Is the Prosecco Boom Sustainable?

Is the Prosecco boom sustainable? Or is it a bubble that’s eventually going to pop? That’s roughly the question that an Italian journalist asked me a few weeks ago and it is easy to appreciate the concern behind it. The market for Prosecco has blossomed, especially in the U.K., U.S., and Germany, the three largest export markets, and Prosecco producers are both excited and anxious about their future prospects.

U.S. Sparkling Wine Imports January-June 2018

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A quick glance at data for U.S. sparkling wine imports January-June 2018 as reported by Wine-By-Numbers (see above) shows strong growth. Italian sparking wine (mainly Prosecco) imports grew 16% by volume and 28.3% by value in the first six months of the year despite rising average dollar import price. Only the Rosé import category is growing faster than Prosecco.

Beyond Bubbles for Birthdays

I am a wine-glass half-full kind of person, so my answer to the journalist’s query was optimistic. The question isn’t so much why U.S. and U.K. consumers are drinking more sparkling wine (and especially Prosecco) now — it is why they didn’t embrace bubbles more ardently in the past? Sparkling wine has always been an attractive option, but for some reason it became associated with special occasions. Bubbles aren’t just for birthdays and New Year any more.

But booms often contain the seeds of their own demise — either in the form of bust, fizzle, plateau, or something else. Prosecco may be no different. Having just returned from a quick visit to Prosecco-ville to speak at an award ceremony in Conegliano (see next week’s column), I can report that there is concern about this possibility within the industry.

Most of the Prosecco on the market is DOC Prosecco produced by makers that range from the very large such as La Marca, which is distributed by Gallo, to the relatively small. There are economies of scale in Prosecco-making, so bigger can be better from a profit standpoint. La Marca, for example is a second level cooperative — a cooperative of cooperatives — and its many members keep its pressurized tanks, used for the secondary fermentation, efficiently supplied with a river of base wine.

Pretty in Pink?

When quantity is the driving force, the focus can easily become one of chasing the market to increase sales, raise production, increase scale economies, and lower cost. Thus there is an incentive to look for incremental sales wherever they can be found.

This might be part of the movement to certify DOC Prosecco Rosé.  Bubbles are hot. Pink  wine is hotter. Pink bubbles should set the market on fire. The Glera grape that is used to make Prosecco is white, not red, but production rules allow the use of up to 15% of other approved grape varieties. If  those grapes are Pinot Noir, which is grown in this region,  the result is a pink sparkling wine. Pink Prosecco isn’t a thing yet, since the rules don’t allow this designation, but it might be permitted very soon.

Pink Prosecco — who could object? Well, many people, actually. The concern is that Prosecco’s identity is not well established — many consumers think Prosecco is the grape name and others are not certain exactly sure where it comes from. Prosecco’s success may come in part from the fact that consumers don’t fret about these things and simply enjoy the experience.

No One Laughed

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But some producers worry that by broadening the Prosecco category with a pink wine, winemakers will further dilute the brand identity to the point where it is just a generic sparkling wine, one of the ingredients in Aperol spritz, unable to command a price premium. The slope that runs down the commodity wine hill can be slippery.

At one point during our visit I joked that, since blue wines are getting some attention these days, maybe some Prosecco producers would move in that direction. Pink, Blue, White — all colors of Prosecco for all occasions. No one laughed. I guess blue Prosecco is nothing to joke about. It’s part of that slippery slope.

The concern that Prosecco’s brand may be undermined seemed particular strong in the Prosecco Superiore DOCG zone between Conegliano and Valdobbiadene. Supply is more limited in the DOCG zone and costs are higher because, unlike the valley vineyards where much DOC Prosecco is grown,  the hillside terraces aren’t all suitable for mechanical harvesting or as easy to maintain generally.

What a Mouthful!

Prosecco Superiore is therefore about value more than volume and maintaining product differentiation — of Prosecco versus generic sparkling wine and of DOCG Prosecco versus DOC production — is very important.  Wine marketing guru Paul Wagner, who led our small press tour, never got tired of pointing out what a challenge the DOCG producers set by branding themselves as Prosecco Superiore Conegliano Valdobbiadene DOCG . What a mouthful!

