Wine & Stagflation: What Will Happen When Wine Prices Rise?

The conventional wisdom is that we are likely entering the first significant period of stagflation — inflation + stagnant economic growth — in several decades.  We have experienced recessions in the recent past, but not rising inflation, and not the two of them at once.

Inflation is in the headlines every day, but unemployment is very low — so why worry about slow growth or a recession? The answer is that while Federal Reserve policies will try to finesse the situation and bring inflation down to a “soft landing,” most observers think that a sharp contraction will be necessary to bring inflationary expectations down. Growth will fall while inflation still runs high, at least for a while.

So, these are uncharted waters for business and government leaders, especially since it comes on the heels of the covid crisis, which has shaken so many economic and social structures. It is, as I have argued here, uncharted territory for the wine business, too.

So far, as I suggest in last week’s Wine Economist newsletter, wine prices overall have not risen to the degree you might expect given the many cost pressures the industry confronts. Average wine prices seem to have actually fallen in real terms so far according to the data I have surveyed.

It may be premature to begin worrying about how wine consumers will react to higher prices in the stagflation context if and when they arrive.  Or — and this is my point — it might be strategic to consider possible scenarios in order to prepare for the eventuality. Because this is uncharted territory — and because, as Jon Fredrikson says, there are no one-liners in wine — it makes sense to consider the range of consumers responses rather than to look for a single silver bullet answer.

Herewith, therefore, a brief and incomplete list of possible consumer responses to rising wine prices in the context of stagflation.

Econ 101: substitution, income, and wealth effects. 

We begin with Econ 101 basics. An increase in the relative price of wine would create a substitution effect to some extent. It might be to substitute other beverage alcohol products for wine or — the trading down effect — to substitute less expensive types of wine for previous purchases.  How this plays out depends on a number of factors. Younger drinkers, for example, are known to be less loyal to wine and more prone to dividing their purchases among many beverage types, so the substitution effect may be stronger for them than for boomers, for example.

Of these three effects the substitution effect is the most interesting to me because we don’t have much recent experience of supply-driven price increases in wine (versus demand-driven “premiumization”.

The income effect, driven by both higher wine prices and higher prices in general, points towards lower consumption of wine overall. Wine is already more expensive than most beer and spirits on a per-serving basis, and so vulnerable to income-driven consumption adjustments.

There is also likely to be a wealth effect, with wine consumption falling as consumers (mainly but not exclusively boomers) re-assessing buying decisions in light of changing net worth. Rising interest rates implemented to fight the inflation tend to reduce the value of bond holdings directly and equity values indirectly through their impact of the present value of corporate cash flows. Substantial interest rate rises are likely to affect portfolio balances and 401k holdings. If you have been watching the way that equity markets have reacted to the Federal Reserve’s initial 1/2 percent interest rate increase you know what I am talking about.

Stalking the Illusive Wine Bargain

In a perfectly competitive market the “Law of One Price” rules, but the wine market has many quirks and peculiarities, so similar products can sell for very different prices. Rising wine prices are likely to push price-sensitive buyers to even more aggressive bargain hunting efforts. Expect your local Grocery Outlet store to do even more wine business.

But bargain hunting doesn’t necessarily mean searching for rock bottom prices. We recently received samples of two wines that represent good value in their respective categories. The pitch that came with the wines was that these are inflation-fighters. The first wine was Villa Maria Marlborough Pinot Noir Private Bin, which retails for about $19.00. It is an excellent wine that sells for less that many comparable products from, say, Oregon or France.

The second wine was Le Volte dell’Ornellaia, a “Super-Tuscan” from the Bolgheri region that, at around $29, represents a way for many consumers to raise a glass in high style without breaking the bank. How do you find inflation-fighter wines like these? Start by asking whoever sells you wine to solve a puzzle — I’d like a wine like this, but I want to pay something more like that. A good wine seller will appreciate the challenge.

Risk Management

Buying wine is not easy because it is what economists call an “experience good.” You won’t really know if you will like a particular bottle of wine until you buy it and pour yourself a glass.  Reviews and so forth help, of course, but the taste of wine is ultimately very subjective and the risk of disappointment almost inevitable.

As inflation pushes wine prices higher, the disappointment risk becomes more of an issue. One strategy that consumers are likely to adopt in this circumstance is to concentrate their purchases on a few tried-and-true brands or grape varieties that they trust to consistently please. Trying new wines from different regions and brands made from different grape varieties is great fun, but the high reward when you find an exceptionally pleasing wine comes with high risk of disappointment.

So don’t be surprised if consumers — and the stores and shops who sell them wine — react to wine inflation by doubling down on tried-and-true wines. This reinforces a trend that emerged during the pandemic wine surge.

But don’t forget that all this is predicated on wine prices finally rising as fast or faster than the general inflation rates. This hasn’t happened yet … and it might not happen at all. Stay tuned.

