Down the Rabbit Hole: Wine Takes the Virtual Plunge

alice02aThe recent pivot to on-line and virtual programs, events, and communication presents challenges and opportunities. How well has the wine industry responded? What does the future hold? Join me on a trip down the virtual rabbit hole to find out.

Can’t Un-Ring a Bell

It has been fascinating to see how quickly we and our wine industry friends and colleagues have adapted to using technology to overcome necessary distancing and business and travel restrictions. There are costs, for sure, in terms of lost personal interactions, but gains, too. They say that you can’t un-ring a bell, and I don’t think we can (or should) completely un-do the recent pivot towards virtual communications.

So Sue and I have decided to embrace the opportunities of virtual wine for the time being and to appreciate the many creative ways that wineries are using online platforms to get their messages out and connect with customers. Herewith several examples from our personal explorations. There is still a steep learning curve, but as you will see below, lots of progress, too. Please use the comments section below to give more examples  of successful virtual programs and events from your personal experience.

 

People, Places, Things

Let me start with an example of a simple idea well done.  Promotional videos are not a new thing and, with the rapid advance of technology, they are easier to make and to distribute via the web. But they seem to be very difficult to do well. Videos are the perfect opportunity to tell first-person stories, but so many winery videos seem to forget what their story is once the camera light comes on and default to generic “four seasons in the vineyard” images.

So we celebrate when someone gets it right and tells the story of the people, the places, and the wines and how they are all connected, as the video above from Andrew Will Winery does.  Andrew Will is located on Vashon Island, just a short ferry ride from our home base, sourcing grapes from some of the best sites in the Columbia Valley, including the Two Blondes estate vineyard.  The wines are elegant, distinctive, delicious — we are big fans.

The video is very effective in introducing the people, Chris Camarda and his winemaker son Will, their views and values, the role of terroir, and the nature of the wines.  You will know if you would like the wines after seeing the video and why they are special. And the winery is using the video effectively just now to maintain connections with customers during the current crisis.

BDX In the Rocks

The virtual space can be as interactive as you want it to be (up to a point!) so many wineries are experimenting with virtual tastings. Our friends at Reynvaan Family Vineyards in Walla Walla show one effective approach.  Winemaker Matt Reynvaan went live on Instagram several Friday afternoons in April and May, talking about his work and tasting interesting pairs of Reynvann wines.

One thing that made these tastings especially appealing was that wine-list members were invited to taste along with Matt by purchasing the library wines at their original release prices, a terrific and unexpected opportunity.

We focused on the May 1 tasting of Cabernet Sauvignon and BDX blend wines from the Reynvaan’s In the Rocks vineyard. These are very special wines that surprise many people because Reynvaan and that region are best known for their outstanding Syrah. Sue and I tasted the Cab wines when we visited the Reynvaan family last year and they are really memorable. Honestly, I couldn’t wait to relive that tasting via the internet.

If you watch the video (even if you aren’t able to taste the wines) I think you will get a sense of Matt and his family and what drives and inspires them.  Toward the end of the tasting Matt opened up the conversation to questions from his on-line audience, adding a small but important interactive element.

The Reynvaan tastings achieved many goals. It got scarce wines into the hands of people who enjoy them and probably replaced to some extent lost sales to restaurants. Most of all, however, it created and nurtured personal relationships, which everyone believes are at the heart of the wine business, and allowed Matt and family to tell their story in the most natural way.

fhw2Virtual Release Party

Mike and Karen Wade, the proprietors of Fielding Hills Winery in Chelan, Washington, had planned to host a big release party this spring for their new line of white wines.  Mike, the founding winemaker of the family operation, is famous for his distinctive red wines, but as the winery grew and winemaker Tyler Armour joined the team, it was clear that white wines and maybe a Rosé needed to be added to the mix.

The Rosé and a Chenin Blanc from the estate Riverbend Vineyard on the Wahluke Slope came first and this year they are joined by a Chardonnay and Roussanne. It’s a big deal for the winery. But the coronavirus crisis made an in-person celebration impossible. With daughter Megan’s help they organized a Zoom-fest instead and brought together friends of Fielding Hills from across the country to taste the wines and learn about them from Mike, Karen, and Tyler.

fhw3Because of the Zoom platform’s flexibility there was the opportunity for more interaction with the audience. Tyler also gave a mini-tour of the wine-making facility and Mike used Google maps to take us to the vineyards, which Sue especially appreciated.  I think everyone enjoyed the delicious wines and appreciated the opportunity to taste them together and learn about them.

Will virtual release parties like this replace in-person events after the crisis is over.  I hope not! But I hope the virtual is retained because it can reach a different and broader audience in a different way, expanding the local to the regional, national, or even global.

The Virtual Tasting Room

boedeckerBy far the most personal virtual experience that Sue and I have had happened last Tuesday, when we Zoomed to Portland to talk wine with Stewart Boedecker and a couple of other wine friends. Stewart and Athena Pappas run Boedecker Cellars, an urban winery that sources grapes from some of Oregon’s best sites. They have been trying many initiatives to connect with customers and supply them with wine while the tasting room was shut down.

One of the clever offers was a trio of “Happiness on a Tuesday” wine packages — six-packs and cases of wine put together from small quantities of interesting products Stewart rescued from the warehouse. Sue picked out an all-Pinot six-pack for us (plus another 6 bottles of her favorite Pinot Blanc) and we will be working our way through them in June and July. Our affordable six-pack included a 2014 Pinot Noir from the famous Stoller Vineyard, so there is no chance of coming away disappointed.

We like the idea of Tuesday night wines and so we couldn’t resist Stewart’s invitation to attend a Tuesday evening virtual tasting. The group was small enough that Stewart just opened up the microphones and we all chatted and learned about the wines just as if we were sitting at the tasting room bar with the winemaker. It was great and reminded us of how much we have missed such previously normal moments during the pandemic crisis.

Virtual Trade Events

It is easy to think about virtual wine events just in terms of consumers and direct sales opportunities, but the coronavirus pandemic has done much more than just shutter cellar doors. Wine fairs and trade events around the world have been canceled or postponed, depriving many producers of the opportunity to present their wares to potential importers, distributors, restaurants, and retailers.

