Author Archives: Mike Veseth

A Tale of Two Initiatives

November 15, 2011 By in Economic impact, Washington wine 1 Comment

Last year Washington voters went to the polls and defeated a Costco-sponsored initiative to liberalize the state’s wine, beer and spirits markets. The vote was 46.5% Yes and 53.4% No. Initiative 1100 mustered a majority in only four counties — Mason, Kitsap, Island and Douglas — and lost in the Pierce-King-Snohomish urban corridor.

What a difference a year makes! Initiative 1183, also sponsored by Costco, passed handily with nearly 60% of the state-wide vote. Significantly, only four counties voted against the ballot issue this time and all the major population centers were in the Yes column. What happened? Herewith some observations.

1. Times Have Changed

Times have changed? Yes, obviously, although this doesn’t really explain such a large apparent one-year shift in voter behavior. Still it is worth considering how much times have changed if only to gauge how anachronistic Washington’s liquor control regulations seem today.

Obviously the most important factor is our continuing recovery from Prohibition’s hangover — attitudes and beliefs about alcohol consumption have changed much more and faster than the relevant legal institutions. A second factor may be the changing demographic profile of  the state, which once featured a stronger Scandinavian-American influence that was sympathetic to what I have called “the Swedish Solution” to liquor sales. More current Washington residents come from or have lived in non-control states and see no harm in private liquor sales.

Finally, market power has shifted, with large retailers embracing alcohol as a high margin product segment. Even Wal-Mart sells wine — who would have guessed? Increasingly these firms want to be freed of regulations (apart from obvious legal age restrictions) that reduce business efficiency.

2. Political Gridlock

Most people believe that public policy should be the realm of elected officials and that private businesses should not have too much influence on the laws that regulate them. We know that special interests have more clout in practice than the civics textbooks say they should have in theory, but there are limits and they should be respected. For Costco to write its own laws was seen by some voters as crossing the line. Better to vote No and let the legislature handle privatization.

But political gridlock is the name of the game today and it seems to have gotten worse in the last year as indicated by the continuing federal budget impasse fiasco. Politicians are frustrated with their inability to take decisive action and the voters are fed up. Washington voters are usually suspicious of initiatives, but in this political environment some ballot issues are seen as a lesser evil to grid-locked legislation.

(The exchange between Sean Sullivan and Rand Sealey in the Comments section of this Washington Wine Report post is particularly instructive in this regard.)

3. Voter’s Remorse

A lot of voters wanted to end the state’s monopoly on liquor sales last year (changing times), but they were unhappy with their choices and confused by the process. There were three different campaigns in 2010 — Costco’s pro 1100 push, a campaign for an alternative law (Initiative 1105, sponsored in part by distributors threatened by 1100’s attack on the three-tier system) and an anti-everything effort (ironically also financed by distributors but also including other groups).

Picky voters cast a No vote — they wanted liquor market reform, but not this way.  This time around, their standards were a bit lower. They no longer expected to have really good choices (see item 2 above), so many people held their noses and voted Yes. This isn’t the way to make state laws, but it is the best choice we have, they said.

4. Divide and Conquer

Finally, the architects of I-1183 crafted their proposal to weaken opposition to it. Last year’s I-1100 was designed to create a nearly perfect market environment for large retailers like Costco. Lots of vested interests were threatened and they reacted with vigor.

There was less opposition to this year’s proposal. In particular, while spirits sales will be privatized and the wine market liberalized, I don’t think there is much direct impact on beer. So beer distributors sensibly stayed out of the fight this time. And I-1183 made a point to increase government revenues from alcohol sales, too, eliminating another potential concern.

So whereas in 2010 it was Costco and other big retailers versus distributors battling for voter attention, this time Costco was opposed by a less effective coalition of anti-alcohol groups, state liquor store operators and employees and some Washington wine producers who fear that they will suffer in the new market environment. The opposition was divided … and conquered.

What’s Next?

It is too soon to know what is going to happen when all of I-1183’s new rules go into effect. Certainly the biggest effects will be on spirit sales. The wine impacts will be smaller (but still significant) and quite diverse. Some wine producers are better prepared than others to compete on price through volume discounts, for example.

Some retailers will no doubt reduce wine shelf space (at least in the short term) in order to make room for spirits. Others may expand the space allocated to wine and spirits at the expense lower-margin items. And big box liquor retailers like Total Wine and BevMo are likely to enter the market, too.

It will be interesting to see how the wine market evolves in Washington as it adjusts to this new environment — more to come on this question. It will also be interesting to see if politicians get the message that some voters put into the election bottle.

