Category Archives: Flashback Friday

Flashback to the Future? Wine & the Demolition Man Syndrome

September 9, 2020 By in Flashback Friday, New Zealand, wine 3 Comments

nz2020Sue and I recently uncorked (or unscrewed, actually) our first wine of the 2020 vintage: a Marlborough Sauvignon Blanc by Cathedral Cove.  2020 already? Wow. That’s quick turnaround. It didn’t take very long to go from vineyard to cellar to container ship to importer to distributor to retailer to our mid-August table. (It was great, by the way, paired with a flavorful Greek salad with veggies from our garden.)

There are lots of wines that generate quick cash flow for producers while providing ready refreshment for consumers. Beaujolais Nouveau (which I have called the “Black Friday” wine) fits into this category along with a Portuguese wine that a happy grower once assured me was the greatest wine in the world (at least from his perspective): Vinho Verde.

Sue and I learned to appreciate the relaxed charm of young wines years ago during a visit to Vienna.  We spent an afternoon in Grinzing where we looked for Heurigen wine taverns with pine boughs over the doors, a signal that fresh wine could be found within.

Our first 2020 wine of 2020 provokes this flashback column from 2016, which speculated about shifting patterns of retail sales, the possibility of grape-free wine, and the rise and rise of New Zealand Sauvignon Blanc. Has the pandemic accelerated some of the trends discussed below? Maybe looking back can help us better recognize what might be ahead.

One thing is sure: in the 4 years since this was written New Zealand Sauvignon Blanc sales have boomed in the U.S. market and the wine’s premium price has endured. Slowly but surely, Kiwi Sauvignon Blanc’s market share has risen higher and higher.  How far can it go?  Here’s that flashback column from 2016. Enjoy

The Demolition Man Syndrome: A Vision of the Future of Wine in America?

Wine Economist / February 26, 2016

I’ve been catching up on my wine industry reading and one report that grabbed by attention is Rabobank’s May 2016 Industry Note,  “The Premiumization Conundrum”.

The gist of the analysis is that the premiumization trend in the U.S. wine market isn’t simply a case of what Paul Krugman calls “up and down economics” — in this case demand for $10+ wine is up, demand for cheaper wines is down –but rather it needs to be understood in the context of a broader set of wine market changes.

Not Just Up and Down

The Rabobank report examines five important tensions that are part of the premiumization syndrome:

  1. Demand for premium vs. basic wine grapes
  2. Securing long-term premium grape supply vs. managing return on capital
  3. Wholesaler consolidation and retail “chainification” of wine vs. premiumization
  4. Traditional retail vs. DTC vs. NIMBY
  5. Domestic wine vs. imports

As I was reading the Rabobank report I began to wonder how these trends might unfold if continued at their present rates well into the future. In other words I was doing exactly what economists are trained not to do, which is engage in straight line projection. The future is out there somewhere, but it is almost never on a straight line that connects the last few dots on your time-series chart and then continues on out to infinity … and beyond.

But humor me with a little thought experiment. What might the future look like under the admittedly unlikely “straight-line trend projection” circumstances? Take today’s trends as Rabobank reports and fly them straight out to wherever they take you.

Pondering this thought, I unexpectedly found myself channeling a 1993 Sylvester Stallone, Wesley Snipes, and Sandra Bullock film called Demolition Man. Stallone plays a police officer named John Spartan who was put into suspended animation only to be awakened 36 years into the future in 2032 in order to catch Wesley Snipe’s bad guy character.

All Taco Bell Now

Stallone’s updated Rip Van Winkle encounters a lot that surprises  including, as in the film scene above, the inconvenient truth about retail consolidation run amuck. Invited to dinner and dancing at a Taco Bell, he can’t help but think, Taco Bell? Really?

But it really is, as Bullock’s character explains. Taco Bell was the only chain to survive the franchise wars and now all restaurants are Taco Bells. “No way!” Way!

Rabobank’s report notes a number of important trends that, if taken to a ridiculous Taco Bell kind of extreme, might produce something that Demolition Man would recognize. Here are three that I can’t help pondering.

