Washington Brands vs Brand Washington

Lettie Teague’s column in today’s Wall Street Journal provokes a post on Washington wine’s identity crisis.

Teague writes in “Stalking the Wines of Washington” that the Washington wine industry has expanded rapidly in the last few years and that there are many great wines and great wine values. Yet Washington wines are hard to buy (she had trouble finding them in New York wine shops) and hard to sell (she quotes several winemakers in this regard, including Chris Camarda of Andrew Will, who is holding back wine and reducing capacity by 40%). What’s the problem?

I Can Get it for you Wholesale

Well, as in most cases, it is not a single thing but a confluence of forces at work. Although she says that fine wines from Washington have a reputation for good value, Teague suggests that many are currently over-priced relative to Napa Valley products. Judging from my email inbox, the reason for this is that a lot of Napa producers are selling off their wines at deeply-discounted prices.

The typical deal I am offered is “limited time only” 50% off the retail price plus discounted shipping. A great deal, except I can sometimes find even lower prices on these wines at local stores. The wholesale prices must be rock-bottom if wineries can do better with these low revenue direct sales. Teague writes that

One Washington winemaker lamented to me, “We can’t compete when Pahlmeyer Cabernet that used to be $90 a bottle is now $45 a bottle.” And so, while the quality has never been higher—Washington has had three excellent vintages (2006, 2007 and 2008)—the wines are getting harder and harder to find in stores outside of Washington state.

[Interestingly, some of the offers have six bottle limits — a psychological ploy in most cases, I think, to make customers believe that surplus wines are really quite scarce. Wine people tell me that it works every time.]

I think that Washington wines are still a great value, given their high quality, but deep discounting by the competition is never a good thing for producers.

Napa Valley vs Columbia Valley

The lack of a strong regional wine identity is a second issue that Teague identifies (she also cites the small scale of most Washington producers as a disadvantage). Everyone thinks they know what Napa Valley wine is (although it is a large and very varied AVA that produces lots of different types and styles of wine). Napa was a strong brand.

What is Washington wine?  Washington apples have a strong identity and Washington cherries, too. But Washington wine — not so much. A stronger, more prestigious identity could be a real advantage, especially in this economic climate, Teague notes.

… Napa Valley has just done a much better job of marketing itself, according to Marty Clubb, whose L’Ecole 41 Winery in Walla Walla is probably one of the best known and oldest (circa 1983) wineries in the state. “Nobody really knows where our wines are from. People recognize our brand but not as a Washington-state winery.”

Washington has well-known wine brands at nearly every price point from Columbia Crest to Quilceda Creek, but there is no well-established Brand Washington. This is an issue that Paul Gregutt identified in his terrific book,  Washington Wines & Wineries: The Essential Guide (watch for a second edition on bookstore shelves this fall). He interviewed leaders in the Washington wine industry about their vision for Brand Washington and, while most considered this an important issue, no consensus emerged.

I’ve heard that Allen Shoup (the godfather of Washington wine: former head of Chateau Ste Michelle, now the driving force at Long Shadows) wanted to promote the idea of the Columbia Valley as Washington’s equivalent of Napa Valley — building the Columbia Valley brand to compete with California.

But this plan ran into a collective action problem as individual producers invested in their own private brands and sub-AVA brands instead. I’m sure some buyers today see Columbia Valley as a generic designation, not the prestige brand originally envisioned. And I’m sure a lot of people don’t associate it with any particular place (some people still confuse Washington  State with Washington DC; maybe they think the Columbia Valley is in … Columbia!).

Although the lack of regional identity may be a serious issue in the long run, I think other problems are more pressing right now. After all, most of those deep discount emails I’m getting aren’t coming from Washington, they’re being sent out by famous wineries in famous Napa Valley.  A strong identity surely helps, but can’t completely compensate for competitive market forces.

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One area where Washignton’s wine identity is strong is in Riesling. Riesling Rendezvous — sponsored by Chateau Ste Michelle and Mosel’s Dr. Loosen, begins tomorrow. Riesling makers from around the world will gather near Seattle to discuss the problems and opportunities they face. Look for a Riesling Rendezvous post in the near future.

Riesling: How Sweet It Is?

There is no doubt about it: Riesling is one of the world’s great wines. I think my students were slightly stunned by the eight Riesling wines (ranging from very dry to an ice wine) that they sampled at a recent tasting I organized for them.

Riesling drinkers know “how sweet it is!” (to borrow Jackie Gleason’s signature phrase). The wines are good and good value, too. Some of the best American Rieslings (wines like Poet’s Leap or Chateau Ste Michelle’s Eroica) sell for  only about $20. What a deal!