Prosecco Superiore suggests a premium product and is probably the right brand to try to build, although Americans have little experience with the Superiore designation for wines generally. The Conegliano-Valdobbiadene reference is meant to indicate that these are wines of origin — grown in a particular place, but most consumers don’t know what that place is or exactly how to pronounce the place names either.

Glass by Glass by Glass

I have done Prosecco tastings for non-profit groups and I note that consumers are often surprised when they taste the DOCG product, especially DOCG Brut. They like Prosecco a lot, but think of it generically as defined by DOC Extra Dry wines. They are surprised when they can taste a difference. (I’ve had the same reaction in tastings of Argentina Malbecs from different production zones).

Based on my very limited personal experience, it seems to me the key to differentiating Prosecco from other sparkling wines and DOCG Prosecco from the DOC wines is going to involve a lot of hard work. Consumers won’t understand the differences if you just tell them. You can’t tell people how something tastes. You have to show them, and let them experience it for themselves one glass at a time.

Is the Prosecco boom sustainable? Yes, I think it is, but it will take work to shore up its foundation and simply chasing market share, as tempting as that it, may not be the best long-term strategy.

Money & Wine: Good, Bad & Ugly

cattivoWe are living in a golden age for wine, or at least that’s what many people (including Jancis Robinson, Matt Kramer, and Richard Hemming) have said. Never before have so many wine lovers around the world been able to enjoy so much good wine from so many places in so many styles at so many price points. If that’s not some sort of golden age, I don’t know what is.

The wine world isn’t a utopia, of course. And, like all golden ages, this one probably contains the seeds of its own eventual demise. But I think it is pretty clear that these are s good times to be a wine drinker, don’t you think?

Jefford on the Money Problem

So was I a bit shaken when I came across Andrew Jefford’s Decanter column on “Money & Wine.”  Jefford doesn’t see a golden age at all. Wine is sick, terminally ill, and the disease that is killing it is money. He writes that

“The biggest wine contaminant (far worse than sulphur) is money. I don’t know how to put it any other way. The contamination is growing worse all the time. The better the wine, tragically, the more money it contains. Fine wines are now brimfull of money.”

Ironically, having written about the devastating disease of money in Decanter on Monday, Jefford’s weekend column in the Financial Times was about a completely different devastating plague: grapevine trunk disease. Wow, wine is really sick, sick, sick.

I suppose there is a good reason why Jefford didn’t talk money to money, which he could have done by publishing his anti-money column in the FT instead of Decanter. In any case, it is clear that Jefford believes that wine is cursed. Golden age? Nonsense!

Masters of the Universe investors sweep up the best wines, pushing prices beyond the reach mere money mortals. Price becomes just a way to score the game and higher is better. Worse, I suppose are wealthy individuals who say that they are investing in fine wines but actually just want to lock them up and treasure them like Gollum’s precious ring. I have called their behavior “conspicuous non-consumption” with a nod to Thorsetin Veblen.

Jefford’s Lament

Jefford takes this whole money-wine syndrome seriously because, as a wine writer and critic, he feels that he is part of the problem. Once critics like Jefford have identified an outstanding wine, it becomes a target for those with money and pretty soon money is all that matters.

Worse, critics sometimes praise ludicrously expensive wines, presumably because they are really good, thus unintentionally reinforcing the notion that wine quality can be measured in dollars, euro, pounds, and yen. “I am guilty of this myself,” he writes, “and wholly complicit.”

One ironic result, Jefford notes, is that the wines that wine critics praise are sometimes bid up to such extraordinary prices that the critics can’t afford to buy them.

“They may briefly encounter great wines at a tasting, but they don’t own them, drink them, or develop a relationship of understanding with them in the way that wealthy wine-lovers are able to. This makes those writers, at best, outside observers of a world to which they will never belong …”

Don’t Cry for Me …

There is truth in this, I guess, but one thing that I have learned from personal experience is that pretty much no one feels sorry for wine writers. They taste wines that most people can only dream of sampling. That they cannot afford to own cases of them and have personal relationships with them doesn’t seem like a serious problem.

