Unified Symposium: Wine and the New Now

These are fast times. I used to think about “getting back to normal” and then I started talking about what the “new normal” would look like. Now I don’t really know what normal is — it’s a “new now” every day.

Crossing the River, Feeling the Stones

Planning for the future in the “new now” era reminds me of the Chinese saying about crossing a river by feeling the stones with your feet. Know where you are going but be sure to take each step one at a time.

I am struck by the degree that the program for the Unified Symposium this year reflects the “new now” of the global economy. The environment has long been a concern, for example, but now there is a timely immediacy that spans the global to the local. The Unified examines the issues starting with Dr. Steven Ostoja’s Tuesday luncheon presentation on “Changing Climate, Extreme Weather and Water Scarcity: What It All Means for the Future of Farming” and extending into sessions on vineyard adaptation, living with climate change, and wild fire smoke issues.

Labor has long been a critical issue in the wine industry, but we often focused on vineyard labor and sometimes, as in Napa, the problem of attracting and retaining cellar staff in a region with sky-high living costs. The labor problem in the “new now,” however, extends throughout the organization, so human resource issues are front and center.

These are just two of the important “new now” issues the Unified will examine this year. Check out the complete program to see what else is on tap. And don’t miss the trade show, which is where new ideas are put into practice.

State of the Industry Now

I will be hosting the State of the Industry session on Wednesday morning and I think you can expect a lot of “new now” thinking from the all-star speaker lineup: Jeff Bitter (Allied Grape Browers), Danny Brager (Brager Beverage Alcohol Consulting), Steve Fredricks (Turrentine Brokerage), and Mario Zepponi (Zepponi & Company). Their collective expertise spans the issues — demand, supply, markets, and investment.

The State of the Industry session looks back at 2021 and ahead to 2022 and beyond but a “new now” problem is understanding exactly where we are at today given the big swings in wine demand, sales channels, and grape harvests that we have seen. It can be hard see through the thicket of short-term events to pick out the real longer-term trends. Prediction is difficult, they say — especially about the future when the present in unclear. But I guarantee that the team will have revealing insights to share.

New Now Sacramento

If you want to get a sense of “new now” maybe the best example of change and adaptation is the Unified itself. It starts with the newly remodeled SAFE Credit Union Convention Center. I haven’t seen it yet but I am told it is state of the art — bigger and better — and safer — than before. I am really looking forward to the new trade show and session spaces.

And then there is the health and safety element of the “new now.” Bringing together thousands of wine industry people during this pandemic and doing so responsibly requires organization, cooperation, and critical analysis.

As Cyril Penn reported recently on WineBusiness.com, the organizers have retained a health data analytics firm to model the Unified from a covid safety standpoint.

Epistemix develops simulations that approximate risk based on venue, audience and anticipated virus levels with proprietary software developed by a team from the University of Pittsburg School of Public Health. The firm partnered with the Exhibitions and Conferences Alliance a year ago and has worked on risk assessments for conferences and conventions in twenty cities. Reiser said Epistemix has been 95 percent accurate in making event projections thus far.

The models take into account the number of attendees and their vaccine and testing status, the prevalence of the covid variants, the mitigation protocols, the varieties of activities that the convention entails, and the various ways that the groups are likely to mix.

The modeling indicates Unified’s masking and vaccination/testing policy at the newly-remodeled Sacramento Convention Center will create a controlled environment with an expected case rate of one in ten-thousand, according to Lindsey Solden Reiser, PhD, Managing Director of Professional Services for Epistemix, Inc. That modeling assumes 12,000 people attend Unified.

If the projections are correct, the convention will have a much lower expected case rate than Sacramento itself, which has a projected rate of eight cases per ten-thousand persons.

Wine and the New Now

The point is that the new now of trade shows and conventions is very different from the old normal, where people like me mainly worried about mundane things like whether the slide-advance “clicker” would work for the PowerPoint presentation.  I am sure I never gave a moment’s thought to the idea that data modeling of pandemic spread would be needed or desired. But here we are now.

And I think the wine business is in the same situation. We need to analyze the new now and to try to understand it, but without assuming that it will somehow revert to the old normal or remain fixed in place as the new normal, either.

Better take off your shoes and socks. Time to get your feet wet.

Wine and Inflation: Will the Rising Tide Lift Wine’s Boat?

The U.S. is experiencing the highest inflation rates since the 1980s and cost-of-living increases are on everyone’s mind here and around the world. The Federal Reserve has signaled that it will speed up monetary tightening to try to reverse rising inflationary expectations — too little and too late, according to   the Economist newspaper (The Federal Reserve Has Made a Historic Mistake on Inflation).

I am very concerned about how higher inflation will impact the wine industry, especially when combined with a stagnant overall economy (GDP actually fell in the US in Q1/2022).

The Big Squeeze

Costs are increasing, some dramatically, throughout the wine and grape commodity chains and rising interest rate expenses will add to cost woes. The list of cost factors is long and includes energy, fertilizer, transportation, glass and other inputs, and especially labor, which remains in short supply.

Will growers and wineries be able to hold on to their margins by passing higher costs along to consumers in the form of higher prices? A lot of people I talk to think so. Surveys suggest that many wineries plan to raise prices in 2022 and there is an attitude that consumers might not push back too much, given that the price of everything else is rising, too.

So I am a little bit surprised that some of the data suggests that wine prices have not risen along with the prices of other goods — at least not yet.  Wine Business Monthly, for example, cites NielsenIQ data on average bottle prices. The May 2022 issue reported an average price of $8.52 for the most recent 4 week survey period, up from $8.18 reported in the May 2021 issue — an increase of 4.1  percent. Average domestic bottle price rose  from $8.12 to $8.46 and average import bottle prices rose from $8.35 to $8.69.

The Booze Bust

Prices are rising, according to these figures, but at about half the current rate of overall inflation. NielsenIQ doesn’t measure all sales channels, of course, and there is a lag in the data, so maybe prices are really rising faster than these numbers suggest and wine industry margins will hold.

But the IRI data shown above, taken from a recent Rabobank report about inflation and the beer market suggest that wine in particular and beverage alcohol in general is struggling to increase prices in line with rising costs. Take a close look at the top half of this table, which shows that some non-alcohol beverage categories have been able to boost price much faster than the roughly 8% general inflation rate for the U.S. economy — topped by sports drinks with an incredible 17%+ annual rate price increase. Wow!

Beer, wine, and spirits have all increased average prices, but much less than, say, coffee, and substantially below the overall inflation rates. In other words, the real price of wine, on average, has actually fallen in the last year and the relative price of wine with respect to some other beverage categories has fallen, too. Averages hide a lot, of course, and some strong brands have successfully pushed prices higher while others have not. But beverage alcohol generally, according to the Rabobank figures, has fallen behind in terms of price.