But the reason these great wines are great bargains is that the demand for them, while on the rise, is really not so great. Consumers by and large are afraid to buy Riesling. They don’t know how sweet they will taste or if they will like them. The “how sweet is it?” question and the “how sweet it is” exclamation (of those who know the answer) are thus  inextricably linked.

Asymmetric Information Strikes Back

Students of economics will recognize this as a problem of asymmetric information.  The people who make wine know its flavor profile and the people who buy it presumably know what they like (although winemakers tell me that people tend to say they like dry Riesling, but end up buying sweeter products). But they don’t know what’s in the bottle and can only find out by trying it.

Experimentation typically leads to confusion and disappointment as bottles that say “Riesling” produce glasses with much different taste. At some point, for many buyers, the disappointment factor is just too big. Lots of other wines out there. Why beat your head against the wall?  Riesling sits on the shelf.

One answer to the asymmetric information trap is signaling: tell the buyers what they need to know to make a purchase with confidence. It sounds pretty simple, but Riesling makers have until recently resisted it.

Of the seven Riesling table wines at my tasting, only two of them used the front label to signal something about the relative sweetness of the wine. The Pewsey Vale was labeled a “Dry Riesling” (and it was pretty dry, too) while the Pacific Rim bottling billed itself as a “Sweet Riesling” and was medium sweet and very tasty.

Some of the other wines offered descriptors on the back label, but I think it’s fair to say that a typical buyer would have been in the dark trying to figure out how sweet or dry most of them  were. The Pacific Rim wine was interesting because it was the first one I’ve seen that uses the International Riesling Foundation‘s new Riesling Tasting Profile Scale.  About a million cases of Riesling will be released this year by U.S. wineries that are participating in this program. Pacific Rim, a Washington Riesling specialist, has used the scale since 2008, according to a recent article on Decanter.com

How Dry Am I?

I first learned about this initiative at the 2008 Riesling Rendezvous conference, sponsored by Chateau Ste Michelle (Washington State) and Dr. Loosen (Mosel, Germany). An international group of Riesling producers decided to confront the asymmetric information problem head on by developing a simple way to communicate useful information about their wines.

Here is an example of the scale they have come up with taken from a limited edition Chateau Ste Michelle product. As you can see, it is pretty simple — just four descriptors ranging from Dry, Medium Dry, Medium Sweet to Sweet with +/- variation. This wine is “Dry +” — between Dry and Medium Dry.

This would seem like a very small step were it not for the fact that the current state of bottle information is so very limited and uneven. I suspect that this small step will help a lot of wine drinkers take a positive step towards enjoying Riesling.

Simplicity Is Complicated

As is often the case, getting something simple like this tasting scale is a very complicated process. As you may imagine, not all producers see the situation in the same light (there is much more to wine, even Riesling, than sweetness — a valid point). And tastes differ, of course, so what is medium dry to you might be medium sweet to me. (Some of my students thought the Pewsey Vale Riesling was quite sweet, for example.)

How do you define  sweetness in wine? Well, of course, it is a matter of balance between sugar and acid — with the right balance even a dessert wine with a high residual sugar level can avoid having a sticky sweet taste. Translating the chemistry into a taste profile, however, is a complicated matter.

Here is how the IRF handled the problem. As you can see, the standard begins with a simple sugar to acid ratio test (a relative calculation of grams per liter of acid and sugar). It then takes into account the absolute pH, which can push the rating up or down one level of perceived sweetness. Click on the table to enlarge it and see a more detailed explanation of the methodology.

I am going to have to pull a few corks (or twist some ‘caps) to see if I agree with the scale and if there really is the desired consistency across makers. But I am optimistic that this is a step forward. If it works, how sweet it will be!

Note: I am looking forward to attending the 2010 Riesling Rendezvous and getting an update on progress on this and other Riesling industry issues.

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Update 2/17/2010

My friend David Rosenthal, a winemaker at Chateau Ste Michelle, provides this useful news:

I wanted to let you know that all of the 2009 Rieslings from CSM will have the IRF scale on the back.  That includes:

Columbia Valley Riesling
Dry Riesling
Waussie Riesling
Harvest Select Riesling
Cold Creek Vineyard Riesling

We are jumping in with both feet on this one to try and educate people as much as possible at the point of sale.