I am not an A-List wine critic like Jefford, but even a wine economist like me has occasional opportunities to savor great wines and have memorable wine adventures. I have learned not to speak too loudly about these experiences, however, and to write about them with care. None of my wine enthusiast friends would have any sympathy for me if I offered Jefford’s complaint as my own. Maybe Jefford’s friends are more sympathetic to his needs?

To DRC and Beyond

Tom Wark’s reaction to Jefford’s column (“Andrew Jefford and the Contamination of Wine”) acknowledged that there is a sliver of the market (fine wine, as Jefford defined it in the first quote above) where money is out of control. Top flight Bordeaux and Burgundy get lots of attention, but they are essentially irrelevant to the vast majority of wine enthusiasts. To generalize, even implicitly, from DRC and Petrus to the broader market is to misunderstand the impact of money on wine.

Robert Joseph’s Meininger’s Wine Business International column on “Is Money Ruining Wine”  broadens the discussion in several interesting ways while still retaining the fine wine focus. Yes, great wines cost more today than 50 years ago, Joseph says, but global wealth has increased at the same time. Maybe today’s doctors and lawyers can’t drink Petrus every night (or have a relationship with it, I suppose), but they can afford to taste it on occasions if they want and that’s not nothing.9781442234635

Joseph doesn’t mention it, but part of the money problem, in terms of higher price, is that interest in wine has spread around the world, so that affluent buyers in China and the U.S. seek their share. Price allocates the limited supply — more for New York and Shanghai means London gets less. That’s how markets work

It’s Complicated!

As a wine economist, I am supposed to know something about money and wine. The more I learn, the less willing I am to make bold statements as Jefford has done. There are just too many sides to consider.

That’s how I ended up writing my 2016 book Money, Taste, and Wine: It’s Complicated. I made a list of all the different ways that money could affect wine and then wrote this book to try to make sense of the situation. I ended up examining the good, bad, and ugly of money, taste, and wine. The book ends on a cautiously optimistic note, which is how I will end this column.

Money has many and varied effects on wine, just as it does on everything else. But wine is resilient and wine lovers are, too. Money and markets bring the world of wine to us, creating this golden age. Does the fact that the Golden Rule — he who has the gold makes the rule — is part of the golden age package (at least when it comes to fine wine) ruin everything? That’s up to you to decide.

It’s Not About the Wine

In the meantime, Jefford’s most recent Decanter column, Wine & the World, argues that money isn’t the world’s only curse — politics, culture, and environment are all being corrupted and society itself fragmented. If wine, with its privileged global status, isn’t part of the solution, Jefford argues, it is part of the problem.

The world is a messy place and Jefford’s goal seems to be to make you consider that fact and what you are doing about it with every glass of wine you drink. It’s not really about the wine, it is about you.

Heal the world — that’s a lot to ask of wine, but the healing needs to be done and wine is as good a place to start as any.

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The Wine Economist will take a brief break for the end-of-summer holiday and return in two weeks.

Book Review: Intriguing Variations on a Wine Globalization Theme

9781107192928Wine Globalization: A New Comparative History edited by Kym Anderson and Vicente Pinilla, Cambridge University Press, 2018. (See also The World’s Wine Markets: Globalization at Work edited by Kym Anderson, Edward Elgar, 2004.)

The fact that wine is such a global business was one of factors that motivated me to study it seriously in the first place. My 2005 book Globaloney (named a Best Business Book of that year by Library Journal) included a chapter that examined the evolution of global wine markets and that got me hooked.

Globalization’s Terroir

Globaloney was a heart a series of case studies that together argued that  globalization is not an  unstoppable tsunami that sweeps away all before it, but rather a complex set of forces that play out differently in different industries. Fast food globalization, for example, is different from slow food globalization. And while high fashion and used clothing are both traded in global markets and acted upon by some of the same general forces, their specific patterns and impacts are very different.

Globalization reflects its terroir, I used to tell audiences at book talks, and the volume that Kym Anderson, Vincente Pinilla, and their talented team of authors have assembled take this idea one step further. The core of the book is a collection of historical case studies of how national wine industries have developed in both the old and new wine worlds in the context of global markets.

Two things struck me as I read the studies. First, I was excited by how detailed and interesting this research is. Fascinating. Irresistible. I couldn’t wait to turn the page to read more.