All MoVin Now

The fictional John Spartan goes shopping for wine in 2032 San Angeles and the first place he sees is a big box MoVin store, bigger than the biggest wine-beer-spirits stores of the past, but recognizably the same concept. He continues on in search for a small, specialist shop, but soon runs across another MoVin. And then another and another and slowly it comes to him that just as all restaurants are Taco Bell, all wine is now retailed by MoVin.1353026500232-577831165

How did this happen? Well, as the Rabobank report notes, all of the growth in off-premises retail sales of wine in the U.S. in the last couple of  years has come through retail chains, not independent shops and stores. Take away BevMo, Total Wine, Costco and other multiple retailers (I assume Kroger fits here, too) and Rabobank’s data show off-premises wine sales would be flat.

Follow that trend to its illogical extreme, with the chains seizing market share each year, add logical pressure to consolidate and — hey, presto! — you have a retail wine monopoly.

How did MoVin win this fictional competition over other chains? Because, in this made-up universe, they drew upon the growing consolidation in distribution channels (another Rabobank finding).

Yes, all wine is sold by MoVin in 2032 because they are a wholly-owned subsidiary of NSEW (North-South-East-West),  the only company to survive the vicious distributor wars of 2021.

All Kiwi White Now

There are lots of different super-premium brands on offer at the big box wine store of the future, but the vast array of colorful labels and fictional names actually disguises a certain sameness. Much of the wine comes from the same few large producers, the ones who were able to able to secure reliable quality grape supplies in the grape wars back before 2022, when the last independent North Coast vineyard was swallowed up.

The imperative to lock up vineyard resources is another of the trends that Rabobank spotlights and it is natural to wonder where it will all end. But that isn’t the only source of concern.affiche2

When John Spartan looks closely at the super-premium white wines that he favors (because they pair so well with his favorite Taco Bell fish tacos), he slowly realizes that they are all made by a few large multinational firms in New Zealand. Just as Taco Bell conquered food, the Kiwis were the victors of the white wine wars.

The one constant of U.S. wine import statistics in recent years has been that New Zealand Sauvignon Blanc imports will grow, often faster than any other import category. I keep waiting for the run to end (and I know Kiwi producers who hold their breath and cross their fingers because they are worried, too). But nothing has stopped or even seriously slowed down New Zealand wine imports so far. And you know where that can lead!

You Want Grapes with that Wine?

What about inexpensive wine? Glad  you asked because that’s where John Spartan had his harshest shock — it made him want to give up wine altogether. It seems that as grape supply became less and less secure and falling prices pushed basic grape producers to other crops like almonds and pistachios, wineries were forced to weaken links to particular regions and then to grapes themselves.

Appellations and geographic designations generally are an expensive luxury if you’re not sure if you can buy the grapes you need to maintain a region-specific brand, so they had to go. And then wine companies gave up specific grape variety designations for the wines for essentially the same reason. All inexpensive wines in 2032 are now proprietary blends. No one knows what might be in the bottle, box or can or where it might have come from. Not many seem to care.

Absent place of origin and clearly-identified grape variety components, inexpensive wines evolved into branded alcoholic beverages and, once consumers accepted that, there wasn’t any reason why they had to be made out of grapes any more. The laws were re-written to allow inexpensive wine-like products to be made and marketed and people lapped them up. Wine for the masses endured, but in an ersatz Taco Bell kind of way.

Or at least that’s where bad economic analysis (and not enough sleep) takes you if you follow recent trends to ridiculous extremes, which I have done here just for fun, but the Rabobank report definitely avoids.

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2020 Editor’s note: Wait! Did the final section anticipate the rise of hard seltzer? I’m not sure. The future? Taco Bell? No Way! That’ll never happen. Don’t worry. Go back to sleep. G’night!

Thanks to New York Times columnist Thomas Friedman, who indirectly inspired this column. He told the story of the “Demolition Man” Taco Bell scene in his best-selling 2000 book about globalization, The Lexus and the Olive Tree.

Thanksgiving Flashback: Black Friday Wine

November 26, 2019 By in Flashback Friday, wine 4 Comments

beaujolais-nouveau-e1477026349777Thursday is Thanksgiving Day here in the United States and it is a time for remembering and being grateful. I am grateful for friends and family and for all the wonderful wine choices we have today. As for remembering, here is an abridged version of a Thanksgiving Wine Economist column from 2009.