In the meantime, I plan to encourage my students to study these election results at a micro level to pick out and try to explain more clearly the key electoral shifts that have ushered in this new alcoholic beverage regime.

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Click here to view an interactive 2011 election map provided by the Washington State Secretary of State’s office. Click here to see the county-by-county results for Initiative 1100 in the 2010 general election. Click on the map above to see the Wine & Vines article where it appears.

Kudos to Sean Sullivan and his Washington Wine Report blog for his thorough analysis of the initiatives in both 2010 and 2011. Sean opposed I-1183 because of its potential negative impact on the Washington wine industry, but correctly predicted that the measure would pass.

Wine Wars World Tour Continues

November 10, 2011 By in Shameless Self-Promotion Leave a comment

I’m on the road today, headed to Pasco to give the keynote at a Washington Association of Wine Grape Growers meeting. Here’s the Wine Wars World Tour schedule for the next couple of months. Hope to see you at one of these events!

November 2011

December 2011
  • Mercer Island Chamber of Commerce Luncheon. Thursday, December 1, 2011. Noon.
  • Retired Teachers Association of  Tacoma. Saturday, December 3, 2011.
  • World Affairs Council of Oregon. Thursday, December 8, 2011. Portland, Oregon.  Time and place tba.
  • Metropolitan Market wine tasting and book signing. Friday, December 9, 2011 from 4-7 pm.  25th & Proctor Street, Tacoma, WA. (This is the store featured in chapter 3 of Wine Wars). I’ll be chatting and signing books at the kiosk in the deli section.
January 2012
  • Transportation Club of Seattle. Wednesday, January 4, 2012. Details tba.
  • Olympia, Washington Alumni Event, Thursday, January 19, 2012. Details tba.
  • Unified Wine & Grape Symposium, Sacramento, California. Wednesday, January 25, 2012. I will be moderating the “State of the Industry” session and leading an afternoon break-out on global wine supply issues.

Grape Transformations: Oregon Origins

November 8, 2011 By in grape transformations, Jancis Robinson, Oregon wine, wine history 16 Comments

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I had a hidden agenda when I visited McMinnville, Oregon a few weeks ago. Ostensibly I was there to talk about my new book at Linfield College and to the local Rotary Club. Those events were great but I would not have been happy if I hadn’t done one more thing: return a minor piece of Oregon’s  wine history to its rightful home.

“To Nick, Cheers for all the years — past & future. David Lett, Christmas 1989.”

That is the inscription I found in a second-hand bookstore copy of Vintage Timelines, a neglected classic book that Jancis Robinson wrote over twenty years ago. The idea of the book was to select a group of the world’s greatest wines and examine how different vintages have evolved (and would be expected to continue to evolve) over time.  The research required Jancis to taste trough verticals of each great wine (research is such a drag!) and compare notes from previous years to create complex and quite fascinating graphical timelines.

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Darn few American wines were good enough (in terms of their ageing potential) to make the cut and only one wine outside of California — the Eyrie Pinot Noir Reserve made by David Lett. Lett planted the first Pinot Noir vines in the Willamette Valley and he, along with the group they call “the Pioneers,” set Oregon wine on its present course.

Nick’s Back Room

The Nick in the inscription is almost certainly Nick Peirano of Nick’s Italian Cafe. Lett’s audacious egg was incubated and eventually hatched by the Pioneers and others over countless discussions in Nick’s back room. I’ve loved owning the book, but felt it didn’t belong to me. I needed to take it home and give it back. But to whom?

My first thought was my friend Scott Chambers, a professor at Linfield College and a friend of both Nick and the Lett family. He’d love to have the book, I thought, but it didn’t really belong to him any more than me. Maybe Jason Lett, David’s winemaking son who is carrying on the Eyrie tradition and building upon it? Yes, that would make sense.

But then I learned about the Oregon Wine History Project at Linfield College and that sealed the deal. They were pleased to add my copy of Vintage Timelines to their archive as a document chronicling the Eyrie Reserve’s early international recognition as well as the role of Nick’s back room in the region’s early development. Jeff Peterson, Director of the Linfield Center for the Northwest, accepted the book and both Scott and Jason supported the decision.

A Remarkable Story: David Lett (and the Pioneers)

David Lett is one of my heros and I am including him in my “Grape Transformations” list of people who have changed the way people think about wine or wine regions. He was certainly instrumental in the transformation of Oregon from a place known for fruit and nuts rather than grapes to a region frequently mentioned in the same breath with Burgundy.