The second striking feature was how much wine globalization really does reflect its terroir. Although there are some common themes (the impact of phylloxera and the Great Depression, for example), the fact is that wine has developed and evolved in distinctly different ways in different parts of the wine world. Globalization has been an important factor in many cases, but not in the same way everywhere.

Argentina’s Unique History

Let me use the excellent chapter on Argentina by Steve Stein and Ana Maria Mateu as an example. Argentina’s wine history has been shaped by a series of strong internal and external forces. Let’s start with the grapes. Spanish missionaries from the Canary Islands brought high-yielding low-quality Criolla grapes with them and this set the tone for wine-making and drinking for much of the country’s history.

French wine authority Michel Aimé Pouget was lured away from his work in Chile to improve wine quality and he brought higher quality grapevines, including especially Malbec. Alas, the authors tell us, Malbec was frequently valued less for the quality of its wines than the fact that they were dark and strong and could therefore successfully be diluted with water without completely losing their identity as wine. Low standards like this defined the domestic market for decades.

British influence, in the form of the railroads that they financed and helped to build, had a profound impact on Argentina wine. Prior to the railroads that connected Mendoza and San Juan with bustling Buenos Aires, the domestic wine industry was quite small.

Mendoza and environs made wine for local consumption. Buenos Aires residents (more and more of them immigrants from Spain and Italy) filled their glasses with imported wine. Lower land transportation costs changed everything  when the train line was completed, expanding the internal market and fostering a wine boom.

Anticipating the impact of the railroads, Mendoza officials sent recruiters to Europe to bring back experienced Spanish and Italian wine-growers and wine-makers who expanded the industry. With phylloxera spreading at home and hard times all around, the difficult decision to uproot and replant families and businesses to immigrant-hungry Argentina was easy to  make.

Peso Problems

The list of international and global forces and effects in Argentina is a long one and I  only scratch the surface here. In recent decades, for example, the government’s strong-peso policy of the 1990s (the peso was linked to the U.S. dollar) made imports of wine-making equipment and technology artificially cheap and wineries were quickly upgraded. The collapse of this monetary system and the peso crisis that followed made the output of those wineries artificially cheap to foreign buyers, a factor in the country’s wine export boom.

Rapid domestic inflation combined with an unyielding exchange rate earlier this decade made the peso over-valued again and the wine export boom fizzled. Policies are changing now. Perhaps the export boom will return, albeit in a different form. Too soon to tell at this point.

Argentina’s wine history and its experience with international and global forces is fascinating and other chapters in the book are equally interesting. Wine’s story is a complicated one, with each nation developing and responding in a different way depending on many factors including history, culture, institutional structure, timing, and government policy.

This book is a great resource for anyone interested in understanding the wine world today and how we got here. The volume concludes with “Projecting Global Wine Markets to 2025” by Kym Anderson and his colleague Glyn Wittwer, a set of forecasts and analyses based upon their econometric model of global wine markets.

Economists Know the Price of Everything …

Wine Globalization has many strengths that recommend it to a broad readership and one obvious weakness that will discourage some who would otherwise benefit from studying it: the price. If you are not familiar with the academic book market, the price of this volume will take your breath away: $139.50 for the hardback and $124 for the Kindle on Amazon.com.

This is how books are often priced by academic publishers, who need to spread high fixed costs over small expected press runs.  If you have a son or daughter in college (or are in college yourself), you already know what textbooks cost these days. Incredible.

But all the news about price is not so discouraging. Kym Anderson and his colleagues at the Wine Economics Research Center at the University of Adelaide provide an enormous array of useful and interesting global wine market data (some of which informs the Wine Globalization volume) for the attractive price of … free. Free!  Here are some of the data sets you might want to explore. (You can find even more data here.)

Anderson, K., S. Nelgen and V. Pinilla, Database of Global Wine Markets: A Statistical Compendium, 1860 to 2016 (November 2017)

Anderson, K., S. Nelgen and V. Pinilla (with the assistance of A.J. Holmes), Annual Database of Global Wine Markets, 1835 to 2016 (November 2017)

Holmes, A.J. and K. Anderson (2017). Annual Database of National Beverage Consumption Volumes and Expenditures, 1950 to 2015 (July 2017)

Wine Globalization is a valuable contribution to our understanding of world wine markets. Highly recommended. And that’s not globaloney!