Wine Spectator 100: North and South

The lists of the Top 100 wines have started to appear — just in time for holiday buying. Wine Spectator released their Top 100 last week and now Wine Enthusiast has followed suit. Other lists are showing up, too, such as Paul Gregutt’s list of the 100 best Washington wines.  Fun and informative, these lists provide wine lovers with endless opportunities to discuss, debate and of course pull corks. Gotta love ’em.

But you’ve gotta hate ’em, too. Top 100 lists are a mixed blessing on the supply side of the market. Although they do promote wine and wine drinking generally, they necessarily privilege some wines over others and this is always problematic given the thousands and thousands of good wines that are produced each year. Why this wine and not that one? It’s an inevitable question that matters because wines on the list get more attention than the wines that don’t for some reason make the cut.

Dancing in the Streets

Top 100 lists slice up the market in many ways and this year my email inbox has revealed a North-South divide. Here in Washington State we are very happy with the 2009 Wine Spectator league table. Nine Washington wines made the list — more than any previous year — including the #1 spot, which went to the 2005 Columbia Crest Reserve Cabernet Sauvignon (95 points, $27 dollars). Two Oregon wines were also listed, so altogether this was a banner year for the Pacific Northwest.

While they are dancing in the streets in Woodinville and Walla Walla, the mood is more sober down south in Mendoza.  Two Argentinian wines appear on the WS100, which is welcome recognition of course, but that’s down from four last year. This is really Argentina’s year to shine in the U.S. wine market, with overall sales surging by more than 40% in dollar value according to Nielsen ScanTrack data. But only half as many WS100 wines! You can’t blame members of the Argentinian industry for kinda hoping to see their success more enthusiastically celebrated in the Top 100 lists. Hmmm. Maybe next year.

A Nobel Prize for Wine?

It seems to me that these top 100 wine lists are a little bit like the Nobel Peace Prize. Highly publicized awards like the Nobel and the Top 100  end up being both reflections of excellence and opportunities for the judges to send a message (political, economic or otherwise). There are many worthy nominees for each award so the final choice is always arbitrary — and the opportunity to send a message is irresistible. Or at least I wouldn’t be able to resist it.

There are obviously many factors that go into a Top 100 wine list and a wine’s objective quality  is just one of them. This is easy to see if you take numerical ratings seriously. The WS100 #1 wine this year earned a 95 score, for example, but the #2 wine received a higher score (96) and the #8 wine’s score was even higher (99). A 100-point wine was placed in the 21st spot last year. This is a numbers game but not just a numbers game.

Don’t Cry for Argentina

Wine Spectator uses four criteria in making their list: quality (the score), value (the price), availability (the volume) and excitement (the X-factor). The Columbia Crest wines (both the Reserve that won this year and their other wines) generally do very well on the first three factors year in and year out. The X-factor this year, I believe, was the recession and the desire to inspire some excitement among American buyers by giving them a #1 wine they could find and afford. That $27 Columbia Crest wine says that American wine drinkers can enjoy truly excellent wines at relatively affordable prices. Time to start pulling those corks! A good message to send in this economic climate.

What about Argentina? Well, I understand their situation. No problem with quality, volume or availability. But I think the market excitement is already there and doesn’t need any help from the wine lists at this point (as much as the Argentinian makers would love to have it). The U.S. industry (like President Obama?) could use some encouragement right now, which may be a good enough reason to draw attention to its outstanding, good value wines like the Columbia Crest Reserve.

Note: Congratulations to Juan Manuel Muñoz Oca, the 34-year old Argentinian winemaker who made the #1 Columbia Crest Washington State wine. What a great North-South connection!

Wine as a Liberal Art

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David Rosenthal at Chateau Ste Michelle

I  teach a class called “The Idea of Wine” at the University of Puget Sound. It isn’t your typical wine class. It’s an examination of wine in the context of geography, history, science, business, politics, culture and globalization and how these various forces create different and sometimes conflicting “ideas of wine.”

I guess it is really about my idea of wine – that wine is a liberal art and a fascinating social mirror. The fact that it tastes so good is a wonderful bonus.

Wine isn’t usually included in the liberal arts curriculum, reflecting  America’s prejudice against anything that contains alcohol. But there is historical precedent. Symposium, in the original Greek useage, was a discussion over wine! Wine, as I think about it anyway, is certainly in the liberal arts tradition.

Chateau Warehouse sur Industrial Park

Part of my course involves fieldwork. In 2008 I took  the class to experience two ideas of wine that they wouldn’t get on a typical winery visit. Ken Avedisian at Cordon Selections wine distributors gave us a tour of his warehouse and explained how the distribution business works. We learned how Ken successfully balances his deep love for wine with the need to make a living selling it. Most of all, I think, we came away with an understanding that wine business is really a people business and that Ken is successful because he never forgets this fact.

