Wine Book Review: Rethinking Wine Market Perspectives

Giacomo Negro and Michael T Hannan with Susan Olzak, Wine Markets: Genres & Identities. Columbia University Press, 2022.

What would you think if you stumbled upon a tasting note for a familiar wine that was written by someone from a very different culture, using different terms and concepts, and set in a different frame of reference? Think of an extreme version of the Chinese wine tasting notes described in a 2013 Wall Street Journal article.

At first you might just be puzzled and scratch your head (being careful not to spill any wine), but then — if the tasting note is a good one — you’d find yourself thinking, questioning what you thought you knew about the wine, and maybe considering it in a whole new way. That was my experience in reading Wine Markets: Genres & Identities.

I come from Planet Economics, so for me a book about wine markets is a book that is rooted in supply and demand. Producers, consumers, price and quantity — these are the fundamental building blocks.

The authors of Wine Markets come from Planet Sociology, so they think about the people and their relationships as much as — or maybe more than — the wine itself. Hence the book’s subtitle: Genres & Identities. A tasting note from Planet Sociology contemplates the same reality but analyzes it in very different ways.

Chapters at the beginning and end of the book lay out the theoretical elements and the terms that go with them. Different readers will react to this material in different ways. The core of the book is a set of three case studies that all readers will agree are interesting both for their stories and for the conflicts they reveal.

The first case study is Barolo, where modernist producers confront those who follow traditional practices, creating two genres within the one appellation. One element of tension is the use of small oak barriques versus large neutral botti grandi, although it a distortion to oversimplify in this way because some noteworthy producers — including iconic modernist Angelo Gaja — use both to good effect.

Brunello is the second case study, where tension arises between those who follow tradition in using 100% Sangiovese grapes and those who favor “super Tuscan” blends that include international varieties. Finally, the authors visit Alsace, where producer identities are at least in part defined along a biodynamic – organic – sustainable – conventional viticulture spectrum. The research proceeds mainly through interviews with the producers, although there is also statistical analysis of some issues.

The stories are told in terms of wine genres, producer identities, solidarity (or lack thereof), the audiences (consumers, critics), and the markets where they all come together. A different way of thinking about wine markets indeed.

For me the Barolo case study, which was the most detailed, was also the most interesting. The Alsace case confused me — which is not necessarily a bad thing — because the authors argue in part that biodynamic producers there are driven by the desire to achieve market differentiation. My experience is very limited, of course, but I have never met a biodynamic grower who struck me as doing it for the money.

Much of the research for the book was completed several years ago and I wish that more of it had been updated. I also wish there was room for case studies from the New World, where appellations are more geographic indicators than prescriptive wine genres. I wonder how the social dynamic analysis would be different from Barolo and Brunello?

Finally, I appreciate this book because it has given me some new ways to think about the natural wine movement, a genre of wine where identity is both strong and hotly contested at times. I am not ready to move from Planet Economics to Planet Sociology in terms of wine market analysis, but I think we can all benefit from ideas that challenge and stimulate as this book does.

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Gillian Tett, an anthropologist by training who reports on the world of global finance, is chair of the editorial board of the Financial Times and an advocate of the sort of cross-silo thinking discussed in this book review. You might be interested in her recent book Anthro-vision: a new way to see business and life.

Wine and the British Sunshine Tax

If you stroll around London for a while you are likely to come across a scene like the one shown here. An old building with its windows bricked up. Sometimes it’s one or two windows.  Sometimes they are all covered over. No sunlight gets in.

Ain’t No Sunshine …

The reason the owners decided to keep the sun out was the window tax, an attempt by 19th-century government in England and then later in Scotland to tax the rich in a manner less invasive than an income tax.

What could be better than a window tax?  Big houses with many windows were indicators of wealth and simply counting the windows (with exemptions for the humble cottages of the poor) an arbitrary straight-forward way to assess tax liability.

This was an era when revenue-craving governments were willing to go to almost any length to raise funds through specific excise taxes — think about the advice to “declare the pennies on your eyes” in the Beatles tune “Taxman” (see below for music video). Rather than one big tax source, dozens of smaller excise taxes were imposed.