Around the World in Eighty Wines: Racing to the Finish Line

51ppzy7bwzl-_sx332_bo1204203200_Sue and I spend so much time travelling to visit the world’s wine regions and speaking to wine industry groups that we sometimes feel a bit like Phileas Fogg and Passepartout, the characters in Jules Verne’s novel Around the World in Eighty Days.

That feeling and the experiences that go with it are one of the inspirations for my next book, Around the World in Eighty Wines, which will be released on November 1, 2017. (You can already pre-order it on Amazon.com!).

Although our travels continue (we are off to Spain next week and then to Cyprus in May), at some point it is necessary to draw a line and declare the book itself finished. And that’s what I did today, when I finished proofing the copy-edited manuscript and sent it in to my production editor at Rowman & Littlefield right on deadline.

The Wine Economist will take a break for a few weeks while we are in Spain for the FEV General Assembly meetings and visits with winemakers there. Circle back in a few weeks to see what’s new at The Wine Economist. Cheers!

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I asked a few friends to read the manuscript and write brief “blurbs” for the book cover. Here is what we have so far. Enjoy!

This captivating book is about more than just wine—it’s about human nature, travel, and enjoyment. As the Rick Steves of the wine world, Mike’s talents as a writer and storyteller transport the reader to a new territory to explore as each of the eighty wines are opened.
Howard Soon, Master Winemaker, Sandhill Wines

Mike Veseth takes the reader on a Phileas Fogg–inspired odyssey in search of the answer to the question: why wine? The solution is a true global adventure—a mosaic of stories that illuminate wine beyond the glass to embody the enduring human spirit through controversy, love, endurance, loss, and hope. I was packing my bags to join the journey before the end of part one. A must-read for all who love wine and life.
Michelle Williams, freelance writer and author of the Rockin Red Blog

Like a master blender, Mike Veseth stimulates the mind’s appetite with a wonderful balance of illusion and substance, as complex as a fine wine.Structured with cultural nuance and imagination, this delightful book is a must-read for serious wine enthusiasts and neophytes alike. Circumnavigating the world in eighty wines should be enjoyed with a glass of your favorite origin in hand.
George Sandeman, Sogrape Vinhos, Portugal

Mike Veseth has deftly captured the magical worldwide journey of wine. This is a great rollicking educational roller coaster of a ride that the global fraternity of wine enthusiasts will embrace.
Robert Hill-Smith, vigneron, Yalumba, Australia

What’s the Big Deal about Supermarket Wine Sales in British Columbia?

vqa-surrey-save-on-foodsWhat’s the big deal about British Columbia supermarket wine sales? It is a very big deal in some circles because the stakes are higher than they might seem. Here’s my analysis of the situation.

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Supermarkets are an important wine sales vector in the United Kingdom and most but not all U.S. states, so many consumers take it for granted that they can walk into their  local Safeway, Kroger-affiliate, Whole Foods or Trader Joe’s store and be greeted by a world of wine choices.

Oh, Canada!

Things are a bit different in Canada. Provincial alcoholic beverage control regimes  apply somewhat in the spirit of Sweden’s Systembolaget monopoly, which was at one time the world’s largest wine retailer — a title that I think passed to the Ontario Liquor Control Board store system before being taken up by Tesco, the British supermarket giant.

British Columbia is moving towards expanded supermarket wine sales after some preliminary trials. The process is a bit awkward because there are many stakeholders with vested interests in the old control system of wine sales. Moving to supermarket sales may increase total wine sales, but the “trade creation” will be accompanied by a certain amount of  “trade diversion” from other retailers, who are understandably unhappy. There is lots of push back as you would expect.

The political economy of B.C. supermarket wine sales is both domestic (more supermarket sales at the expense of existing wine sales license holders) and also international. Incredibly, the B.C. regulations exclude non-B.C. wines from regular supermarket shelves (imported wine may theoretically be sold in a separate and costly and somewhat inconvenient “store within a store”). This has produced an international dust up as the United States has brought charges at the World Trade Organization over the discriminatory practice, an action that the European Union and New Zealand have also supported. The list of wine exporting countries lined up against the B.C. supermarket regime continues to grow. Argentina recently joined the US in this action and Australia quickly followed suit..