The Black Friday Wine?

I called Beaujolais Nouveau a “Black Friday wine” back in 2009 because good sales were critical for producers and distributors who wanted to finish the year profitably “in the black.” Success was certainly not guaranteed back then, with the global financial crisis still casting its dark shadow over wine sales.

A lot has changed in 10 years. The economic crisis has passed, for example, but the current trade war, with its 25% tariff on French still wines below 14% abv has come at a bad time for Nouveau. Some of it arrived on U.S. shores just in time to pay the extra tax. Yikes!  The Georges DuBoeuf we found at the local market is listed at 13.8% abv, just below the 14% abv line where the tariff would disappear.

Indications are that suppliers are absorbing some of the additional cost in order to preserve their market. That makes sense since the selling window for Nouveau is relative narrow. No one is very interested in old (last year’s) Nouveau.

The DuBoeuf’s price — $10.99 — is about the same as last year, suggesting slimmer margins somewhere along the product chain in an effort to keep price down. Will this be a Black Friday? Too soon to be sure.

Here’s a blast from the 2009 past. Happy Thanksgiving!

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(November 23, 2009) Although the United States is not the only country to set aside a day for giving thanks, we like to think of Thanksgiving as our distinctive holiday. It was conceived as a day for deep reflection, but Thanksgiving has evolved into a long weekend of over-consumption and discount shopping. Some of my friends really prefer to celebrate Black Friday, the day after Thanksgiving, when the holiday shopping season formally begins and retailers find out if they will be “in the black” for the year based upon early sales data.

If you plan an Old Time giving-thanks Thanksgiving, then Nouveau is not for you. If wine were literature, my friend Patrick points out, Nouveau would be the trashy paperback novel you read at the beach. Nothing wrong in that — everyone needs an escape once in a while.

The grapes for Nouveau are picked in late September or thereabouts and the only thing that prevents instant sale is the necessity of fermentation and the mechanics of distribution.  It’s still a bit sweet when it’s bottled and sometimes a bit fizzy, too, when it arrives with great fanfare on the third Thursday in November (a week before Turkey Day). Best served cold (like revenge!) it is the ultimate cash flow wine.

Black Friday Wine?

Nouveau is not very sophisticated, so why do the French, who otherwise are known to guard their terroirist image, bother with it? The Beaujolias producers make very nice ordinary (non-nouveau) wines; character complexity, you can have it all and for a surprisingly low price.

Ah, but that’s the problem. Sitting close to prestigious Burgundy, the Beaujolais cannot command high prices for their wines, good as they are, so they must try to make money through turnover more than markup. They churn out millions of bottles of Nouveau to pay the bills.

At the peak of the bubble in 1992 about half of all wines made in Beaujolais were Nouveau. The proportion remains high even today. Ironically, Nouveau often sells at prices as high as Beaujolais’ more serious wines because it is marketed so well. So it is hard to see why you’d want to buy it instead of the region’s other wines. It’s easy, on the other hand, to see why you’d want to sell it.

Beaujolais Nouveau, it seems, is France’s Black Friday wine! If the makers can sell their Nouveau, then maybe the bottom line for the year will be in the black. If the Nouveau market fails, well that red stain on the floor won’t be just spilled wine.

Nouveau is therefore generally marketed around the world with more than the usual urgency (just as those Black Friday sales seem a little desperate at times) — and not just because young wines hit their “best by” date pretty quickly. This year things are even more stressful than usual, as you might imagine, with the economic crisis still on everyone’s minds and 10+ percent unemployment here in the United States.

An American Wine?

Beaujolais Nouveau sounds like the perfect wine for American consumers brought up on 2-liter jugs of fizzy-sweet Mountain Dew and Diet Coke. If you were kinda cynical, you would think Nouveau was an American wine … made in USA.

And it is, in a way. Although the wine obviously comes from France (and there is actually a long tradition of simple and fun early-release new wines in France and elsewhere), I think it is fair to say that the Nouveau phenomenon is an American invention.

W.J. Deutsch & Sons, the American distributors, really put Beaujolias in general and Nouveau in particular on the U.S. wine market map when they became exclusive distributors for Georges Duboeuf some years ago. They took this simple wine and made it a marketing event. To paraphrase an old Vulcan proverb, only Nixon could go to China and only the brilliant Deutsch family could sell Nouveau!