The Taxman Cometh

But the tax authorities didn’t count on quite how much the English hated to be taxed and, obviously, many of them were willing to wall-up their windows and contentedly sit in the dark in order to escape the despised taxman’s assessment.

This bit of fiscal history is prompted by what might be considered by some to be a new tax on sun light, but this one collected via wine instead of windows. Galileo famously said that wine is sunlight held together by water, so what better way to tax sunshine than through wine. Or at least that’s what some people are saying, according to a recent article in the Financial Times.

Britain is slowly adjusting to its post-Brexit status and part of that means transitioning away from EU rules on the taxation of alcoholic beverages. Under EU regulations, which are still in effect, still wines and fortified wines are taxed in three bands according to alcohol by volume (abv), with sparkling wines in a further higher-rate band.

Let the Sunshine In?

Britain’s chancellor has proposed a new 27-band system with the rate rising every half percent of abv.  The complexity of the plan suggests high compliance costs, don’t you think, and would seem to invite a certain amount of gaming of the system. The abv of that wine in your glass may or may not be the same as the number of the label — a certain amount of rounding up or down often takes place — and this will matter more if fine-grained tax consequences are at stake.

I’ve heard that the chancellor’s office says that it is really just one band with 27 steps., not 27 bands. Good to know.  I’m sure that makes compliance much simpler!

Some members of the British wine trade go further, asserting that this amounts to a “sunshine tax.” The argument is that producers in sunnier regions like Australia can’t help producing riper grapes that yield higher abv levels while wineries in cooler climates, like the Mosel, naturally produce wines with lower abv.

This is true to a certain extent, although wine producers certainly have their secret ways of increasing abv when they want to and reducing it when that makes sense. No one in California brags about de-alcoholization, for example, but people tell me it happens all the time. Part of a batch of wine goes through a process to extract alcohol, they say, and is then blended back into the tank to bring the percent of abv down.

One winemaker friend talks about using “Jesus units” to accomplish the same end more directly. This process involves water and a hose. The result turns water into lower alcohol wine. A miracle!

Australian producers are particularly upset. Australia and the UK have signed a free trade agreement which will modestly reduce tariffs on Aussie wines exported to Britain. The “Sunshine tax,” which would apply to most wines from Oz, more than offsets any advantage from the new agreement.

Let me know if you see any wineries bricking up their windows. They might do that if they don’t want the world to see how they are lowering the alcohol levels in their wine!

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Lift a Glass to Toast Open That Bottle Night 2022

Wine lovers have a lot to celebrate. The calendar is dotted with days devoted to particular wines. International Malbec Day. International Grenache Day. The list goes on and on. They are all great in that they help us both celebrate wine and remember its incredible diversity.

But the greatest wine holiday of them all IMHO is Open That Bottle Night, which is celebrated on the last Saturday of February each year (that’s February 26 in 2022). The idea, according to John Brecher and Dorothy Gaiter, who invented the occasion when they were wine columnists for the Wall Street Journal, is to ferret out some of the wines that you have squirreled away to open on some indeterminant special occasion and open them up to enjoy now. Ferret? Squirrel? What are you waiting for?

Or, as Orson Welles might have said in one of the old Paul Masson television commercials, we will drink no wine until its time. It’s time now!

Sue and I take turns picking a bottle for our OTBN celebration — the choice often driven by the memories the bottle holds as much as the wine itself. This year we are remembering our trip to the cradle of wine, Georgia, where I spoke at the first United Nations World Tourism Organization wine tourism conference back in 2016.

At one point the conference paused to visit the Alaverdi Monastery, which has been producing traditional wines since 1011. We surveyed the monastery and toured the marani (cellar) with its clay  qvevri vessels, which are buried in the ground in the traditional way. I was surprised and delighted when I was called aside to receive a gift from the archbishop — the bottle of the monastery’s golden Rkatsiteli that we will uncork on OTBN 2022.

