The Beginning of the End of the Old World Appellation System?

“Some New World regions are adopting European-style AOC rules,” the Italian journalist I met in Sardinia explained, “Do you think this is an important trend?”

“No. Just the opposite. I think the Old World appellation system is under attack and will need to change to survive.”

He looked at me like I had dropped down from Mars. This was clearly not the answer he was looking for, but I think it is true. I wasn’t able to explain my logic very well in the rush of the interview, so let me try to explain here.

We Have Met the Enemy …

New World wine appellations are geographical indicators that specify a wine’s origin and help differentiate a region’s products. Some of these designations are very valuable (Napa and Sonoma, for example) in terms of price premium. Others are of little economic value, but can sometimes be useful in other ways that I don’t have time to explain here.

The Old World appellation system starts with designation of origin and adds to that a system of rules that restrict grape choices, blend components and ratios, viticultural practices, and other factors. AOC rules can literally fill a book as Jancis Robinson shows us in the classic video above.

AOCs (and Italian DOCs, Spanish DOs, etc.) evolved as essentially protective structures based on the experience in Champagne, which was the model for the current system. (I wrote about this in my book Money, Taste, and Wine). The first goal was to protect regional reproducers from fraud by outsiders passing off their imitation wines as the real thing.

The second goal (and the reason for such detailed regulation) was to protect quality producers in the region from neighbors inside the region who might cut corners and sacrifice quality to increase profit while benefiting from the regional “brand”.

Very high yields, for example, might increase a particular winery’s profit, but the lower quality dilutes the value of the appellation to all others. It is a cut-throat situation. “We have met the enemy and he is us” describes this element of the AOC program.

So AOCs seek to defend the regional brand from threats from the unscrupulous both outside and inside the region. Today, however, there are two powerful forces that threaten this system and will force it to change. Indeed it is already changing.

Shifting Center of Gravity

The first force is the global market, where the fastest-growing segments and categories are not closely aligned with the AOC system and where the premiumization syndrome is strongest. American consumers have shifted their market’s center of gravity to higher price points, but not higher prices for the same products. They will pay more than before but the product has to be differentiated and appealing. So innovation, which is not a strong point of the AOC system, is increasingly important.

Sue and I saw this when we visited the Valpolicella region a few years ago. The AOC system basically provides opportunities for Valpolicella wines, Ripasso, and Amarone in ascending order of retail price (I am leaving out details to simply, but you get my drift).

We met producer after producer who responded to this situation by creating proprietary blends of grapes that were “downgraded” to IGT status (because the blends don’t strictly adhere to the rule book), but upgraded in terms of price because of their effective branding and high quality. These new IGT wines were designed to fit price points created by premiumization that were not easily attainable with existing AOC products.

There is nothing new about the IGT movement — remember when super-Tuscans were controversial, which feels like a very long time ago? But the IGT trend, which basically slips out of the AOC handcuffs, has gathered unstoppable momentum. We see these wines everywhere now — France, Italy, Spain, everywhere. And some of them of fantastic. AOC? We don’t need no stinkin’ AOC?

In a sense the rise of these “super-” wines represents a shift in mentality that is worth noting. If the AOC system if defensive at its core, the IGT movement is entrepreneurial, seeking out new opportunities and breaking rules to get them.

Climate Change Challenges

The AOC system can withstand these market forces, although some regions will find it in their interests to adapt as Chianti did in the face of super-Tuscan success. But a second force is harder to ignore and will be even more threatening in the long run: climate change.

AOC rules are often promoted as an evolutionary pinnacle. We’ve had hundreds of years to figure out what grapes and blends are the very best for our terroir and here they are laid out in the rule book! Best of the best. You cannot improve upon the AOC rules.

It is a nice argument, but what happens when the terroir changes due to new climate patterns? The answer is that the wines need to adapt and evolve to remain at the peak, which is hard to do if the rule book doesn’t change. AOC standards need to evolve with the climate or become irrelevant or, worse, counter-productive.

Bordeaux Adapts

Some Old World regions already see the writing on the wall, as Jane Anson reported in Decanter earlier this year. Bordeaux and Bordeaux Superieur producers now are able to experiment with “accessory grape” varieties that may better withstand climate change than the traditional (and designated) grape varieties such as Cabernet Sauvignon and Merlot.