Why haven’t wine prices increases faster.? Here are a few of the many possible explanations.

  1. Radar’s Rule. Wine prices will increase — “wait for it,” as Radar used to say on M.A.S.H. — it just takes time for price changes to work their way through the system.  It is hard to refute this because it is impossible to know the future. Maybe there is something about wine’s annual production cycle that causes price changes to come more slowly. But then why do beer and spirits, which are in continuous production, also lag behind the inflation rankings?
  2. The Wall. Consumer pushback is too strong in the wine category for large price increases to take hold. Yes, I agree that wine buyers are very price sensitive, but prices do rise when they are driven by short supply. And of course there is the whole premiumization phenomenon, where consumers pay more for what they see as better products while resisting price rises on products they already buy.
  3. The Hidden Price Increase Trick. Candy bar makers sometimes try to disguise price increases by simply shrinking the size of the product. Wine makers can do something a bit like that by shifting grape sources from coastal to inland vineyards and in some cases by blending in wines from earlier vintages. Consumers may not notice (just as they might not immediately realize their candy snack has shrunk a little).  Wineries can also increase their average revenue by reducing production of lower-tier wines, shifting the grapes up the ladder.
  4. Three-tier Blues. It’s the three-tier system, where producers sell to distributors who sell to retailers who sell to consumers. On one hand this system means that there are three margins at stake and to each tier has an interest in raising the price at which it sells wine. But each tier also has an incentive to resist increases in its cost of goods. So distributors push back on producers who want to raise price, retailers push back on distributors, and consumers push back on retailers.  The three-tier effect may explain why the lowest average price increases in the Rabobank table above are for beer, wine, and spirits.

More Questions Than Answers

There are other theories and explanations about inflation and the wine category, but perhaps the most important thing to say is that, with the most recently experience of significant U.S. inflation so far back int he rearview mirror, we are left with more questions than answers.

All the basics — the who, what, when, where, how, and why of the wine market have changed very dramatically since the 1970s and 1980s.

Will wine prices rise in line with inflation? If so, when? And how will consumers react? Come back next week for more analysis.

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Thanks to Steve Fredricks at Turrentine Brokerage for stimulating my thinking on this topic.

The Origins of the California Cabernet Bubble

Jeff Bitter emoji urging grapes growers to pull out vinesCalifornia’s Cabernet Glut Deepens” is the title of W. Blake Gray’s recent Wine-Searcher column, reporting on the Vineyard Economics Symposium discussion of current market trends. It makes good reading, with its useful mixture of threatening dark clouds and potential silver linings.

California (and Washington, too) was over-supplied with wine in tanks and vines in the ground before the coronavirus crisis hit. The lock-down booze-buying surge in March and April made a dent in the wine lake (a net increase in U.S. sales after considering lost on-trade sales). But there is concern that overall sales will fall once the second shoe drops and the impact of the recession is fully felt despite the eventual return of bar and restaurant activity.

Cabernet was the focus of a boom because it is the most popular red wine variety and can sell for a premium, especially in the Napa Valley.  It seemed like it was impossible to go wrong planting a few more acres of Cabernet, so plant we did. Economists see moral hazard in situations like this. Moral hazard is the notion that if you don’t think that an otherwise risky bet can fail, you will take more risk and make bigger bets.

Gray reports that there are rising bulk wine surpluses and falling prices. That sure thing turned out to be a fallacy of composition. What was true for an individual grower (profitable to plant more acres of Cab so long as everyone else holds steady) was not true when everyone planted more Cab. No wonder Allied Grape Growers President Jeff Bitter (that’s Jeff in the cartoon image above) told growers at this year’s Unified Wine & Grape Symposium meetings that it is time to pull out marginal vines.

But the fallacy of composition can apply to grubbing up, too. If everyone else is going to pull out Cab vines, the logic goes, then I’m better off keeping mine in the ground. But if no one pulls vines, the bust gets deeper. Fortunately there is evidence that some vines are coming out. But, as Gray’s report suggests, the problem persists.

Agricultural markets (and sometimes financial markets, too) go through cycles of boom and bust. The Turrentine Wine Wheel of Fortune captures very well the cycles in wine. People are often surprised  by the cycles because moral hazard or the fallacy of composition blinds them to the evidence that was always hidden in plain sight.

With this is mind we re-print below two Wine Economist columns,  a nervous report on the emerging Cabernet boom (August 2018)  and suggestions (some a bit tongue-in-cheek) about what to do with surplus Cabernet grapes (July 2019).

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The Cabernet Boom and Its Discontents

August 2018

What winegrape variety comes to mind when I say “Napa Valley …”? There are lots of possibilities. Chardonnay. Merlot. Sauvignon Blanc, of course! Hey, Larkmead makes a tasty Tocai Friuliano.

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But I’ll bet that your “fill in the blank” answer was Cabernet Sauvignon and there are several good reasons for this. Cabernet is a noble grape and many of the world’s great wines are made from it or with it. American consumers are in love with this winegrape variety. Cabernet Sauvignon has recently overtaken Chardonnay as America’s #1 favorite.

Cabernet is #1

According to recent Nielsen data taken from the August 2018 issue of Wine Business Monthly, sales of Cab wines totaled more than $201 million in the most recent 4-week period, up 3.9% from the previous year. That compares with $190 million and 0.5% growth for Chardonnay, which has for years topped the league table.  Next in line but far behind, is Pinot Gris/Grigio ($96 million / 1.3% growth) and Pinot Noir ($82 million / 2.6%). The fastest-growing category is Rosé, as you might have guessed, with 67% growth on a relatively small $22 million sales base.

Consumers love Cabernet Sauvignon and growers love it, too, because they see it as a potential solution to the their financial squeeze. The costs of land, labor, equipment, and supplies keep rising, but the prices of many grape varieties have been stagnant, putting pressure on profits and, in some cases, generating rivers of red ink.

The Cabernet grape price premium can be substantial according to the 2017 California Grape Crush Report. Cabernet grapes fetched $700 per ton on average in Lodi, for example, compared with $552 for Merlot and Chardonnay. A ton of Cabernet sold for $2209 on average in Mendocino county, $2352 in Lake Country, and about $3000 in Sonoma County.

Premium Prices

Napa county topped the list with an average Cab price of $7,421 per ton. That average translates into a $70+ bottle price using the one-percent rule of thumb. And that’s the average. The very best Napa Cab grapes from exceptional sites sold for $10,000 per ton and more. Lesser Cab grapes sold for less, of course, but still generally for more than other grape varieties. Cab Rules.