It isn’t the same, but virtual pitches can at least partially replace the wine fair booth and give wineries an opportunity to get their messages out. That’s what I found at the On-Wine Fair, where 45 Italian wineries were each given twenty minutes to tell stories to a virtual U.S. trade audience.

I attended the webinar of Tenuta Montemagno, a producer in Monferrato (Piemonte) that specializes in wines made from local indigenous grape varieties.  The brief and well organized presentation was very effective.  Place, personality, emotion. These characteristics came through clearly. This won’t replace the traditional wine fair — the opportunity to taste and talk in person is very important — but it goes a way toward filling the gap in the current crisis and expanding opportunities in the future.

vinarium

Vinarium Becomes TeleVinarium

The virtual world really is a rabbit hole. One you dive down there’s no telling where you might end up. The only limit (besides bandwidth, I guess) is imagination.  So when the Romanian organizers of Vinarium, the International Wine Competition Bucharest realized that it might be possible to shift on-line for their annual wine competition, they took the fateful first step. First time anyone has tried  to organize a virtual wine competition, but changing conditions provoke innovation.

A typical wine competition is a coronavirus nightmare. Five jurors sit close together around a table, spitting and dumping repeatedly while sommeliers fill glasses from masked bottles in a specified secret order.  There’s a certain close-quarters logistical choreography here that, when done well, would make Balanchine smile but earn a frown from Dr. Fauci today.

Virtual Vinarium aimed to get the results, but without the risk, and on-line platforms meant that jury members could be safely isolated.

The 36 international judges from 12 countries (including 4 Masters of Wine) were divided into juries of 5 or 6 persons. Getting them zoomed-up and their OIV judging software connected was probably the easy part (although I am glad I didn’t have to figure it out). Bringing the physical world along for the journey came next. That meant taking each of the 853  entered wines and decanting them into small coded sample bottles that could be shipped away to wherever the judges were. Then, of course, they needed to be tasted in the correct order and all the usual protocols followed.

I have only judged a couple of wine competitions and I’ve always been impressed with the complexity of the logistics involved. TeleVinarium went to the next level. Outrageously ambitious!

These are just a few of the hundreds of virtual events and projects. They begin as supplements to real world activities, sometimes replace them, and have the potential to transform them. Where will it all lead? Only one possible answer. Ask Alice!

Ten Years Later … The Wine Economist Celebrates its 10th Anniversary

Next week — on Memorial Day, in fact — the Wine Economist will celebrate its 10th anniversary. Ten years of regular columns about the world of wine as seen from an economist’s perspective.

The very first column, which is reproduced below, was an account of my visit to family-owned Fielding Hills winery, one of Washington’s best, to help bottle the 2005 vintage. The bottling line was a volunteer operation back then, fueled by enthusiasm and steady sips of the wine, which I compared to Adam Smith’s famous “pin factory” example of the benefits of division of labor.

A lot has changed since 2007. Fielding Hills’ reputation has grown, its lineup of wines expanded, and the cramped garage-style winery replaced with an efficient production facility and beautiful tasting room over-looking scenic Lake Chelan.

A lot has changed at the Wine Economist, too. I could never have guessed that this first column would slowly and with much effort turn into something more, spinning off four wine books, several awards (wine book of the year, best wine blog, best wine writing) and a series of lectures that has taken us around the world. Amazing!

Tenth anniversary? That calls for a celebration. I think we’ll open a bottle of Fielding Hills wine! Cheers to the Wade family and Fielding Hills for getting this column off to a good start.

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Wine Economist Column #1:

Bottling the 2005 at Fielding Hills (May 29, 2007)

I spent the weekend after commencement in Wenatchee, Washington helping Mike and Karen Wade and their friends bottle the 2005 vintage of Fielding Hills. I got to drink some great wine, meet some wonderful people and learn more about the wine business. Here are some photos (courtesy of Dave Seago) and some observations.

The Wades are orchardists and fruit distributors in Wenatchee, which is the heart of Washington Apple country. They got the wine bug a few years ago and now run an 800 case operation from a building near their home, overlooking the Columbia River. The grapes come from vines they own near Matawa on the Wahluke Slope, further down the Columbia. They make reds — Cabernet Sauvignon, Merlot, Syrah, Cabernet Franc and a blend called RiverBend red. These wines are not easy to find (remember: only 800 cases total) but they have received rave notices in the wine press: Wine Enthusiast rated them all between 91/100 and 95/100 points in its December 2006 assessment of the 2004 vintage. They are all good, the magazines and web sites say, the only question is which one is best.

I know the Wades through their daughter Robin who is one of my students at the University of Puget Sound. She knows about my interest in the wine business, so when they needed volunteer labor for the annual bottling weekend, she knew who to call.

I have taken dozens of tours of large wine-making operations, so it was interesting to see the process first-hand and on a very human scale. I hope the photos capture something of the process. We bottled the Cab, a blend featuring 76% Cabernet Sauvignon, on Friday afternoon. The first step was get the appropriate barrels of wine out of storage and to carefully pump the right proportions of the right wines into a large stainless blending tank. From there, the wine moved to the assembly line, where I worked alongside about a dozen of the Wades’ friends and neighbors.

The bottling process reminded me of Adam Smith’s famous pin factory example of the division of labor. One person (1) brought in pallets that contained cases of empty wine bottles. A second person (2) removed the bottles from the cases onto a table so that another worker (3) could invert them over a nitrogen supply, which removed any oxygen. The bottles were then (4) filled with wine on a six-bottle machine (see photo), then corked (5). A foil closure was then placed over the cork top (6) and secured firmly using a surprisingly nasty electric device (that was my job — #7). Then the bottles were wiped down (workers 8 and 9) before going through a label operation (10), being loaded back into boxes (11) that were sealed and stacked (12) and then moved out on the pallets they came in on. It took us about six hours to bottle 200 cases of Cabernet Sauvignon on Friday afternoon. We did 150 cases of the RiverBend Blend in four hours on Saturday morning. My reward? Wonderful family-style meals with my co-workers and one bottle of each of the wines I worked on, autographed by my fellow volunteers.