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.

Countdown to Wine Wars II

Here at Wine Economist World Headquarters we have started counting down the days until the release of Wine Wars II: The Global Battle for the Soul of Wine.  The book’s official release date is July 1, 2022, but it is not too soon to put in your pre-order at Amazon.com or Rowman & Littlefield. Wine Wars II will be available in paperback, e-book format, and (eventually) audio-book, too.

Wine Wars II is a major revision of my best-selling 2011 book Wine Wars. I’ll be honest — I wasn’t really planning to revise Wine Wars, but I couldn’t help myself. I re-read the book last year on its 10th birthday and there were some parts that really made me smile — they held up very well over the decade since release.

But there were other parts that made me shake my head. I wouldn’t write that today, I thought, either because so much has changed in the global wine industry or because I have changed — learned so much from all the people we’ve met on our global travels.

So there was nothing to do but write a revised book, which went into Rowman & Littlefield’s production pipeline last year and will come out in a few weeks.

I asked a few colleagues to read the book and write “blurbs” to help promote it. Here’s what they have to say.

Judy Chan, CEO of Grace Vineyard China:

10 years ago, when I first read Wine Wars, I was excited to see finally someone wrote about the business aspect of wine. As a wine producer in China who was new to the industry (and the industry was also very new in China), the book gave me a global perspective to look at my local market. With the updated information in this edition, it would be refreshing for someone who wants to see how the industry has and has not changed.

Elin McCoy, author of The Emperor of Wine, global wine critic for Bloomberg News and U.S. Editor of The Wine Conversation podcast

No one makes the powerful economic forces behind a bottle of wine more fascinating than Mike Veseth. Yet his easy-going, down-to-earth approach to these complex topics also brims with entertaining stories and humor – who else would analyze the appeal of wine brands named Secret Squirrel or Tussock Jumper? This new, 10-years-later, version two of his classic Wine Wars is filled with pithy insights about the world of vino today, such as ‘identity trumps authenticity.’

If you want to understand the future of wine, this book is a must read. It will convince you that climate change, economic risk, and stronger-than-ever global wine brands threaten the soul of wine itself. Are we headed for a dark age? Spoiler alert: Wine Wars II ends on a slightly optimistic note, in Portugal.

Andrea Robinson, Master Sommelier and author, Great Wine Made Simple

What a timely book for business leaders and their advisers! While the book’s context is the wine and wine grape growing industries, the challenges and opportunities pinpointed and deftly parsed easily apply to so many industries and brands. Globalization, climate change, the economic challenges of labor, supply chain, brand-building and brand equity preservation in a digital world—Mike Veseth’s synthesis of their present-day coalescence, and the ‘so what’ of that, seems almost clairvoyant. Wine Wars II is also a fun, punchy read, ripe with storytelling, along with some cool comparative wine tastings to illustrate the points. As an economics and finance-trained banker-turned-sommelier, I found this book to be invaluable for my work with clients and wine industry stakeholders of all sizes and stripes, as well as a delight to read.

Alessandro Torcoli, Director, Civiltà del bere

I’ve always been amazed by Mike’s ability to clearly describe wine dynamics in a global perspective with a deep understanding of local forces. Wine Wars II is a must-read book to anyone who want to feel like a real expert on our marvelous, but a bit tricky world of wine.

Flashback: Global Rosé Market Q&A

Spring is here and summer is just around the corner, so it is time to Think Pink. Here is a Flashback column from 2019 that is still relevant today. We tend to assume that we know how the Rosé market breaks down, but the details might still surprise you.

One thing has changed: Rosé sales are not growing at the double-digit rates of three years ago, but then overall wine sales growth has been stalled in recent months. Keep an eye on store shelves in the coming weeks — I think you’ll see pretty pink bottles everywhere.

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(Originally published March 12, 2019) Interest in Rosé wine is on the rise. The most recent Nielsen numbers (as reported in Wine Business Monthly) show that sales of Rosé wine in the U.S. market is growing by more than 40% per year — the fastest growth rate of any category.

Producers want to better understand the Rosé phenomenon, which explains why both the Unified Wine & Grape Symposium and the Washington Winegrowers convention featured specialized Rosé seminars this  year.

This column aims to add to the discussion by bringing together what Sue and I have learned at the Unified and during recent visits to France, Spain, and Italy, some insights from Elizabeth Gabay‘s recent book, Rosé: understanding the pink revolution, and a 2015 report on the global Rosé market produced by the OIV and the Provence Wine Council (CIVP). Here is a pdf of the OIV/CIVP report.

Who Makes the Most Rosé Wine?

Rosé is made pretty much wherever wine is made and sometimes accounts for a remarkable share of a region’s production (think about how important Mateus and Lancer’s Rosé were for Portugal during their peak years).