Then we visited owner/winemaker Tim Narby at Nota Bene Cellars, where he makes spectacularly good red wines in an anonymous South Seattle industrial park. No fancy chateau here, just focused winemaking using exceptional fruit. We were fortunate to be there during crush, so my students got a clear sense of how wine develops by tasting at many stages from fresh juice to fermentation bin to barrel to finished product. The field trip popped some romantic visions of wine by revealing the reality of how it is made and marketed.

The Big and the Small of It

This year we headed to Woodinville, Washington, which is home to four or five dozen wineries that range from tiny family operations to the large and magnificent Chateau Ste. Michelle. The fruit comes from Eastern Washington, but the wines themselves are made and sold here, close to the market in a classic “cluster” of inter-related businesses. Our agenda was to compare and contrast big and small winemakers to see what we could learn from the experience.

We started the day at JM Cellars, a family winery that has in just a few years  expanded from a couple of barrels to 5000 case annual production. The setting is so spectacular – perched an a hillside next to a wetlands – that Wine Advocate praises the view almost as much as the wine.

Owner/winemaker John Bigelow took us through both the cozy winery and the hands-on production process (it was crush time once again) and I think everyone learned a lot about the art, craft and science of winemaking. It was easy to see that John enjoyed the opportunity to talk with a group that really wanted to learn about wine, not just swirl, sip, spit and move on. It was a great experience.

After an alcohol-free lunch at the Red Hook Brewery pub (I think this made some of my beer-loving students want to cry!) we headed to Chateau Ste. Michelle, which is Washington’s largest wine producer by a big margin. CSM and its sister wineries like Columbia Crest produce about three-quarters of all Washington wines. The beautiful Woodinville chateau-style facility makes nearly 2 million cases of white wine each year. The reds are made in Eastern Washington.

Enologist David Rosenthal took time out from the rush of crush to show us how a big winery works. Tanker trucks were arriving every few hours from the Eastern Washington vineyards full of fresh Riesling juice. We were able to taste the fresh juice and at several stages of the fermentation produces, with David drawing wine from the giant stainless steel fermentation tanks. Quite a difference in scale compared to JM!

The Little Winery Inside the Big One

One of the most interesting parts of the visit, for me at least, was to learn the extent to which CSM’s winemakers keep the lots of wine separate through fermentation and aging and, in the case of Chardonnay, make a point of experimenting with many different oak treatments. Instead of just making one big volume wine they actually make dozens and dozens of smaller lots, which can then be assembled in different ways that both reflect different geographic and geologic terroirs, different market ideas of wine (price points and so on, since CSM is in the wine business) and different aesthetic concepts of wine as well.

I’m impressed with CSM’s commitment to keeping wine small while making it big – I don’t know if there are many other wineries that pull off this trick quite so well. Maybe this is why Ted Baseler, CSM’s CEO, was recently name Wine Enthusiast’s Man of the Year. The citation reads

Ted Baseler is President/CEO of Ste. Michelle Wine Estates, the most prominent wine company in Washington State. Under his leadership, it has evolved into a high performance organization known for its top quality, world-class wines; for its strategic partnerships with leading wine producers in Italy and Germany; and for collaborating with fellow members of Washington’s wine industry to help raise the region’s profile, worldwide. For his vision, leadership, brand-building, team-building, and region-building accomplishments, Ted Baseler is Wine Enthusiast’s Man of the Year.

Sounds like Chateau Ste Michelle thinks big and global while acting small and local. Sounds like a contradiction, but it is an appealing idea of wine.

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Special thanks to Ken, Tim, John and David (and to Marci Clevenger at JM Cellars) for making time in their busy schedules for my students and several parents who came along on the trip. Thanks, as well, to the anonymous donor who established the Robert G. Albertson Professorship at the University of Puget Sound, which makes my class and this educational fieldwork possible.

Wine, Recession and Argentina

The global economic crisis has been bad news for Argentina, but good news so far for Argentinian wine. Will the wine part of the story have a happy ending or, like so many Argentinian economic booms, turn eventually to bust?

Bad News and Good

The Economist Intelligence Unit reports that Argentina’s economy has been hard hit by the economic crisis. The economic forecast is gloomy (see below) with the only good news being that inflation, while still high, is falling.

Given rapidly declining business and consumer confidence, the government’s fiscal stimulus measures will have a limited effect, and we expect the economy to contract by 3% in 2009, before only a mild recovery in 2010.

