The first thing you notice as you approach Cantina Frentana is the tower, which rises up over the flat landscape and trellised vines like a lighthouse. And in a way it is a beacon, shining a bright light on the future of Abruzzo, Italy’s underestimated wine region.
The tower, Torre Vinaria, was originally built in 1958-60 with the practicalities of winemaking in mind. A gravity-flow winery, as you probably know, is thought to be gentler on the wine because less pumping is involved (and economical of labor, too, I think). Such facilities are frequently built on hillsides, but there are few suitable hills so near the Adriatic coast, so the grapes were hoisted to the tower’s top floor and worked their way down until they were finished wine at the bottom.
The tower, 28 meters high and 18 meters in diameter, is thus a symbol of a thoughtful commitment to quality. It was also a statement of confidence and ambition because it was created along with company itself, which is a cooperative or cantina sociale as they say in Italy. Cooperatives are generally born in times of crisis for grape growers, who band together to make and sell wine from their grapes when other market opportunities are scarce. To have this tower rise up from tough vineyard times was indeed confidence and optimism.
Preserving Vineyards and Grape Varieties
Ninety-two growers signed a deed to organize the Cooperative Society “Cantina Sociale Frentana” on November 16, 1958. The first vintage was released (and the famous tower completed) two years later. Now, after more than 60 years, the cooperative has 500 members who collectively farm 1000 hectares (or about 2500 acres). The average vineyard size is small, only 4 hectares or about 10 acres, and so there are many members who farm very small plots indeed.
As the years have passed and the founding members grown older year by year, the cooperative has had to face the fact that interest in the hard work of grape growing is not always passed down to the next generation. To keep membership alive, therefore, it has instituted what it calls the vineyard bank. The cooperative contracts with the elderly grape grower and family to manage the vineyard for them, thus allowing the family to maintain membership, ownership, and income.
Cantina Frentana is committed to preserving native grape varieties, especially the distinctive local white grape Cococciola. Indeed, it is the largest producer of this wine in the region and, hence, in the world. Still, sparkling, or a bit frizzante, it is a delicious wine.
Stronger Brands, Higher Margins
A generation ago, when Burton Anderson surveyed Abruzzo for his classic Wine Atlas of Italy, the number of high-quality producers he found could be counted on your hand. The rest, including the cooperatives that dominated the landscape, bet on quantity over quality. And in a big way.
The statistics that Anderson cited in 1990, were stunning. Abruzzo’s wine production often exceeded the output of Tuscany or Piemonte, for example, with less than half their vineyard areas. This was made possible by pushing vineyard yields to the highest average in all of Italy — 133 hectoliters per hectare, according to Anderson. I calculate this to be about ten tons per acre on average, which is high given the viticultural practices then in use and the fact that red wine grapes dominate the market.
Get the Incentives Right
High yields, and the lower quality that often follows, creates a vicious cycle. High output and low quality push prices down. Swimming upstream against this current by raising quality is risky and expensive, so the incentives are to push for even higher yields to make up in volume what is lost in margins. This can be a race to the bottom.
Cooperatives are often part of this problem, which is why they have poor reputations in some regions, but it doesn’t have to be the case as Cantina Frentana shows. In my experience there are three steps that cooperatives must be willing to take to move ahead in quality. It is all about getting the incentives right.
First, grower members must commit to sell all of their grapes to the cooperative. Otherwise, they will sell the best grapes privately (or make their own wine from them) leaving the cooperative with the low-quality product. Second, the cooperative must be able to vary grape price by quality, so that growers will find the lower-yield/higher quality trade-off attractive. If all grapes are worth the same, we are back to the race to the bottom again.
Finally, the cooperative must be able to refuse to purchase sub-standard grapes. This is obviously necessary if quality is to be maintained, but difficult from a social standpoint because cooperative members are also neighbors and sometimes even family.
Necessary But Not Sufficient
Cantina Frentana satisfies my quality cooperative checklist, but it is important to remember that these are necessary but not sufficient conditions for success. Excellent wine is the beginning not the end in today’s crowded and competitive marketplace.
Cantina Frentana impressed us with their wines, commitment to quality, ability to adapt to changing natural and economic climates, and their efforts to build brands for their wines and margins for their grower members. Cooperatives like Cantina Frentana are part of the promising future of wine in Abruzzo.
Back in Burton Anderson’s day, a cooperative winery was probably the last place someone would send us to learn about the promising potential for Abruzzo’s wine industry. Flash forward to 2022 and Cantina Frentana was our first stop. There is a message there.
Is the Abruzzo region the next big thing in Italian wine? That’s the question on our minds here at Wine Economist world headquarters after returning from a media tour of Abruzzo last month. The tentative answer is that Abruzzo has the foundation needed to move up to the next level in the Italian wine hierarchy. Abruzzo is on the rise — let’s see how far it can go!
Abruzzo By the Numbers
From the standpoint of volume, of course, Abruzzo is already a big thing. Abruzzo boasts 33,000 hectares (over 80,000 acres) of grape vines, of which more than half are planted to its signature red wine grape, Montepulciano. Total production is 3.2 million hectoliters or more than 35 million 9-liter cases of wine each year. About a quarter of the wine is designated DOC.
There are more than 250 wineries in this region. With more than 6,000 grape growers it is obvious than many of the vineyards are quite small. No wonder, then, that cooperative wineries are very important here (as they are in most of Italy and Europe generally).