In fact they were so successful that they partnered with another family firm — the Casella family from Australia — and created a second wine phenomenon tailored to American tastes: Yellow Tail!

So although Nouveau is an American wine of sorts and might be perfectly crafted for this American holiday as we actually celebrate it on Friday, I’m going to pass this year (on Thursday, at least) and see if I can nurse some thoughtful reflection from my holiday glass instead. Cheers, everyone! And thanks.

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2019 update: I passed on Nouveau back in 2009, but I will try some of the 2019 vintage over the holiday weekend this year. Hmmm. I wonder if I can find it in a can? 

Happy Thanksgiving to all!

Flashback Friday: What Was Revealed at Riesling Rendezvous

July 15, 2016 By in Chateau Ste. Michelle, Dr. Loosen, Flashback Friday, Riesling, wine, wine festivals Leave a comment

Riesling Rendezvous 2016 starts on Sunday with a grand tasting on the beautiful grounds of Chateau Ste Michelle in Woodinville, Washington. Riesling Rendezvous is a project of Ste Michelle and the Mosel’s Dr. Loosen that brings together people from the four corners of Planet Riesling for three days of tasting and discussion.

Riesling Rendezvous comes around every three years and this is all the excuse needed for a Flashback Friday feature that returns to a dramatic moment at the 2013 conference.

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2_rr_wineglassI’ve been writing about the problems of marketing misunderstood and misunderappreciated wines for the last couple of weeks and before I leave this subject I want to take time to give you a brief report from the Riesling Rendezvous conference hosted by Chateau Ste Michelle and Dr Loosen in Seattle last month.

Although the public face of the conference was the sell-out Sunday Grand Tasting on the grounds of the Chateau in Woodinville, the real work took place at the waterfront Bell Harbor Conference Center on Elliott Bay. What did we learn about life on Planet Riesling (as Stuart Pigott calls it)?

Small Worlds and Big

Well, its a big world after all — that’s the first insight. We tasted spectacular wines from many corners of the globe and regions of the U.S. and Canada. But it is a small world, too, as global quality standards have risen due in part, I think, to the international exchange of technical information that Riesling Rendezvous and its partner conferences have promoted. The gap between Old and New Worlds has closed dramatically.

You might have enjoyed the scene at the two formal tastings, where about 300 of us sat in front of 20 glasses each of dry Riesling on the first day and off-dry Riesling on the second. We tasted the wines blind and then, one by one, members of the expert panel commented on the wines and tried to place them in terms of origin — Old World or New? Cooler climate or warmer site? Particular time (vintage) and place?

Sometimes the experts were spot on, but I think the organizers might have selected the line up of wines to make the point that Planet Riesling is changing, so sometimes (more often than not, I believe) they were fooled. Fooled, generally, by unexpected quality from an unexpected source, which is a nice way to be surprised.

Ooohs and Aaahs

There were ooohs and aaahs, for example, when one wine was revealed to be from Elesko Winery in Slovakia. Wow, none of us saw that coming, probably because we didn’t have Slovakia on our radar. I remember tasting a few crisp, delicious white wines from this region when I taught in Prague, but beer, not wine, is probably the first thing that comes to mind (despite Austria’s obvious presence) when you think Central Europe.  Very impressive.

Tim Atkin, who moderated the off-dry tasting (John Winthrop Haeger handled the job for the dry wines) seemed to take special pleasure in revealing that a wine that had been firmly placed in the Mosel region by a panelist was in fact made by Ste Chapelle of Idaho (part of the rapidly rising Precept Wine group).

How many cases do you make, Atkin asked Marueen Johnson who represented the winery, probably imagining the sort of hillbilly Idaho wine industry that the old Muppet Movie scene suggested? Forty thousand cases came the reply. Wow, that’s lot, Atkin said obviously surprised (and that’s just Riesling — total production tops 100,000 cases for this, the largest winery in Idaho). It’s a brave new world on Planet Riesling when fine wines can come from such unexpected corners of the globe.