I remember tasting this golden wine and being moved. Here is Tim Atkin’s tasting note for an earlier vintage. I guess he was moved, too.

This is the wine that first won me over to the charms of the qvevri – the most astoundingly complex nose of tea leaves, baked apples, jasmine, herbs and plum compote (and bear in mind my description does not remotely do it justice). Very much an amber/orange style, with chewy but perfectly ripe tannins – and yet the fruit shines through effortlessly. Outstanding.

Inspired by the choice of wine, Sue has announced that she will pair it with homemade Khachapuri, which is sometimes described as a Georgian cheese bread. If you’ve ever had Khachapuri, however, you know that description doesn’t really do it justice.

Sue plans to riff on the King Arthur Flour recipe for Khachapuri, which substitutes ingredients readily available here in the United States for some of the Georgian originals.

The food and wine will be great in themselves, I’m sure, but more important will be the memories of people and places that they will inspire.

Those are our OTBN plans for this year. What bottle will you open on February 26? What memories will be uncorked. Please share your thoughts using the Comments function below.

Cheers to Dottie and John, who gave us Open That Bottle Night and to everyone who celebrates it in 2022!

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Here’s a photo Sue took of the wine — remember it is a white wine! I know it looks dark in the decanter, but it really had amber notes in the glass. And it held our attention for a couple of hours as we tracked its development, An experience to remember

Build Wine Back Better: “Got Wine?” meets “License to Steal”

“WineRamp” is an important new initiative to try to overcome obstacles to the continued growth in the U.S. wine market. The idea, in simple terms, is that younger consumers aren’t finding the on-ramp to wine that the baby-boom generation discovered back in the day. What’s the problem? Well, it is complicated, of course, and there are many factors at work here.

Got Your Moo-Stache?

But one issue is simple. There are literally thousands of wine brands on U.S. shelves and each one promotes its own products. But no one is telling the story of Brand Wine. WineRamp hopes to fill in that gap.

It is still early days and impossible to know what WineRamp might look like if it gains the necessary industry support. Some people think of it as a “Got Milk?” program for wine. “Got Milk?”, you may recall, was a very popular generic promotion campaign for dairy milk, with television, print, and more components. You might remember the photos of celebrity endorsers with their white “moo-staches.”

“Got Milk?” was successful in raising awareness, but as I wrote on The Wine Economist a few years ago, it could not prevent the slowly evolving collapse of milk consumption in the United States as consumers opted for other products, especially plant-based non-dairy milks. Got Milk? Yes, but increasingly it is made from almonds or oats.

Grass Roots Initiatives

Generic marketing campaigns are inherently top-down projects, but that’s not the only possible strategy. Mobilizing forces at the grass roots level is another option. Neither approach is easy or guaranteed to work. What would a grass roots wine project look like?

“License to Steal” (aka LTS) is the name of the national wine marketing conference, which will be held this year on March 22-24, 2022 in association with the Eastern Winery Exposition in Syracuse, New York. License to Steal? Well, the idea is that everyone brings their best ideas about how to reach consumers and promote wine in a sort of open-source environment where sharing and stealing go hand-in-hand.

I started thinking about License to Steal when Donniella Winchell, the driving force behind the 15-year old initiative, asked me to recommend someone to record a brief “Crypto 101” video for the program. I’ll do it, I said. It will give me a good excuse to do some research and get up-to-speed on blockchain, crypto-currencies, NFTs, and so forth.

Gulliver in Lilliput?

The LTS program includes presentations and discussions that are relevant to all wineries, but especially the ones that I think of as “grass roots” American wine. Some U.S. wineries are huge (Gallo produces an estimated 100 million cases a year) and sell in broad national and even global markets. Gallo towers over the U.S. wine industry like Gulliver in Lilliput.

But most of the 11.300 US and 872 Canadian wineries are smaller — much smaller — producing 10,000 or 5000 or even fewer than 1000 cases of wine each year. These wineries succeed or fail depending upon how well they connect with local communities, forging wine-based relationships one happy consumer at a time.