The “Good Value” Curse
Montepulciano d’Abruzzo and Trebbiano d’Abruzzo wines are produced in large quantities and are available world-wide. But, as I wrote a few weeks ago as we were preparing for this visit, the wines entered the U.S. market years ago at what were then the “sweet spot” price points. As the market has moved up to higher price tiers, however, Abruzzo’s wines (like those of Chile) lagged behind s bit, recognized for their good value rather than great quality.
Indeed, I remember stumbling onto a big 1.5 liter bottle of Montepulciano d’Abruzzo by a well-known producer at a local Grocery Outlet discount store a few weeks ago. It was priced just above the Two Buck Chuck level. Not the best advertisement for Abruzzo wines!
The Abruzzo wine producers have adopted a strategic plan to raise the profile of their wine region (the media tour, which included journalists from North America, Europe and the UK, and Asia was part of that program). One small step that I think will be important is to establish a stronger Abruzzo identity by unifying some of their classification systems and adopting the logo you see above. This sort of strategy worked very well for Sicilian wines and it holds promise for Abruzzo.
Abruzzo Has Much to Offer
Tourism (and not just wine tourism) is one way to strengthen a regional identity in today’s competitive market. How many people do you know who took a Douro River cruise in Portugal, for example, fell in love with the country, and have been buying Portuguese wines ever since?
Abruzzo has a lot to offer tourists who take the time to explore. There are golden beaches on the Adriatic coast, for example, and delicious seafood served at restaurants located in converted trabbochi (extravagant fishing shacks built at the end of long piers).
There is beautiful scenery and charming towns in the hills and mountains, too, with wonderful food including juicy porchetta and tasty grilled lamb skewers. All this with fewer crowds than in the better-known tourist spots. Honestly, Abruzzo is hard to beat once you make the modest effort to get there. Abruzzo’s visibility in the world of wine will rise as more and more people discover its many charms.
Abruzzo Pecorino Potential
But wine regions are ultimately built on the quality of the wines they produce and we come away from our brief visit very optimistic. Part of this, as I will explain over the next two Wine Economist columns, is because of specific efforts to raise quality and create distinctive wines that we discovered. But a lot of it is because of our overall impression of the region’s wines, which I think was shared by many in our group.
The clear favorite among the wines we tasted were those made from the Pecorino grape. These white wines, both still and sparkling, were bright and appealing — alive in the glass for the most part — and seemed to us to be a perfect fit as the U.S. market shifts to white wines, especially Sauvignon Blanc, with a bit more zip than Chardonnay and Pinot Grigio. We also enjoyed fruity white wines made from the Cococciola grape, which has only relatively recently been upgraded from blending grape to a varietal wine. But Pecorino was the star.
Pretty in Pink: Cerasuolo
The other hit with our group was Cerasuolo d’Abruzzo, a darkish rosé wine made form the Montepulciano grape. It was distinctive and delicious — perfect for the warm evenings we experienced. Some producers have been encouraged to make paler versions for the U.S. market because of the perceived prejudice against darker pink wines, but I don’t see the point. Anyone who tries this wine will want more.
So what about Abruzzo’s most important wines — Montepulciano and Trebbiano d’Abruzzo? Perhaps it was because of the heat, but the red wines didn’t impress as much as the whites, although (stay tuned for upcoming Wine Economist columns) we did find some really memorable wines. And, with a few exceptions, the overall impression of Trebbiano was overshadowed by the Pecorino wines.
The Road Ahead
One logical market strategy might be to highlight the Pecorino and Cerasuolo wines, which match so well with trends in the U.S. market, while raising quality standards for Montepulciano and Trebbiano. Indeed, it seems to me, that’s exactly what’s happening now.
But there are still many questions to be answered before Abruzzo’s wine sector can fully achieve its clear potential. Can the cooperative wineries, which are so important here (and were sometimes in the past blamed for low standards), raise their game? And can Montepulciano, the most-planted grape variety, refresh its image? I will address these questions in the next two Wine Economist columns.
The global wine market is almost insanely competitive. The standard is constantly rising. The Abruzzo producers we met have listened to what the market is saying and found a pathway ahead.
Thanks to the Consorzio di Tutela dei Vini d’Abruzzo for inviting us to visit the region and learn more about it and its wine sector. Special thanks to our friends at I.E.E.M. for taking care of all the logistics and making the visit as smooth and enjoyable as possible.
We are especially grateful to four wineries who generously hosted us during out visit and showed us some of the very best of Abruzzo wines:
Cantina Frentana: A cooperative winery on the move. See next week’s Wine Economist for details.
Agriverde Winery: An award-winning winery seriously committed to environmental goals. Ambitious vision matched by achievement. Keep an eye on this one!
Bosco Winery: Historic family-owned winery that both looks back to tradition and ahead to the future. We could spend all day in the family museum, wandering with a glass of great wine in our hand.
Margiotta Winery: A perfect example of a small family winery making excellent wines. Humble and proud in equal measure. Italian wine at its best.
My new book Wine Wars II has just been released — you can order it in paperback or e-book format from Rowman & Littlefield, Amazon.com, and other online and bricks-and-mortar book sellers. The audio version will be released in a few days. How exciting!
Rowman & Littlefield is offering US and UK customers a 30% discount on Wine Wars II publisher-direct purchases for a limited time. See details below.