One thing that you can’t see in the photos is the fuel that kept the volunteers going: it was the wine we were bottling, drawn straight from the barrel. Good juice, in my opinion. Can’t wait to taste it when it’s had a bit of time in the bottle. (Expected release date: October 2007.)

One thing I learned from this is that although 800 cases of wine is a tiny operation by the scale of today’s wine business today, it is still a very significant investment of time and energy. I thought we would never come to the end up those 200 cases (2400 individual bottles) of Cabernet on Friday afternoon!

Because they have been so successful, both in terms of wine quality and wine economics, the Wades are planning to take the next step — to expand production from 800 cases to 2400 cases. This is a big step, since the business model changes with the higher volumes. Family labor plus volunteer help at key points works fine for wineries producing 1000 cases or less, but a bigger operation means hired help and higher fixed costs. The marketing end changes, too. The Wades prefer to sell most of their wine direct to customers rather than to discount it in order to get it into wine shops and restaurants. Given their stellar ratings, they have a good opportunity to build a “wine club” list that will automatically take most of their output, matching demand and supply very efficiently. Building a bigger winery will mean matching a bigger demand to their bigger supply.

Mike Wade told me what it takes to make good wine — it’s in the fruit, he said. The economics of wine is in the market — matching demand and supply. I would say that the Wades understand both the fruit side of their operation and the market side, too.

Wine Economics: Coming Full Circle

My new book, Wine Wars, will be officially released next month; it tells the story of the battle for the future of wine (the Curse of the Blue Nun, the Miracle of Two Buck Chuck and the Revenge of the Terroirists) starting  in Napa Valley, where my interest in wine economics began, and ending  back in the same place 30 years later. Here’s a brief excerpt from the book.

Back on the Silverado Trail

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 to 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 financial issues.

Besides the initial investment in vineyards, winery facility, equipment, and so forth, there is also the fact that 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 things will be like when the first bottle is sold. As Bill Hatcher (of Oregon’s A to Z Wineworks) likes to say, from an economic standpoint the only person who is crazier than a winemaker is his or her banker.

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. Fully a third of the ferociously difficult Master of Wine exam (the MW designation that appears after the names of many famous wine experts) deals with business and economic issues.

Coming full circle — returning to the Stags Leap District and to that same cellar 30 years later —  gave me a strong appreciation for how wine has changed in the past and will likely continue to evolve in the future. I hope I have captured that understanding in Wine Wars.

Adam Smith’s Winery

I came full circle in another sense last weekend, when Sue and I crossed the Cascades to work on the bottling line at the Fielding Hills Winery in East Wenatchee. Mike and Karen Wade use the great fruit from their Riverbend Vineyard in the Wahluke Slope AVA to make wine at their small production facility perched high on a hill overlooking the Columbia River.

The very first Wine Economist blog post was an account of my initial visit to the Wade’s winery and the fun Dave Seago and I had helping out on the bottle line that year. I was struck by the productivity of the bottle crew (particularly since some of us were “quality testing” the wine as we worked) and I compared it to Adam Smith’s famous pin factory example of the benefits of the division of labor. (It is a little known fact that Adam Smith is both the Father of Economics and also the Father of Wine Economics.)

Arriving at the winery on Friday, I was very pleased to discover that the Wades were celebrating their tenth year of handcrafted production with a T-shirt that actually listed the twelve bottle line work stations.  The twelve tasks are:

  1. Bottleunboxer
  2. Sparger
  3. Fillerdeupper
  4. Corker
  5. Wiperista
  6. Foilplacer
  7. Foilmeister
  8. Wiper
  9. Labelista
  10. Boxfillerupper
  11. Tape Gunslinger
  12. Palletizerist

Adam Smith could not have organized the assembly line any better (or come up with more creative titles).

Mike and Karen’s daughter Robin was one of my university students and they have been very generous with their time, teaching me how the wine business works in practice to supplement my theoretical background. So I was pleased to join the volunteer bottling crew again this year, 243 blog posts after that first visit.  The Smithian division of labor allowed us to bottle 291 cases (that’s 3492 individual bottles) of Cabernet Franc between 9 a.m. and 4 p.m., when we finally ran out of wine to bottle.

The Wine Economist has come along way from that first post and the Wades and Fielding Hills have come a long way, too, from their first tiny vintage ten years ago. Although production levels are still relatively small (about 1200 cases this year, up from 800 when I first visited), their reputation is large and growing.

When Paul Gregutt surveyed Washington’s 600+ wineries for the second edition of his authoritative book Washington Wines & Wineries he awarded five stars to just twenty wineries. Fielding Hills made the five star list, as it did in Gregutt’s first edition, joining much larger producers like Chateau Ste. Michelle and famous wineries like Betz Family, Leonetti, Woodward Canyon and Quilceda Creek. Nice company to be in.

Coming full circle. It’s what winegrowers do — the conclusion of each vintage is also the start of the next. I guess it’s what wine economists do, too.  It is a good feeling to circle back and start out again!

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Photos by expert Foilplacer and master Boxfillerupper Sue Veseth.

The Wine Economist 200

This is The Wine Economist’s 200th post since it began a little more than three years ago under the name “Grape Expectations” —  a good opportunity to reflect briefly on readership trends, just as I did when we passed milepost 100.

Not that kind of list!

Milepost 200

The Wine Economist has an unusually broad readership given its focus (wine economics), content (no wine reviews, no ratings) and style (most posts are way longer than is typical for weblogs).

I never expected to get millions of visitors like Dr. Vino or Gary V. and other popular wine critic sites, so I’m surprised by how many people have found this page and come back to read and re-read.

About 200,000 visitors have clicked on these links, sometimes with surprising intensity. The Wine Economist has been ranked as high as #6 in the big “Food”  category where wine blogs are filed in Technorati‘s daily ratings and as high as the top 30 in the even broader “Living” group.