Each of these Lilliputian wineries is small by itself, but there are so many of them that they can make a difference. That’s how grass roots connections work and it would be a mistake to underestimate their current and potential aggregate impact on wine in American society.

While we are thinking about top-down wine promotion, I think it is important keep the grass roots in mind, too.  LTS is a powerful tool and the dozens of regional and local wine associations and their members. Can they be persuaded to sing a song of wine (with local variations, of course) to win the ear of hesitant consumers? E pluribus unum is a worthy goal.

Lessons from Catena & the Argentina Wine Miracle

The press release begins this way:

MENDOZA, Argentina – February 8, 2022 – Dr. Nicolás Catena Zapata of Catena Zapata winery received the Lifetime Achievement Award at the 22nd Annual Wine Enthusiast Wine Star Awards held last night at the Eden Roc Hotel in Miami. This prestigious industry event recognizes individuals and companies for their exceptional contributions to the success of the wine and beverage alcohol industry.

Dr. Catena’s life in wine is indeed worth celebrating. He was a leading protagonist in what I call the Argentina wine miracle. An economist by training, Dr. Catena was a visiting professor at UC Berkeley in the early 1980s when he was inspired by what he saw happening in California. These were the exciting days that followed the 1976 Judgement of Paris, so there was energy and confidence in the air.

California Lessons in Argentina

Catena took this vision back to Argentina, where he exchanged academic tweeds for vineyard and winery clothes. The family firm, Bodega Catena Zapata, and Argentina’s wine industry in general, faced a dire crisis.

Sue and I visited the Catena Zapa “Pyramid” winery a few years ago and, because I am an economist like Dr. Catena, we were ushered into his personal library. I recognized many of the books because they were the same ones that I was studying in the 1970s and 1980s, when stagflation was a global problem, and the debt crisis was on everyone’s minds.

These were more than academic issues for the wine business in Argentina at the time. Having evolved in the “old world” style to make inexpensive commodity wine for the domestic market, Argentina wineries were caught in a squeeze when inflation pumped up costs at the same time that domestic recession caused demand to slump. Could the surplus wine be diverted to export? Not likely, because the quality of much of the wine was below international standards. Argentina’s economic crisis was a wine crisis, too.

That Argentina wine found the energy and confidence to turn the corner, to make wines of constantly rising quality in the face of daunting headwinds, is noteworthy indeed and Dr. Catena more than deserves his lifetime achievement award for his role in making Argentina a world-class wine producing nation. A miracle? I don’t think it is wrong to apply this term to Argentina’s dramatic transformation.

I think it is important to keep these past achievements in our minds today because the challenges that wine faces, while different from the past, are not so different that important lessons cannot be gleaned. History may not repeat itself but sometimes, as Mark Twain observed, it rhymes.

Dividends from the Argentina Wine Miracle

Argentina is experiencing economic crisis again today, overwhelmed by external debt and internal inflation. Perhaps the single best indicator of the depth of the crisis is this graph of the Argentina peso against the US dollar for the decade 2011 to 2021. Fewer than 5 pesos were needed to purchase a dollar in 2011. The rate was about 15 pesos per dollar when we visited five years later in 2016 — that’s a very substantial decrease in the currency’s value in such a short period of time.

But the exchange rate today is much worse — it takes more than 100 pesos to buy a dollar now. And that’s the official exchange rate. I’m guessing that the peso is much cheaper on the unofficial market. This is what an (official) inflation rate of over 50% a year (even higher than inflation in Turkey!) will do.

Although Argentina’s economy is bouncing back from its covid-induced decline, domestic economic conditions are very challenging — not as bad as in the 1980s perhaps, but difficult indeed.  The uncertainty about what policies will be result from continuing debt negotiations with the IMF cloud the horizon. Argentina wine is not immune to these problems, but it is much better positioned today to ride out the storm. Exports were up in 2021. The miracle continues to pay dividends.

Lessons for the U.S. and Beyond

But the lessons don’t end there. I think it is important for wine business leaders in the United States and elsewhere to study Argentina’s wine history and remember that sometimes it is necessary to radically re-think arrangements to adapt to changing circumstances. “They say that time changes things,” according to one of my favorite maxims, “but sometimes you have to change them yourself.”