This week’s Wine Economist offers you a taste of my new book in the form of two brief excerpts from the first chapter. Cheers!
It was the best of wines, it was the worst of wines (apologies to fans of Charles Dickens). The global wineglass, it seems, is both quite empty and full to the brim. We live today in the best of times for wine if we evaluate the situation objectively, as economists like me are trained to do. Never before has so much good wine been made and so many wine choices offered up to consumers. For someone who loves wine, the glass is very full, indeed; it is hard to imagine better days than these. The global markets deliver a world of wine to your door. Drink up!
And yet many enthusiasts are anxious about the future of wine. The good news we find in our wineglasses and on the supermarket shelves is often accompanied by disturbing rumors, feelings, and forecasts. It is the worst of times, too, you see—especially if you are a maker of cheap wine in France, Italy, or Spain, the largest wine-producing countries. Everything about wine is wrong for you. Consumption at home has been falling for decades and squeezing your market share, and import competition has increased. The rise in global wine drinking that you counted on to power your export business has unexpectedly stalled at exactly the wrong moment. You find yourself making the wrong wine in the wrong style from the wrong grapes at the wrong price and trying to sell it in the wrong places. You are betrayed at every turn by the markets that once treated you so well. You hold an empty glass, or so it must seem.
Times are troubling in Australia, too, where a wine boom was followed by a wine bust, when consumers around the world have seemingly turned away from the muscular Aussie wines they enjoyed so much just a few years ago. So the Aussies turned to China and, through lots of hard work, turned it into their number 1 export market, bigger that either the United States or the United Kingdom. Then the lucky country’s luck turned again. Driven by political disagreements that have nothing to do with wine, China imposed tariffs of more than 200 percent on Aussie wine, choking off this promising market.
Wine producers are optimists by nature, but they face serious challenges. Recession, pandemic, falling consumption, rising antidrinking lobbies, water shortages, global warming, and even raging brush fires all threaten the livelihoods of winegrowers and producers in many parts of the globe.
It is the worst of times for consumers, too, if they seek that special taste of a place that wine geeks like me call terroir. The wine in your half-empty glass is free of any technical flaw, but so what? Does it have a soul? Does it express any particular place or any producer’s distinct vision of what wine should be? This is the age of McWine, I have heard people say: wine that is all the same. When everything is the same, then it is all nothing! And what’s worse than that?
These are good times and bad ones, too, for the world of wine—what a contradiction! What about the future? Will wine’s tale of two glasses have a happy ending? Or will our (excuse the Dickensian pun) “grape expectations” be crushed? I’m an optimist about the future of wine, but as an economist, I am trained to pay close attention to the dismal side of any situation. I wrote this book to try to find out just how empty or full the global glass really is and how the world of wine is likely to change.
The first thing to understand about wine is that it is many things, not just one, in terms of both wine itself and the economic forces that drive the wine industry, so the story of the future of wine will necessarily be a complicated one. Although hundreds of factors will come into play as the wine world evolves, three big forces will almost certainly shape the overall pattern: globalization; brand-driven commodification; and resistance to these powerful winds, which I call the revenge of the terroirists. Globalization and commodification are economic push forces that are transforming the world of wine. The revenge of the terroirists is all about pushing back.
WINE’S TRIPLE CRISIS
The global wine industry is in the midst of a triple crisis, and I am not really sure how it will end. The climate change crisis comes first. It affects everything if we consider both direct and indirect effects, so it may seem odd to think of it as a wine crisis. Wine grapes generally can be made to grow under quite extreme conditions; in some colder regions, they actually bury the vines in the winter to protect them and unearth them each spring so that they can come back to life (you might call this Lazarus viticulture). But specific wine grape varieties thrive in only very narrow bands of average temperature, and wine regions defined by particular grapes or wine styles are threatened by relatively small changes in environmental conditions. Wine is, therefore, the canary in the coal mine when it comes to climate change. It will feel the impacts before many other industries, and so it is not a surprise, as I explain later, that wine businesses are among the strongest advocates for progressive environmental action.
The climate change crisis dwarfs everything else in the long run, but because the long run can seem far away and we often misjudge how fast it is approaching, climate concerns do not get the attention they deserve. Indeed, as the global reaction to the coronavirus pandemic crisis has demonstrated, climate change generally isn’t treated with the “drop everything” or “operation moonshot” urgency that real crises warrant. But even if the climate change threat were to disappear tomorrow, wine would still be in trouble.
The second crisis is economic. Wine is magical beverage, but it is a crazy business. Wine’s economic environment is characterized by cyclical, structural, and “wild card” forces that make it difficult to prepare for or successfully execute a business plan.
Global wine consumption grew steadily for the twenty years that ended in about 2008, the date we associate with the global financial crisis. Rising wine sales were important because they slowly soaked up a surplus of wine. Too much wine? Well, for many years the European Union in effect subsidized wine
production to stabilize agricultural economies, especially in France, Italy, and Spain. Wine farmers were paid to grow grapes and to make wine that could not be sold, so some of it was distilled into industrial alcohol. Yuck! Those policies are history, and European winegrowers turned from government subsidy wine to wine aimed at global markets. This is a good thing, but it happened just as wine production increased in other parts of the world, too. The result: a lot of grapes, a lot of wine, and a lot of jobs and incomes at risk.