France is the largest producer by far today followed by Spain, the United States, and Italy. Production has increased dramatically in Australia, Chile, and South Africa, according to the OIV/CIVP report.

Who Buys It?

Let me answer this question three ways using three different figures from the OIV/CIVP report. The data are from 2014, so current data will differ, but the patterns are still relevant.

oiv1

Rosé wine sales are significant just about everywhere wine is consumed, but France is the market leader. Rosé accounted for 30% of all wine sold in France in 2014 according to the study, consistent with other reports that Rosé outsells white wine in French supermarkets, which feature large sections devoted solely to the pink stuff.

Although France is the largest Rosé producer in the world, it actually imports Rosé from Spain, which is the largest Rosé exporter. I think there is a pattern of inexpensive Spanish imports, which fill supermarket shelves with box wine, although that is only part of the story.oiv2

Is Rosé a wine for women? I have heard this said many times and never really believed it. The OIV/CIVP study casts doubt on this stereotype. Although women drink significantly more Rosé than men in some markets such as Germany, the Netherlands, and the UK, there doesn’t seem to be a strong gender bias in other markets. especially in France but also in the U.S., Russia,  and Canada. Men drink more Rosé than women in Brazil, according to the study.

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Finally, consider the distribution of sales by age group. Winemakers today are very interested in breaking into the millennial market. So it is significant that the OIV/CIVP study finds a strong youth bias in Rosé consumption.  Young people in every country surveyed here have a higher Rosé consumption than older people. France is noteworthy because all age groups consume Rosé in substantial quantities, even if the younger ones drink a bit more.

Bottom line: the market for Rosé seems to be both broad and deep. No wonder everyone is so interested.

How Much Does Color Matter? Is Rosé Just a Summer Wine?

Wait — that’s two questions. I wrote about color in an earlier column, so I will make that answer short. The conventional wisdom is that pale Rosé sells better than darker Rosé wines. But the fact is that Rosé from around the world comes in many different hues (as Sue’s photo above from a tasting in the Loire Valley shows).

I agree with Elizabeth Gabay that the color issue is exaggerated, but I don’t expect to convince anyone. If someone makes a darker Rosé and it doesn’t sell, I am sure that the color (not other factors) will be blamed.  They used to say that nobody ever got fired for buying IBM equipment and no one’s going to get a pink slip for making too pale a Rosé wine.

The summer wine question is quite interesting and can be answered in two ways. Yes, Rosé is a summer wine in the sense that there is a strong seasonal component in sales. Consumers drink more Rosé in warmer months. But Rosé is not just a summer wine as sales are now significant throughout the year.

Is There Easy Money in Rosé?

The answer to this question is related to the seasonality question above. It is easy to imagine that Rosé is a Chateau Cash Flow kind of wine. You pick the grapes, make the wine, ship the wine, cash the check — all in just a few months. The money pours in on a timeline only a little longer than Beaujolais Nouveau, which is the ultimate cash flow wine.

But there’s a hitch in the easy money Rosé game — you have to sell out to make it work. The residual seasonality of Rosé sales means that moving your product in February is more difficult than in July or August. And although I have had some Rosé that has benefited from a few years of bottle age, the conventional wisdom is that last year’s Rosé is over the hill — Rosé passé!

The consumer preference for fresher Rosé (which is also true for some other wines, such as Marlborough Sauvignon Blanc) creates a problem for producers. If you don’t sell out, then last year’s slow-selling wine is likely to clog up the supply chain, discouraging orders for this year’s wine.  Reliable supply is important to developing customer loyalty, so you want to have enough, but excess supply is hard to get rid of. Rosé producers must navigate complicated currents!

Here Be Dragons: Wine and the Economy Enter Uncharted Waters

The International Monetary Fund is expected to announce today revised global economic forecasts –– slower growth, higher inflation, and increased uncertainty due to war in Ukraine plus (although I don’t know if it will feature in the IMF report) massive  covid lockdowns in China. Here be Dragons, indeed!

As much as we all would like to think that economic conditions and the global wine market will soon return to what we used to call “normal,” I think it is important to realize that we have actually entered what are in some ways uncharted waters. Old maps and rules of thumb do not necessarily apply and the ability to pivot quickly as conditions change is even more important than in the past.

Flashback to the 1980s

Sometimes I get to thinking that I’ve passed this point in life one time before. (That’s actually a line from a John Hartford song.) Way back in 1981 I wrote a college economics textbook because I couldn’t find a text that could help my university students understand what was happening to the economy.

The uncharted territory back them was stagflation — high inflation and high unemployment at the same time. The standard textbook analysis used Keynesian analysis to understand unemployment and the Phillips Curve to plot the trade-off between unemployment and inflation. Higher unemployment meant lower inflation. But we had both high inflation and high unemployment — how did that happen? And what could be done about it?