Two Directions at Once

Further evidence of how the Riesling map is changing was provided by two new Chateau Ste Michelle Riesling wines: Anew Riesling, which seeks to broaden the Riesling base, and Eroica Gold, which aims for a more classic style and promises to deepen interest in this category.

Anew, with its elegant bottle (which reminds me of a graceful off-the-shoulder gown) and subtle flower label seems to enter the market as a wine targeting  women, who of course make up the majority of wine drinkers and, for reasons that I’ll explain in a future post, a disproportionate part of the Riesling base. Off-dry but not too sweet,  it makes a tasty aperitif — a nice way to end of day of work and start the evening. Coming from the creators of the hugely successful 14 Hands wine brand, this is a wine that could convert Pinot Grigio drinkers to Riesling fans.

Seafood

Eroica Gold is the newest project of the Ste Michelle – Dr. Loosen partnership and it builds upon and expands the very successful Eroica Riesling line. Eroica has a hint of sweetness and can often be purchased for $20 or less (I’ve seen it at Costco for about $15) — very good value for money and often listed as one of America’s best Riesling wines.

Eroica Gold is riper, botrytis influenced, and, at $30+, more expensive. It aims to take American Riesling consumers to the next stage. Hopefully it will both communicate to American consumers what they might find in European wines and also represent the New World effectively to the Old.

Inevitable Seattle Food Porn

The conference ended with a festive reception at the Chihuly Garden, a blown glass fantasy highlighting the work of Northwest art icon Dale Chihuly, which I mention only because it gives me an excuse to include this “food porn” photo of the seafood buffet. Ahi tuna, smoked salmon, oysters, shrimp, and crab. What a treat!

Riesling may be misunderstood and there certainly are problems to be worked out, but on that warm afternoon in Seattle, with Riesling in my glass and smoked salmon on my plate, life on Planet Riesling seemed a pretty sweet place to be.

July 4th Flashback: How the U.S. & Canada Almost Destroyed Wine

July 4, 2016 By in Flashback Friday, wine, wine history, wine law 1 Comment

patriotic_pourIt is Independence Day here in the United States and that is all the excuse I need for this special Flashback column, which takes us back to 2015 to tell the story of how, in very different ways, the U.S. and Canadian governments almost destroyed their respective wine industries.

My friends always tell me to have a fifth for the Fourth, and I assume they are recommending a bottle of American wine with the required holiday menu of hot dogs, hamburgers and salads. Cheers and Happy Independence Day.

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At one point in Kym Anderson’s new book about the Australian wine industry he reflects on what can be done to shorten that country’s current wine slump and to get things sailing again on an even keel. One of his suggestions caught my eye:

“Governments need to keep out of grape and wine markets and confine their activities to generating public goods and overcoming market failures such as the free rider problem of collecting levies for generic promotion and R&D.”

This is more than the simple Adam Smith “laissez-faire” idea. Anderson’s book clearly demonstrates the law of unintended consequences — how well-meaning government policies sometimes have had unexpectedly negative side-effects. No wonder he recommends a cautious approach to wine and grape policy.

I was reminded of this when I was researching the history of the Canadian wine industry for a recent speaking engagement in Ontario. I was struck by Canada’s experience with Prohibition in the 20th century, how it differed from the U.S. experiment, and how both ended up crippling their wine industries but in very different ways. Here’s what I learned.

How U.S. Prohibition Crippled the Wine Industry

The great experiment in Prohibition in the United States started in 1920 and lasted until 1933. The 18th Amendment outlawed the manufacture, sale or transport of intoxicating beverages, including wine. Most people assume that the wine industry collapsed as legal wine sales and consumption fell and this is partly true but not the complete story. Commercial wine production almost disappeared, but wine consumption actually boomed.

How is this possible? There were three loopholes in the wine regulations outlined in the Volstead Act. Wine could still be produced and sold for medical purposes (prescription wine?) and also for use in religious services (sacramental wine). This kept a few wineries in business but does not account for the consumption boom, which is due to the third loophole: households were allowed to make up to 200 gallons of wine per year for “non-intoxicating” family consumption.

Demand for wine grapes exploded as home winemaking increased (but not always for strictly non-intoxicating purposes). Total U.S. vineyard area just about doubled between 1919 and 1926! But the new plantings were not delicate varieties that commercial producers might have chosen but rather grapes chosen for their high yields,  strong alcohol potential and ability to survive shipping to eastern markets.