Reader Favorites

The most-read articles of the last few days are always listed in the right-hand column on this page, so it is easy to see track reader behavior. I thought you might be interested in readership trends since the blog began. Here are the top ten Wine Economist articles of all time.

  1. Costco and Global Wine — about America’s #1 wine retailer, Costco.
  2. Wine’s Future: It’s in the Bag (in the Bag in the Box) — why “box wine” should be taken seriously.
  3. The World’s Best Wine Magazine? Is it Decanter?
  4. [Yellow Tail] Tales or how business professors explain Yellow Tail’s success.
  5. Olive Garden and the Future of American Wine or how Olive Garden came to be #1 in American restaurant wine sales.
  6. Australia at the Tipping Point — one of many posts about the continuing crisis in Oz.
  7. No Wine Before Its Time explains the difference between fine wine and a flat-pack  antique finish Ikea Aspelund bedside table.
  8. How will the Economic Crisis affect Wine — one of many posts on wine and the recession. Can you believe that some people said that wine sales would rise?
  9. Wine Distribution Bottleneck — damned three tier system!
  10. Curse of the Blue Nun or the rise and fall and rise again of German wine.

As you can see, it is a pretty eclectic mix of topics reflecting, I think, both the quite diverse interests of wine enthusiasts and wine’s inherently complex nature.

My Back Pages

What are my favorite posts? Unsurprisingly, they are columns that connected most directly to people. Wine is a relationship business; building and honoring relationships is what it is all about.

KW’s report on the wine scene in Kabul, Afghanistan has to be near the top of my personal list, for example. I am looking forward to following this friend’s exploits in and out of wine for many years to come. (Afghan authorities found KW’s report so threatening that they blocked access to The Wine Economist in that country!)

Matt Ferchen and Steve Burkhalter (both former students of mine now based in China) reported on Portugal’s efforts to break into the wine market there. The commentaries by Matt, Steve and KW received a lot of attention inside the wine trade, but their thoughtful, fresh approaches also drew links, re-posts and readers from the far corners of the web world.

Looking back, I think my favorite post was probably the very first one, a report on my experiences working with the all-volunteer  bottling crew at Fielding Hills winery. I learned a lot that day about the real world of wine and I continue to benefit from my association with Mike and Karen Wade (and their daughter, Robin, another former student) who have taught me a lot about wine, wine making and wine markets.

Look for another report like this when The Wine Economist turns 300. Cheers!

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Thanks to everyone who’s helped me in various ways with these first 200 posts. I couldn’t have done it without you! (Special thanks to Sue, my #1 research assistant!)

Getting Serious About Washington Wine

“Wine is not a serious subject. Its point is to give pleasure.” This is what Jancis Robinson says in the opening segment of her BBC series on wine.

It is pretty obvious that Paul Gregutt (author of Washington Wines & Wineries: The Essential Guide 2/e; University of California Press, 2010) didn’t get the message because he seems to take wine pretty seriously and manages to do so without sacrificing pleasure. The new edition of his book is a serious analysis of Washington wine that is seriously interesting.

Wine for Nerds?

Is there an audience for serious wine writing? Certainly Jancis Robinson must think so, despite her disclaimer, since her books and articles are so comprehensive. Gregutt knows this audience, too. When he begins chapter 4 by saying “If you are the type of person who delights in reading through every scrap of information on the back labels of wine bottles …” he must be aware that this description will apply to nearly every one of his readers, of which there are sufficient numbers to justify a second edition of this book just three years after the appearance of the first.

Gregutt’s book is unusual in that it is neither a coffee table photo album nor a wine tourism guidebook (the two most popular formats for northwest regional wine books). Rather it is a comprehensive resource for anyone interested in the continuing development of the Washington wine industry. Gregutt takes us through the history of Washington wine followed by a detailed analysis of the terroir (Washington’s AVAs), the grape varietals (with recommended producers for each wine type) and the most important vineyards (what a great idea). Then and only then does he begin a survey of wineries. The message is clear: wine is made in the vineyard before it is made in the cellar and there is a lot to know if you want to understand it.

The focus is clearly on AVAs, vineyards and wineries — the constants of Washington wine —  not individual wines that can change from vintage to vintage, although an appendix contains Gregutt’s “Top 100 Washington wine” lists for the last few years for those who want to know more specifically what to look for on shop shelves.

What’s New?

What’s new in the second edition (and is it enough to justify replacing your copy of the first edition)? Well, there is a great deal of new material reflecting the fact that the Washington wine industry has experienced so much recent growth.  There are new AVAs, of course (Snipes Mountain and Lake Chelan) and many new wineries (now up to 650+ for the state). Gregutt has doubled the number of vineyards (a top twenty list) and wineries (about 300 in this edition), making this volume far more comprehensive in this regard than the first edition.

I’d say the additional and updated material easily justifies a new edition. And, with the way things are changing, I suppose a third edition will be needed in a few years.

One aspect of the book that is sure to be controversial is the way Gregutt has organized his analysis of the most important wineries in the state. If this were a wine tourism book, I suppose he would have organized them by regions or wine roads and provided tasting room hours and so forth. But he didn’t and that’s a good thing, since the internet is the best place to find that sort of often-updated information.

Instead, Gregutt organized the wineries into four categories, starting with “five star” superstars that both produce great wines but also provide important leadership, moving down through four stars, three stars and then a “rising stars” category.  Where you put a winery in this taxonomy is necessarily problematic, since each of us might use different criteria or weigh the same factors differently. Hence the potential for debate.

Some ratings are surely uncontroversial (Leonetti and Quilceda Creek are superstars, of course), but others are likely to generate discussion. Gregutt is interested in the wines, of course, but also the wineries’ impacts on the Washington wine industry, so the huge Chateau Ste. Michelle appears in the five star list alongside tiny Fielding Hills — each very important to the Washington industry, but in very different ways.