The problem (in very simple terms) was that inflation was caused by cost-push not demand-pull factors and had unleashed sustained self-fulfilling inflationary expectations.  The Volker solution was highly restrictive monetary policy that pushed unemployment even higher until the expectations broke. Harsh medicine for a vicious disease.

Zoom Ahead to 2022

Zoom ahead to 2002. After years of relatively stable or even falling price levels, inflation is here again at rates that haven’t been seen in the U.S. since the 1980s. The problem this time is a combination of cost-push and demand-pull factors. Higher energy, food, and transportation costs plus persistent shortages of key commodities push prices higher while the huge fiscal and monetary stimuli of the pandemic and post-financial crisis era have pulled inflation higher, too.

This is not a repeat of the 1980s, by any means, but also not like anything we’ve seen at this level in a very long time. I can’t remember seeing such a combination of broad forces aligned to boost demand and constrain supply.

The war in Ukraine adds to the inflationary pressure, especially with respect to energy and food prices, and it is hard to see these forces disappearing any time soon. Even if a truce were declared today, the energy and food price effects would continue for some time. The Chinese covid lockdowns are squeezing production of many manufactured goods at the same time.

Disruptions in global trade and finance are another factor to take into account. For a long time the “China Price Syndrome” kept a lid on prices of manufactured goods. If a company was tempted to raise price, the ready availability of cheaper alternatives from Asia and especially China acted as a constraint. The “China Price” served as a price anchor then, but much less so now because of unraveling trade relations.

Getting from QE to QT

Taken together this is a situation we haven’t really seen before, but the thing that really makes people like me nervous is monetary policy, The Federal Reserve will be responsible for squeezing inflation out of the economic system (just as it was in the 1980s), but financial conditions are different now. We have had very low interest rates for a long time now and wave after wave of quantitative easing (QE — Fed purchases of Treasury and mortgage-backed securities that pump liquidity into the markets). The markets have kind of become addicted to the constant monetary boost.

Raising interests from this very low level can be expected to disrupt financial markets if only because of the mathematical impact on present value calculations. Exchange rates will shift, too, with disproportionate impact of development market currencies.

But the real “uncharted waters” factor is the transition from QE to QT, quantitative tightening. This will initially take place as the Fed’s bond holdings mature and are not rolled over, which takes liquidity out of the market. It will start slow (which still means billions of dollars a month) and could pick up speed if necessary.

The question is how financial markets will deal with this change after having a liquidity drip line month after month for this long? There is nervous talk of another sharp liquidity crisis, but maybe bigger than the last one, which the Fed addressed quickly and well. If key credit markets freeze up and contagion takes place, the Fed will have little choice but to reverse course, opening the door to even higher inflation.

The alternative is a very hard landing as the impact of the financial crisis spreads through the economy. How hard a hard landing? It depends on what it would take to shift inflationary expectations. So you can see the concern — we may be perched on a narrow ledge with higher inflation on one side and financial crisis on the other.

What About Wine?

The wine economy operates by its own rules, but it can’t fully escape the forces shaping the economy in general. To repurpose something that is said about the pandemic economic, we aren’t all in the same boat, but we are in the same storm.

Wine has also experienced a combination of cost-push and demand-pull factors, but not uniformly for various categories. Demand-pull, for example, seems focused on more expensive wines. Cost-push is everywhere, however, which means that the crunch is felt particularly in the middle- and lower-price tiers.

Honestly, I cannot remember a time when cost pressures have been so broad and deep. To what extent will price-sensitive consumers push back on price increases? Or will the consumer inflation expectations in general soften attitudes towards rising wine prices? Given that these are uncharted waters, the map holds more questions than answers.

Charting Chile & Argentina Wine Strategy for the U.S. Market

These are challenging times for the U.S. wine market. NielsenIQ data reported in the April 2022 issues of Wine Business Monthly shows the wine market declining overall in value and volume terms. The picture isn’t perfectly clear, of course, because NielsenIQ numbers miss some sales vectors and it is hard to know what base to pay attention to given covid sales channel distortions. But there is plenty of cause for concern about U.S. wine market growth.

The situation is even worse for wine imports, because they face most of the headwinds of domestic producers but also have to deal with unfavorable international logistics issues and significant exchange rate and trade policy uncertainty.

But cloudy skies over the U.S. wine market landscape contain some welcome sun breaks — market segments where growth opportunities can be found — even for imported wines. Sue and I recently sampled wines from Chile and Argentina that illustrate this strategy.

Sauvignon Blanc to the Rescue

Where you search for growth depends on how you look at the market. In terms of grape varieties, for example, the clear target these days is Sauvignon Blanc. Sales of both domestic and imported Sauvignon Blanc have done very well in the last year.

For a long time Sauvignon Blanc has been all about New Zealand, which has sold out of this wine year after year. The rising SB tide seems to be raising all ships these days, which is good news for growers in California and elsewhere.