Thus did Prohibition increase wine consumption in the U.S. but it also corrupted the product by turning over wine-making from trained professionals to enthusiastic  amateurs working in often unsanitary conditions. The home-produced wine sometimes had little in common with pre-Prohibition commercial products except its alcoholic content.

Americans drank more wine during Prohibition, but it was an inferior product. No wonder they dropped wine like a hot stone when Prohibition ended. That’s when the real wine bust occurred and it took decades to fully recover. Do you see the unintended consequence in this story? But wait, there’s more …

How Canadian Prohibition Crippled Its Wine Industry

Prohibition started earlier (1916) and ended earlier (1927) in Canada and took a different fundamental form. With support from temperance groups, consumption of beer and spirits (Canada’s first choice alcoholic drinks) was banned as part of war policy with the stated intent of preserving grain supplies for vital military uses. Consumption was forbidden, but production of beer and spirits was still allowed for export, which accounts for the boom in bootleg Canadian whiskey in the U.S. in the 1920s.

Neither production nor consumption of wine was included in Canada’s ban on alcohol, although wine sales were limited to the cellar door. What made wine different? Maybe grapes were not as vital to the war effort as grains, although John Schreiner cites the political influence of the United Farmer’s Party in his account of this period in The Wines of Canada. Wine became the legal alcoholic beverage of choice for Canadian consumers and production boomed. By the end of Canadian Prohibition there were 57 licensed wineries in Ontario (up from just 12) to serve the big Toronto market.

Wine sales increased 100-fold, according to Schreiner, but “It would be charitable to describe the quality of the wines being made in Ontario during this period as variable,” he writes. The market wanted alcohol and set a low standard of quality, which many producers pragmatically stooped to satisfy. No wonder wine production collapsed at the end of Prohibition as consumers went back to spirits and beer.

Unintended Consequences

Thus did government policy in both Canada and the United States create wine booms during their respective Prohibition eras, but the worst kind of booms: bad wine booms. Quality suffered as quantity surged. It is no surprise that consumers turned away from wine once other beverages were available. It took decades for these industries to recover.

Both the Canadian and U.S. wine industries are vibrant and growing today, having recovered from the crippling effects of poor quality wine. But they both are still hampered by other policies — especially regarding distribution and sales — that date back to the end of Prohibition. Economic policies can obviously have unintended effects and the shadows they cast can be long indeed.

No wonder Kym Anderson is skeptical about government interference in the Australian industry. Prohibition is an extreme case, to be sure, but such cases clearly show the unintended consequence potential that exists even with other seemingly harmless proposals. A cautious approach makes sense.

Flashback Friday: Cracking the Chinese Wine Market

June 3, 2016 By in China wine, Flashback Friday, Portuguese wine Leave a comment

The news from my friends in Portugal is that exports to China are rising, which reminds me of the first time I wrote about Portuguese wine in China back in 2010. Here is a Flashback Friday reprise of that column.

Portuguese Wines in Beijing

President Obama wants to double U.S. exports within five years. With this in mind he recently sent Commerce Secretary Gary Locke to Hong Kong to sign a Memorandum of Understanding (MOU) on Cooperation in Wine-Related Businesses. The press release says that

The United States is one of the leading wine-producing countries in the world, and American wines have been growing in stature internationally for decades as people around the world have learned what American wine producers and consumers have known for years: American wines are outstanding,” Locke said. “Working with the Hong Kong government, we want to create opportunities to heighten exposure to American wines in Hong Kong and the region. This MOU will help do just that.

“Hong Kong and the region” … I think that would be code for China. Everyone wants to crack the Chinese market, something that is easier said than done. I’ve written about this problem before (see “Wine and the China Syndrome”). Sean, one of our recent graduates, wrote his senior thesis on the challenges and opportunities of exporting Washington wine to China. Sean identified a number of significant political, economic and cultural barriers that American wine exporters must overcome. He was optimistic regarding the long term, but very cautious about short term success. (Secretary Locke, you might want to give Sean a call.)

Cracking the Chinese Market

Everyone looks hungrily at China with its growing economy and expanding consumer base. But it is hard to break in. Bulk wine imports are substantial (imported wines get blended with local products and labeled “Chinese wine”), but at unsustainably low prices. No future there.