Lett’s story is remarkable. Trained at UC/Davis, he came north looking for terroir where he could make Pinot in the Burgundian style. The first Pinot vines were planted in 1965; 1970 was the first Eyrie Pinot vintage.  After one or two false starts he hit paydirt. Great wine.

But from Oregon? Rainy old Oregon probably seemed like the last place on earth to make world class wine in the 1970s.

Olympic Gold

Then came the Wine Olympics of 1979. This was a competition, sponsored by  the French food and wine magazine Gault Millau, that featured 330 wines from 33 countries tasted blind by 62 judges. The 1975 Eyrie Pinot Noir Reserve attracted attention by placing 10th among Pinots. A stunning achievement for a wine from a previously unknown wine region.

Robert Drouhin of Maison Joseph Drouhin, a Burgundy negociant and producer, was fascinated and sponsored a further competition where the Eyrie wine came close second behind Drouhin’s own 1959 Chambolle-Musigny. Thus was Eyrie’s reputation set (and Oregon’s, too). It wasn’t long before Domaine Drouhin Oregon (DDO) was built in the same Dundee Hills as Eyrie’s vineyards — a strong endorsement of the terroir and recognition of the achievement.

The Pioneers founded the Oregon wine industry, but now the torch has been passed to a group that you might call the Sons [and Daughters] of the Pioneers. Some of them appear in the video at the top of this post (don’t be discouraged by the poor audio at the start — it gets better quickly). I’ll have something to say about this group in an upcoming post.

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Special thanks to Scott Chambers and Jason Lett for their hospitality during our stay in McMinnville.

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Update 11/16/2011: You might be interested in Katherine Cole’s recent piece on the 50th anniversary of wine in Oregon — it includes a nice annotated chronology of the wine industry.

Chinese Wine [Uncorked]

November 1, 2011 By in book reviews, China wine 1 Comment

Li Zhengping, Chinese Wine 3/e (translated by Shanghai Ego — really!). Cambridge University Press, 2011.

Many of my conversations with wine makers and wine sellers this year have looped back around to the question of China. China seems to be the Great Hope for people who see it as a vital future market and also a Great Mystery for those who haven’t yet figured out how to uncork it.

Great Wine Wall of China

Uncertainty is the Grape Wall of China to those who wish to penetrate its market borders. The known knowns are few and the unknown unknowns many, or so I am told. Talk about assymetric information inefficiencies! So everyone’s interested in learning more about wine in China.

Hence my interest in this slim (146 page) book from Cambridge University Press. It is part of the “Introduction to Chinese Culture” series of brief guides that includes ten published volumes (Chinese Clothing, Chinese Furniture, Chinese Music and more) with additional volumes (Chinese Gardens, Chinese Jade, Chinese Food, Chinese Tea and so on) set for publication in 2012.

The back cover description of this book reads.

This illustrated introduction to Chinese wine explores the history of wine production in China, the legends and customs that surround it and its place in China today. Traditionally, Chinese wine and spirits were made from grain, and had three important uses: to perform rituals, to dispel one’s worries and to heal. Today, wine is still believed to have a therapeutic benefit, but the Chinese beverage industry has expanded on a large scale and now includes famous brands of beer and, increasingly, vineyards producing red and white wine for global consumption. Chinese Wine is indispensable reading for both wine-lovers and all those with an interest in the transition from traditional to modern Chinese culture.

The book delivers on this promise with clear direct prose and beautiful illustrations. But it would be a mistake to read more into this description than there is.

Lost in Translation

The term “wine” can easily get lost in the translation. Wine here in the U.S. is grape wine for the most part, but wine in China is a much broader concept including fermented fruits and grains. Chinese Wine  examines grain wine, beer, distilled spirits and Chinese-made grape wine. Changyu, Great Wall and Yanjing brand wines receive special attention.

Grain wine, especially rice wine, is much more important than grape wine in this narrative. Why? The author explains that “Grape wine is easier to produce than rice wine. However, as grapes are seasonal and cannot retain their freshness for long compared to grain, grape wine-making technology was not adopted extensively in China.”

Whereas grape wine is made when the grapes are harvested, rice wine (like beer) can be made year round from stored rice — a practical advantage. But grape wine was favored in times when it was necessary to conserve grain stocks.

The cultures and traditions associated with Chinese wine are superficially very different from ours.  Wine is if anything much more important in China (if I have read this book correctly) than it is here, but the social rituals of wine drinking seem to be the point, not the beverage itself. Maybe this is not so different after all? Chinese Wine is making reconsider what I thought I knew about grape wine’s social function in the world of vitis vinifera.

An Afterthought?