Rising global wine sales were most welcome in this context, and when sales dropped a bit in 2008, no one was very concerned. “It’s just the economy, dummy,” they said. “Wine will spring back when the economy improves.” But it didn’t, and the next ten years were what I have called “wine’s lost decade.” Why did wine lose its mojo? There are many possible reasons (I explain them later), but the sudden loss in momentum changes the nature of the game from a positive-sum fight, where a rising tide raises all ships, to a zero-sum fight for market share. And the battle isn’t just between Old World and New World or among the growers and producers in these regions; the opponents are now more diverse and unexpected than ever before.
The reason? Wine’s identity crisis. Wine has never been just one thing. It is, after all, both that fancy French Champagne at the top of the wine wall and that big box of Franzia at the bottom. Wine is healthful (think Mediterranean diet) and dangerous (read the government required warnings on wine labels in the United States). It is culture to some and just another commodity to others.
The cartoon character Pogo famously said, “We have met the enemy, and he is us,” and this is true in a way for wine. The biggest threat to wine’s identity is something inherent to wine’s existence: alcohol. You might think that wine is just grape juice with alcohol, but wine doesn’t taste much like the grapes it is made from except for in a few specific cases. Fermentation doesn’t just add an alcoholic kick; it transforms the product in complex ways. It’s the same with the way that fermenting yeast makes bread different from flour and water. So wine as we know it is impossible without alcohol, but it may also be impossible with it if antialcohol forces have their way.
Wine’s identity crisis is significant because it seems like those who see wine as a social or health problem, not an essential element in our culture, have seized the momentum. If wine doesn’t know who it is and what it is and cannot tell its story to the world, then how can it survive?
Wine Wars II 30% discount offer. Many thanks to Rowman & Littlefield for making this discount available.
My new book Wine Wars IIwill be released in just a few days on July 1, 2022, and so. in the spirit of shameless self-promotion, let me remind you that you can order Wine Wars II in paperback or e-book format from Rowman & Littlefield, Amazon.com, and other online and bricks-and-mortar book sellers.
Rowman & Littlefield is offering a 30% discount on Wine Wars II publisher-direct purchases for a limited time. Scroll down to the bottom of this page for details.
Tantor Media will release the audio-book version of Wine Wars II (read by Jonathan Yen) on July 19, 2002. It will be available everywhere audio books are sold. Ten hours of fascinating stories about where global wine is going and how it got there.
A Tale of Two Glasses
Paperback, e-book, audio. Wine Wars II is everywhere!
Wine Wars II updates and extends the most important arguments I made in the original Wine Wars and then adds a new set of chapters on Wine’s Triple Crisis. Each “flight” or set of chapters ends with suggested wine tasting so you can consider the arguments using all your senses. What fun!
Here is a brief excerpt from chapter 1 “A Tale of Two Glasses” for your reading pleasure. It talks about the origins of Wine Wars and the development of Wine Wars II. I think it is interesting that the road to Wine Wars II began with a winery visit about forty years ago, when the problems facing the wine business and the economy more generally were a lot like those we confront today.
HOW I STUMBLED INTO THE WINE WARS
People often ask me how I became a wine economist, an economist who studies the global wine markets. The answer is rooted in a particular time and place. Sue and I were still newlyweds, taking a low-budget vacation in the Napa Valley back in the day when that was still possible. We were headed north on the
Silverado Trail late on our last day, pointed toward our economy motel in Santa Rosa, when we decided to stop for one last tasting.
The winery name was very familiar, and I had high hopes for our tasting. If I had known more about wine back then, I would have recognized this as one of the wineries that kicked French butt in the 1976 Judgment of Paris wine tasting. We pulled off the road and went in to find just the winemaker and a cellar rat at work. No fancy tasting room back then, just boards and barrels to form a makeshift bar. They stopped what they were doing and brought out a couple of glasses. If I knew more about wine back then, I would have been in awe of the guy pouring the wine, but I was pretty much in the dark. So we tasted and talked.
I started asking my amateur questions about the wine, but pretty soon the conversation turned around. The winemaker found out that I was an economics professor. Suddenly he was very interested in talking with me. What’s going to happen to interest rates? Inflation? Tax reform? He had a lot of concerns about the economy because his prestigious winery was also a business and what was happening out there in the financial markets (especially interest rates and bank credit, as I remember) had a big impact on what he could or would do in the cellar. Wineries, especially those that specialize in fine red wines, have a lot of
In addition to the initial investment in vineyards, winery facilities, equipment, and so forth, each year’s production ages for two or three years, quietly soaking up implicit or explicit interest cost as it waits to be released from barrel to bottle to marketplace. The wine changes as it ages, but the economy changes, too. It’s impossible to know at crush what market conditions will be like when the first bottle is sold. Wine economics is a serious concern. Few winemakers are completely insulated from the business side, and sometimes the economy can have a huge effect on what winemakers get to make (if they have the resources to stick with their vision) or have to make (if they don’t).
And so a famous winemaker taught me to think about wine in economic terms and to consider that supply and demand sometimes matter as much as climate and soil when it comes to what’s in my wineglass. I should have known.