France and Spain have had better luck. The French have been able to leverage their reputation and the prestige of their finest producers to carve out a attractive niche markets for Bordeaux and Champagne as luxury products.

The Spanish achieved success through old fashioned hard work. They have partnered with Chinese wine producers in both production and distribution. If Chinese wines are improving in quality (and I understand they are) then this is at least in part due to technical improvements facilitated by joint ventures.

Miguel Torres has been particularly active in partnerships and ventures of all sorts. You might be interested in their everwines project, which was recently launched in an attempt to develop a western style Chinese wine culture. If you check out the site be sure to click on the Online Shopping link to purchase a variety of international wines in the $20 range and also Opus One for about $550 and a first growth Bordeaux for more than $1200.

Any Port in a Storm

The U.S. is obviously not the only wine producing country with China on its mind and  I was pleased to receive an invitation from ViniPortugal to participate in their recent China seminar program and tasting of Portuguese wines. Sixteen winemakers flew from Lisbon to Beijing to present and promote their wines. A good chance to observe this Old World wine country’s China strategy in action.

Beijing is a long way to go for an afternoon tasting, so I was represented by my crack China wine research team, Matt Ferchen (Assistant Professor of International Relations at Tsinghua University) and Steve Burckhalter (who works as a translator for the Chinese public relations firm BlueFocus). Matt and Steve are former students of mine at the University of Puget Sound and keen observers of rapidly changing Chinese markets.

Matt said that he was impressed with the wines he tasted.

The first wines I tasted, and the ones I ended up liking the best, were from a cooperative called Adega Coop. De Borba.  A couple of the wineries were family owned and there was a kind of earthiness to the wines that I really enjoyed.  I was especially impressed with the Portuguese whites, which were all very crisp and I think would go very well with spicy Chinese food.

I find that most of the wines available in Beijing, both foreign and Chinese, are expensive and mediocre or cheap and bad.   Across the board the price to quality ratio was just excellent and I really hope that some of these wineries can find distributors here … [but] …there was only one of the wineries that had any presence in Beijing.

So the product is good and a good value. But that doesn’t necessarily solve the Chinese market puzzle.

Most of the representatives seemed rather disappointed that the turnout at the tasting was quite small and that many of those who were in attendance weren’t in the wine business (i.e. they didn’t see many prospects for finding distributors even if they found possible retail customers).  I was asking some of the representatives why Portugal seemed so far behind Spain in terms of entering the Chinese market, especially given what seemed to me the outstanding quality of their product.  The answer mostly just seemed to me a question of focus, that somehow the Spanish wine organization was just more aggressive about getting Spanish wines to China and advertising.

Steve also commented on quality and value — and the problem of focus and establishing reputation.

The[seminar] speaker, who I believe was a Chinese man from Macau, noted the long history of wine making in Portugal, the long time presence and popularity in Macau (“We drink this all the time in Macau”), the diversity of wines they are able to grow thanks to the wide range of different climates in Portugal, wines unique to Portugal – such as a “green wine” they grow in the North, which he reasoned would do well in China, being ‘fruity and sweet’ – and finally he also stressed that “Nearly all Portuguese wines are reasonably priced. It’s hard to find any in excess of 2000 RMB.”

He also expounded on why Chinese outside of the Southeast regions don’t care for white wines, which I found interesting. As for the growers and the distributors, there was some diversity to be found in “Brand Portugal”. Interestingly, some were insistent on showing tasters how they straddled both New and Old World wine making (actually, the speaker also touched on this, going on about a vineyard that had invited Australian winemakers to teach them in the ways of new world wine). Others, however, were insistent that they were exclusively Old World – “Portugal is Old World. How can it be New World – that’s not us.”

In response to how they were looking to position their wines, one of the winery reps said that they were looking to focus on promoting, above all, their grapes: the varieties, why they grow so well in Portugal, etc. And their other edge (which I heard from several people) is in pricing, “what you get for X RMB in a Portuguese wine is better than what you get for X RMB in a French wine.” That tended to be the dual answer whenever someone brought up how Chinese people generally went straight for French or Italian wines.