Hedges Family Estates and Corliss Estates (two wineries owned by University of Puget Sound graduates) receive four stars, but I think you could make a case for “promotion” to the top group. For Hedges it would be based upon its leadership in development of the Red Mountain AVA and promotion of Washington wine abroad. For Corliss, it is the single-minded commitment to the highest vision of excellence — an attempt to redefine what Washington wine can be. Four stars or five? Such questions are pleasurable recreation for wine nerds like me.

More for Wine Nerds?

The success of Gregutt’s book has me wondering what other products wine nerds might be willing to buy. Hopefully, of course, they’ll want copies of my book when it comes out in 2011, but maybe there’s an even broader market for wine nerd products.

De Long’s periodic table of wine grape varietals (see below) is a great wine nerd item. I can spend hours looking at it and thinking about the different relationships it proposes. Excellent! De Long’s regional wine maps are great, too.

And then there are wine games, like Winerd the Game shown above. Winerd has a colorful playing board (decorated with faux wine labels), 276 quiz cards and includes a blind tasting test component. Pretty nerdy and probably pretty fun, too, since it has a strong educational component and people always seem to enjoy learning about wine.

I actually have a sealed Winerd game box on my game shelf. Nerdy, yes — and I’m sure it will be fun to play when I eventually get around to it. But apparently I’d rather be drinking wine (and reading nerdy books like Paul Gregutt’s).

Restaurant Wine: A Double-Sided Puzzle

If there is one thing that wine enthusiasts have in common (maybe the only thing?) it is their frustration with wine in restaurants. I was reminded of this fact as I read through the weekend newspaper wine columns. Lettie Teague’s Wall Street Journal piece is an extended rant (or maybe she’s venting and not ranting) about wine-by-the glass in restaurants.

The Confidence Game

Teague can’t decide which is worse in restaurant wine-by-the glass programs — the price or the quality. The rule of thumb is that restaurants charge as much per glass of wine as they actually paid for the whole bottle (and sometimes even more). This makes her feel ripped off. At the same time, the wine has been sitting around open for who knows how long, losing some or all of its freshness.  Fancy wine storage systems can help with this, but still it’s difficult to order a glass of wine (sometimes for $25 or more) with much confidence.

Over at the Financial Times Nicholas Lander approaches the issue from the business side and  looks for a solution in cooperative arrangements between wine collectors (who are willing to sell off some of their stash at market prices) and restaurants who offer these wines to their customers at reduced mark-ups.  The collectors get a fair price on their investment, the restaurants get a middle man return without big up-front costs and customers get access to special wines at lower prices. A great idea, but perhaps hard to scale-up.

Restaurant wine is like a double-sided jigsaw puzzle. The same pieces have to fit together to form two different appealing pictures — one for the customers and another for the business. If any of the pieces are upside down or missing, the whole experience is ruined.

Putting the Pieces Together

Not that it is impossible to put it all together. One of my most completely satisfying wine experiences of recent years was a dinner at The Black Rabbit Restaurant at Edgefield, a funky old  hotel in Troutdale, just outside of Portland, Oregon. A bottle of  the stellar 2006 Fielding Hills Cabernet Sauvignon sold for the same price that the winery was charging at that time — what a deal! It wasn’t the only good value on the menu, either. (The current wine list on the Black Rabbit website lists a 2007 Ken Wright Cellars McCrone Vineyard Pinot Noir for $60. I saw the same wine on another wine list for about $200. Where are my car keys?)

How can they do it? Well, Edgefield is an unusual operation.  It is an affordable destination hotel housed in a former Depression-era poor farm (really!) with its own movie theater, winery, brewery and distillery.  The owners can afford to sell their own wine at good prices and the rest of the list falls into place around those wines. Edgefield is part of a regional chain of restaurants and hotels, so some scale economies may exist, too.

Constantly Disappointed?

Edgefield shows that it is possible to put the pieces together to everyone’s satisfaction. But is it the model for restaurant wine programs generally?  Obviously not. Like Lander’s proposal it is too much of a special case, but it shows that there is hope for constantly disappointed wine enthusiasts. Unlike a real jigsaw puzzle, which has just one solution, I think there are probably many different ways to put the pieces together to improve the restaurant wine experience.

Flemming’s Steak House offers 100 wines by the glass at its restaurants, for example. Although Lettie Teague is appalled by this for the price and quality reasons noted above, the broad choice may please many customers.  After all, we are accustomed to choosing from a huge wine selection at competitive prices at supermarkets and wine shops. Even a very large restaurant wine list (say, 300 choices) is tiny compared with your local upscale supermarket, which may have 2000 or more wines on the shelves.

The fact that the restaurant charges a semi-monopoly price (hard to get a competitive bid once you’ve been seated) makes the situation more frustrating.

One solution is to loosen the monopoly hold on price, which some restaurants are doing right now by reducing or eliminating corkage fees. Bring your own wine (purchased at normal retail prices) and enjoy dinner and a wine experience. Since wine is typically the highest priced item on a restaurant bill (more expensive than the entree, for example), reducing the wine cost removes a disincentive to dine out.

I don’t think many customers take up the “no corkage fee”  offer, but some do and if treated well they are likely to return to dine again. If there are conditions on free corkage (the wine cannot be on our list, for example, or free corkage on one bottle if you purchase a bottle from us) they need to be clearly stated to avoid misunderstanding and hard feelings.

Wine-by-the Keg?

The continuing recession is putting more strain on restaurant wine programs, which is unfortunate for everyone involved. But perhaps it will also spur the search for creative solutions to the double-sided puzzle problem.

One interesting approach to the wine-by-the-glass problem, for example, is keg wine — wine packaged in reusable steel containers. Cheaper per unit than bottled wine (assuming that the keg can be returned and refilled efficiently) with a reasonably long quality shelf life if properly tapped, keg wine may be the rosy  future of restaurant wine-by-the-glass.

Someone should tell Lettie Teague the good news.

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Thanks to Michael and Nancy Morrell for their assistance with this report.

The Bottleneck Bottleneck

Bottlenecks are always problematic.  It seems like they are always too narrow or not narrow enough.