Although my interest in wine and economics merged on that Napa day, it sat on its lees for a long time, as I waited for an opportunity to link my personal passion with my professional research agenda. The two naturally converged a few years ago when I began writing what turned out to be a four-volume series
on the global economy. My 2005 book Globaloney: Unraveling the Myths of Globalization includes a chapter called “Globalization versus Terroir,” my first attempt to write about wine economics for a general audience. Globaloney argues that complex global processes shouldn’t be reduced to a few simple
images. Globalization and food are more than just McDonald’s, for example, and globalization of wine isn’t just McWine.
The wine chapter in Globaloney gave me confidence that I had more to say about money, wine, and globalization, so I launched a website called The Wine Economist (WineEconomist.com), where I could work out my ideas in public, make connections, and develop a wine voice. After several years and nearly
200,000 words of blog posts, The Wine Economist evolved into the first edition of this book.
THE ROAD TO WINE WARS II
I wasn’t sure if anyone would want to read about the business of wine, but I was wrong. Wine Wars was warmly received by both critics and readers. It turns out that while wine is good, wine and a story is even better, and stories about the business side of wine can be very interesting. A number of wine industry readers have said that Wine Wars helped them connect the dots and see things more clearly. Consumers, who have no particular business connection, say they just like knowing the backstory of their favorite drink.
I’ve spent the last decade on the wine road speaking at wine industry conferences around the world and learning more about wine and the people who make it. It is a tough job, but someone has to do it, and apparently I am that lucky someone! I have recorded my impressions and experiences in hundreds of columns on The Wine Economist.
Wine Wars has been joined by three other books that continue my analysis of global wine: Extreme Wine (2013); Money, Taste, and Wine (2015); and Around the World in Eighty Wines (2017). Wine Wars celebrated its tenth birthday in 2021, and that occasion made me stop and think (as round-number birthdays sometimes do).
The powerful forces that I identify in Wine Wars are still important, but they’ve changed in ways both big and small. Environmental and demographic shifts, for example, re now much more clearly understood as wine industry challenges. There is a lot to think about and to write about. And so I have written this new book, Wine Wars II, which updates the first edition and extends its argument to address wine’s global crisis.
In a way, this journey has brought me back to that dark cellar on the Silverado Trail in Napa Valley, the great wines we sampled that day, and my “aha!” moment when I realized that wine and economics are a perfect pairing. I’ve learned much more about wine and wine economics, and I appreciate now more than ever the many challenges that the world of wine faces. But I remain an optimist, as I show in this book. I still have grape expectations.
Sue and I are in Santa Rosa this week where I will be speaking to a meeting of Allied Grape Growers, a 500-member grape grower marketing association that sells more than $100 million worth of grapes each year. I am looking forward to learning as much as I can from the growers about what they are seeing in the grape markets today and how they plan to react.
Optimists and Pessimists
There are two schools of thought about what is happening to the economy, both here in the US and around the world. One school holds that we will soon face the most serious case of stagflation — inflation with slow or no growth– that we’ve seen in 40 years. These are the optimists!
The opposing school — call them pessimists or realists — holds that stagflation is already here (have you seen some corporate earnings reports?) but maybe we just don’t fully appreciate it yet. And it will get worse before it gets better.
Either way the near future promises to present challenges to everyone in the wine product chain with costs rising, consumer budgets getting squeezed, and a strong dollar disrupting international trade flows.
Waiting for Wine Prices to Rise
So far wine prices have not risen as fast as consumer prices generally, which have been up more than 8% on an annual basis in recent months. Wine prices (and beer prices, too) have risen less than half that, which means they have fallen in real (inflation adjusted) terms.
A recent Wine Economist column tried to think through what might happen (and why) if wine prices do eventually start to increase. But I am having real doubts that this will happen generally. Some wineries and retailers are likely to be able to raise price, but I am not so sure about the broader market.
The “Stag” in Stagflation
Why? Well, because this isn’t inflation that we are looking at, it is stagflation and distressed consumers (and the retailers who market to them) are likely to push back against price increases even more firmly than in the past. Yes, I know that premiumization has been one of the big trends on recently years, but premiumization is about buyers moving up to higher priced products, not paying more for the stuff they already buy. Rising wine prices? They still hate that.
Big box retailers like Walmart and Target are already feeling the squeeze as costs rise but prices don’t or don’t as much. Some reports suggest they are trying to protect margins by shifting even more to private label brands, for example. In any case the push back seems to be as strong as the cost push itself in many cases.
Retailers are feeling the squeeze. Will wine margins experience a big squeeze, too? That’s what I suggested in a presentation to the Wine Industry Leadership Conference. earlier this year and, with the ability to raise price in even more in question today, it seems to be a likely scenario.
Sue and I have just returned from a very quick trip to Italy to explore the wines of Abruzzo, a region that, as I wrote on this page a few weeks ago, doesn’t get the attention it deserves either in the wine world or more generally. This is changing and our multi-part report, which you will find here in a few weeks, will explain how and why.
In the meantime, here is an abridged “flashback” column from 2019 that examines some of the challenges and opportunities that the regional wines of Italy faced then and, to a considerable degree, face today.
Wine Economist (November 19, 2019). Italian wine has a lot going for it in the U.S. market. Wines from Italy are by far the largest category of imported wines. Recent Nielsen figures (reported in Wine Business Monthly) show almost $1.2 billion in 52-week sales of Italian wines in the channels that Nielsen surveys — that is almost a third of all spending on wine imports and far more than #2 Australia ($720 million) and #3 New Zealand ($496 million). France is #4 at $462 million.