A Wineglass Half Full. Red or White?

Based on Matt and Steve’s reports you can be either an optimist or a pessimist regarding Portuguese wines in China. The upside is that there are many potential advantages, cost being one of them. It is obvious that Portuguese winemakers would like to be seen as a “value” fine wine and avoid the cheap and anonymous bulk wine trap. Good thinking.

But then there is a bit of an identity crisis. Old World or New? Well, both – a harder sell. Focus on regions or grapes (or both)? That requires a substantial sustained education program.

Even the most basic question is problematic: red or white?  Westerners know that crisp whites like Vinho Verde taste great with Asian foods – great to westerners, anyway. But, as has often been said, the first duty of wine in Asia is to be red.

I’m cautiously optimistic about Portuguese wines in China, especially if they can settle on the right focus and sustain the education/marketing efforts. But they have a long way to go.  Steve reports that “I noticed at a store (targeting Western tastes) last night the only Portuguese wines (out of hundreds and hundreds) were four Ports. Haven’t been to Carrefour in a while, but I bet it’s the same deal.”

Good luck to Portugal – and to American winemakers, too, of course.  China is a key market for the future. But scaling the Great Wall is a real challenge and many will fail in the attempt.

Are You Going to the UNWTO Global Wine Tourism Conference in Georgia?

May 13, 2016 By in Flashback Friday, wine, wine tourism Leave a comment

unwtoI’ve recently accepted an invitation to speak at the first global wine tourism conference to be organized by the United Nations World Tourism Organization (UNWTO). The event is set for September 7-9, 2016 in the Republic of Georgia, which is the cradle of wine and an emerging wine tourism destination. Here are links to the preliminary program and registration information.

I will be on a panel that includes representatives from Argentina, France, Japan, Italy and South Africa to talk about best practices in wine tourism in each country. I plan to focus on Napa Valley and the many and quite diverse lessons both that this wine tourism hot spot provides. Should be an interesting discussion!

Are any of you in the Napa or California wine tourism sector (either individual wineries or regional groups) planning to attend the UNWTO conference? I am curious to know who else will be there to represent the U.S. industry.

I like to think that we in the U.S. are in the lead when it comes to wine tourism, but I have seen (and written about) some fabulous and innovative programs in other countries.  Sue and I were recently in Portugal, for example, and were impressed with wine tourism initiatives at Sandeman in Porto, Quinta do Bomfim in the Douro and at Esporão in the Alentejo. The global standard is rising and everyone needs to up their game.

Wine tourism is only going to become more important in the future and opportunities for global dialogue are potentially very valuable. With this in mind, here is a “Flashback Friday” column from 2015 when the UNWTO conference was first announced.

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I think the United Nations has a thing about wine. I recently wrote about the surprising number of wine regions that have received Unesco World Heritage site recognition, for example. Now the United Nations World Tourism Organization (UNWTO) is getting into the act.

The 1st UNWTO Global Conference on Wine Tourism will be held in the Kakheti wine region of Georgia from 7-9 September 2016. “Wine tourism represents a growing segment with immense opportunities to diversify demand. In the case of Georgia, this potential is well-known and we are very pleased to be holding the first UNWTO Global Conference on Wine Tourism in the country,” according to UNWTO Secretary-General, Taleb Rifai.

Why Georgia? History is part of the story, but it is also true that wine is an effective way to promote tourism and economic development. Come for the wine (and food) and stay for the people, culture, history and geography. Trade and investment flows may follow the wine route, too. Georgian officials appreciate this logic.

“Georgia’s unique wine-making traditions date back 8,000 years and are part of UNESCO’s intangible heritage, creating the ideal base to host the Wine Tourism Conference. Herewith, the country’s recent success in attracting a growing number of tourists, its development in terms of tourism products, branding and marketing present an excellent platform to share best practices, experience and knowledge¨ according to Dimitry Kumsishvili, Minister of Economy and Sustainable Development of Georgia.

U.S. regional wine associations with a strong interest in wine tourism may be able to participate in the Georgia program, but I am not sure about the details.  More information can be found here.

I wrote about wine tourism in my book Extreme Wine, so I am going to be following this initiative closely. Best wishes to Georgia and the UNWTO for a successful inaugural conference.