In the US, for example, inflation has returned as an economic concern and, for the wine industry, the fact of stagnant demand cannot be ignored. There is no debt crisis at present, but with gross debt levels at record highs and rising interest rates on the horizon, it is foolish to think that cracks in debt markets will not eventually appear. Small increases in interest rates can translate into trillions of dollars of additional interest obligation very quickly with so much public and private debt in play at high levels of risk.

Foreign debt is especially vulnerable because so much of it is denominated in dollars and the dollar is likely to appreciate as U.S. interest rates rise. That’s double jeopardy.

For the wine industry, stagnant demand is a problem that is on the minds of many, just as it was in Argentina four decades ago. The Argentina miracle was to shift from low- to high-quality to escape a race-to-the-bottom scenario. For the U.S., the challenge may well be to produce good quality but more affordable wines to appeal to potential consumers who are put off by wine’s relatively high price compared with other beverages.

I note without comment that Wall Street Journal wine columnist Lettie Teague’s recent column on good $10 wines did not include any U.S. product recommendation. “Sadly,” Teague writes, “I couldn’t find any wines made in the U.S. that fit all my criteria.” That’s pretty much the flip side of Argentina back in the day.

I believe in miracles and in wine’s ability to transform itself without losing its soul. And so I offer a toast to Dr. Nicolás Catena Zapata, the economics professor who became a transformational winemaker and whose miracle offers lessons that are relevant today.

Has U.S. Wine Industry Consolidation Gone Too Far?

Is the U.S. wine industry becoming too concentrated, with just a few big firms dominating the marketplace? That, more or less, was one of the questions we were asked at the press conference that followed the annual “State of the Industry” session at last month’s Unified Wine & Grape Symposium in Sacramento, California.  How would you answer this question?

The query was prompted in part by Mario Zepponi’s excellent presentation about merger and acquisition activity in the wine industry in 2021. Mario is principal at Zepponi & Company, a firm that advises winery and vineyard M&A clients and was very busy indeed last year, when a number of large (for the wine industry) deals were concluded.

How concentrated has the U.S. wine industry become? How competitive is the wine marketplace? The answer you get depends in part on how you look at the data. Wine Business Monthly (which sponsored the State of the Industry session again this year) publishes a report on the U.S. wine industry early in each new year which is required reading. This year’s report appears in the current March 2022 edition, which can be accessed online.

U.S. Wine By the Numbers

Judging by the number of firms competing for retail shelf and restaurant wine list space, the U.S. market is very competitive indeed. For perspective, consider that the WBM report for 2014 found 8,287 U.S. wine producers in total, 3913 in California, 734 in Washington State, 632 in Oregon and the rest distributed across the country. Mississippi was at the bottom of the league table with just two wineries.

Zoom ahead to the just-published WBM report for 2021 and the numbers have jumped.  The U.S. winery count rose by 36% in the intervening years, with 11,300 wine producers in total. California again leads the way with 4804 wineries, Oregon comes second with 877, followed by Washington with 875. Mississippi’s winery count increased to six. The Other Washington — Washington DC — is last with two wine producers.

Looking at the data this way, the U.S. wine industry is very competitive, with amazing growth in number of wine producers for such a brief period of time. The increase in winery count in 2021 was slower than in 2020, WBM reports, but that’s not a surprise given the covid and economic conditions we have experienced.

The U.S. market is actually more competitive than these numbers suggest because imports account for about a third of U.S. wine sales, so thousands of international brands are also vying for buyer attention.

Top of the Table Concentration

But number of competitors is not the only factor to consider when assessing industry competition. Market power matters a great deal and the U.S. wine industry features a number of very large players. WBM reported on the top 30 companies in 2014 and the top 50 companies in 2021 along with the lineup from the first report in 2003 and the lists make interesting reading.

The top five producers, ranked by volume of sales, in the very first WBM report in 2003 were as follows: E&J Gallo Winery, Constellation Brands, The Wine Group, Beringer-Blass Wine Estates (now Treasury Wine Estates), and Bronco Wine Company (followed by Mondavi — now part of Constellation — and Trinchero Family Estates).