Chinese Wine treats us to discussions of the origins of Chinese wine, the varieties of Chinese alcohol, rituals and traditions, legends (a very interesting group of tales) and finally, towards the end, a bit about imported wine and its growing popularity. Seriously, imported wine takes up just a couple of pages if you don’t count the photos, and the most important brand name mentioned is Gallo’s Carlo Rossi red (which is credited with boldly entering the Chinese market in 1992).

Is that it? Is imported wine in China just an afterthought? Probably not, although it is good to put things in perspective. I suspect that the author was chosen because of expertise in Chinese cultural history and so the book reflects this (and goes lightly on China’s recent fascinating with Bordeaux). Certainly everything I read suggest that market for grape wines in China is growing and maturing rapidly.

But it doesn’t hurt to remember that wine exports to China to do enter a sort of market tabla rasa. Just because there are few European-style wine traditions in China doesn’t mean there are no wine traditions at all. And the importance of grain wine should not be ignored.

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I called this entry [Uncorked] because none of the traditional wine vessels illustrated in the book looks remotely like anything that you could stop up with a cork, highlighting the differences between Chinese and European-style wines. The urns and pots are often beautiful. A feast for the eyes!

Boom Boom! On Money and Wine

October 25, 2011 By in wine investment, wine research 2 Comments

I’m just back from the San Francisco Treasury Symposium where I gave the luncheon keynote speech on “Wine Boom and Bust — With Lessons for Finance in the 21st Century.” You might well ask what business a wine economist has speaking to a group of treasury executives (I asked that question myself!), and the answer has two parts.

First,  I actually know a little bit about global finance from my day job as a university professor. I’ve written frequently about global financial flows and especially the periodic crises that seem to plague them.

The other reason is that the conference organizers thought it would be interesting and different to hear someone talk wine, but in a way that would still be relevant to their treasury executive audience. So that was my challenge.

Money into Wine? Easy! Wine into Money … Not So Much

Money and wine are closely tied, although it is an asymmetrical relationship. It is pretty easy to convert money into wine, for example. In fact, it may be a little too easy to do this. Some of my friends report that the whole “money into wine” thing has gotten way out of hand for them. You probably know the problem from personal experience if your cellar has grown bigger than your bank account.

It is harder to convert wine into money, especially if you are in the wine business. The best way to make a small fortune in wine, people tell me, is to start with a large one.  I focused on three aspects of wine economics for my talk: globalization’s opportunities and threats, the “new rules of the game” and the need to embrace (or at least accept) volatility. All these points apply to both wine and 21st Century finance.

Globalization: Opportunity and Threat

Globalization offers a world of opportunity to winemakers and financial managers alike, but it is a complex world and a very competitive one. New markets open their doors … but your market doors are open wide, too. Optimists will see the wine glass more than half full and seize the opportunities that present themselves, hopefully taking the associated costs and risks into account.

One problem with globalization is that the risks are so difficult to fully evaluate. The Australian wine industry, for example, is currently suffering from a bad case of globalization gone bad and part of the problem has nothing directly to do with wine.

Although the Crash of 2008 slowed down the global economy, China continues to surge ahead, its demand for natural resources (one of Australia’s strong sectors) growing year after year. Australian has come down with a bad case of the “Dutch Disease” where success in one sector causes chaos elsewhere. As mineral sales have increased, the strong Australian dollar has depressed the already weakened wine industry by discouraging exports. Click on the “Dutch Disease” link to see my report on this problem.

The [New] Rules of the Game

Global finance is dominated by a number of key financial centers that set the “rules of the game” for money. Wine works the same way, but the centers have shifted and the rules of the game have changed.

Producing nations (think France and Italy) once determined the rules of the game with their AOC designations.  The center shifted to Great Britain, Germanyand the United States in the last 20 years and now the rules are written by those who sell wine (think Tesco, Costco and Aldi) more than by those who produce it. The most successful wine sectors so far are those that have best adjusted to the new rules.

The rules will change again soon, I suspect, as the BRIC and new BRIC nations make their wine market influence felt. I think finance will also experience shifting centers with new rules and have to adjust accordingly.

Volatility was my final point and wine markets have plenty of it. Boom and bust cycles seem to be “baked in the cake” in both money and wine. I talked about Australia’s five big wine booms and busts in the past 150 years and characterized them in terms of Hyman Minsky’s famous “seven stages” description of financial crises.

Beyond Boom and Bust

Booms and busts are bad enough, but wine markets also suffer from medium-term cycles of surplus and scarcity as illustrated by the Turrentine Brokerage “Wine Business Wheel of Fortune.”  High prices today sow the seeds of low prices a few years down the road, according this analysis, which is based on the well-known “cob-web” model of lagged adjustment in agricultural markets.