Chile has a long history of Sauvignon Blanc production with quality rising year after year. Sauvignon Blanc is the second most-planted grape variety and Chile is the world’s third largest SB producer. But the marketing focus has often been on that other Sauvignon, Cabernet Sauvignon. Until now. Concha y Toro sent us three wines that will compete very well in this dynamic market segment.

  • 2021 Concha y Toro Gran Reserva Sauvignon Blanc | D.O. Litueche, Colchagua Valley | $15 | 100% Sauvignon Blanc | 12.5% ABV | 1.5 g/L RS.  Sourced from our estate Ucúquer Vineyard, located in the arid hillsides of the Rapel River in Colchagua Valley, 10 miles from the Pacific Ocean.
  • 2021 Cono Sur Organico Sauvignon Blanc | Chile | $11 | 100% Sauvignon Blanc | 12.5% ABV | 3.1 g/L RS | Made with organic grapes | Vegan.  Fruit from coastal San Antonio DO’s Campo Lindo Estate and Bío Bío provide an ideal mixture of sand and red clay for this Sauvignon Blanc expression.
  • 2020 Concha y Toro Casillero del Diablo Reserva Sauvignon Blanc | Chile | $12 | 100% Sauvignon Blanc | 12.9% ABV | 2.44 g/L RS.  Fruit from Aconcagua—which stretches inland from the coast above San Antonio—Valle Central, and Región de Coquimbo compose the final blend.

As you can see from these wine profiles, the three wines present three distinctively different representations of Sauvignon Blanc from different Chilean wine regions. What they have in common — beyond grape variety — is their remarkably good value-for-money proposition.  This is especially true for the Gran Riserva. It is not often that you can find a wine like this for such a reasonable price. Distinctive and intense, you won’t mistake it for France, New Zealand, or California. Definitely worthy trying.

Raising the Bar for Malbec and More

Wines of Argentina sent us a little “mystery box” to sample and I wondered what would be in it? What message would they want to broadcast? How would they attempt to navigate the swirling U.S. wine market currents? The answers to these questions were clear as soon as we opened the package.

Message #`1: Argentina is Malbec, as everyone knows, but not just Malbec (just as Chile is not just Cabernet Sauvignon). Our mystery case included both a cool climate Wapisa Pinot Noir from Patagonia and a Trapiche Broquel selected barrel Cabernet Sauvignon, hand-picked from 30-year old vines.

Sue and I learned about the great diversity of Argentina wine on our first visit there in 2011. Our friend Andrés Rosberg arranged a tasting menu that featured wonderful wines not named Malbec until, at the very end, when a Rutini Vino Dulce Encabezado de Malbec 2007 appeared with dessert. Argentina is more than Malbec. Message received!

Message #2: Argentina makes wines that can compete successfully in the key growth segment of the U.S. wine market when we analyze it by price point — the ultra-premium $20-$25 range. A Salentein Reserve Malbec from high elevation vineyards in the Uco Valley and Luigi Bosca “De Sangre” limited edition Malbec from select vineyard parcels in the Altamira district.  I understand the average vine age is 90 years — remarkable!

During the Malbec boom of a few years ago Argentina became stereotyped as the source of simple Malbec wines at bargain prices.  Slowly — and now more quickly — Argentine producers have worked to show that they have more to offer and distinctive wines of higher quality, too, for those who are willing to reach up to a higher shelf on the wine wall.

Follow the Money

Follow the money. That’s what Deep Throat famously advised and it is something to consider in today’s U.S. wine market. If you break down market trends you’ll find a number of categories where growth opportunities exist. These Chilean and Argentinian producers demonstrate the strategy of focusing on key categories with wines of quality and value. Good lessons for us all to consider.

Wine Book Review: Britain, Imperialism, and the Wine World They Created

Jennifer Regan-Lefebvre, Imperial Wine: How the British Empire Made Wine’s New World. University of California Press, 2022.

Imperial Wine is a serious academic study of how imperial economic, political, and social relations between Great Britain and three of its colonies — South Africa, Australia, and New Zealand — shaped their wine industries and New World wine more generally from the time of the first plantings through to today.

This is an argument that I am glad to see examined in depth. In my books Wine Wars and the forthcoming Wine Wars II I nominate Great Britain as the center of the wine universe, so powerful, I think, is its influence on wine and the wine trade.

Australia and New Zealand were British colonies that developed wine industries that were shaped to a great extent by the ebb and flow of trade with the United Kingdom. Although South Africa and its wine industry have roots in Dutch colonial trade, the decades under British rule had powerful effects.

It is a fascinating study, but I admit that I struggled at times because I really wanted this to be a book about wine first and foremost and the author is really focused on imperialism, with wine used as a lens. I think that authors earn the right to define their works, so I cannot really complain. This is a story that can be told several ways.