And it’s not just a California thing. Cabernet is now the most-planted winegrape variety in Washington state, too, with 62,200 tons harvested in 2017 compated with #2 Chardonnay’s 39,300 tons.  The overall average price of Washington winegrapes was $1200 per ton, with Cabernet selling at a significant premium at $1500-$1600 per ton.

No wonder more and more Cabernet is being planted wherever it might possibly grow successfully. Jeff Bitter, recently appointed President of Allied Grape Growers, presented the results of the 2017 California Nursery Report at the Unified Wine & Grape Symposium meetings in January. Bottom line: Cabernet is big and getting bigger.

The Nursery Report provides insights about what grape varieties are being planted or grafted, which foretells shifts in winegrape production a few years from now when the vines are productive. The 2017 report showed that 72% of new vines were red varieties with only 28% white. Cabernet vines accounted for an incredible 37.4% of all new vines followed by 19.5% for Pinot Noir and 16.7% for Chardonnay.

Cab Pipeline is Full

If you combine Cabernet with other varieties that are often blended with it (such as Merlot, Malbec, Cabernet Franc, and Petit Verdot), they account for over 42 percent of all new California vines. I am not sure what the composition is of the vines they may have replaced, but I suspect the disproportionate emphasis on Cab and Cab blending grapes represents a significant net increase in future production.

Cabernet’s dominance is noteworthy, but the upward trend in Cab plantings is part of the long term trend that Benjamin Lewin MW described in his 2013 book Claret & Cabs: The Story of Cabernet Sauvignon. Zinfandel, not Cabernet, was the most-planted winegrape variety in the Napa Valley in the decades following Prohibition.

Zin was thought to  make the best Claret, according to Lewin, which of course is interesting because Claret is the name the British gave to Cab- and Merlot-based Bordeaux wines. Ridge made a “Claret”  in 1981, for example, from Zinfandel, Petite Sirah and Carignan and I’ll bet it was delicious!claret

Cabernet Sauvignon was a minor player on Napa’s wine scene, Lewin notes, although it made some historic wines including the great Beringer Cabs of the 1930s and the Beaulieu Georges de Latour Private Reserve wines that André Tchelistcheff made between 1938 and 1973.

The Napa Cab boom really picked up speed in the 1970s as new quality-driven wineries (think Robert Mondavi) focused on Cabernet. The Judgement of Paris in 1976 put Napa Cab firmly on the wine world’s radar.

No wonder new investment flooded into Napa Valley and Cabernet plantings expanded rapidly, both in Napa and California generally. Now the steady rise has accelerated, taking on some boom-time characteristics. The cycle of higher Cab prices, higher vineyard valuations, and increased Cabernet plantings continues.

Stein’s Law

Cycles and booms are a common characteristic of agricultural and financial markets, both of which I have studied. There are two things I have learned about the booms. First, they are driven by internal logic that seems bullet-proof from inside the cycle.  People (like me) who try to call turns often end up looking like Chicken Little fools. So don’t expect me to forecast a Cabernet bust!

The other thing I have learned is that Stein’s Law always applies in the long run. Named for the famous economist Herb Stein, Stein’s Law is says that if something cannot go on forever … it will end. And I think that Cabernet prices cannot go on going up forever (especially with new plantings on the rise) any more than housing prices could defy gravity forever a dozen years ago, no matter how how much rising prices might seem baked in the cake at any particular moment.

That doesn’t mean that the boom must inevitably be followed by a bust — there are many possible adjustment patterns as Kym Anderson’s analysis of Australia’s winegrape cycles shows. In the meantime, Cabernet is crowding out other grape varieties, including those Zinfandel vines that were once the pride of Napa Valley winemakers. That’s where we are going in the next column.

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The Boom Varietal image above comes from a 2011 Sky Pinnick documentary of the same name about Malbec, which is sort of the Cabernet Sauvignon of Argentina. I was pleased to be part of the cast for this award-winning film. The film talks about the rise of Malbec in Argentina and the understandable concern that the boom could go bust (Argentina has a history of boom and bust).

 

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Six Things to Do with Surplus Cabernet Sauvignon Grapes

July 2019

The wine grape harvest is just around the corner in California and Washington State and, while that’s a great time of the year, it will present economic challenges to some winegrowers. There’s going to be an awful lot of Cabernet Sauvignon harvested this year. Most of these grapes are contracted, but some will be looking for buyers and it might not be so easy.

Cabernet has been the top choice for new plantings for the last several years and it is easy to understand why. It is a noble grape and can make terrific wine. Consumers love it, so growers have responded enthusiastically. The problem, as has been noted here before, is that wine demand generally has slackened just as new supply is reaching the market. For a few years at least there is likely to be a surplus of Cabernet Sauvignon in many regions.

In fact, the surplus is already here, or at least that’s how I read the recent reports from Turrentine Brokerage. Turrentine data show the highest level of Cabernet on the bulk market for many years. Add the 2019 harvest to the current market and you have a problem — not for everyone, but for those who are left with unsold grapes or wine.

Econ 101 Meets Yao Ming

What do you do when you have too much Cabernet? Econ 101 suggests price adjustment — cheaper grapes, cheaper wine, and so on. But there are limits to this strategy, especially since the lower price tiers of the retail market are in decline.

Export sales are another Econ 101 solution and certainly there is an opportunity here, especially if President Trump succeeds in talking the dollar’s exchange value down. But the president’s trade wars have had an offsetting impact on wine exports.

Countries that compete with us in the export markets, notably Australia and Chile, have aggressively sought out free trade agreements to boost sales. The U.S. has recently taken the opposite strategy. U.S. wines are therefore a tough sale today in many export markets including especially China, where Australian and Chilean wines find great success.

Yao Ming, the Chinese basketball legend, has trouble selling his signature Napa Cab back home because of 93% tariffs imposed in response to the Trump administration’s policies. If Yao can’t sell Cab in China, there is not much hope for the rest of us. Export markets are unlikely to absorb very much of the surplus Cab. Other options?

Searching for alternatives, I consulted the most recent Nielsen market figures in the current issue of Wine Business Monthly and found a few ideas to consider if you find yourself holding excess Cabernet this year.

#6 Two Words: Red Blends

Red blends are a useful market category because you can blend away unfashionable or surplus grape varieties without consumers necessarily noticing what’s up. Syrah and Merlot are not as popular as they once were as varietal wines, for example, but blend them together, call the result a Red Blend, and consumers snap them up. Cabernet blends would be very competitive at the right price. This market segment is fairly large but, unfortunately according to the Nielsen data, its growth has stalled a bit this year. That means we need to think about …

#5 Three Words: Sweet Red Blends

See “Red Blends” above but add some residual sugar.  I don’t have a lot of personal experience with these wines, but I see them everywhere. 19 Crimes, which tastes sweet to me, has a successful varietal Cabernet Sauvignon, so this is not uncharted territory. Even better, why not try …

#4 Rosé of Cabernet

Rosé is the fastest growing market segment in the Nielsen table. A lot of that Rosé comes from France, to be sure, but the market is large and fluid.  Picked at the right time, Cabernet makes a nice Rosé and in fact there are a great many produced both here in the U.S. and around the world.