Anyone who has tried to guide their 401k portfolio (much less manage corporate financial affairs) knows how volatile financial markets can be – the wine world’s bubbles and cycles must seem pretty peaceful by comparison.

Wine and money may be very different, but the problems they face bear a certain resemblance, don’t you think? What can wine teach money in these uncertain times?

One lesson, I proposed, is to “think global but drink local.” This sounds pretty simplistic, but it captures trends that I see in wine today. Economic imperatives have made both global and local markets more important than in the past. Developing direct sales vectors and developing and maintaining personal relationships is high priority today. Wine (like money) is a relationship business that needs constant attention.

Boulding’s Law

But it’s useful (and often necessary) to keep a global mindset even as you cultivate local markets. The world is getting bigger and smaller at the same time and the rules of the game continue to change.

The second lesson is what I call “Boulding’s Law” after Kenneth Boulding, the famous economist. Boulding once made a study of the history of the future. He looked at what people thought about the future at various points in time and then did a “fast forward” though the history books to see if they were right.

His conclusion? When the future came around people were usually surprised. It wasn’t what they expected at all (even if it was exactly what they predicted years before!).

Hence Boulding’s Law: The best way to prepare for the future … is to prepare to be surprised. That holds for wine, I think, and for money, too.

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Thanks to the San Francisco Treasury Management Association for inviting me to speak at their symposium. Special thanks to Jim Lindsay and Larry Goldman.

In Search of Pinot Noir

October 19, 2011 By in book reviews 5 Comments

Benjamin Lewin MW, In Search of Pinot Noir. Vendage Press, 2011.

Burgundy makes Burgundy, Benjamin Lewin reports (quoting a local producer). All the rest make [merely] Pinot Noir.

What should we make of Burgundy’s self-proclaimed status as king of the Pinot Noir hill? Lewin circled the globe to find out and this fascinating book is his report. I recommend it with enthusiasm.

To the Summit

Burgundy dominates the book, as one would suspect, both for its wines and because it is the standard of reference, and in the final pages Lewin reveals his conclusion: Burgundy does indeed stand at the summit based in part upon its superiority ability to age and develop in the bottle (with DRC and Domaine Leroy at the peak of the peak).

But Lewin’s search for Pinot, which takes him to Germany, Switzerland, Italy, Oregon, California, South Africa, New Zealand and Australia, reveals a number of near-rivals and raises many questions. The Pinot world may not be very big (compared with Cabernet and Chardonnay, for example), but it is a bigger world than Burgundians might like to think. And it is changing fast.

Dr. Lewin’s Lab Notebooks

Pinot Noir (along with Riesling) is thought to be the ultimate “terroir” wine, so the wines themselves should tell the story. In vino veritas as they say. This line in inquiry takes us into the detailed tasting notes that are appended to most chapters. These are Lewin’s lab reports (he is a famous scientist — a cell biologist — so it is unsurprising that he would evaluate claims empirically). At best the tasting notes are insightful observations of the ways that wine changes as time and place are varied. Sometimes, I have to admit, they are a bit like wine porn, read to vicariously share Lewin’s delicious work.

Do the wines of Burgundy live up to the myth of Burgundian terroir? Sometimes is Lewin’s answer. Burgundy at its best reveals its terroirist magic, but it doesn’t always turn out that way; caution and care are warranted. Winegrowing and winemaking practices can highlight terroir or disguise it. It just depends.

And climate change threatens to make Burgundy more like everyone else’s Pinot Noir by fundamentally altering growing conditions. Indeed, the book’s final pages ask whether Burgundy will be able to maintain its subtle complexity in the face of climate change and other challenges.

New World Challengers

I received my copy of In Search of Pinot Noir just as I was leaving to give some talks in Oregon Pinot country and I reported Lewin’s conclusions to my audience, which including many wine industry people. If you taste wines from different Oregon AVAs made by the same producer, Lewin writes, you can taste the terroir — just like in Burgundy. But when you taste wine from different producers in the same AVA, no strong common terroir thread emerges. Terroir is a weak force in the New World, it seems. Why? Lewin has an answer.

If you taste the best available Burgundies against the best available Pinots from Oregon and California, Lewin writes, the French wines “blow away” the competition. But it’s a biased comparison since the very best wines from New World producers never see the marketplace. They are tiny production single vineyard wines that disappear into allocation list buyers’ cellars. Ironically, they have no impact on the regions’ reputations and cannot define a signature terroir style.