Most people will be surprised at the poor reputation of Australian wines in the UK market in the early post WWII period, for example, given how popular they are today. There are many ways to demonstrate this, but the author highlights a lame Monty Python joke that compares and aroma of Aussie wine to the smell of an Aborigine’s armpit, which invites a discussion of imperial racist attitudes in the post-colonial era.

“Some wine lovers might protest that colonialism is a distant historical footnote to the history of wine, and that dredging up colonial history is a buzzkill, a weary intrusion on our enjoyment of wine,” the author writes in the concluding chapter, suggesting that she’s run into people like me before. “Can’t we just enjoy a glass of wine without someone introducing controversy?  Is colonial history designed to make wine lovers feel guilty?” Imperial Wine, the author argues, makes the case that ignoring the history of wine distorts our understanding of both it and the complicated processes that have shaped it.

Fair point. Understanding the forces that conditioned what is in your wine glass, how it is made, and who it is made for deepens the wine experience, don’t you think? And that includes the forces of empire and the long shadow that they cast.

The author’s deep dives into historical documents drew me in again and again. During World War II, for example, Old World wine pretty much disappeared from store shelves, replaced for the most part by “colonial wines” from South Africa, Australia, and Algeria (not a British colony, but a colony nonetheless).  The author traces changing wartime wine patterns though a study of the detailed records of the King’s College off-license store, called the buttery, which provided wine for fellows and sold it to students. Algerian red wine and South African sherry sold well to penny-pinching students, who would turn their backs on colonial wine after the war in favor of the French wines returned to the market.

Imperial Wine teaches wine enthusiasts about the role of empire in shaping the wine world of the past, present, and probably the future, too. And it teaches students of imperialism that the influence of those forces continues even in something as seemingly simple as a glass of wine.

Interesting. Well-written. Thought-provoking. I learned a lot. Did Imperial Wine change the way I think about wine? Yes, at least a bit. Well worth your consideration.

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Curry: A Tale of Cooks & Conquerors by Lizzie Collingham is one of my favorite books about cultural globalization. Imperialism is a strong force in this account (which includes historical recipes at the end of each chapter). I was reminded of Curry when I noticed that Collingham wrote one of the cover blurbs for Imperial Wine. 

We Don’t Talk About Abruzzo … But We Should!

The thing about Bruno, a character in the Disney film Encanto, is that everyone talks about not talking about him. Or at least that’s the gist of the wildly popular song “We Don’t Talk About Bruno.

The Abruzzo Syndrome

For a long time this situation kind of applied to Abruzzo, the under-appreciated Italian region you reach by flying to Rome and driving east over the Apennine mountains to the Adriatic. My well-worn 1998 Knopf Guide to Italy, for example, devotes more than 500 colorful pages to tourist Italy, but gives poor Abruzzo precisely 2 pages of text.

The Abruzzo syndrome, as illustrated by the Knopf guide treatment, is that the Itay is full of the best of the best of tourist sights and attractions. Abruzzo’s natural beauty and modest charm is undeniable, but it struggles for the spotlight that is focused elsewhere.

Sue and I can appreciate this situation from our experience living in Bologna some years ago. For the most part foreign visitors only knew Bologna from changing trains at the station or attending conferences at the big convention center outside of town. Bologna was a place you passed through on your way to somewhere else. Abruzzo’s location makes it ever less of a destination point.

Abruzzo Wine Syndrome

The Abruzzo syndrome plagued the region’s wines, too. Take the usually-generous Burton Anderson’s Wine Atlas of Italy, for example. Anderson gives 3 pages out of 300 to Abruzzo in my 1990 edition of this classic volume, disappointed by what he saw as a lack of interest in quality.

… the growing of grapes in abundance as just another fruit crop still offers more attractive prospects than does the making of premium wine. The shame of it is that the Abruzzi’s sunny hills could make outstanding wines, not only from the native Montepulciano but from many other noble vines.

A few producers stubbornly swam against the tide — Anderson cites Edoardo Valentini in particular — but it was a difficult task given the region’s lack-luster reputation. Abruzzo’s reputation was nothing much to talk about even though the potential was clear.

Abruzzo Fast Forward

Fast forward to 2022. Sue and I hadn’t talked much about Abruzzo over the years, but an unexpected invitation to visit later this year was enough to make us circle back to see how Abruzzo has changed and it is clear that the region is getting some of the respect it was previously denied.

Travel and Leisure magazine, for example, named Abruzzo to its list of the 50 best places to travel in 2022.  Abruzzo has changed, as the article suggests, but perhaps travelers have changed, too, and now appreciate local charm and character more than before. Here’s an excerpt from the article.

Stretching from the heart of the Apennines to the Adriatic Sea on the peninsula’s southeastern side, Abruzzo, Italy has long been one of the country’s most overlooked destinations despite its unspoiled villages, picturesque Trabocchi Coast, and stunning natural escapes. Over the past few years, however, it has gone from a sleepy underdog to an ambitious harbinger of slow travel, sustainable gastronomy, and conscious hospitality.