The Weak and the Strong

What is the problem? Can’t British Columbia to what it wants regarding wine retail regulations? Maybe not, because Canada (along with most of the world’s nations) is a member of the World Trade Organization (WTO) and is bound by its rules.

The World Trade Organization is actually a fairly weak international institution. It has spent the last couple of decades trying and failing to reach a global agreement on trade liberalization. But the WTO (through its predecessor, the General Agreement on Tariffs and Trade or GATT) was founded on two very strong principles: Most-favored-nation (MFN) treatment and non-discrimination.

Most-favored nation treatment prohibits a country from discriminating at the border against the goods of one WTO-member trading partner relative to others in terms of tariffs and so forth. Every country gets the deal that the most-favored country gets. You cannot single out one country for better treatment or — the real fear — impose sanctions against another except in well-defined circumstances. This was one reason why China worked so hard to get into the WTO — to limit the threat of a trade war against its products.

The MFN rule has been diluted somewhat in recent years as bi-lateral and multi-lateral preferential trade agreements like NAFTA have become more important. (The rise of preferential agreements is often seen as a reaction to the inability of the WTO to produce agreements on broader, global trade regimes) These agreements allow a certain amount of systematic positive discrimination in favor of fellow trade block members. The MFN rule still controls negative “trade war” discrimination.

The second rule, the non-discrimination principle, holds that once a product enters a country, paying whatever legal tariffs are levied at the border, it cannot suffer internal discrimination because of its import status. It must be treated from a regulatory standpoint just as domestic products are treated. That’s a powerful principle.

I am an economist, not a lawyer, but it seems to be that allowing domestic B.C. wines to be sold in supermarkets while prevented equal access to legally-imported California, France, New Zealand or Australia wines would seem to be a violation of the non-discrimination principle and actionable under WTO rules.

Principle and Interest

I was aware of some discussion of possible US action through the WTO as the BC supermarket protocols were being developed, but the US threat was taken lightly by some north of the border. The BC market is relatively small (we are not talking Ontario here) and there are substantial costs to initiating a WTO action, which can take years to resolve and burn up a lot of attorney fees in the process. Not worth the trouble! So some people in BC were surprised when the US finally acted.

But I was not surprised. While BC market losses might be relatively small for international wines, they establish a precedent that could be important if the local-product-only supermarket sales idea spreads — to Ontario, for example. And there might be other discriminatory practices that apply in Canada and its provinces that need to be studied — the supermarket rule might have been the tipping point to take action.

Finally, there is a more global concern. We seem to be living through a period when protectionist rhetoric is in the air and actions that challenge or violate the rules of fair trade are seriously proposed.

In this environment, it is in the interest of global industries like wine to resist the protectionist tide wherever possible on the grounds of both principle and interest (self-interest, that is).

The Name Game: Porto, Napa Diplomacy and the Fortified Wine Dilemma

portoThe Association of Port Wine Companies roadshow passed through Seattle recently and Sue and I were fortunate to be invited to attend the Porto and Douro Wines Tasting, a ceremony initiating several local wine trade representatives into the Confraria do Vinho do Porto, and a festive dinner hosted by the winemakers.

The events, which involved wines and representatives from eleven Port houses, had two main purposes. The first and most obvious was to introduce or re-introduce local restaurant and trade people to the Porto and Douro wines and to establish or renew relationships. In other words, this was a sales call and I will talk about this aspect next week. But first I want to discuss a secondary purpose: economic diplomacy.

Protecting the Brand

Champagne and Porto have two of the world’s most valuable regional wine “brands.” Sparkling wines are made all over the world, but Champagne can only comes from the Champagne region of France. Ditto Port wine and the Porto region.

When producers in other regions use these terms generically, they potentially dilute or devalue the brand. It is easy to see why this might be a problem. Trade treaties have enabled Champagne and Porto to assert their intellectual property rights here in the U.S., but with pre-existing commercial use “grandfathered” in. Thus Gallo legally sells inexpensive Andre’s California Champagne and Fairbanks Port.21344

Not all of the grandfathered brands are high volume value wines. Prager Royal Escort  Port, made from Napa Valley Petite Sirah grapes, sells for $90 per bottle for the current 2009 vintage release. It may not be real Porto Port, but it is a wonderful wine.