Italy has benefited from the hot market for sparkling wines in general and Prosecco in particular. …
It would be a mistake to take these advantages for granted and the Italians are working hard to consolidate their market base and move forward. Or at least that’s what we think after attending the Seattle stop on the “Simply Italian Great Wines US Tour 2019.” We spent the day attending seminars sponsored by the European Union and wine region groups and meeting producers (many of whom were seeking local distribution) at a walk-around tasting.
The Seattle event reminded us of how much we love the wines of Italy. But it also highlighted some of the challenges that Italy faces.
Italy is a complex mosaic of wine regions, styles, and brands. Although an amazing array of Italian wines can be found in the U.S. market, there are a few names that dominate the conversation: Chianti, for example, and Prosecco. It is easy for other wines from other regions to be over-shadowed. Sue and I saw the shadow effect when we stopped at a nearby Total Wine, which has a big selection of Italian wines. We were looking for wines from Friuli and we found just a hand-full — mainly Pinot Grigio. The big regions crowd out the smaller ones on store shelves.
This is the challenge facing Vino Nobile di Montepulciano DOCG, for example. Vino Nobile is a small and distinctive appellation located about 65 km south-east of Siena. The four wines we tasted at the seminar were terrific and made me think about this region as a sort of Tuscan Stags Leap District — one of my favorite U.S. wine appellations.
But excellent wines are not necessarily enough when you need to compete with famous Chianti Classico. You need to get glasses in consumer hands and give the wine and region a distinct identity. Tourism (and not simply wine tourism) is one way to do this. Come for the history, food, and culture and learn about the wonderful wines. This seems to be part of Vino Nobile’s strategy to get out from under the shadow of its more famous neighbor and to tell a distinctive story about the region and the wines.
Italians love to drink sparkling wines and they make some terrific ones. And although my friends in Conegliano hate to hear me say it, it is a shame that the only Italian sparkler that most Americans can name is Prosecco.
I wish they’d give more attention to Francicorta DOCG, which faces a similar challenge to Vino Nobile. Franciacorta is often said to be the “Champagne” of Italy. It is made using the classic method from mainly but not exclusively the traditional Chardonnay and Pinot Noir grapes . The comparison to Champagne is understandable and the wines stand up well compared to their French cousins.
But it is not always helpful to think of Franciacorta this way because if you want Champagne you want Champagne and not necessarily something else. Franciacorta needs to more clearly develop a distinctly Italian identity that positions it apart from French wines and also Prosecco. The two Franciacorta DOCG wines were tasted were delicious — and I don’t think the skilled presenter ever called them Italy’s Champagne. I know producers are working hard to build their market category because the current interest in sparkling wines presents a great opportunity.
A Grape or a Region?
One of the sessions focused on DOC Pinot Grigo delle Venezie. Pinot Grigio is one of white wine’s big success stories in the U.S. market. Pinot Grigio/Pinot Gris is the second largest selling white wine category in the U.S. market, according to Nielsen figures, far behind #1 Chardonnay but well ahead of #3 Sauvignon Blanc.
Some of the Italians I have met like to imagine that all the Pinot Grigio sold in the U.S. comes from Italy — and Italy might have dominated this category a few years ago — but now Pinot Grigio is grown just about everywhere. I made risotto a few nights ago with a nice little Pinot Grigio from Washington state. That is the problem with the “signature wine grape variety” strategy. The category may start associated with a particular place, but often the place fades and it is just about the grape and then it is anyone’s game.
Italian producers hope to stake a territorial claim to the Pinot Grigio market with DOC Pinot Grigio delle Venezie — Pinot Grigio from a specific region subject to DOC rules and regulations. The consorzio logo above is meant to establish the identity. Italy first — can you miss the green-white-red stripes? And then Venice and Venezie as symbolized by the stylized prow of a Venetian gondola. Italy, Venice, Gondolas. Get it? That’s Pinot Grigio.
It is easy to be a little skeptical about the effort to re-brand Pinot Grigio this way since Americans generally know little about DOC and DOCG designations, but in this case there is reason for cautious optimism because many of the DOC Pinot Grigio wines have big marketing and distribution muscle behind them. The list of wines that were tasted in Seattle, for example, includes DOC wines from Lumina by Ruffino (Constellation Brands), Prophecy by Cantine di Mezzacorona (Gallo), Montresor (Total Wine & More), and Cupcake (The Wine Group).
Pinot Grigio won’t stop being a grape variety that could come from anywhere, but with some effort it can also be a regional wine of Italy once again.
Italian wine makers are luckier than most. They face challenges, some of which are the product of their own success, but there is a tremendous reservoir of good will and affection for Italy and its wines. The struggle for market attention is therefore not easy but still possible. The Seattle event has inspired us to look more closely at the Italian wine mosaic and to try to appreciate a bit more its many shapes, colors, and styles.
In theory wine is an enormously diverse product. There are hundreds and hundreds of wine grape varieties grown all around the world. You could drink a different kind or style of wine from a different place every night of the year and not more than scratch the surface. What fun!
In practice, however, wine as it is actually experienced often ends up being far less interesting than it could be. Global vineyards are increasingly planted to just a couple of dozen grape varieties out of the roughly 1500 available, for example. A handful of “international” wine grape varieties make up an increasing proportion of the global vineyard area, squeezing out space for other grape varieties.