Reality vs Reputation

Reality has moved faster than reputation on the wine front, too. Abruzzo is still noteworthy for the quantity of wine it produces. Abruzzo ranked #5 among Italian wine regions in 2020 for volume of production. Veneto and Apulia topped the table followed by Emili-Romagna and Sicily. Abruzzo was followed by Piedmonte and Tuscany. But quantity is no longer the only game in town.

My battered copy of Slow Wine Guide 2014, for example, highlighted the growing number of premium producers who were able to meet the guide’s high standards.

It is a mistake to speak about the Abruzzo as an emerging winegrowing region. Consistent quality has now become more general, no longer the prerogative of a handful of historic cellars plowing the furrow of tradition, but also a characteristic of the work of both small wineries and large cooperatives.  … All in all, the Abruzzo wine world is in good health, working the land more sustainably than in the past and affording consumer enjoyment with very reasonably priced labels.

Clearly Abruzzo has turned a corner, a fact underlined by the evaluation I found in my copy of the Gambero Rosso 2019 guide to Italian wines. “Abruzzo’s wine industry is in many ways a kind of microcosm of the nation as a whole,” the analysis begins, “… leaving behind an age in which it was dominated by large quantities of generic bulk wine used outside of the region.”

Slowly Then Suddenly

The wines today (and the people who make them) are a better reflection of the remarkable diversity found within the region. “And they won’t cost you an arm and a leg either,” the report suggests, “(it’s not a coincidence that once again a number of Tre Bicchieri come at a price that would allow for daily consumption).”

Slowly — and then suddenly — Abruzzo is a topic of conversation. Just last week, for example, the region was highlighted in two news stories. The Drinks Business reported that Italy’s National Wine Committee and Agricultural Ministry agreed to consolidate the central Italian region’s wines under a single IGT (Indicazione Geografica Tipica), Terre d’Abruzzo. IGT wines are an important category where innovation is encouraged and the new designation will raise Abruzzo’s visibility. The hope is that Terre d’Abruzzo  IGT will do for Abruzzo was “Terre Siciliane” did for Sicilian wine identity when the designation was introduced a few years ago.

Meanwhile, New York Times wine critic Eric Asimov featured two indigenous Abruzzo wine grape varieties in his column on “Ten Grapes Worth Knowing Better.”  Pecorino and Trebbiano d”Abruzzese — and recommended Abruzzo producers — made the list of wines worth discovering.

So apparently we are talking about Abruzzo now for the quality, value, and character of its wines. And it is good to keep the conversation going because it will take some time for Abruzzo’s reputation to catch up to reality. And it will not be easy to get attention in the crowded market for Italian wines, where famous names abound.

Wine Book Review: Grassroots Perspectives on Portuguese Wine

Simon J. Woolf and Ryanb Opaz, Foot Trodden, Portugal and the Wines that Time Forgot. Interlink Books, 2021.

Portugal is having a much-deserved moment at present. For a long time Portugal wasn’t really on the radar for most people. The situation was so bad that some folks couldn’t find Portugal on a map — I saw a headline that proclaimed Portugal as a Mediterranean destination! It was enough to make Henry the Navigator cry!

Portugal Discovered

Now Portugal is high on the list of popular destinations for travelers of all stripes. Many of our friends have visited Portugal as tourists, for example, one has bought property there and is moving permanently, and another is seeking Portuguese citizenship.

What is the attraction? The people, their culture, food, wine, climate — the list goes on and on. The question isn’t so much why people love Portugal as what took them so long to discover it!

You can say pretty much the same thing about Portuguese wine.  For a long time the wines of Portugal have been sort of filed away a couple of niches. Port and Madeira? Check! Vinho Verde? Check! Lancers and Mateus? Check! Check!

But the world of Portuguese wines beyond the niche categories was essentially uncharted territory. What would it take for get wine drinkers to try Portuguese wines from unfamiliar regions made with unfamiliar grape varieties? It seemed like an impossible challenge.

Portuguese Charm Prevails

But the challenge is being met these days and Portuguese wine sales have been strong in the United States market, due in part to the popularity of Portugal as a travel destination, but also the rising profile of the country and its people more generally. Portugal has become a little bit like Italy in the sense that warm feelings about the place encourage consumers to give the wines a foot in the door, which is all they really need.

Walking into Costco recently, for example, I was met by a giant haystack wine display right by the entrance featuring colorful bottles of wine labeled simply “Portugal Red Blend” from the Lisboa region. It is an honest red wine, not too complicated, and a very good value. Shoppers happily filled their giant shopping carts. Would that have happened five years ago?