Champagne, Port and the other key regions would obviously like to see there brand rights more strictly enforced and they hoped to accomplish this as part of the big Transatlantic Trade and Investment Partnership Agreement (T-TIP) that has been in negotiation between the U.S. and the European Union for some time.

Shifting Political Winds

But the political winds have changed directions (in case you haven’t noticed) and big trade agreements are now pretty much off the table. The incoming Trump administration seems more likely to dismantle existing trade deals than to encourage new ones. The political environment in Europe is no sunnier.

Even a fairly straightforward trade treaty with Canada nearly collapsed at the last minute when officials in the parliament of the Belgian region of Wallonia raised objections. Reminds me of The Mouse that Roared.

Facing this political roadblock, the Porto producers have turned to the art of persuasion — diplomacy. Thus the photo above, which shows George Sandeman at the October 27 Confraria induction ceremony in San Francisco where Boyd Family Vineyards, Freemark Abbey, Jessup Cellars and Schweiger Vineyards were welcomed into the Brotherhood of Port to honor their commitment to respect the traditional use of the Porto brand.

The Napa-Porto Connection

Napa Valley Vintners was also recognized for their work to protect place names. Napa has particular interest in this issue because the Napa brand itself is very valuable and, like Champagne and Port, is at risk of being diluted in various ways. It is no accident, therefore that the Joint Declaration to Protect Wine Place Names and Origins,  which an increasing number of regions are embracing, is also called The Napa Declaration on Place. Porto and Napa were founding members of this initiative.

I asked George Sandeman (the handsome fellow in full Confraria regalia in the photo above) about the situation and he noted that “Napa producers switched away from Champagne on a voluntary basis long ago.  Now nobody in Napa Valley produces Champagne, even though they legally may do so according to US law (those grandfathered in the 2006 Wine Accords).  The producers in Napa have made that change as a show of respect to the Champagne region.”

“There has been discussion for several years of doing the same for Port,” he continued, “and now the first handful of Napa producers voluntarily made a switch away from the term “port” to something else, even though they weren’t legally compelled to do so.  It was a sign of respect to Porto and the Port producers, but also an acknowledgment that it is important to “walk the talk” when it comes to respecting and protecting winegrowing place names.”

Not Port: The Name Game

One problem that the makers of Port-style wines face is “the name game” — how to describe their products and market them without using the forbidden terms. It is a tricky business. Poking around our little cellar, for example, I found two examples of winemakers who make interesting wines and work hard to stay inside the lines.mfw

Hedges Family Estate, for example, makes very small quantities of wine from traditional Port grapes (plus a little Cabernet Sauvignon in the example we have). The back label clearly identifies itself as “Fortified Wine,” which accurately describes the process and is one possible generic descriptor of these wines. Unfortunately, the terminology also emphasizes alcoholic strength and not everyone will see that as a positive.

Mosquito Fleet Winery makes a fortified wine called Griffersen Reserve from Touriga Nacional grapes . As with Hedges, the term “Port” is carefully avoided on the package. Small print on the back label describes the product as “dessert wine,” emphasizing sweetness and the after-dinner occasion instead of alcoholic content or production process. This is accurate (at the winery you are served a taste in a small dark chocolate cup– yum!), but is obviously also vague and somewhat limiting as a category.

If you called either of these wines Port they would be easy for consumers to understand. The diplomatic initiative to protect the Port producers’ brand would be more effective if someone could find a generic term that works as well for these wines as “sparkling wine” does for wines made in the Champagne style and method. The lack of such a term means that honest efforts to respect Porto’s rights in theory frequently fail in practice. While Hedges and Mosquito Fleet won’t call their wines “Port” nearly everyone else does when they refer to them.

What’s the best way to honor and protect the Port brand while also allowing U.S. producers to identify and successfully market their own fine wines? The name game continues.

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Seems like Shirley Ellis could solve the Porto name game dilemma.

 

Republic of Georgia: First Impressions of a Wine Industry in Transition

qvevri1Sue and I were fortunate to be able to extend our visit to the Republic of Georgia at the conclusion the  of United Nations World Tourism Organization’s (UNWTO) first Global Conference on Wine Tourism. The conference’s focus was on wine tourism, but we wanted to learn more about the Georgian wine industry itself.