We ran into an unusual bottleneck last week when were went to Wenatchee to help our friends Mike and Karen Wade bottle the 2008 vintage at the Fielding Hills Winery.  FHW is award winning 800-case operation and the bottling is done by a volunteer crew of friends, family and wine club members. I wrote about it in one of my first blog posts, comparing the wine bottle assembly line to Adam Smith’s famous pin factory.

Bottleneck Bottleneck

The division of labor does improve efficiency,  just as Smith said, but anyone who’s worked an assembly line knows about bottlenecks – the whole process only moves as fast as the slowest work station.  If the corker is slow, for example, nothing else will go very fast. (The corker was no slacker on our shift – John Sosnowy of the Wine Peeps blog.)

Our crew worked very well, but there was still a bottleneck, albeit an invisible one. The capsules that fit over the bottle’s neck hadn’t arrive (a bottleneck bottleneck!) – they were held up somewhere in customs in a container that must contain hundreds  of thousands of capsules for many wineries. We bottled the wine, but when the capsules finally arrive it will be necessary to open each of the 800 cases, pull out every bottle, affix the capsule, return and reseal. That’s about 10,000 bottles. What a headache! I hate bottlenecks.

The biggest bottleneck in the American wine business, of course, is distribution. With 51 different sets of state rules and regulations and the three-tier winery/distributor/retailer/consumer system, it sometimes seems like making wine is the easy part – getting it to customers is the bigger problem. Widening the distribution bottleneck seems to me to be a key to expanding the wine market and building a more robust American wine culture.

Tightening the Distribution Bottleneck

The Obama administration seems to want to build up the U.S. wine industry – that’s why he sent Commerce Secretary Gary Locke to Hong Kong to sign an agreement to ease the wine export process and open that bottleneck a bit.

But Congress is moving in the opposite direction. Wine Spectator reports that more than 100 members of Congress have announced support for H.R. 5034, a bill that would further restrict direct wine sales in American. It would make it (even) harder to ship wine across state lines. Wine Spectator reports that wine distributors (who benefit from their key position in the three tier bottleneck) actively support the bill.

The supporters of H.R. 5034 argue that direct shipping undercuts the power of states to regulate alcohol distribution and sales, and I understand this logic. But the winery owners I know actually go to extremes to satisfy state regulations because the penalties for making a mistake are often extremely onerous. (I know one winery that has stopped all interstate sales for now because of compliance concerns.)

Focus on Direct Sales

The slack economy has put direct sales in the spotlight. With wine sales down in many categories and price points still eroding, wineries are trying to boost the yield per bottle and increasing direct sales and reducing the flow that goes through distributors is one way to do that. Isenhower Cellars in  Walla Walla  has actually reorganized itself (and opened an off-site tasting room) so that it can rely entirely on direct sales. Their website announced that

Isenhower Cellars is no longer selling wine to restaurants, wine shops, or grocery outlets in Washington State. Our wines are now exclusively available from the winery in Walla Walla, Washington, our tasting room in Woodinville, Washington, or here on our web site. We treasure the past relationships with our Washington State distributors and friends in the wine trade. However a complete focus on quality limits production to 2,000 cases of wine and the success of our wine club and second tasting room leaves no extra Isenhower wines available for sale outside of our winery’s embrace.

Even E&J Gallo, which has done quite well thank you during the recession, is trying to increase direct sales. I’m on a couple of email lists for Gallo wine brands that I follow and they frequently offer nice discounts or low cost shipping to try to encourage orders from their online wine shop, The Barrel Room.

It seems inconsistent to send Gary Locke to China to expand wine exports and then discourage the equivalent interstate trade. As an economist, I am naturally biased toward more choice and freer trade. I hope the attempt to tighten the wine shipping bottleneck gets caught in some legislative bottleneck somewhere down the line and never reaches President Obama’s desk.

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Thanks to Karen, Mike and Robin Wade for their hospitality and great wine. Thanks to the members of the 2008 FHW Cabernet Franc bottling crew both a fun and productive afternoon.

Where Does Wine Come From?

Where does milk come from? Most people will tell you that milk comes from a cow, but it is easy to imagine that a child might be confused and tell you that milk comes from the supermarket or from the milk company because these are the most obvious choices for someone who has never visited a farm.

The links between products and their natural origins are easy to miss or misinterpret in today’s complicated world, with its long and sometimes global supply chains. Christopher Chase-Dunn used to ask his students “where did your breakfast come from?” and the question when taken seriously sometimes really stumped them.

How Wine is Different from Milk

I like to think that wine is different from milk because we have a lot more information about its origins.  We know that it comes from grapes, of course, but there is often a lot of specific information available (on the label and on the web) about the origins and production processes. Most wine labels tell us the vintage year, for example, and the production region. Data on harvest dates, brix levels, vineyards sourced, fermentation and aging techniques and so forth are frequently available, too.

We typically know or can conveniently discover a whole lot more about where wine comes from (and when and how it was made) than we typically know about milk. It gives wine a certain “somewhereness” that I have written about before. So it’s easy to get sorta cocky about wine and to think that wine enthusiasts actually drink in all this information and are very well informed about wine terroir. But it would be a mistake to think that everyone is a geeky as I am in this regard.

Taste the Vineyard

If you ask winemakers where wine comes from many will tell you that it is made in the vineyard (vineyards are to wine as cows are to milk, I guess). But consumers don’t always think of it that way, as I learned on Sunday when Sue and I poured wines by several makers using grapes from the Riverbend Vineyard in the Wahluke Slope AVA during the Taste Washington event in Seattle.

Most of the action at Taste Washington was out on the main floor, where about 200 wineries offered tastes of their wines.  Our table was in a area designated for vineyards, not wineries. You could visit the Boushey Vineyard table, for example, and taste its terroir as expressed by several different wineries that source their fruit from this famous grower. It was a different way of thinking about wine: vineyards, not varietals or winemakers or AVAs.

It’s an idea of wine much closer to the concept of terroir that wine geeks talk about with such urgency.