Grassroots Portugal

Foot Trodden, the recent book by Simon J. Woolf and Ryan Opaz, comes at an opportune moment when many wine enthusiasts are thirsty to learn more about Portugal. The book is appealing in part because it approaches Portuguese wine from a different angle than many wine books.

The standard format of “Wines of XXX” books is to survey the landscape from the perspective of the grape varieties, the wines they produce, the regions where they are made, and the wineries that make them. It is essentially a top-down approach, which is appropriate for a survey volume. Richard Mayson’s The Wines of Portugal, for example, applies this template to Portugal very successfully.

Foot Trodden breaks the mold a bit by focusing on the people and their stories, letting the other elements appear as part of the human tale. This is a bottom=-up perspective, which I find especially appropriate in this case because, as I noted above, so many of the sources of Portugal’s current success are essentially grassroots characteristics.

The book is well written, the stories, which mainly focus on family wineries, are well chosen and told, and the result a feeling of the place and the challenges that wine makers faced in the past and confront today, too. Excellent book. It deserves the success and recognition it has received.

All in the Family

Because stories are the driving force here, breadth is sometimes sacrificed for depth. So, for example, we are introduced to far fewer wine makers than in the survey books and these tend to be smaller multi-generation family affairs. The big wine producing houses are mentioned, but the focus is elsewhere.

I especially enjoyed the chapter on the Alentejo, which was organized around the tradition of making wines in large clay pots called Talha.  The rise, fall, and now rise again of this tradition is very interesting and deftly connects several family wine stories. These wines certainly honor the book’s sub-title.

I was also pleased to see so much Portuguese history woven into the book’s tapestry.  It seems to me that it is impossible to understand Portuguese wine today, for example, without taking into account the long shadow case by Prime Minister Salazar’s policies and the reaction to the Carnation Revolution.

The book features many colorful photographs, which support the grassroot perspective by highlighting the families, their land, and work. There are a few missed opportunities. The one map included in the book is pretty, but doesn’t answer many questions. More is more when it comes to maps, especially in this case because they can help connect the top-down and bottom-up perspectives.

Which is the better approach — survey or grassroots? Each is useful and interesting. Why choose? More is more when it comes to perspectives on Portugal and its wine!

Wine on the Nile: Wine Goes to the Movies (and TV)

One of my pet peeves is wine’s lack of impact in popular culture. Celebrity chefs get lots of traction — even fictional cartoon rodent chefs (have you seen the Disney film Ratatouille?). Celebrity winemakers? Not so much.

Wine shouldn’t try to simply imitate food, of course, Watching Michel Rolland micro-oxygenate a tank of Merlot will never be as much fun as watching Julia Child throw together a pot of Boeuf Bourguignon.  If we want to reach potential newbie wine drinkers, I think wine needs to go where they are and to connect in as many ways as possible.

Wine is so often an afterthought. I bemoaned the fact that wine had no particular pride of place in Stanley Tucci’s hit television series Searching for Italy, for example. A wasted opportunity for sure!

Bordeaux on the Nile?

So I am pleased to see the efforts that Bordeaux producer Chateau Malartic-Lagravière, which is working very hard to position its fine wine where it can be seen and appreciated by a diverse audience.  The white wine, for example, appears in the second season of the Netflix series Emily in Paris.  And the red wine is featured in the recently released big-budget 20th Century Studio version of Agatha Christie’s Death on the Nile.

Why Death on the Nile? A press release suggests that the Bonnie family that owns the Chateau connects with the film’s chief protagonist, fellow Belgian countryman Hercule Poirot. Perhaps. But I have to think the luxury setting in which the film’s action unfolds is an appealing frame for a luxury Bordeaux wine.

Consumers need a nudge to put wine on their minds and I congratulate Chateau Malartic-Lagravière for taking the initiative.  Product placement, however, is just one element of a potential initiative to connect wine culture with the interests and lifestyles of today’s consumers.

Wine First, Please!

Sue and I have been impressed for the early efforts of a group producing a public television series called Wine First, for example. The idea, I think, is that when most people go to a restaurant they pick their meals first and then choose a wine. But when YOU dine out, I’ll bet, at least some of you study the wine list first, choose the wine you want, and they pick food to go with it. Wine First.

The series format takes a wine first approach. The hosts visit a wine region (the Mosel, for example), stopping at three wineries to choose wines that captures the essence of each place — plus a regional food ingredient. A local restaurant chef is then challenged to prepare dishes that will highlight the wines — the wines are the star. The local wine producers evaluate the imaginative pairings that result and render a wine first verdict. Sue and I really enjoyed the programs and hope the multinational series comes back for a second season.

So far so good. But there is a lot more work to be done to get wine more clearly on the radar of the next consumer generation. In the meantime, remember that it is not telling the world how wine tastes (or is made) that will be the key to future growth. What’s important is how it makes you feel.

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I thought you might enjoy viewing the trailer for Death on the Nile.