As I noted here earlier this year, there are tricks to the Rosé trade to consider. Rosé is not that easy to make, since color is a concern, and can be tricky to sell because consumers prefer the most recent vintage and demand seasonality is a factor, too. If you like the idea of Rosé of Cabernet, then I think you will also like …

#3 Sparkling Rosé of Cabernet 

Take two fast-growing categories — sparkling and Rosé — make the wines from Cabernet  and you are ready to go. The only thing that could be better is …

#2 Canned Sparkling Rosé of Cabernet 

… because canned wine is also a thing (watch for a report here in the near future) and it is growing fast. Have you seen all the new canned wine displays in the supermarkets? Don’t dismiss canned wine too quickly.

Canned sparkling Rosé of Cabernet leverages three hot trends to use up your excess Cab. It is a perfect storm of wine. What could be better? And while you have the mobile canning equipment hooked up, you might consider …

#1 Canned Sparkling Cabernet + Black Currant Spritz

Seriously!

I am paying more attention to the canned wine displays and one thing I note is that canned wine spritz is generally right beside the other canned wines. These seem generally to be mixtures of wine, fruit flavors, and carbonated water. They sound refreshing and they have less than half the alcohol of regular wine. A Cabernet and Black Currant spritz sounds drinkable to me on a hot day, but you might prefer blackberry or some other fruit flavor.

Since the consumer segment that is interested in low alcohol products is growing, I can see how this trend might persist.  Something to consider.

Seems Like a Stretch?

Bottom line. The U.S. industry is going to need to find uses for its  excess Cabernet Sauvignon if the potential surplus materializes. These examples are ways to take advantage of the small number of growing wine market segments. If it seems like getting Cab products into these segments is a stretch, then it shows how much more pressure there will be on the traditional product markets.

I hope the market can absorb all the Cabernet that’s coming its way. Fingers crossed.

Return of the Roaring Twenties? Anatomy of Wine’s Next Chapter

Will wine’s next chapter be characterized by continued crisis and austerity? Or is a return of the Roaring Twenties on the cards? Herewith some thoughts about the changing wine market and where it might be going next.

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I became an economist because I’m interested in change and economics provides a logical framework to study cause and effect. I gravitated to the study of wine economics as I began to learn more about global wine markets and saw in them case studies of the sort of dynamic forces that fascinate me.

There are many ways to think about the economics of change. The first formal model that I discovered in my first year university economics course was the “cob web model” of agricultural markets, which explains why some markets are in constant flux and seldom static or idle. Under some conditions markets will gradually converge to equilibrium, but sometimes they can blow up! Change is the rule, not the exception. It is no surprise that the cob web model applies to the wine market as the Turrentine Brokerage wine business “wheel of fortune” aptly illustrates.

The Dynamics of Change

I studied globalization for many years and developed an analytical framework to help me understand global change. It isn’t original by any means and doesn’t apply to every situation, but it is a way of thinking that helps me work things out. Here’s a way to think about change. Start with a dynamic force, the source of change. Could be a change in policy, technology, or even nature. The dynamic force stimulates responses in the form of actions, which attempt to accommodate or exploit change. The actions further disrupt existing systems and bring forth reactions to both the initial change and the actions it produced. If the reactions are strong enough, they can produce another wave of change.

Change. Action. Reaction. Change. Once you think about it  you start seeing these forces everywhere.

The Wine Wars Scenario

If you’ve read my book Wine Wars you can already see how this analysis can be applied to the wine industry. Globalization is the dynamic force in this case and it comes in many flavors and has many impacts both positive and negative. Globalization has spread wine around the world and fostered the exchange of international investment (think Chandon China), expertise (think Flying Winemakers like Michel Rolland), and grape varieties (Rkatsiteli in the Finger Lakes of New York, Gruner Veltliner in Australia’s Adelaide Hills, Chardonnay and Cabernet just about everywhere).

Globalization brings a world of wine choices to your doorstep, inducing many actions is response. The one that I focused on in Wine Wars was the commodification action. With so many choice at so many price points, consumers can feel overwhelmed. Risk and uncertainty discourage wine consumption, so a logical action is to simplify wine. I identified “the Miracle of Two Buck Chuck” as a particularly successful example of this action. Consistent commercial quality wine plus low price backed up by Trader Joe’s bulletproof reputation equaled a phenomenon. Two Buck Chuck gave millions of Americans the confidence they needed to try wine and to enjoy it. It helped democratize wine, if you see my point.

But not every attempt at commodification grows the wine pie the way that TBC did. And sometimes simplification can go too far, as the current hard seltzer phenomenon attests. It is no wonder that there is a reaction that I called “the revenge of the terroirists.” The reaction also took many forms, with the natural wine movement just one highly visible aspect.

What Next?

We have experienced a lot of change in the last 12 months in terms of the pandemic and the resulting economic crisis. This prompted a flood of actions ranging from dramatically aggressive monetary policies and fiscal stimulus packages to lockdowns of bars, restaurants, cities, regions, and sometimes whole nations. It’s been a “K-shaped” situation: some people have profited from the pandemic syndrome while others struggle and sometimes fail to hang on.

Now there is relief in sight with the emergency release and slow roll-out of vaccine. How will people react when the dark clouds begin to lift? I have argued that we are unlikely to see a sudden return to what we used to call “normal” life. You cannot simply flip a switch and bring back business and lives that have disappeared.

The Punch Bowl Overflows

But not everyone shares this cautious view and there are plenty who look forward to a “Roaring Twenties” of fast growth and exuberantly high times as Financial Times columnist Martin Sandbu recently noted in an op-ed titled “Goodbye virus-ridden 2020, Hello Roaring Twenties.” One hundred years ago the world was traumatized by a bloody world war and the devastating Spanish flu. When the fog cleared, people looked around and decided it was time to celebrate — to live for now since tomorrow is always uncertain.

From a financial standpoint, there is reason to think that the twenties might roar, at least for a while. I used to teach my university students the conventional wisdom that it was the role of the Federal Reserve to take the punch bowl away just as the party was really getting rolling. But these days central banks are pledging to keep interest rates very low and easy money available far into the foreseeable future.  It is easy to see how this could pump up a bubble (for bears) or sustain solid growth (for bullish types).