Unofficially measured inflation will ease to 10-15% in 2009, as private demand falls. The official rate will end 2009 at 6.8%, with a similar rate in 2010.

The peso will continue to depreciate in 2009 owing to weaker foreign-exchange inflows, before the pace of depreciation slows in 2010. The current-account position will weaken in 2009-10.

The Argentinian wine economy situation is sunnier.  The May 2009 issue of Wine Business Monthly includes two reports that paint a bright picture of Argentinian wine trends.

The first story is a competitive analysis of Argentina wine in the United States market.  It reports that U.S. imports of Argentinian wine have risen dramatically in recent years, from 2.6 million cases in 2006 to 4.3 million in 2008.  The total value of Argentinian wine in the U.S. rose from $75 million to $146 million in this period.

It is important to put this increase in perspective, however. Total Argentinian imports are roughly equal to the annual output of a single US winemaker, Washington State’s Chateau Ste. Michelle. So the Argentinian presence is rising, but from a modest base.

Molto Malbec

Unsurprisingly, Malbec is Argentina’s calling card in the U.S. market. Malbec’s share of Argentinian wine imports increased from 35% to 48% over 2006-2008 measured by volume and from 44% to 55% measured by dollar value. I was interested to learn that Argentina wine sales are rising at all price points, not just in the value brand segment as you might imagine.  But value is still important.  Argentinian wine prices are rising, but still relatively low.  The article reports that the average FOB price has increased from $29 to $33 per standard 9-liter case.

In the same issue the results of the Nielsen company wine market survey for the period ending 2/7/2009 are reported.  Argentinian table wine imports were up 40% by dollar value for most recent year.  This compares to a 10 percent increase for Chile, one percent for Italy and a one percent decline for Australia.  Overall growth in imported wines was 2.4 percent by dollar value for the most recent year.

The 40 % annual rise is spectacular, but  Argentinian wines account for just 1.4 percent of U.S. domestic wine volume compared with two percent for Chile, nine percent for Australia, almost 10 percent for Italy. This shows that Argentina either has a lot of room to grow in the U.S. market, as optimists will perceive, or a lot of work to do to escape niche player status.

American Exceptionalism

I think the Argentina producers were wise to focus on the U.S. wine market for their export surge.  Although the European Union is more important to Argentina in other major export sectors, the U.S. is the target wine market, and that’s a good thing in this economic environment.  EU wine consumption has long been in decline because of demographic and market shifts, for example, while wine sales have been rising in the U.S.

The recession is likely to depress wine sales growth in both the U.S. and the EU, but the impact will be less in the U.S., I believe, if only because I think the recession will be shorter here. My current thinking is that the U.S. economy will benefit from greater short term fiscal and monetary stimulus, compared with the EU, and more effective medium term structural adjustment.  That said, the recession is and will be very severe.

Early U.S. evidence suggests that wine sales have actually continued to rise during in the first year of the recession, when measured by case volume, although the dollar value of those sales has declined as consumers trade down.

Opportunities and Threats

Reading the latest articles on WineSur, a noteworthy Argentinian industry website,  it pretty clear that Argentina producers appreciate both the opportunities and threats inherent in the current situation.  The opportunities — to establish a market presence built around good value and the rising popularity of Malbec — are significant. But I think it must be hard for Argentinians to see silver linings without looking around for associated dark clouds — their country has suffered repeatedly from the global market booms and busts.

Some of the threats are strictly economic. Argentinian producers are currently benefiting from a falling peso value relative to the US dollar, for example, which helps their wine hit market-friendly price points in the US.  But the falling currency is in part a reflection of high domestic inflation rates, which ultimately lead to higher production costs. A lot will depend upon how the inflation (cost) and exchange rate (export price) factors balance out in the future.

Some of the threats relate more to the fickle nature of the wine market itself.  Malbec and Argentina are nearly synonymous today, but this could change as other wine regions adopt their signature varietal. A recent visit to the Walla Walla AVA, for example, found many producers experimenting (successfully, I think) with Malbec.  Argentina has the first mover advantage in Malbec and must capitalize on this because it will face more competition in the future.  This happened to New Zealand (Sauvignon Blanc) and Australia (Shiraz) and I do not think Argentina will be different.

In exploiting its Malbec lead Argentina will need to strike another difficult balance, between establishing a useful “house style” that will build market identity and letting this deteriorate into a stylistic “monoculture” that soon bores consumers.  It seems to me that Australian Shiraz is currently suffering from the “monoculture” curse, perhaps unfairly, while New Zealand still benefits from a popular “house style,” although I’m not sure how much longer it can ride the gooseberry wave, especially given the vast quantities of Sauvignon Blanc that need to be sold.