The best available wines are more comparable to Burgundian village wines than the grand crus, according to Lewin. No wonder they suffer by comparison to the best of the best Burgundy has to offer. No wonder that Burgundy is Burgundy and the rest are not. Interesting.

Much to Like [and to Learn]

In Search of Pinot Noir, like Lewin’s earlier books (What Price Bordeaux? and Wine Myths and Realities) is big and bold, filled with colorful (and informative)  charts, maps and photos. The depth and breadth of Lewin’s analysis is impressive as he breaks down each Pinot Noir region into the historical, cultural, economic and natural forces that shaped it in the past and continues to influence it today. A great wine economist read. A great read period for anyone with a serious interest in Pinot Noir.

I think I learned something new on almost every page. But the most interesting parts  of the book for me are the questions, not the answers. Almost every chapter ends with a question about the future of Pinot Noir. Sometimes they seem to be leading questions (where you are pretty sure how Lewin would answer them) but others are very much more open.

I sense that the search for Pinot Noir is open, too. Market forces and climate change mean that the future is up in the air. Will Pinot Noir retain its special status as the ultimate terroir wine? Or will it become just another “international variety” with subtle differences slowly lost as styles converge on a rich, ripe “international style?”

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What make’s Pinot Noir different? Here’s the famous scene from Sideways where Miles makes the case for Pinot Exceptionalism. Enjoy! (Click here to watch the video if it does not appear above)

Malbec: The Film! [A World Premier]

October 11, 2011 By in Argentina, Shameless Self-Promotion, Supply and Demand, wine history 6 Comments

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Boom Varietal: The Rise of Argentine Malbec. A film by Sky Pinnick (Kirk Ermisch, executive producer). “Southern Wine Group presents a Rage Productions documentary,” 2011.

We are just back from the BendFilm Festival in Bend, Oregon — an unlikely trip for a guy who sees about one new movie a year. The special occasion? The world premier of a documentary about the Malbec boom, Boom Varietal by filmmaker Sky Pinnick.

Simply Irresistible?

A film? About wine?. How could I resist?

Well, actually I might have been able to resist driving 6 hours from Tacoma to Bend for the premier since the track record for wine films is so mixed. Mondovino is a classic, of course, but it sure is long (or does it just seem that way while you’re watching it?) and it’s kinda annoying, too? So damn earnest! (“Le vin est mort” and all that.)

Then there’s Bottleshock, the film that’s loosely based on the famous “Judgment of Paris” tasting of French versus California wines in 1976. The film is a lot of fun (the opposite of Mondo?) but just as annoying since almost every single detail is distorted for dramatic effect or commercial purpose. The best way to watch Bottleshock is to forget that there really was a Paris tasting and enjoy the pure theater of the thing.

A Feast for the Senses

So which way would Boom Varietal go — earnest but annoying like Mondo or annoyingly commercial like Bottleshock?

Well, incredibly it is not annoying at all. In fact, it is completely enchanting. The first five minutes are a feast for the senses. The film captivated me, drawing me into the world of Malbec and the people and places associated with it.

The land and people of Argentina are the stars of this film, especially the winemakers. Executive producer Kirk Ermisch, CEO of Southern Wine Group, no doubt used his industry connections in Argentina to make the film possible, but he commendably resisted the temptation to make this a promotion piece for his business.

Typecasting? Dismal Scientist?

I went to Bend knowing that I had a bit part in the film. Sky and his wife and collaborator Shea Pinnick interviewed me me in my office last spring as they were trying to stitch together the video pieces to tell a coherent story. I’ve been writing about Argentinean Malbec for several years and obviously worrying about its future. My role, I thought, was to be the classic “dismal scientist” and wonder aloud if today’s silver lining isn’t really surrounded by a deep dark cloud. And that’s what it seemed to be when I viewed the film’s “teaser” (see above) a couple of weeks ago.

So imagine my surprise as I watched the film for the first time. I wasn’t dismal at all! Sky was able to capture my enthusiasm for Argentina and Malbec and my cautious optimism about its future in the world of wine. If Argentina’s Malbec industry falters (and that’s always  a possibility in this uncertain world) I think it will be because of factors that are beyond the control of the winemakers — especially inflation and exchange rates.

I was also surprised to see myself on the screen so frequently. I think this is because Boom Varietal tells the story of the land, the people and the markets. A wine economics story! No wonder I had such a good time at the premier.

Beyond Malbec Boom?