Sandbu writes that

Public health restrictions have disproportionately hit the more hedonistic end of the consumption spectrum: what we have stopped doing is eating together, drinking together, entertaining one another and going on holiday together. Vaccine-induced herd immunity will, quite literally, make it OK to party again. And my goodness will we have reason to party.

It is not just the numbers that point to a consumer boom; behind them lies something less tangible but yet more convincing. You do not have to be an economist, only human, to understand the desire to let loose, get together, and take risks after a year of cautiously locking down at home and distancing ourselves from one another.

This scenario suggests a roaring decade for wine, too, as the travel and hospitality sectors take flight. It won’t be a simple reset, however. As any Marty McFly fan can tell you, the future changes when you tweak its past.  But the wine sector should share the good times in Sandbu’s roaring economy scenario.

There are no guarantees, however. The roaring 1920s didn’t end very well. The current economic expansion depends upon both good health policy and good economic policy. What happens when fiscal stimulus ends, as it much eventually, and the monetary punch bowl runs dry? What will the receding tide reveal?

And then there is inequality to consider. Sandbu notes that

What all this calls for are measures which ensure that everyone feels the economic and social system has their back. A dark underbelly was, of course, also as much a feature of the previous Roaring Twenties as the glitz of its Great Gatsby surface.

The economy and the wine economy, too, have been K-shaped so far, with some sectors rising sharply while others struggle or fall. That’s not a recipe for sustainable growth.

It’s Going to be Huge: 2020 Unified Wine & Grape Symposium

 

The Unified Wine & Grape Symposium is just a few weeks away (February 4-6 in Sacramento) and I am already excited. The Unified is North America’s largest wine industry event with about 14,000 in attendance for the trade show and seminars.

Bursting at the Seams

The 2020 Unified promises to be bigger and maybe even betterthan ever before. The event has been moved out to the Cal Expo fairgrounds for 2020 while the Sacramento Convention Center is expanded and remodeled — the Unified  simply outgrew the old facilities. The one-year move means even more room than in the past for trade show exhibitors, including outdoor space for big machines and equipment. It’s going to be huge — literally!

And the program organizers have gone to some trouble to expand seminar offerings, too, with 110 speakers divided among about 30 sessions. Something for every need and interest with programs for growers and winemakers, marketing and business management. As has been the case for several years, some of the technical sessions are offered in both English and Spanish.

Labor cost and availability is an important issue in the wine business, so I am interested in one session that examines mechanization in the vineyard and includes a wine tasting. I’m guessing that the audience will be offered the opportunity to see if they can taste the difference between wines made with machine-harvested versus hand-picked grapes. Should be interesting.

State of the Industry

I’ll be moderating and speaking at the “State of the Industry   general session on Wednesday morning. Danny Brager (Nielsen), Steve Fredricks (Turrentine Brokerage), Jean-Marie Cardebot (University of Bordeaux), and Jeff Bitter (Allied Grape Growers) will be joining me on the big stage. A great team with deep understanding of the wine market.

Jeff O’Neill of O’Neill Vintners and Distillers is giving the Tuesday luncheon keynote speech this year and I am looking forward to hearing what he has to say. These are uncertain times for wine in the United States and it is easy to be pessimistic about the future. O’Neill’s company has been remarkably successful in navigating the treacherous seas, taking advantage of favorable winds. Everyone will be looking for lessons and insights they can take back to their businesses.

This is important because one cloud hanging over the meetings is a structural surplus of grapes and wine in some categories. U.S. wine demand is plateauing, which is better than some countries where demand has been falling for years. Overall wine expenditures are still rising even if overall volumes have declined.

The surplus creates a problem that may take years to correct through a combination of rising sales in old markets, development of new markets, and adjusting production capacity. Heidi Scheid is leading a session that will address the issues directly titled Strategies for Managing Through Over-Supply. Should be a standing room crowd.

Trade Wars Shrink the Pie

Trade wars are another concern. President Trump has said that trade wars are good and they are easy to win, but the wine industry has found little to celebrate about being in the center of the battlefield. Having invested years of effort and lots of dollars opening up Chinese markets, for example, many wineries have watched hoped-for opportunities disappear with retaliatory Chinese tariffs on U.S. wines.

It looks like French wine producers have dodged a bullet, avoiding sky-high U.S. tariffs that were threatened as retaliation for France’s digital tax scheme. You might have expected U.S. wine producers to celebrate tariffs on wine imports because some buyers are likely to shift from imports to domestic wines. But this substitution effect is not the only impact the tariffs have.

Prohibitive tariffs on imported wine are more likely to shrink the wine market pie at every stage of the product chain. It is hard to see how retailers or distributors can justify investment in the wine category when overall sales fall and uncertainty about future conditions is high. The uncertainty effect looms especially large, despite the recent wine tariff trade truce. If wine was caught in the trade war cross-fire before, there’s no reason it couldn’t happen again. And truces are by their nature temporary and fragile.

When tariffs work to protect an industry they tend to do so only temporarily and at high cost (struggling Harley-Davidson is a good example of this). But they more often backfire. The recent tariffs meant to protect manufacturing jobs in the U.S., for example, seem to have only accelerated the decline of the manufacturing sector generally because of the complex international interweaving of manufacturing chains and other factors.

Food (and Drink) for Thought

There a lot to think about as the wine industry moves into 2020, so I encourage readers to check out the Unified’s seminar programs and start working on a strategy for the trade show.

I’ve been to a lot of wine meetings both here and abroad, but there’s nothing like the Unified. Hope to see you there.

Six Things to Do With Surplus Cabernet Sauvignon Grapes

cabThe wine grape harvest is just around the corner in California and Washington State and, while that’s a great time of the year, it will present economic challenges to some winegrowers. There’s going to be an awful lot of Cabernet Sauvignon harvested this year. Most of these grapes are contracted, but some will be looking for buyers and it might not be so easy.

Cabernet has been the top choice for new plantings for the last several years and it is easy to understand why. It is a noble grape and can make terrific wine. Consumers love it, so growers have responded enthusiastically. The problem, as has been noted here before, is that wine demand generally has slackened just as new supply is reaching the market. For a few years at least there is likely to be a surplus of Cabernet Sauvignon in many regions.

In fact, the surplus is already here, or at least that’s how I read the recent reports from Turrentine Brokerage. Turrentine data show the highest level of Cabernet on the bulk market for many years. Add the 2019 harvest to the current market and you have a problem — not for everyone, but for those who are left with unsold grapes or wine.

Econ 101 Meets Yao Ming

What do you do when you have too much Cabernet? Econ 101 suggests price adjustment — cheaper grapes, cheaper wine, and so on. But there are limits to this strategy, especially since the lower price tiers of the retail market are in decline.

Export sales are another Econ 101 solution and certainly there is an opportunity here, especially if President Trump succeeds in talking the dollar’s exchange value down. But the president’s trade wars have had an offsetting impact on wine exports.