Argentina is at a crossroads at a critical moment and moving in the right direction.  Count me cautiously optimistic regarding the future of Argentinian wine.

Update: Just hours after I posted this piece about Argentina the following item appeared on the Decanter.com website.

Argentine wine harvest down 25%

May 1, 2009  / Jimmy Langman

Due to climatic conditions, this year’s wine harvest in Argentina will be down 25% as compared to last year.

According to Argentina’s National Wine Institute, hail in some provinces, and overall higher temperatures in February and March, are factors in the lower production output this year.

The lower production this year has occurred despite Argentina having a 12% increase in land under cultivation for wine grapes.

Guillermo Garcia, president of the National Wine Institute, said: ‘If there had not been an international crisis, we would not have been able to provide wine to countries with developed markets.’

Garcia added that Argentine wine companies need to begin keeping more than three months of stock on hand to make up for such production shortfalls.

Exequiel Barros of the Mendoza-based Caucasia Wine Thinking consultancy told decanter.com that many Argentine wineries are worried about their ability to supply medium-priced wines but added: ‘We need to see how the international outlook develops this year before we can dare to make any projections.’

In Chile, wine growing areas that are not irrigated, such as Cauquenes in the Maule Valley, are predicting a similarly low harvest, with an estimated drop in production from 30 to 40% because of higher temperatures and low rainfall.

Most wineries in Chile, however, are reporting a good harvest. ‘The lack of rain has been good for this year’s harvest. But wineries in the far south, such as in the Bio Bio, may experience changes to quality because of the higher temperatures,’ said Edmundo Bordeu, professor of oenology at Chile’s Catholic University.

Turning Water into Wine

The Bible tells us that Jesus turned water into wine (John 2:1-11) — a miracle!  Given the amount of water used in making wine today I think the miracle isn’t so much the conversion itself (no sacrilege intended) as the efficiency with which it was accomplished.  Jesus didn’t waste a drop.  Improving water use in winemaking is a serious issue today.

The End of Cheap Water

Readers of this blog know that water is important in wine production, but you may not appreciate just how much the wine industry depends upon cheap water supply.  I have written about the effects of the Australian drought on wine output there, for example, and how producers like Casella (Yellow Tail) are adjusting.  But water isn’t just an Australian wine problem, as everyone in the business knows, and the situation isn’t getting any better.

So the December 2008 issue of Wine Business Monthly is especially welcome.  WBM chooses a theme for the last issue of each year and this time it’s “The End of Cheap, Plentiful Water;” it is required reading for anyone interested in the economics of wine. Much of what follows is based on data from the WBM report.

Given all the attention that the Australian drought has received it would be easy to dismiss wine’s water woes as just another example of the challenge of global climate change.  And while this is undeniably true to some extent, I think it is more useful to think about the water problem in terms of supply and demand.

Winegrapes: Squeezed and Dried

The supply of water for wine production is limited by nature, of course, especially in the long run, but that’s the easy part (and the focus of the climate change discussion).  It is perhaps more realistic to consider that the supply of water for wine is limited by competing water needs. Water is valuable for environmental purposes, such as to maintain fish runs, for example.  Water is needed for residential and industrial uses, too.  And of course water is in very high demand for agricultural crops other than winegrapes.  About 80% of California’s annual non-environmental water “budget” goes to agriculture, including wine.  Residential and business use accounts for rest.  As population continues to grow, the squeeze will affect everyone.

Between competing uses and recent drought conditions, it is no wonder that the water supply for winegrape production is being squeezed.

All agriculture suffers when water becomes scarce and drought conditions force both a general reduction in farm output and also a shift away from the most water-intensive crops to those that use water more sparingly.  In Australia, for example, we have seen a decline in grape production in some areas due to drought and a shift from rice to grapes in other areas. 2001 data from the California Department of Water Resources estimates that grape growers in that state use an average of 2 acre-feet of water.  That’s about 25% more than used for grain crops, but much less than rice production (nearly 6 acre-feet of water) or corn and tomatoes (about 4 acre-feet).

Water use in winegrape production varies considerably.  Irrigation isn’t always necessary or even desirable, but high volume production is very water-dependent.  It takes 75 gallons of water in the vineyard to grow the grapes for one gallon of wine in the California North Coast area.  That seems pretty inefficient until you compare it with Central Valley production, where the ratio is 430 gallons in the vineyard to one gallon of wine! Water is also used in some areas for frost protection, which can adds to the total water bill.