I enjoyed this film and even learned a few things from it, but I had to keep reminding myself that this is a film about Malbec, not Argentinean wine more generally. Although the focus on Malbec is understandable and even appropriate for a U.S. audience (Malbec represents abut 2/3 of Argentina’s wine exports to the U.S.), one thing I learned from our trip to Mendoza earlier this year is that Argentina is Malbec, but not just Malbec.

If Malbec boom becomes Malbec bust (and I’m not predicting it will), then Argentina will be glad that it produces many other fine  wines, both red and white. Search for Argentina among the Decanter World Wine Awards results and you will see what I mean. Maybe what lies beyond Malbec boom is not Malbec bust but a growing appreciate of Argentinean wine more generally.

But whatever happens I think Argentina will be thankful that Malbec vaulted them onto the world stage in the first place. An incredible story! Thanks to the makers of Boom Varietal for telling it so well.

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Thanks to Sky and Shea Pinnick and to Kirk Ermisch for their hospitality while we were in Bend and for inviting me to participate in this project in the first place. I wish them every success with their project.

NZ Winemaking: Delayed Reaction meets Arrested Development

October 4, 2011 By in book reviews Leave a comment

Eric Arnold, First Big Crush: The Down and Dirty on Making Great Wine … Down Under. Scribner, 2007.

I don’t know why it took me so long to get around to reading this 2007 book about wine-making in New Zealand. I am very interested in Kiwi wine and I’ve written about it on several occasions. Can’t explain my why I didn’t find time for it until now.

Delayed Reaction

First Big Crush is Eric Arnold’s account of a year he spent working at the Allan Scott winery in Marlborough. It is a chronological record of what he did in the vineyard and cellar, the people he met and the flow of life, wine and commerce as the seasons changed.

I felt a personal connection as I read the book because Sue and I spent part of that same year in New Zealand and so I visited some of the places Arnold describes and met a few of the same people.

One of my strongest memories of that trip (which produced a chapter called “Globalization versus Terroir” in my 2005 book Globaloney) was a conversation with Jane Hunter. Hunter had just come from a difficult meeting with growers where she told them the bad news — they’d need to drop more grapes to preserve quality. Growers (who are usually paid by the ton) understood the need for a green harvest, but it wasn’t what they wanted to hear.

Arrested Development

Arnold does a great job putting that difficult day (and many others like it) into context. And although wine economists are surely not the author’s target audience, I found Arnold’s explanations of the economic side of the business very interesting, especially the stories about grower relations and handshake contracts (that sometimes are literally worth the paper they are written on), vineyard labor relations and the crazy market for bulk wine within the New Zealand industry, which reminds me of a game of wine-infused Twister.

Although I am glad that I read this book for the reasons I’ve just explained, I have to admit that there were several points where I nearly stopped reading. The problem? Well, Arnold reports a lot of crude behavior often using crude language. Some of the humor would not be out of place in a middle school locker room. I guess I’m not surprised that this sort of thing goes on among wine-makers since it goes on every where else. It’s just not my cup of tea (or glass of Sauvignon Blanc?).

On Champagne: Keynes or Adam Smith?

September 28, 2011 By in wine education, wine price 5 Comments

John Maynard Keynes loved Champagne. When asked if he had any regrets in life he admitted to only one. I regret that I did not drink more Champagne, he said.

He even applied economic analysis to Champagne. Looking for ways to increase revenue from the bar at the Cambridge theatre where his ballerina wife Lydia Lopokova often danced (Keynes subsidized the theatre, so he had an interest in its “liquidty”), he studied the cross elasticity of demand between ordinary and premium Champagnes and proposes a novel plan to increase total expenditures by altering prices.

Raising the relative price of the cheaper stuff would make the more expensive tipple seem a better deal, he said, and increase total revenues. I don’t know if the author of Essays in Persuasion was able to persuade the bar manager to go along with the experiment.

Adam Smith, Terroirist

There is no indication that Adam Smith was fond of Champagne or even gave it much thought. Perhaps this was because of the difference in time and place relative to Keynes, but I think it might be because Smith was a terroirist. He believed in the idea of terroir and wrote in the Wealth of Nations that the wine grape was particularly sensitive to local growing conditions. He noted that certain famous Bordeaux wines earned a terroir premium in the marketplace.

If Smith was in fact a terroirist he might shy away from Champagne because most of the Champagne wines in the market place are relatively terroir-free.  Yes, of course, they represent that terroir of the Champagne appelation. But the wines that come from the big houses are blends that come from hundreds of growers and several different vintages. The wines are made in the cellar (through the highly manipulative methode champegnoise) at least as much as they are made in the vineyard. They can be excellent luxury products to be sure, but consistency is generally valued more than terroirst local or vintage variation.