Riverbend is the estate vineyard of the highly regarded Fielding Hills Winery, so the people who stopped by to chat and taste with us were able to sample the Fielding Hills 2006 Cabernet Sauvignon and Syrah as well as and a half dozen other wines made from Riverbend grapes by others (including wines by Nefarious Cellars, Soos Creek, Tildio Winery, Hard Row to Hoe, and Chateau Faire Le Pont).

The wines, all excellent, were sometimes very different (the influence of the winemakers) but there were some interesting common threads (the terroir) that could be teased out with a little time and concentration (difficult, I know, in the context of a big tasting event). It was an unusual and interesting opportunity to taste wines in this way and decide for yourself where wine comes from — the vineyard, the cellar or maybe both.

Where Does Wine Come From?

We had a great time and met a lot of great people, but we soon came to realize that the idea of tasting wines from the same place but made by different people was quite foreign to most of the attendees. They knew about the idea of terroir, but that’s not the way they identified wine in practice.

Where does wine come from? From wineries — those tables out on the main floor of Taste Washington — and the winemakers who work in them. The idea of the vineyard’s critical role was something we had to explain. To their credit, a lot of people embraced it and took their time tasting through the wines. I hope they found the time they spent worthwhile (they paid a high opportunity cost for their education in terroir given limited time  in a room full of great wines).

I’m always on the lookout for teachable moments and so I liked the challenge of staffing the Riverbend Vineyard table. It turns out that wine is more like milk than I thought — it’s easy to think that it comes from the store or the winery and to forget its natural origins. But you can find terroir if you know where to look and you take the time and trouble to seek it out.

Events like Taste Washington create teachable moments and proponents of terroir-based wines have lots of educating work to do to make the difference between milk and wine even clearer in consumer minds.

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Update 3/31/2010: By coincidence Jancis Robinson has posted an article on her Purple Pages website about the incredible terroir of Washington’s best vineyards. She attended a London tasting of Washington wines and was drawn to the the Cabs made from Champoux Vineyard fruit. Here’s a quick taste of the article.

The highlight of the Pacific North West tasting in London earlier this year was a clutch of very fine Cabernet Sauvignons from Champoux vineyard in Washington state. They reinforced my impression from the rest of the tasting that Cabernet can be a real star among the state’s reds, particularly when the vines are more mature, the site just right and the vineyard manager a perfectionist.

You can find the entire article (including tasting notes) here. It reinforces what I wrote above about the benefits of thinking of wine as a vineyard product.

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Thanks to Mike and Karen Wade of Fielding Hills for inviting us to work the Riverbend Vineyard table. Thanks as well to Robin Wade for all her help. Thanks to all the nice people we met. Great wine, great people, great event.

Strong Wine

Wine’s strength is usually measured in percent of alcohol — and everyone complains that it is too strong, too hot. A recent charity event reminds me that there are other ways of measuring the power of wine and that perhaps it can never be strong enough.

Tacoma Wine Classic

Mike and Karen Wade of Fielding Hills Winery asked us to pour their wines at the Tacoma Wine Classic, a charity dinner/auction organized by the Tacoma Community College Foundation to benefit TCC’s scholarship fund and education programs. It’s their major fund-raising event and they were hoping to generate about a third of the $500,000 annual target on this one night. More than 200 people paid $150 each to attend. Wineries and others donated thousands of dollars of goods and services (including a “mountain of magnums”) to the auction. Scores of volunteers contributed their time to pull it all together.

We poured the Fielding Hills wines during the reception alongside representatives from Fort Walla Walla Cellars, Kestrel Vintners, McGavick Winery, Milbrandt Vineyards, McCrea Cellars, Northstar, Page Cellars, Spring Valley Vineyards, Woodward Canyon Winery, Maryhill Vineyards and Saviah Cellars (what a great group of wineries). Everyone had a good time tasting and noshing and bidding on silent auction items (wines and wine-related packages). Then the dinner bell rang — more wine, good food, and the oral auction, which included a five-year vertical of Leonetti Cellar Cabernet Sauvignon magnums that went for about a thousand dollars.

As I reflect on this experience the thing that stands out to me is the power of wine to bring these people together to support a good cause. Providing adequate resources for higher education is very important, but the free rider principle is powerful and the “collective action problem” is therefore difficult to solve. It is hard in general to get people to support projects that provide widely dispersed benefits. Mancur Olson, the great political economist, argued that “specific incentives” are often needed to motivate individuals to cooperate to produce collective goods. People need to feel that they benefit as individuals in some way from their support of collective goals and that their individual benefit and the collective benefit are linked. (This is one reason public television stations both ask for your unselfish support of their public good and at the same time try to give you some sort of private good — a Masterpiece Theater coffee mug? — in exchange for your donation.)

Wine’s Hidden Strength

It seems to me that wine lends itself very well to solving the collective action problem. Wine has obvious private benefits, but it is well known that these benefits are best appreciated (magnified?) in association with others. This is obviously true about wine consumption — half the fun of drinking wine is talking about it with friends. But it is also true of other aspects of wine. People gain private benefits from display of their wine knowledge and taste and from the generous feeling one gets in sharing with others. But these benefits can only be realized in the company of other people — they are private goods that are collectively produced, if that makes any sense (I was tasting as well as pouring last night, so my logic may be a bit fuzzy). Educational benefits are both private and public in a similar way, at least to some extent, which makes the wine and education link useful in both symbolic and practical ways.

In an age when many social activities such as listening to music are increasingly individualized and privatized (think iPod here) the power of wine to connect remains strong and perhaps has become more profound. I would like to say that wine has a universal power to bring people together, but that’s clearly wrong. Some people just don’t care about wine — they have other interests– and some positively object to it because of its alcoholic content.

But it is interesting to observe how effective wine can be at events like this to bring together people of different ages and backgrounds to share collective experiences and support a good cause. The TCC Foundation is wise to uncork wine’s hidden strength by making it the theme of their annual fund-raising event.