The extent of varietal concentration in the world’s vineyard has increased non-trivially between 2000 and 2016. Half the world’s plantings were accounted for by 21 varieties in 2000 but, by 2010, that total had dropped to 15 varieties and it rose only by one, to 16, in 2016. …
Other ways to explore the varietal diversity issue involve examining how internationalized varieties have become. One way is to look at what share of the global area is devoted to varieties by their country of origin. In 2000, French and Spanish varieties dominated the global landscape, accounting for almost three-fifths of the world’s winegrape vineyard area, with Italian varieties boosting that share to 70%. By 2016 that share had risen slightly to 72%, but France now dominates much more at the expense of Spain
You see the loss in diversity almost everywhere if you look for it. In the Napa Valley, for example, historically significant Zinfandel is replaced by Cabernet Sauvignon. Tempranillo is taking over Spanish vineyards in the same way. This trend is not always a bad thing, it must be said, because sometimes the vanishing grapes were grown for their high yields not good quality. But it isn’t always a good thing either.
As distributors have consolidated in response to the covid pandemic and now the prospect of stagflation’s unwelcome return, they have also tended to focus on a smaller selection of wine products. And, as I argued here a few weeks ago, some consumers are likely to react to stagflation’s impacts through “risk management” strategies that focus on a few trusted wine brands or types with fewer experimental purchases.
The Case of Sauvignon Blanc
Have wine styles (not just the grape varieties) become less diverse, too? This is an economics newsletter, not a tasting report, so I will ask you to think about this question and answer it yourself. It does seem to me that at least some of the diversity in regional and personal styles has disappeared (with the rise of natural wine being the obvious counter-point). And I am not just talking about “Parkerization.”
It used to be that Marlborough Sauvignon Blanc stood out as a really distinctive wine, for example. Nothing else really like it. I remember when Sue and I were visiting Norcia, Italy about 20 years ago when the first few bottles of Kiwi Sauvignon Blanc came to town. Our local friends were very excited — this was something completely new to them.
Now, however, when we taste Sauvignon Blanc wines from around the world, we often find products made in the Kiwi style. Lately we have been surprised when we taste something different, something with a sense of itself. They say that imitation is the sincerest form of flattery, so I guess the Marlborough producers should be flattered, indeed.
Support Your Local Grape
All of this is a way of saying that if we value wine’s diversity we need to seek out and support producers who make it their business to fill in the gaps between the big-name international grape varieties and wines. The niches may not be large in market terms, but they can be important. And valuable in the long run, as well. It was not so long ago, for example, that Touriga National seemed to be fading away in Portugal. Now, of course, it is the basis of many excellent wines.
Italy is a place to look if you want to see wine’s diverse mosaic (see Ian D’Agata’s book, Native Wine Grapes of Italy. for details) and two wines that we recently received as samples from dynamic Piemonte producer Colle Manora provide food for thought The first was the Colle Manora “Ray,” made from 100% Albarossa, a grape variety I’ve never tasted before. The second was the Colle Manora “Palo Alto,” 100% Pinot Nero (Pinot Noir). Pinot Noir from the land of Nebbiolo?
First Taste of Albarossa
The “Ray” Albarossa caught my attention right away. Albarossa? Well, it is a little-known and relatively rare Piemonte grape variety — the result of a cross between Barbera and Nebbiolo from the same experimental vineyard in Conegliano that produced the important Mansoni Blanc variety. Barbera — Piemonte’s most productive grape variety — crossed with noble Nebbiolo. You can see the attraction. Wine Grapes reports that there were only about 25 acres of Albarossa in Italy (and the world) in 2000 — a figure that has probably grown but is still tiny by any standard.
But there is a twist. The Nebbiolo in question was Nebbiolo di Dronero, a.k.a. Chatus, Chatus? Another grape variety to add to the list. In any case the cross was a good one. Ian D’Agata calls Albarossa “one of Italy’s most successful crossings ever.”
We paired the wine with asparagus risotto with prosciutto and the acidity, herbs, and spices of this medium-bodied wine worked very well. A success and something I will look for on future trips to the Italian northwest.
And Now for Something Completely Different
As much as we enjoyed the “Ray” Albarossa, I have to say the Pinot Nero was the big surprise. Tasting this wine from a familiar international grape variety I sensed what our Norcia friends must have felt when they sipped their first glass of Marlborough Sauvignon Bland. Pinot Noir? This wine didn’t have any of the subtle nuances that made Miles wax all poetic in Sideways. This Pinot Noir was big and bold. And different in an interesting way. If I had tasted it blind I might have guessed a Syrah — Sue said she would have guessed Merlot perhaps.
But of course it wasn’t Merlot or Syrah, it was a really different vision of Pinot Noir that made me think and re-think. I’ll bet it would be interesting with a few years of bottle age. But I couldn’t wait to pull the cork.
Life is Too Short …
Pinot from Piemonte? Pinot is grown in this region but is most often a blending grape according to my notes. But Pinot Noir has a tendency to inspire winemaker devotion, even in the “wrong” places. When Sue and I visited Braida, the famous Piemonte producer, we learned that Pinot is Giuseppe Bologna’s passion, too, and enjoyed the unique experimental barrel samples he provided.