The 2014 report produced this list: E&J Gallo Winery, The Wine Group, Constellation Brands, Bronco Wine Company, and Trinchero  (followed by Treasury and Ste Michelle Wine Estates). The current (2021) line-up is: E&J Gallo, The Wine Group, Trinchero, Delicato Family Wines, and Constellation Brands (followed by Treasury and Bronco).

I think you would have to conclude that the top of the U.S. wine table has been very stable, with a good deal of the movement due to transactions within the industry such as Constellation’s acquisition of Mondavi and more recently its sale of many brands to Gallo and The Wine Group. The steady rise of Trinchero (think Sutter Home, Menage a Trois among other brands) and Delicato (Bota Box, of course, and now also the Francis Ford Coppola Winery) is noteworthy.

The 50 largest wine companies (out of the 11,000 total) account the vast majority of sales volume for domestic wines (not counting the imports) and it is easy to see why because firm size is very large. JUSTIN Vineyards and Winery is #50 in the 2021 table but still produces a very substantial 339,000 cases of wine each year. Gallo is at the top of table with a WBM-estimated 100 million case annual wine output. That’s 1.2 billion bottles. Incredible!

It is interesting to look at how production measured by volume of the top three largest wineries has evolved over the years reported here. In 2014, for example, the big 3 totaled over 187 million cases (not bottles) of wine (Gallo 80 million, The Wine Group 57.5 million, Constellation 50 million).  The Big 3 total for 2021 is actually bit less: Gallo 100 million + The Wine Group 51 million + Trinchero 20 million = 171 million total. That is less than in 2014, which could be due to a number of factors including, as I have heard some insider’s comment, a lack of investment in some of the brands involved in the Constellation-Gallo transaction during the long regulatory approval process.

If we assume that the total U.S. wine market was about 450 million cases in 2021, then the Big 3 accounted for about 38% of sales by volume. If imports accounted for a third of total sales, then the Big 3 alone were responsible for 57% of domestic-produced wine sales by volume.

The biggest wine companies are really, really big, but some of the market power has shifted down the line. The 30th largest wine company in 2014 (out of the 30 listed), for example, was Purple Wine Company, which produced 415,000 cases. Number 30 in 2021 is Firstleaf at 700,000 cases. Firstleaf is a direct-to-consumer operation founded in 2016 with more than 75 brands in its portfolio.

What’s Driving Consolidation?

Big is in for U.S. wine and a lot of the bulking-up is taking place in the tiers below the Big 3. What’s driving it? Mario Zepponi presented an interesting perspective in our State of the Industry session. He argued that you have to put wine production in the context of its linkages in the product chain.

A lot of wine is sold in grocery stores, for example, and the top 5 U.S. grocery companies account for about half of total revenues in that sector. Big store chains, with their thousands of assorted SKUs, tend to prefer to work with a small number of distributors in each product segment if possible. So maybe it is no surprise that the top 3 wine distributors account for about 65% of revenues according to Zepponi’s data. Connect the dots here and it is easy to see why distributors might favor large wine companies with broad portfolios.

Big favors big, which favors big. Evolutionary forces point towards increased concentration, even in an industry as fragmented in some ways as wine.

To a certain extent, then, wine consolidation is the result of a process (accelerated by the covid channel shifts) that is affecting retail more generally. Consolidation, in this view, starts at the retail level and works its way backwards.

So has U.S. wine industry consolidation gone too far? It depends upon how you look at it and where you are positioned within the industry — in the Big 3 tier, the broader top 50, or further down the pyramid. And maybe the question should start higher up the food chain with consolidation at the retail and distributor levels. The market sure is competitive even if market power is concentrated at several points.

It is, I am afraid, one of those annoying “on the one hand …” situations that provoked President Harry Truman to ask for someone to send him a one-handed economist.

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Thanks to Cyril Penn and his Wine Business Monthly team for the 2022 edition of their wine industry report. A very valuable resource for anyone interested in U.S. wine market dynamics.