“The red grapes for trial,” Anson reports, “will be Marselan, Syrah, Zinfandel and Arinarnoa. In white, Liliorila, Chardonnay, Petit Manseng Blanc and Chenin Blanc will be tested.” A recent VinePair article called this “a small revolution,” but I see it as something bigger and this is just the start.

Anson’s article continues,

Veronique Barthe of Chateau la Freynelle, who is working on the project with the Bordeaux and Bordeaux Superieur Union, told decanter.com this was not a form of sacrilege.

‘We are not trying to make 100% Syrah in Bordeaux, but to test which grapes work best on which terroir in the region with the intention of introducing them only if they offer real quality,’ she said.

This sounds like exactly what a winemaker should be doing, don’t you think? “When the facts change, I change my opinion. What do you do?” according to Keynes. When the climate changes, what will the AOCs do?

So the AOC system is under attack from the inside by IGT wines and from the outside by climate change. The system will adapt, but it won’t be the same. We can debate whether this is a good thing or not (I’m on the good thing side), but it is going to happen. And that’s what I wish I had time to explain to that Italian wine journalist.

7 responses

  1. I agree. Original concept served a purpose but with access to more varietals etc., itis not only obsolete but prevents innovation.
    Chianti was the first where Antinori thiught the concept of 800 gallon ‘barrels’ produced inferior wine. He shunned the AOC…both we and he benefitted, as well as Gaja and other savvy producers.
    Spain has only two DOCG regions Rioja ,the oldest, and Priorat, the newest. Priorat was born with a few families together reviving winemaking and this set their own quality controls in the 1980’s and resulted in the highest quality wines in Spain
    Ribero del Duero was approved in 2007 but never activated. The reason is similar to Priorat with new producers uniting but Vega Secelia, the oldest and most expensive was using Bordeaux varietals.
    Technology has made AOC’s redundant…now if we could get rid of 109 point scoring systems…

  2. Quite aside from your main, clear and provocative theme, does anyone else find it disturbing that the wine trade sees climate change as a given, and that to deal with it involves adaptation rather than the development and implementation of measures to counter it? If you accept broad scientific speculation that climate change not only is real but accelerating, efforts by the wine trade to adapt rather than offset will be for naught in the overall picture.

  3. Hey Mike, you left out two critical benefits of old world appellations for producers:
    1) limits supply (supporting prices, ceteris paribus);

    2) enables consumers to roughly know the flavor profile for unknown producers (important in such a fragmented market). Consumer research shows that incorrectly guessing the flavor profile of an unknown wine greatly reduces the chances of repurchase for the brand, variety or region, and not knowing the likely flavor reduces likelihood of purchase in the first place.

    But as you imply, benefit #2 could be undone by climate change.

      • Appellation economics are fascinating, I hope you do more postings on the topic. The trade offs in sub-AVAs between fragmentation, supply limitation and flavor focus are a quandary for many regions. Admittedly rather overshadowed by climate change issues…

  4. Ciao Mike, some points on your accurate analysis.
    First: in Italy (but I guess same in France), lots of unknown wineries are searching the route to export, and the only thing they can rely on for some chance to be interesting is Doc appellation, which plays the role of the real “brand”. Prosecco is the brightest example of brand/shield, behind it there are hundreds of Mr. no one producers.
    In Spain you have another curious trend, appreciated during the latest edition of tehir main exhibition, Fenavin: here you have very few appellations well recognized worldwide (Rioja, Ribera), and hundreds of Mr. no one appellations, behind whom you have hundreds of Mr. no one wineries. So, the only way to emerge is breaking every limit, focus on innovation of message through packaging (I saw a label called “Just fucking good wine”, in English): the mandatory messages (Spain, Doc, variety), well hidden in the back. This is the “instagram” way to promote (and hopefully sell) wine to new audiences, who don’t care about anything but appearance.
    So, appellations or not? Thast stll remains an interesting question, but maybe the answers you can get are as many as the people you could ask.
    Warm regards from Italy

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