Water use doesn’t end once the grapes have been harvested. On average it takes about six gallons of water in the cellar to make a gallon of wine. Barrel-washing and tank cleaning account for much of the water use, but everything in a wine cellar needs to be as clean as possible, and  water is often the most convenient tool.

The trick, as many wineries have discovered, is to conserve and recycle.  High pressure / low flow nozzles and barrel-cleaning rigs can do more with less.  Waste water can be collected and filtered for many uses from irrigation to flushing the toilets.  Erath Winery in Oregon employs a filtration process that allows it to reused 97 percent of winery processing water in one way or another. (Local ryegrass farmers use the rest as fertilizer.)  Snoqualmie Vineyards, like Erath part of the Ste. Michelle Wine Estates group, uses just 2.9 gallons of water in the cellar per gallon of wine, an indication of the sort of savings that are possible.

What’s Your Water Footprint?

article. It’s only a matter of time, I think, until we start worrying about our water footprint as well as our carbon footprint. You can learn more about the water footprint concept at WaterFootprint.com. Here are some estimates of water costs associated with various products as reported on their website.

Water Footprint Logo
  • One cup of tea: 30 litres of water
  • One slice of bread: 40 litres
  • One apple: 70 litres
  • One glass of beer: 75 litres
  • One glass of wine: 120 litres
  • One cup of coffee: 140 litres
  • One glass of milk: 200 litres
  • One liter of wine: 960 litres
  • One hamburger: 2400 litres

I have seen reports that a Big Mac’s water footprint is 5000 litres, a huge number but understandable when you consider that the production of beef and cheese are both very water-intensive (particularly when the cattle are raised on diets of irrigated grains instead of natural grasses).  I guess a kilo of beef requires  15,500 litres of water.  Amazing!

These figures are estimates of the total water use, including transportation and packaging, which is why the wine figures are so high.  I’m sure that it takes a lot of water to produce and clean wine bottles.  The labels (paper), closures and shipping boxes add to the water footprint.  It all adds up, for wine as for other products.

It Isn’t Easy Being Blue

The wine industry is in the vanguard of many important environmental movements.  Being green (and now blue, I suppose, to represent water) is good marketing for a lot of industries.

But it is good economics for the wine industry, too, because water is such a key resource that we need to manage well in the vineyard, in the cellar and throughout the production process.

[Thanks to Wine Business Monthly for the information in their December 2008 issue and to a former student, Jenna Silcott, for making me think about water resources once again.]

A Riesling Revival?

A hundred years ago the most treasured and expensive wines in the world were not the great reds from Burgundy and Bordeaux, they were wonderful Rieslings from Germany.  Since then Riesling has fallen on hard times in the market, although its status among wine critics and cult collectors has not wavered.  Now there is change in the air.  Have we entered a Riesling Renaissance?

Riesling Rendezvous

Woodinville, Washington was the center of the Riesling world for a few days in July when Chateau Ste Michelle and Dr. Loosen hosted a program called “Riesling Rendezvous” that brought together more than 200 producers, critics and industry representatives from around the world. (Chateau Ste Michelle let me attend to do research for my next book – thank you CSM for your support!).  This was the second Riesling Rendezvous conference and a third round is planned for 2010.

Chateau Ste Michelle is the largest Riesling producer in the United States – more than 700,000 cases of their Columbia Valley Riesling are released each year along with a number of other Riesling wines that range from a Dry Riesling all the way to a deliciously sticky Ice Wine.

Dr. Loosen is a famous Mosel producer that has a decade-long relationship with CSM – they jointly produce a Washington Riesling called Eroica and work together in other ways – so their Old World – New World partnership makes this event a natural.  Ernie Loosen (as everyone calls him) is a great ambassador for Riesling.  He reminds me of the glass artist Dale Chihuly – funny, flamboyant, affable and dead serious about his work.  We tasted a lot of wine at the event, including one that Ernie made in 1983 that still sings; quality Riesling is built to last.

The Curse of the Blue Nun

Riesling Rendezvous operated on at least two levels.  The top level was a celebration of Riesling in all its diverse forms.  The $50 ticket to the Grand Tasting on Sunday is one of the great values in the wine world, in my opinion, as dozens of producers poured their best wines on the Chateau grounds and the CSM chefs prepared finger foods to accompany them.  Each of the trade sessions I attended included tastings of great Rieslings brought from afar by the producers.  Honestly, no one could come away unimpressed with the state of Riesling wine today and the commitment that winemakers around the world have to this great varietal.