Taste the Washington Wine Market

Demand meets Supply in Seattle

Mike and Karen Wade of Fielding Hills Winery in East Wenatchee, Washington asked me if I’d like to pour their wines at the big Taste Washington event in Seattle on Sunday. I jumped at the chance, of course, because you hardly ever get to see supply and demand in the wine market at work in such a personal way. I will admit that I enjoyed this opportunity and I might have been a little too enthusiastic at times. I think my boss, Robin Wade, had to restrain me at times from talking up the wines and the winery more than I should. (Robin is my student at Puget Sound during the week, but she was my supervisor on Sunday at her family winery’s tasting table).

Taste Washington is a big event: more than 220 wineries, 70 restaurants and a long list of what I would call “lifestyle product” vendors ranging from Viking, the maker of high end kitchen appliances, to Maserati, the Italian sports car. Click here to download a pdf of the program. People paid $125 to attend the VIP tasting from 2-4pm. Then the doors opened to the “masses,” who paid $85 for unlimited tastings from 4-8pm. Many of the VIPs were industry people – winemakers, distributors, restaurants, wine shops, and so forth. The “masses” were a very mixed group that I’ll discuss below. I guess about 3500 people came in all.

The event is all about giving things away. Wine is sampled, but cannot be sold. Restaurants give samples of food. No cash changes hands once you are inside the room, but I suppose that exchanges can be arranged for future delivery. Apparently someone bought a Maserati ($135,000) off the show floor. There was a moment of silence (while everyone drew a breath) when that was announced.

The Supply Side of the Pour

The list of wineries was long and diverse. Columbia Crest makes at least 200,000 cases each of some of their Two Vine wines, for example, while Benke Cellars, located near us in the exhibition hall, has a total output of just 200 cases. Some of the most prestigious wines in Washington were represented (DeLille Cellars was across the aisle from us and Quilceda Creek was across the room) alongside humble family start ups. Fielding Hills was one of several wineries in a sort of intermediate position: a small family operation, but one with an impressive record of ratings and reviews and hence a built-in audience among wine enthusiasts.

What do wineries gain from giving away wine at tasting events like this? There needs to be a benefit, especially for the smaller wineries who may pour away a couple of percent of their annual production. Some of the large volume wineries seemed to use the event to show that they were about more than just fruit forward popular premium supermarket wines. Chateau Ste Michelle, for example, poured these wines

  • 2005 Boreal, Columbia Valley $30
  • 2005 Ethos Cabernet Sauvignon, Columbia Valley $38
  • 2006 Chardonnay, Horse Heaven Hills $22
  • 2007 Eroica, Columbia Valley $22

and Columbia Crest offered these

  • 2005 Grand Estate Merlot, Columbia Valley $11
  • 2004 Reserve Red Walter Clore, Columbia Valley $44
  • 2005 H3 Chardonnay, Horse Heaven Hills $15

These are very good wines – on average several steps above what you would probably taste for free at the winery. I like the Eroica quite a lot and I wish I’d found an opportunity to taste the Walter Clore. The Grand Estates Merlot is a great value in my opinion.

I spoke with a famous winemaker – he was treated a bit like a rock star – who spent most of his time in close conversation with customers, distributors, and fellow winemakers. He said he thought it was important to be at the tasting and to make personal contact, but he wasn’t sure if it had much effect on sales. He was “preaching to the choir,” he said, talking with current customers and business clients more than making new ones. I wonder if he’s right. I like to say that wine is good but wine and a story is better. A story about talking with a rock star winemaker adds a lot of value to a bottle of wine. Maybe he was just being modest.

Mike and Karen Wade are certain that this event benefits them by connecting them with the trade network and giving wine drinkers who read about their wines in magazines (but often cannot find them on local shop shelves) an opportunity to see what all the fuss is about. I certainly think the wines made a good impression and even created a bit of a buz in the room as word spread. It will be interesting to see how this is reflected in the market.

Spit, Don’t Swallow!

Spit! We were told to encourage people to spit the wine rather than swallow it so that they would not get tipsy so soon. The trade visitors often did spit, as you have to do if you are really going to taste a lot of different wines, but most people didn’t. They did dump out extra wine into the spit buckets, however, which was a good thing. The woman who came around to empty the spit buckets every 15 minutes estimated that she had collected 20 gallons by 6pm.

Like the organizers, I was worried about the alcohol problem. Faced with 200+ wineries pouring maybe 700 different wines – and you with a bottomless glass until 8pm – it is easy to see how things could get carried away. I only talked with a few tasters who had clearly had too much to drink, however. Most people seemed to understand the problem and, even if they didn’t spit, they tried to limit consumption so that they could continue tasting.

The people on the other side of the table were an interesting collection of wine people. The $125 VIP tasters were mostly trade people, as you might imagine, many with well-defined agendas of people to meet and wines to taste. It was fun to talk with them to get an insider view of the event and the business. The $85 general admission tasters were perhaps younger than I expected (many in their 20s) and more diverse in their apparent knowledge of wine. Many were wine enthusiasts, of course, armed with detailed notes and Parker numbers, looking to taste specific wines, interested in every detail from vineyard to barrel.

Others were “image seekers” (to use Constellation Brands’ Project Genome taxonomy – see next post). They didn’t know as much about wine but they wanted to learn. It was fun to meet them because we were pouring a 2005 Cabernet Franc – a varietal many of them had never tasted before – and I enjoyed watching them make up their minds about what was in the glass. Finally I would say that I met some “traditionalists” and even some “overwhelmed” consumers (it was easy to be overwhelmed at this event, to be honest, with so many wines and wineries present). They were spending $85 to try to figure out what was new and what they liked. That seems like an expensive education until you consider how fast you can burn through $85 on failed wine experiments.

People always ask me if interest in Washington wine is a bubble that will someday pop leaving broken wineries in its wake. It is difficult to be sure about bubbles (ask Alan Greenspan about this) and I actually worry that there might be a supply side wine bubble shaping up and a shakeout coming (Paul Thomas, a pioneer Washington winery, closed shop last year). But the demand side looked strong to me as I poured my measured tastes on Sunday. Education is the key to sustainable growth in the wine industry and I met a lot of people who seemed to be committed to broadening and deepening their knowledge of wine. The Washington wine industry can only benefit from this. That makes Taste Washington a more important program than I thought it would be.