Grower Champagnes are different; Smith and Keynes would both love them. They combine all the luxury and sensuality that Keynes appreciated with Smith’s intellectual focus on local conditions. Grower Champagnes are made in teeny tiny quantities by individual Champagne winegrowers from estate fruit. They are cult wines sold by specialists like Terry Theise, who also champions high terroir Rieslings from Germany and Austria.

Popping a Fat Cork

Is there a market for luxury terroir wines like grower Champagne? This question led us to a Seattle door marked “Fat Cork” where owner Bryan Maletis imports an exclusive list of grower Champagnes and sells them directly to small but growing local and national network of Keynesian-Smith and Smithian-Keynes buyers.

Bryan is well placed to take on the grower Champagne business. He has deep experience in the wine business, most recently as brand manager for Champagne Laurent-Perrier at Winebow, the big distributor. His connection to the grower networks and understanding of the market and distributional issues are valuable assets.

Bryan led us through a terroir tasting of three grower Champagnes (see the list at the end of this post) and the differences in wine were readily apparent to me and my Champagne research unit, which includes Sue, Joyce, Bonnie, Barry and Richard. Joyce revealed herself to have both a fine palate and an exceptional ability to express herself when it comes to Champagne and it was interesting to watch Bryan and his wife Abigail analyze the particular qualities of the wines in their portfolio in order to select the perfect wine for Joyce.

I asked Bryan about the challenges that his business faces, expecting him to start with shipping problems. But he told me that shipping isn’t an important barrier for him at this point. He has created innovative shipping containers that allow him to safely ship wine even in the hottest weather.  So check that important box. And he simply complies with all the interstate laws as best he can, accepting the constraints and pushing on.

University of Champagne

The real problem is that sparkling wine is a small part of the wine market and grower Champagne is a small part of that. People don’t drink Champagne every day, but save it for special occasions. Bryan would like to change that. And even people who have a Keynesian view of Champagne don’t necessarily know about grower Champagne, but may stick for the most part with the heavily-promoted brand names of the major houses.

It’s a marketing problem, he said, although I think it is also an educational problem (which probably makes it even worse). People won’t seek out grower Champagnes until they understand them. Once they taste them, however, I think many will be intrigued and want to probe the Champagne terroir as terroirists do for other wines.

Am I saying that, with a little education, Keynesians can embrace Adam Smith? I guess so! At least when it comes to Champagne.

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Here are the three grower Champagnes we tasted with Bryan and Abigail. Special thanks to Sue, Bonnie & Richard and Joyce & Barry for their assistance in analyzing the market for grower Champagnes. And thanks to Richard, of course, for sharing his business model with us and popping a few fat corks.

  • Perrot-Batteaux et Filles Cuvée Helix Blanc de Blancs (Bergeres-les-Vertus, Cote des Blancs)
  • Pascal Redon Brut Tradition (Trepail, Montagne de Riems)
  • Didier-Ducos Fils Brut (St. Martin d’Ablois, Valee de la Marne)

Wine Wars World Tour Begins

September 24, 2011 By in Shameless Self-Promotion 1 Comment

The fall season of Wine Wars book events (which I am modestly calling The Wine Wars World Tour) kicked off last week with a well-attended talk at the University of Puget Sound. My calendar is starting to fill up so I think it’s time to post a schedule for September and October. I have created a World Tour page (click on the link) that I’ll update whenever a new event is added to the list.

Hope to see you somewhere down the road at a Wine Wars World Tour book talk or signing!

September 2011

  • “The Miracle of Two Buck Chuck and the Revenge of the Terroirists.” Saturday September 17 2011  11:00 am in McIntyre Hall 103, University of Puget Sound.
  • ”Wine Wars: A Tale of Curses, Miracles and Revenge.” Thursday September 29 2011. 7:30 pm Linfield College, McMinnville, Oregon.
  • “Wine Wars: A Tale of Curses, Miracles and Revenge.” Friday September 30 2011.  McMinnville Rotary Club, McMinnville, Oregon.

October 2011

November 2011
December 2011
  • Retired Teachers Association of Tacoma. Saturday, December 3, 2011. Details tba.
January 2012
  • Transportation Club of Seattle. Wednesday, January 4, 2012. Details tba.
  • Olympia, Washington Alumni Event, Thursday, January 19, 2012. Details tba.
  • Unified Wine & Grape Symposium, Sacramento, California. Wednesday, January 25, 2012. Details tba.
  • Book talk at an historical Napa Valley winery. January 27 or 28, 2012. Details tba.
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Please contact me if you are interested in hosting a Wine Wars book event.