The state of the Riesling wine economy is another matter.  The Riesling market went all to hell in the 1970s when German producers pumped out lots of low quality wines to try to appeal to a mass market (a market defined here in the US, I suppose, by the big jugs of sweet California “Rhine” wine that filled the supermarket shelves).  They made the fatal mistake of devaluing their brand.  Riesling’s reputation suffered and it has been a long struggle to rebuild it.  Perhaps this is Riesling’s moment, now that everyone has grown tired by simple over-oaked Chardonnay and thin Pinot Grigio. Perhaps this is under-appreciated Riesling’s time to shine?  Certainly the sales numbers are trending up, although a relatively small segment of the market accounts for most of the sales.

But Riesling has an identity crisis and a lot of the discussions centered around this fact.  There is no one Riesling wine, as we learned through the tastings, because Riesling reflects it terroir so faithfully.  Wines from different vineyard areas (or subject to different cellar choices) taste very different.  This diversity is one of Riesling’s most appealing characteristics, but it makes it hard to sell to confused and uncertain buyers.

Consumers as a group tend to think of Rieslings in terms of a single characteristic: its sweetness. This is a shame because there is much more to wine than sweet versus dry, but it is Riesling’s particular burden, its  Blue Nun curse.

Rieslings are sweet, of course, but they also are dry.  I tasted wines that ranged from a few grams per liter of residual sugar (very dry) to perhaps fifty times that.  But the key to Riesling isn’t dry-sweet, as Pierre Trimbach said on the first day, it is balance – the balance of sugar and acid and the other critical elements of the wine.  The technical problem is to produce balanced wines of whatever degree of alcohol and residual sugar.  The economic problem is to communicate to consumers the characteristics of the wine so that they can buy it with confidence.  I would say that the Riesling Rendezvous showed that producers are closer to solving the technical problem than the economic one.

Riesling and Thai Food: How Many Stars?

Consumers want to know what’s inside the bottle and it is particularly hard to explain this with Riesling.  The nature of the wine isn’t as transparent to buyers as the glass bottle it comes in.  The German wine labeling rules classify wines by their sugar levels, which reveals something about the wine, but that isn’t as useful as you might think since two wines with similar residual sugar levels can have different tastes depending upon the acid balance, the type of sugar (some forms of sugar taste sweeter than others) and of course the myriad other factors associated with wine.  The German code gives some information, but it doesn’t solve the problem. In a way, in fact, it might define the problem because it defines Riesling by its sweetness.

New World labels aren’t much help either.  Only a few of them give technical data that would help a geek like me figure out what’s inside.  Some use vague descriptors (what does “off dry” mean and why is this one producer’s off dry so much sweeter than another’s?) but most just make you guess what style of wine you have before you.  Guess wrong three times in a row and I predict you will stop buying Riesling wine for a while.

A producer group, the International Riesling Foundation, is trying to address this problem by creating a clear and simple system that would tell consumers what to expect – something perhaps like the star system commonly used in Thai restaurants.  You know how it works: one star is mild, five stars is very very hot.  The star system makes people more comfortable ordering food at Asian restaurants, although there is obviously more to Thai food than just heat (and more to Riesling than residual sugar).  It’s worth a try, I suppose.  Even a trustworthy dry-to-sweet graphic index would probably help in the marketplace.  Sake producers (see below) are working on this problem, too, although I wouldn’t recommend their particular descriptors (a translation problem?).

This is how different styles of Sake are described on www.sake.com

This is how different styles of Sake are described on http://www.sake.com

I hope that Riesling producers can find a way to make the complex characteristics of their wines clearer and therefore more appealing to confused consumers.  Conferences like the Riesling Rendezvous are a useful way to get that conversation going. There is a natural tendency, however, for such gatherings to “preach to the choir” and focus on the well informed specialist market that already exists rather than the potential market of former Chardonnay drinkers looking for a more interesting wine, who could be drawn to Riesling if they understood it a bit better. I think this educational mission is the real challenge for Riesling Rendezvous III: thinking beyond today’s market to tomorrow’s.

I am hopeful that the International Riesling Foundation will make progress in this regard, but the collective action problem is significant here. It won’t be easy to get dozens of producers of differing size, style and market position to agree to standards and then implement them uniformly. It is more likely, I think, that a few of the big brands like CSM will lead the way and define the image of Riesling in consumer minds.  Others will follow or not and so the future of Riesling will unfold.