Countries that compete with us in the export markets, notably Australia and Chile, have aggressively sought out free trade agreements to boost sales. The U.S. has recently taken the opposite strategy. U.S. wines are therefore a tough sale today in many export markets including especially China, where Australian and Chilean wines find great success.

Yao Ming, the Chinese basketball legend, has trouble selling his signature Napa Cab back home because of 93% tariffs imposed in response to the Trump administration’s policies. If Yao can’t sell Cab in China, there is not much hope for the rest of us. Export markets are unlikely to absorb very much of the surplus Cab. Other options?

Searching for alternatives, I consulted the most recent Nielsen market figures in the current issue of Wine Business Monthly and found a few ideas to consider if you find yourself holding excess Cabernet this year.

#6 Two Words: Red Blends

Red blends are a useful market category because you can blend away unfashionable or surplus grape varieties without consumers necessarily noticing what’s up. Syrah and Merlot are not as popular as they once were as varietal wines, for example, but blend them together, call the result a Red Blend, and consumers snap them up. Cabernet blends would be very competitive at the right price. This market segment is fairly large but, unfortunately according to the Nielsen data, its growth has stalled a bit this year. That means we need to think about …

#5 Three Words: Sweet Red Blends

See “Red Blends” above but add some residual sugar.  I don’t have a lot of personal experience with these wines, but I see them everywhere. 19 Crimes, which tastes sweet to me, has a successful varietal Cabernet Sauvignon, so this is not uncharted territory. Even better, why not try …

#4 Rosé of Cabernet

Rosé is the fastest growing market segment in the Nielsen table. A lot of that Rosé comes from France, to be sure, but the market is large and fluid.  Picked at the right time, Cabernet makes a nice Rosé and in fact there are a great many produced both here in the U.S. and around the world.

As I noted here earlier this year, there are tricks to the Rosé trade to consider. Rosé is not that easy to make, since color is a concern, and can be tricky to sell because consumers prefer the most recent vintage and demand seasonality is a factor, too. If you like the idea of Rosé of Cabernet, then I think you will also like …

#3 Sparkling Rosé of Cabernet 

Take two fast-growing categories — sparkling and Rosé — make the wines from Cabernet  and you are ready to go. The only thing that could be better is …

#2 Canned Sparkling Rosé of Cabernet 

… because canned wine is also a thing (watch for a report here in the near future) and it is growing fast. Have you seen all the new canned wine displays in the supermarkets? Don’t dismiss canned wine too quickly.

Canned sparkling Rosé of Cabernet leverages three hot trends to use up your excess Cab. It is a perfect storm of wine. What could be better? And while you have the mobile canning equipment hooked up, you might consider …

#1 Canned Sparkling Cabernet + Black Currant Spritz

Seriously!

I am paying more attention to the canned wine displays and one thing I note is that canned wine spritz is generally right beside the other canned wines. These seem generally to be mixtures of wine, fruit flavors, and carbonated water. They sound refreshing and they have less than half the alcohol of regular wine. A Cabernet and Black Currant spritz sounds drinkable to me on a hot day, but you might prefer blackberry or some other fruit flavor.

Since the consumer segment that is interested in low alcohol products is growing, I can see how this trend might persist.  Something to consider.

Seems Like a Stretch?

Bottom line. The U.S. industry is going to need to find uses for its  excess Cabernet Sauvignon if the potential surplus materializes. These examples are ways to take advantage of the small number of growing wine market segments. If it seems like getting Cab products into these segments is a stretch, then it shows how much more pressure there will be on the traditional product markets.

I hope the market can absorb all the Cabernet that’s coming its way. Fingers crossed.

What’s Ahead for 2019? Wine Economist World Tour Update

51ppzy7bwzl-_sx332_bo1204203200_The Wine Economist World tour continues in 2019 and I thought you might  be interested in the who/what/when/where because I think my speaking schedule reflects some important issues and concerns in the  global wine business. Here’s an annotated itinerary.

Unified Wine and Grape Symposium

The Unified Wine & Grape Symposium is the Big Show, the largest wine industry gathering in the hemisphere. About 14,000 people will come to Sacramento for the sessions, trade show, and networking opportunities. The Wednesday morning State of the Industry session draws a huge standing-room-only audience that will be anxious to hear about this year’s special challenges: slowing economy, plateauing demand, surplus stocks, and useful strategies to deal with these problems.

I will moderate the session and present, too, along with Jeff Bitter, Allied Grape Growers, Danny Brager, The Nielsen Company, Marissa Lange, LangeTwins Family Winery and Vineyards, and Glenn Proctor, Ciatti Company. This is a fantastic lineup of speakers with much to say about the industry today and in the future. Not to be missed.

I will be busy again on Thursday morning as co-moderator with L. Federico Casassa, California Polytechnic State University, of “Technology Thursday: From Drones to Chatbots; How the Wine Industry is Embracing Digitalization.”  The speakers will examine digital technology in the vineyard, cellar, and beyond, revealing what’s already available, what is coming soon, and what the  distant future holds. The distant future, by the way, is only ten years away — the pace of technological change is that fast.

There is much to discuss, so there will be about a dozen speakers including Bob Coleman, Treasury Wine Estates, Nick Dokoozlian, E. & J. Gallo Winery, David S. Ebert, Purdue University, Nick Goldschmidt, Goldschmidt Vineyards, Liz Mercer, WISE Academy,  Miguel Pedroza, California State University, Fresno. and Will Thomas, Ridge Vineyards, California. . Each speaker will have just ten “Ted Talk” minutes, so hold onto your hats!

Washington Winegrowers Convention

I will be a busy guy at the Washington Winegrowers Convention & Trade Show in Kennewick, Washington, February 11-14, 2019. I’ll begin early on the morning of the 12th moderating and presenting at the State of the Industry session, which will deal with some of the economic challenges facing the region’s wine businesses today.

Joining me will be Wade Wolfe, Thurston Wolfe Winery, Chris Bitter, Vintage Economics, Steve Fredricks, Turrentine Brokerage, and Jim Mortensen, President & CEO,  Ste. Michelle Wine Estates.

In the afternoon I will be part of a session on “Intentional Rosé.”Rosé is the hottest category in wine and so it is no surprise that it gets a full session here and also at the Unified.

I will talk about the global market dynamic and be joined by Megan Hughes, Barnard Griffin winery, Rob Griffin, founder of Barnard Griffin winery, Lacey Lybeck , Vineyard Manager at Sagemoor Vineyards, and Vincent Garge, Maison Henri Garde, Bordeaux. Fred Dex with lead a tasting of Rosé from around the world.

Porto Climate Change and Wine Conference

Sue and I are looking forward to the discussion at Climate Change: Solutions for the Wine Industry in Porto on March 6-7. The focus will be on action, not just talk, which is much appreciated. Al Gore is giving the closing address and a host of wine industry leaders will speak on their concrete efforts to address the challenge of climate change. Climate change is such an obvious risk to the wine industry. It is great to see so many rise to meet the challenge.

I will be moderating and presenting at a session called “Efficiency & Economics: Call to Action,” which I assure you will be more interesting than it sounds. Joining me on the panel are Stephen Rannekleiv, Executive Director, Food & Agribusiness Research at Rabobank, and Malcom Preston, Global Head of Sustainability Services at PricewaterhouseCoopers.

Chile’s National Wine Fair

Sue and I are looking forward to being at Viña Viñamar, Chile on May 15-16 for the Feira Nacional Vitivinicola.  I will be speaking about Chilean wine on the global stage, which is appropriate given that Chile is such an important wine exporting nation. Chile is hosting the Asia Pacific Economic Cooperation (APEC) meetings in 2019 and I expect that the National Wine Fair will take full advantage of this opportunity. The U.K. and U.S. have long been Chile’s top export markets, but China became #1 in 2017.

British Columbia Winegrape Council Conference

I’ve been invited to speak about the economics of sustainable winegrowing at the BC Winegrape Council Enology & Viticulture Conference and Tradeshow in Penticton, British Columbia in July  Sustainability is on everyone’s lips (see climate change conference above), but the transition from theory to practice or talk to action is a challenge. Looking forward to discussing this issue with my BC friends and colleagues.

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Change is the common feature of all these programs. Changing economic conditions, changing market focus (who would have guessed that everyone would be talking about Rosé?), climate change and sustainable practices, and technological change, too. Change is always disruptive and always interesting, too. Hope to see you somewhere along the wine road in 2019.

Mother Nature Strikes Back: The Big Wine Market Squeeze of 2018

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I’m busy getting ready for the Unified Wine & Grape Symposium, which takes place in Sacramento later this month. It is the biggest wine industry meeting and trade show in North America, with over 14,000 attendees expected for the event’s three-day run from January 23 to 25.

Sacramento Dreaming

There’s a lot to see and do at the Unified. The trade show itself is fantastic, with the full range of wine industry goods and services — from tractors to raptors to bottles and corks to finance and insurance — on display. The seminars are especially interesting this year. Gina Gallo will kick off the program with a much-anticipated keynote address at the luncheon on Tuesday.

Other sessions will look closely at wine-growing and wine-making issues, including a special program on Cabernet Sauvignon, which is the hottest thing there is in California wine these days. There are several parallel programs in English and Spanish, A very timely addition to the program this year is a series of seminars on preparing for and dealing with emergency conditions. Lots to see, hear, and learn.

I will be speaking at and moderating the “State of the Industry” general session on Wednesday morning. This will be a very intense session, featuring analysis by Danny Brager (The Nielsen Company), Steve Fredricks (Turrentine Brokerage), merger and acquisition expert Mario Zepponi (Zepponi & Company), and Allied Grape Growers’ Jeff Bitter. You really don’t want to miss this session — or any of the others.

Mother Nature Strikes Back

What’s ahead for the U.S. and global wine industries in 2018? Looking back at my notes from previous “State of the Industry” sessions, I see that in 2016 I suggested that the wine market looked very good … if the economic clouds on the horizon stayed away. They did and it was a good year for wine. In 2017 I proposed that the issue was more political than economic – lots of political uncertainty with the Brexit vote, Donald Trump’s new administration, and upcoming elections in France, Germany and elsewhere. If the political system can hold together, I speculated, it could be a good year for wine.

I might have been right at the time to focus on politics, but in retrospect it is clear that the real threat to the wine industry wasn’t economic or political … it was Mother Nature herself. 2017 (now extending into the 2018 harvest in the Southern Hemisphere) will be the smallest global wine grape harvest in a generation and, in some areas, the smallest since at least 1945.

Wildfires, both in California and in Portugal and Spain, are the iconic image of the year, but they are not the only or even the principal cause of the global grape squeeze. 2017 produced a perfect storm of different challenges in different places. Heat here, drought there, frost, freeze, hail. Sometimes it seemed like everything that could go wrong did. The impact on the global market will be significant. In fact, as I will explain next week, it could be game-changing.

Winegrowers are no strangers to bad weather or unfavorable conditions. What makes 2017 different is the fact that so many regions were affected during the same growing season – that’s what is causing the Big Squeeze. Typically small harvests in one region of the world are offset at least to some extent by abundant harvests elsewhere. This time was different – most of the world’s important wine growing regions were hit at once, albeit by different factors.oiv

The Biggest Losers

The biggest wine producers were also the biggest losers. OIV harvest estimates released on October showed a global reduction in wine production of about 8 percent compared with 2016 (see pdf here). Italy, France, and Spain – the three largest producers accounting for about half of global wine production – were down 23 percent, 19 percent, and 15 percent respectively.

There were only a few bright notes among major producers. Argentina’s 2017 harvest, for example, was 25 percent greater than in 2016. But the 2016 harvest, while good in terms of quality, was very small and not a really good point of comparison. In fact, Argentina’s 2017 crop was much lower than harvests in 2013, 2014, and 2015.

South Africa’s 2017 harvest was relatively good, up 2 percent from 2016, putting South Africa just ahead of Chile and behind Australia and China in the OIV wine league table. But the good news has not lasted. The 2018 harvest that will begin in just a few weeks looks to be the smallest in years due to very dry conditions through the growing cycle.

If you add the small 2018 southern hemisphere harvest to the northern hemisphere’s weak 2017, you get a dramatic shock to the global wine market environment – a sharp decline of 10 percent or more in global wine grape production.

What are the implications of this Big Squeeze? Your Econ 101 professor taught you that shortages cause prices to rise and that certainly in in the cards. But the wine economy is complicated, so it should be no surprise that the Big Squeeze will have complicated impacts. Come back next week for analysis.

What Next for U.S. Wine? Unified Symposium’s “State of the Industry”

whatnextSue and I are in Sacramento for the annual Unified Wine & Grape Symposium trade show and meetings that start today and run through Thursday. This is the Western Hemisphere’s largest wine industry gathering and there is a lot going on this year, both on the trade show floor and in the ambitious seminar program.

I will be moderating the “State of the Industry” panel on Wednesday and also speaking about the global wine market “big picture.” Nat DuBuduo of Allied Grape Growers will explain what’s happening in the vineyards (Allied’s most recent newsletter suggests Nat will have some dramatic statistics to reveal), Steve Fredricks of Turrentine Brokerage will examine bulk wine market dynamics and Jon Fredrikson of Gomberg, Fredrikson & Associates will break down the U.S wine market and name his Winery of the Year.