What’s Ahead for the Wine Business? Wine Industry Leadership Conference Next Week

The Wine Industry Leadership Conference, a free group of webinars produced by the Wine Industry Network, is set for next Wednesday (February 9, 2022) at 9 am Pacific time.  Follow this link for more information and to register.

The program is divided into three parts that are relevant to just about everyone in the wine industry.

Session 1: Economic Forecast – What to Expect in 2022 will fill the hour between 9 and 10 with critical analysis of U.S. economic conditions from Sonoma State University Professor Robert Eyler follow by my analysis of some of the implications for the wine industry. I am calling my presentation “Wine and the Big Squeeze,” which may give you some idea of what I see ahead.

The ten o-clock hour is devoted to Session 2: Talent Retention – Keeping A Strong Team Intact featuring commentary by Sandra Hess, Founder / DTC Wine Workshops; Joel A. Miller, Owner & Principal / Chateau HR Consulting; and Karen Alary, Managing Partner / The Personnel Perspective.

Session 3: Successfully Transitioning Your Winery to New Leadership follows from 11 to 12 am and features Greg Brewer, Founder & Winemaker / Brewer-Clifton; Peter Mondavi Jr, Co-Proprietor / Charles Krug Winer; and Mario Zepponi, Principal / Zepponi & Company.

Moderators for the three sessions are George Christie, President & CEO / Wine Industry Network; Stacy Briscoe, Managing Editor / Wine Industry Network; and Kim Badenfort, Director of Marketing Services / Wine Industry Network.

The presentations are being pre-recorded so that the speakers can respond to questions and comments in real time during each session, which promises to make this a more interactive experience than the typical Zoom webinar.

I appreciate the Wine Industry Leadership Conference’s focus on practical business issues facing the industry today and the impressive lineup of speakers. Hope to see you there.

Wine Book Review: Three Faces of Malbec

Laura Catena and Alejandro Vigil, Malbec Mon Amour. Catapulta Editores, 2022.

Laura Catena and Alejandro Vigil have written a fascinating new book about their favorite wine grape, Malbec. If you know that they are from Argentina and associated with the famous Catena Zapata winery, this connection will seem natural, since the roots of Malbec run through this territory and, I guess, through the authors, too.

Three is a number that is full of tension because it defies a casual “either/or” classification, and it is significant that  Malbec Mon Amour is built around a number of threes. There are, first of all, the book’s three protagonists: Catena, Vigil, and Malbec itself. They mix and relate in complicated ways over the course of the book’s 200 or so colorful pages.

Then there are the three sides of Malbec as presented here. First is Malbec’s history in France (hence “mon amour), which casts a bright light on the importance of Malbec in Bordeaux’s early development. Then comes the history in Argentina, which is a bit of a roller-coaster ride (and hence typically Argentine, if I can say that). And finally there is Malbec’s history with the Catena family, since family is paramount here.

The story itself is presented in three ways, to continue the theme. First there is the straight text, clear and well written. Illustrations — photos, charts, water-color pictures — illuminate the text and can be read on their own. Finally, super-imposed along the way is a dialogue between Catena and Vigil that puts the situation in a personal context.

The book works at several levels and becomes more detailed and technical as the story unfolds. The final sections, which examine in some depth the particular regions and vineyards in Argentina is real wine-geek stuff. Except that the scientific tension is broken by a Catena-Vigil conversation about art, music, family, and even food.

Malbec Mon Amour has a lot of moving parts, Does it hold together? Sue is the resident expert on design here at The Wine Economist and she gives a positive review. The pieces fit together and make sense — rewarding to study and a pleasure as a casual read.

Malbec Mon Amour is a worthy addition to your wine bookshelf — a shelf that includes two other noteworthy works by Laura Catena: Vino Argentino and Gold in the Vineyards. Wait … does that make three books?

Three cheers (of course!) for Malbec Mon Amour! 

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.