I still haven’t tasted what is probably the most extreme Pinot Noir, at least from the standpoint of location. I’m talking about Il Masin, the Pinot Noir that the famous paleoanthropologist Richard Leakey made on from grapes grown on his hillside vineyards in … Keyna!
But I am determined to keep trying wines that celebrate the diverse potential of the grape. Life is too short to drink boring wine, don’t you think?
I am in virtual Madrid today to talk about the changing global wine market on a program that also includes OIV director general Pau Roca and Dorian Tang of ASC Fine Wine in China. Zoom brings the three of us together from across the global wine map to talk with our on-line audience in Spain, Portugal, and many other places.
Preparing for this talk got me thinking about the lessons I took away from a trip to Spain five years ago for an in-person wine industry meeting in Valladolid. I think the message is still relevant, so I reprint it here in a “flashback” column.
Wine Economist (April 25, 2017). Sketches of Spain is the title of the 1960 Miles Davis/Gil Evans album that deftly walks the line between classical and jazz genres, with Davis’s virtuosity shining throughout.
Sue and I have recently returned from a visit to Spain, where I spoke at the General Assembly of the Spanish Wine Federation (Federación Española del Vino or FEV), so Spain and Spanish wine are on my mind and I have been puzzling over how to write about our experiences and all that we learned. Such a big country! So many impressions! The Miles Davis album solved the puzzle.
Davis and Evans gave us a few powerful sketches of Spain and its music, not a detailed musical portrait, which would be impossible in the context of a ’60s-era 33-rpm vinyl recording. A perfect choice! In this and the next several weekly columns I will try to provide sketches of the Spanish wine industry, which I hope you will find useful, leaving a more detailed portrait for another time and place.
Sketch 1: The Spanish Wine Supertanker
They say that it is not easy to turn around a big ship because of all the momentum it has to continue on its path and this might be a good metaphor for Spain. Spain is certainly big when it comes to wine. Spain has the largest area of vineyards of any country in the world and is the third largest wine-producing nation (after Italy and France). Spain produces nearly 70 percent more wine by volume than the United States, which is number four in the global wine table.
The Spanish wine industry has devoted enormous effort to changing wine market direction, investing in more productive vineyards planted to grape varieties like Tempranillo that are more attractive to global wine buyers, and in new or updated production facilities.
The wineries we visited have made the transition and are now sailing in the right direction. As I said to the General Assembly audience, it seems to me that Spain has all the pieces in place to succeed in the new global wine market environment that has emerged, where value matters much more than sheer volume. I am an optimist about Spanish wine. But I am also a realist …
Sketch 2: Breaking the Glass Ceiling
Improving Spanish wine is one thing (a good thing!), but achieving greater success in the global market is another because of reputational momentum. Spain’s wine reputation has not caught up with its reality in many markets. Citing data from a Nielsen Company survey of U.S. on-premises wine drinkers (thanks to Danny Brager for his help), I noted that Spain was stuck under a “glass ceiling” in terms of consumer perception.
Italy and France — these are the countries that American diners think of first when they consider imported wines. Spain, despite its status as the third largest producer, ranks far below with perception roughly on a par with Australia, Argentina, and Chile and only a bit above tiny New Zealand, which is number 14 on the world wine production table, lodged between Romania and Hungary.
Spanish producers would love to break through the glass ceiling to achieve market status of Italy and France, but — let’s face it — everyone wants to do that.
A more interesting question for Spain, I proposed, is why it does not rank higher above Argentina, Chile, and New Zealand. Do they make more wine than Spain? Better wine? Do they have better generic market promotion programs? The answer is no in each case. What do these much smaller countries have that Spain does not that allows them to punch so far above their weight? This got my audience thinking, which is always my intent.
Sketch 3: Spain at the Crossroads
Hard thinking is necessary because Spain’s wine industry is at a cross roads of sorts. A graph of domestic vs export sales of Spanish wine shows that an important line has been crossed. Domestic wine consumption continues to fall in Spain as in other Old World producer countries. The opponent is not so much France and Italy as spirits and beer and changing consumer habits generally.
Wine exports are rising and now exceed domestic sales. This is important since the industry would be in crisis if exports did not replace lost domestic purchases, but that doesn’t mean that slowly losing your most biggest market is not a cause for concern. It was rare for us to meet a wine producer in Spain who had as much as 50 percent domestic sales.
Global markets are congested and competition for high value sales will only increase when Brexit’s full impacts are finally felt. Reversing the decline of the domestic wine market is Spain’s next big challenge.
Fortunately, I think there is an realistic opportunity for domestic wine sales growth. Spain was hit very hard by the global financial crisis and the austerity policies that followed in Europe. Only now, ten years after the crisis, is Spain’s gross domestic product approaching its pre-crisis level. A lost decade! No wonder exports have been the focus.
But growth has picked up in the Spanish economy and optimism is in the air, something Sue and I could feel on the streets of big cities and small towns alike. Beer is a tough opponent, but perhaps this is Spanish wine’s moment at home as well as abroad! More to follow in the weeks ahead.
Thank You Notes
Sue and I would like to send out big “thank you” notes to Pau, Susana, José Luis, and Eduardo and everyone else at FEV and to all the people we met at the General Assembly in Valladolid.
FEV organized a series of winery visits for us in the two weeks following the General Assembly (I will report on this fieldwork in future columns) and we would like to thank everyone who took the time to meet with us and share their stories. Here is a list of the wineries we visited: