recognition and appreciation of “Wines of Chile” as a world-class appellation, which will in turn increase the average price, sales, and added value for all Chilean wine industry stakeholders, including small and large growers, suppliers, wineries, and exporters.

The plan focuses on four messages to drive the transformation:

Diversity and Quality. Chile has much to offer with respect to quality, diversity, and wines that over-deliver at every price point.
Sustainability. Sustainable Chile: Clean, efficient, and responsible.
Country Image. Chile is good for you.
Innovation. Chile: Moving above and beyond.

The plan’s ten year time horizon speaks to the sense of “Chile at the Crossroads” immediacy while the four “strategic pillars” indicate how much needs to be done in terms of recasting Chile’s image. Chile’s reputation as a producer of bargain Cabernet Sauvignon, Chardonnay and Sauvignon Blanc needs to be reshaped in terms of both wine types and price points. And the image of Chile itself must be updated or redefined, according to the plan’s analysis, so that the country sells the wine (as Italy’s image obvious does for Italian wine) and not the other way around. (Whether a campaign built around the slogan “Chile is Good For You” can accomplish this is debatable.)

Audacious Goals?

Exports are key for Chile since domestic consumers drink up only about 30% of total production. The idea that revenues might grow by 9.2% in the next decade is not as ridiculous as it might sound, given the current economic climate, although it is certainly an audacious goal.

Chile’s wine exports grew by a yearly average of 33% in the 1990s (according to data in the Wines of Chile report) and by 11% per year between 2000-2009. But whereas growth came through both increased price (7%) and quantity (25%) in the 1990s, the 11% revenue growth in the 2000s was due to volume growth (12%) offsetting 0.1% average price declines. The new strategic plan calls for a radical change, with rising price not higher production driving revenue growth. Good idea, but easier said than done.

So (and this is the “crossroads” theme again), Chile needs to turn things around in a fundamental sense and this may be difficult in today’s market environment as an excellent interview with with Rabobank’s Stephen Rannekleiv in a special September 2011 Chile Report issue of The Drinks Business makes clear. Rannekleiv is an optimist about Chile’s wines, but very cautious about its wine industry’s ability to meet the 2020 goal.

Something Completely Different

Rannekleiv suggests that Chile seek out new markets to supplement but not replace the UK, its largest export market today, where margins currently are thin or even negative and where upward price adjustment is extremely difficult. Focus must be on price and quality, Rannekleiv notes, so major supply surges must be avoided.

It is very difficult to raise price (without dramatic loss of market share) for existing product lines in today’s market, so “Chile needs to find something different, such as marketing around new varieties that are exceptional; it also needs to continually work on improving quality.”

There is no silver bullet, Rannekleiv suggests. It will take a combination of controlled output growth, continuing quality improvements, image development and new products and markets to turn the Chilean wine industry onto the right path.

Getting the Message Out

One element of the Wines of Chile strategy is a series of blogger wine tastings that are designed to educate, inform and persuade social media representatives and their audiences of Chile’s new direction. I took part in one of these programs last year that featured Chilean Syrah and Pinot Noir, stressing the diversity of Chilean wine.

This certainly is part of the 2020 strategy’s message (and the wines told that story pretty well), but Syrah is a problematic market these days and while Pinot is popular, it is hard to break in except at the bulk level. (Although both Chile and Argentina produce Pinot Noir, for example, neither country made the cut for inclusion in Benjamin Lewin’s recent book In Search of Pinot Noir.)

Is Carmenere The Key?

Which brings us to Carmenere, the focus of the most recent blogger tasting program. Is Carmenere the key (or one of them) to Chile’s crossroads dilemma? Carmenere is (like Malbec) a Bordeaux variety that is now better known in the New World than the Old. Can Carmenere be to Chile what Malbec has become for Argentina, a signature variety that creates a new market and that serves as a brand ambassador for the entire country?

A Carmenere boom would tick a lot of the Wines of Chile 2020 plan boxes. Is Carmenere the key? Come back next week for my answer.

Wine Wars Update: Wine Spectator Feature & Wine Book Award

December 7, 2011 By Mike Veseth in Shameless Self-Promotion 7 Comments

Wine Wars is featured in the year-end collection of book reviews in Wine Spectator magazine’s “Top 100” issue, which will hit newsstands in a few days. You can’t miss it — it’s the first book reviewed and there’s a big color image of the book cover. Thanks for your support, Wine Spectator!

Two of the featured books were also reviewed here at The Wine Economist: Katherine Cole’s Voodoo Vintners and Authentic Wine by Jamie Goode and Sam Harrop. Ian Mount’s history of Argentina wine, The Vineyard at the End of the World is also included in this WS article — look for a review here in early January, just before the book’s official publication date.

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I also want to thank the folks at the Gourmand International Wine Book Awards. According to the email I received earlier this week they’ve named Wine Wars the best American wine book of 2011 in the history category. It will now enter the competition for the global wine book awards. The full list of winners will be revealed in Paris in March 2012. Merci beaucoup for the honor!

BTW the Wine Wars World Tour is picking up steam. Click here to see the book event schedule.

Occupy Napa (and Sonoma and Burgundy and Bordeaux)

December 6, 2011 By Mike Veseth in wine bargains, wine markets, wine price 2 Comments

One of my loyal readers, perhaps inspired by Wine Economist posts about bargain wines and Martians versus Wagnerians, writes to suggest that I organize an “Occupy the Vineyards” movement. The purpose? To protest that part of the wine world that focuses on iconic wines for elites. What about the rest of us, he says? What about the other 99% of wine drinkers who are looking for good, affordable quotidian wines and don’t really care about impossibly expensive 100-point wines?

Not Wine Porn

It is a very Wagnerian idea (the reference here is to Philip Wagner, who promoted a democratic notion of wine here in the U.S., not the more famous aristocratic composer) and I am very sympathetic towards it. Wagnerian wines don’t have to be cheap cheap cheap, they just need to be good drinkable, affordable wines Wine food, not wine porn, if you know what I mean. A sensible idea.

So I started fooling around on the internet, searching for titles like “Occupy Napa” and “Occupy Bordeaux.” I figured that a catchy name would help make the point.

But they’re already taken — by groups affiliated with the “Occupy Wall Street” movement. Occupy Napa leads weekend protests at a Napa, California town square. Occupy Bordeaux seems to be part of the broader Occupy France movement. (I thought France was already occupied …)

A CafePress website sells Occupy Bordeaux souvenirs including T-shirts, water bottles and the neat 20 ounce drinking glass pictured here, but I don’t think it is directly affiliated with the group in France. The Occupy Together website has a cool interactive map that shows “Occupy” movements around the world and lists their websites if you are interested in seeing how this movement has evolved.

The Occupy Principle

I like the idea of promoting a more casual idea of wine, but I guess I won’t be using the “Occupy” trademark, since it would be too easy to confuse the wine group with the larger transnational advocacy movement. But I think that what I am calling the “occupy principle” probably applies to both.

Usually we think that movements need to stand for something quite specific — to have an clear agreed agenda — and in the long run I think this is very important. But in the short run sometimes it helps if a movement is a little ambiguous, with a flexible identity that can lend it self to several different purposes and attract a good many followers. I think this ambiguity helped the Occupy Wall Street movement to gain initial attention and to spread as it has done.

The Occupiers I have read about resent and oppose unequal wealth and power (the gap between the 1% and the rest), but differ in many other respects. It will be interesting to see if a clearly focused agenda emerges and, if it does, what specific goals are adopted. Perhaps, of course, the protest itself and the consciousness-raising it provokes are sufficient as a first step.

Conspicuous Non-Consumption?

A wine movement for the 99% would surely bring together the wine world equivalent of “strange bedfellows,” too. Some supporters are just cheap (or thrifty, if you will) and want a little respect for their self-restraint. Others may be against an elitist idea of wine or oppose conspicuous consumption (which in the case of trophy wines often takes the rather bizarre form of conspicuous non-consumption — costly “collector” wines to look at and talk about, not necessarily to drink).

The reader who originally suggested the Occupy Wine idea has a more basic approach: wine doesn’t have to be a mystery (and most wine isn’t) and it shouldn’t cost an arm and a leg (most wine doesn’t). There’s no reason that perfectly decent, relatively affordable wine can’t be a part of almost everyone’s daily life. That’s a Wagnerian attitude through and through and I can see why he wantd to see it given more attention in the wine world.

The Commanding Heights

So if there were to be an Occupy Wine protest, where would we gather and what would we do? That’s a bit of a problem since the places that sell the most wine (including supermarkets and wine shops) often have a lot of choices for the 99 percent — not much to oppose there. Costco is the largest wine retailer in the U.S. and although it does sell some icon wines, most of the products are more affordable. Most 99-percenters probably view Costco as friendly territory because of its policy of marking up wine only 15% for most bottles and 17% for house brand Kirkland Signature wines.

I suppose that we could protest in front of high end restaurants that sell superstar wines at super-nova prices. But I think restaurant wine mark ups are an issue of their own. And besides, the smell coming out of the kitchen would probably make me crazy. We could meet at Trader Joe’s to acknowledge the Two Buck Chuck phenomenon, but it wouldn’t be the same.

No, we would need to occupy the “commanding heights” — which in the case of wine means the wine media, where the 1 percent wines are praised and raised to an often unreachable altar. But there are flaws in the plan to Occupy Wine Spectator, too. First, all the popular wine magazines are making efforts to reach price-sensitive “99%” buyers just now, even if they also run stories about one percent wines. Even Wine Advocate identifies good values and I have seen box wines and house brands included in some wine magazine reviews.

Fait Accompli?

The other problem is that I am not sure that there is a market for an alternative Occupy Wine magazine that would focus on everyday wine values and ordinary wine lifestyles. The target audience probably wouldn’t buy it — they’d rather spend their money on wine than wine literature. And in any case there are several wine blogs that cater to the good value audience.

Maybe … and this is only speculation … maybe we have already occupied wine and we just don’t realize it? The wines are there and so are we, the 99 percent.

Occupy Wine is a fait accompli? Who knew! Spread the word.