Scratching the Surface of Sicilian Wine

I was intrigued when we were asked if we’d like to sample wines from a Sicilian cooperative winery. The history of Sicily’s wine industry — and the role of cooperatives within it — is a roller-coaster tale and such sagas in wine do not always have happy endings. I was thirsty to learn more about the situation today.

I learned about the history of Sicily’s wine sector from The World of Sicilian Wine by Bill Nesto MW and Frances Di Savio (see the Wine Economist review here). Wine in Sicily has been buffeted by a combination of shifts in the external markets and changing domestic incentives. It is no wonder that cooperatives arose to help growers navigate the ups and downs and gain a measure of control over their own destinies.  Cooperatives spring up in times of crisis, but it is their ability to adapt when conditions change that is most important.

Incentives Matter

Sometimes the economic incentives the cooperatives and other wine actors faced favored quality, but all too often quantity was the dominant strategy. This was particularly true during the years when EU wine policy unintentionally encouraged over-production of low-quality wines with no obvious market potential. These unsalable wines, the source of the famous EU “wine lake,” were bought up and distilled into industrial alcohol, a process that was not sustainable in economic, political, or environmental terms.

The wine lake days are gone — EU incentives now favor market-driven wine production — and the wines have changed faster than their reputations in many cases. Not all wineries have raised their game, however, and that inconsistency is a headwind.

The wines we sampled were from the Cantine Ermes cooperative, which was founded in 1998 in the Belice Valley in northwest Sicily. The cooperative is very large with 2373 members farming more than 12,000 hectares and operating 11 winemaking facilities.  In total Cantine Ermes produces 11.5 million bottles annually, which are sold in 29 countries around the world. Does this surprise you? Cooperatives are important in Italian wine, more important than most people realize.

Beyond Low-Hanging Fruit

One criticism I have heard of many Italian cooperatives is that they cut their own throats by focusing too much on bulk wine and private label products — they take this low-hanging fruit and fail to build the brands that might yield higher margins that would improve their economic sustainability.

Some of the deep dark red wine made in Sicily, for example, is sold off to be blended with lighter Italian reds to give the result more body, color, and alcohol — a practice that has been going on for a long time. Cantine Ermes gives attention to several brands, however, including the Vento di Mare wines that we sampled.

Vento di Mare means sea winds and so it was inevitable that we would ask our friends R and M to sample the wines with us. Their visit to Sicily was punctuated by gale force sea winds that nearly blew them off the island and caused sea foam to pile up on the shoreline like drifts of snow.

The three wines we tasted were screwcap-topped bottles of Grillo DOC, Nerello Mascalese IGT, and Moscato Frizzante that retail for about $12 here in the US — right about the center of the retail wine wall in today’s market.  The Grillo had nice varietal flavor and good balance. It seemed very versatile and would pair with many dishes as well as on its own. It was probably our favorite wine.

The red Nerello Mascalese was more intense and called out for a bold food pairing. Nerello Mascalese is the most-planted red winegrape in Sicilty according to my sources, and it was easy to see how it could be the foundation of a number of interesting blends as well as a single-variety wine.

The Moscato was fizzy and slightly sweet. Just 10.5% abv, the wine has a secondary fermentation for two months in an autoclave and then ages another two months on its lees. Aromatic (think orange blossoms) and nicely balanced. Like the Grillo it would work in a number of situations. Very pleasant indeed.

Sicilian Wine Ambassadors

We were impressed with the Vento di Mare wines and a bit surprised at the affordable entry-level price point. Other Cantine Ermes brands probe the higher reaches of the wine wall. I hope the attractive packaging and price point encourage consumers to give these wines a try (and that some restaurants see the potential for wine-by-the-glass sales). These wines are good ambassadors for Sicily and its cooperative wineries.

Since we aren’t able to travel to explore the wine world these days as we did in pre-pandemic times, we find it useful to focus on invitations like the one we received from Cantina Ermes. Clearly we have just scratched the surface of the wines of Sicily and the progress of Sicilian cooperatives, but we are encouraged, nonetheless. These are good wines that chart a path out of Sicily’s quantity-driven past towards a more sustainable future.