It will be a great session. There’s a lot happening in U.S. wine and this may be the best place to go to learn about it.

Uncertain Prospects

The Economist cover shown here captures the essence of my part of the program. The global economy faces uncertain prospects as we enter 2016. Where will economic growth come from in 2016? I will examine the usual suspects and come up with a surprising answer.

I will also highlight four global  trends that I think will be important for the U.S. wine industry  in 2016. (1) The slowdown in the Chinese economy, which is likely to have significant direct and especially indirect effects. (2) The possible renaissance of the Argentina wine export machine (I have written about this in my last two columns on The Wine Economist).

(3) The “Euro-Doillar Twist” that is taking place as U.S. interest rates rise slowly this year and European interest rates continue to move into negative territory. No one really knows how this will play out in terms of direct and indirect effects, which adds a major element of uncertainty to any economic forecast for 2016.

A Very Good Year?

Finally (4) I’ll talk briefly about the possibility of contagion as economic events in one part of the world cascade through the system. With some countries on the brink of crisis, it wouldn’t take much to set off a chain reaction.

I will conclude my very brief remarks by asking if 2016 will be a very good year for the U.S. wine industry? The answer? Maybe! (Which may come as an optimistic surprise after all the gloom and doom of my previous points.) There are definite positive prospects for U.S. wine this year, but lots of potential problems, too.

What next? Lots of uncertain possibilities. Get ready!

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A very good year? That calls for Sinatra. “I think of my life as vintage wine …”

Legendary Fred Franzia to Speak at Unified Symposium Luncheon

Sue and I will be at the Unified Wine & Grape Symposium in Sacramento on January 26-28, 2016 where I will once again moderate the State of the Industry session featuring presentations by Steve Fredricks of Turrentine Brokerage, Nat DuBuduo of Allied Grape Growers and Jon Fredrikson of Gomberg, Fredrikson & Associates.

I always look forward to the Wednesday “State of the Industry” panel because the speakers are so well-informed and the information so timely and interesting. But if I am honest, this year I am even more excited about the Tuesday luncheon gathering because that speaker will be the legendary Fred Franzia (a.k.a. Mr Two Buck Chuck) of Bronco Wine. Wouldn’t miss this for the world!

Bronco By the Numbers

Bronco Wine Company is a major force in the U.S. wine industry. According to the most recent Wine Business Monthly report, Bronco’s 20 million annual case volume makes it the fourth largest U.S. wine company after Gallo, The Wine Group, and Constellation Brands. Although Charles Shaw (a.k.a. Two Buck Chuck) is the best known Bronco label, the company has more than 50 brands. One of the products that Bronco does not make is Franzia, the popular box wine, which belongs to The Wine Group. Franzia doesn’t make Franzia? It’s a long story that I will tell another time.

Bronco’s history began in 1973, when Fred Franzia and his brother Joseph met with their cousin John and pledged to go all in to build a new wine company. Equipped with a tiny bank loan, their knowledge of the business side (Fred and Joseph) and of winemaking (John), plus a major measure of determination, they set out on the twisting road that has brought them to their current position.

Their accomplishment is quite breathtaking when you think about it.  Bronco today boasts impressive winemaking facilities, a packaging and distribution center in Napa and about 40,000 acres of vineyards. No, I didn’t make a mistake, the number is 40,000, making Bronco one of the largest vineyard owners in the world.P1100664

The Miracle of Two Buck Chuck

One of Bronco’s greatest achievements, of course, is the success of the Charles Shaw wines sold at Trader Joe’s stores. These clean, balanced, and affordable wines played an important role in the democratization of wine in the United States. So many previously intimidated consumers were drawn into the wine market by Two Buck Chuck and the other wines it inspired or provoked.

I wrote about “the miracle of Two Buck Chuck” in my 2011 book Wine Wars. The quality of these inexpensive wines forced other winemakers to raise their game and give better value, which in turn gave consumers more confidence and expanded the wine market’s reach. If you think about the U.S. wine world before 1973, well it really is a miracle that we have come so far. The Franzias played an important role.

The View from Bronco Wine

What will Fred Franzia talk about at the Unified Symposium luncheon? Obviously I don’t really know, but I hope that he will look back at some of the inspiring figures that he has known in his life in American wine and look ahead at some of the challenges he sees for the future. I’m hoping to be  informed, entertained, and inspired.P1100655

Sue and I had an opportunity to talk about the past, present, and future of American wine with Fred Franzia back in September. Fred invited us to come down to see what a large-scale grape harvest looks like. Fred’s son Joey took us to see the night harvest at a 4000-acre vineyard ranch near Lodi — quite an experience to see the big machines at work under the stars.

We also visited the Napa bottling and distribution center and the main winery in Ceres, where we had lunch with Fred, Joseph, and John Franzia. Then John took us through the working winery (he designed it and supervised its construction), which was receiving grapes picked the night before (more than 300 big truck loads a day at that time).

Big and Bigger

The scale of the Ceres operation got our attention, of course. We saw some tanks that held 350,000 gallons of wine each. Big as they are, they were dwarfed by other tanks that held twice as much. Amazing.

Once we got used to the scale of the Bronco winery we began to appreciate the tremendous attention to detail, which was apparent in all of the other Bronco operations we visited. So many moving parts coordinated so efficiently. Very impressive. We enjoyed the opportunity to sit and chat with Fred in his modest trailer office and to hear some stories from the past and his vision of the future. I’m hoping to hear more along these lines when Fred gives his luncheon talk.

The Name is Shaw, Charlie Shaw

Let me share one story. Fred told us that he was making a call  at a Trader Joe’s store — he still handles that account himself — and struck up a conversation with a young man who was stocking a Charles Shaw display. Fred asked about how the wine was selling and what customers were saying and so on and the clerk asked who he was and why he wanted to know. Well, Fred replied, I’m one of the people who help make this wine — I work at the winery.

Wow, the clerk exclaimed. You’re Charles Shaw? You’re Charlie Shaw! No, no, my  name’s not Shaw, Fred tried to explain, but it was too late and a minute later the store PA system announced that Charles Shaw was visiting the wine aisle. Amazed customers surged to the Two Buck Chuck display to thank their hero and Fred spent the rest of his visit happily autographing wine bottles. A rock-star moment!

I hope I have the details of that story right (and I apologize if I’ve messed up) because it says a something about the pride and personal touch that we found everywhere at Bronco and about the warm enthusiasm that Charlie Shaw inspires in his fans.

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Sue’s photos above show the blur of the Charles Shaw bottling line at the Bronco Napa facility and a tractor driver during night harvest.