Georgia’s DNA

As I explained in an earlier column, I came to Georgia full of questions about the wine industry here and with a preliminary hypothesis to help me shape the inquiry. Here’s what I was thinking.

Georgian wine is very old and the wine culture is strong. I have never been anywhere where wine was so central to the culture. Wine and vine were everywhere we looked. Wine grapes were a central element, for example, of a Soviet-era war memorial we saw in Sighnaghi. And grape vines are at the heart of the image of Georgia as a Christian nation. Saint Nino fashioned the first cross using her own hair to bind two lengths of grape vine. Wine is Georgia’s DNA.

A great deal of the wine that is consumed is produced by families for their own use and to give to friends and neighbors. The fact of such large family production necessarily shapes the market. Not much imported wine enters Georgia, for example. And a great deal of the commercially produced wine must be exported.

The Russia Factor

Russia was for many  years the largest export market for Georgian wine and because of this the focus was on semi-sweet red wines made in state-owned factories and often sold in bulk. Quantity was a priority over quality. But then came the Russian embargo of Georgian and Moldovan wines in 2006 and in an instant the most important market, accounting for perhaps 80 percent of sales, was gone and did not return until 2013.vino1mo

The Russian embargo was the worst thing that could have happened to the Georgian wine industry in the short term and the best thing in the long run. In retrospect it is easy to see that such complete reliance upon a single foreign market for wine sales was not a healthy situation.

The sudden loss of that market forced Georgian producers to develop new markets, improve quality to be competitive in those markets, and find strategies for product differentiation to raise margins and secure market niches.

Silk Road to China

A recent report lists Georgia’s five largest export markets as Russia, Ukraine, China, Kazakhstan and Poland although there have been substantial sales increases (albeit from a low base) to Germany, the UK, and Canada.

The recent  rise in the Chinese market has been particularly noteworthy and follows on investments in Georgia wine shops and culinary centers that were established in China. There are ambitious plans to open 100 Georgian wine houses there.

One wine executive we talked with noted a “Silk Road” connection that works in Georgia’s favor. Georgia has negotiated a preferential trade agreement with China and Chinese traders and investors who visit the country taste and enjoy the Georgian wines, learn about the country’s 8000 year wine history and its Silk Road connection. Nothing could make more sense than to buy Georgian wine with its long history and connection to China. Very smart of Georgian producers to leverage this cultural advantage!p1110666

Natural Wine Buzz

Here in the United States much of the buzz about Georgian wines concerns natural wines made using the traditional qvevri clay containers to ferment and sometimes age the wine wines. Alice Feiring is a leading advocate of these wines and her recent book For the Love of Wine gives a highly personal account of her passion for them.

No one we talked with is sure how much Georgian natural wine is made by families for their own consumption, but commercial production is relatively limited. One producer estimated total output of perhaps 120,000 bottles more or less with several wineries in the 3000 to 6000 bottle capacity range. Little of this wine is sold domestically in Georgia because of its relatively high cost and the existence of family-produced alternatives.

So the focus is clearly on export to markets where natural wines have a strong presence including Italy, France and Denmark, and developing natural wine markets such as UK, Canada and the United States.

Given all of this my working hypothesis when we left for Georgia was this. The Russian market is the past, now they need to look to the future. But which future? The natural qvevri wines are Georgia’s key to differentiation in the new markets, but high quality natural wine is too narrow a category to carry the ambitions of a great wine producing nation.

Process of Elimination

My hypothesis, based on the process of elimination, was that the way forward is for Georgia to focus on increasing the quality of their conventional wines, making them in a clean international style and differentiating by stressing a small number of exciting indigenous grape varieties (perhaps red Saperavi and white Rkatsiteli and various blends) from among the dozens of native Georgia wine grapes.

In other words, I saw Georgia in a very conventional way, much as I view Turkey or Portugal, for example. That was then. What do I think now? Come back next week to find out.

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Thanks to the Georgia National Tourism Administration for inviting us to extend our visit to Georgia and generously providing  us with help in visiitng the wine regions and meeting wine producers.