Is This the Beginning of Juice Box Wine?

Juice Box globalization was one of three wine market scenarios that I proposed in a talk I gave in January 2013 at the Unified Wine and Grape Symposium in Sacramento (you can read a brief summary of my remarks here). I was inspired by the Minute Maid apple juice box pictured in the slide above.

You think of Minute Maid as an American brand and goodness knows that we grow lots of apples here, but in fact it has become a globally sourced product. The generic apple juice in that box could come from the U.S. or Argentina, Austria, Chile, China, Germany or Turkey (or any combination of them, I suppose). The brand is the thing here — country of origin is almost literally a footnote and apple variety is a complete non-issue.

Is juice box wine possible — wine pretty much stripped of variety and place of origin? Many heads nodded yes in the audience as I asked the question. Just a matter of time as global sourcing of wine becomes a key supply side factor and strong brand identity continues to grow in importance on the demand side. Juice box wine isn’t the only direction wine is headed, I suggested, but it is one possibility.

Barefoot Makes an Impression

And now it is here (although perhaps not for the first time). Gallo’s Barefoot brand has introduced a new red blend wine, Barefoot Impression, made from grapes grown on four continents, according to a recent report in the Modesto Bee

Impression Red Blend is the 22nd product from Barefoot, which Gallo has built into the nation’s top-selling brand. The blend includes grenache from Spain, shiraz from Australia, malbec from Argentina and tempranillo from California.

 Impression joins 14 still wines and seven sparkling wines, all made from California grapes, in the Barefoot portfolio. Barefoot winemaker Jennifer Wall describes the new wine as “a smooth red blend with dark fruit flavors, framed by notes of sweet vanilla and spice.” It has a suggested retail price of $6.99.
Lost in Space?
A quick trip to my local Safeway store revealed Barefoot Impression on the shelf along with other inexpensive red blends. The purple footprint was part of the typically attractive Barefoot package. But I was more interested in what the package didn’t say than what it did. No vintage year. No listing of the grape varieties used. And no listing at all of place of origin.
Whereas the Barefoot Zinfandel I found proudly boasted Lodi as its birthplace, and “California” appeared on several varieties (the Pinot Grigio in my store was an American appellation), I could not find any geographical designation at all for the Impression. I guess it makes sense — a multi-vintage blend has no year and a multi-continental blend has no specific point of origin (although there would be nothing to stop Barefoot from providing this information if they wanted to).
Message in the Bottle
Will consumers care that there is no vintage year or appellation? Some might question the wine if they look for traditional year-variety-origin references. But Barefoot has created their own narrative (see video below), which is very much in the Barefoot spirit and very appealing, too, and I am sure the marketing team has discovered that at least some Barefoot drinkers respond to the progressive social message more effectively than they would to a more traditional alternative.
Is Barefoot Impression the beginning of an important trend? Impression probably isn’t the first and certainly won’t be the last wine in this category. Watch this space for future reports.

Sell Local, Source Global: Welcome to Bota Box Globalization

I think I’ve seen the future of  American wine — or at least one aspect of the future, since nothing in wine is simple — and I didn’t need a Time Machine, Crystal Ball or souped-up DeLorean to do it. All I had to do was walk into my neighborhood Safeway store and take a look around.

[This is the final post in a series about what I think I learned at this year’s Unified Symposium regarding the future of the American wine market. Scroll down to the earlier posts if you haven’t already read them.]

The buzz at the Unified Symposium this year was about America’s growing wine market and the bodacious 2012 U.S. grape harvest. Higher demand, abundant supply — happy news.  But, as I have argued over the past few weeks, the future is more complicated, full of both opportunities and challenges.

The U.S. is unlikely to be able to meet all of the rising demand profitably in the long run if current trends continue, so imports will likely fill the gap. U.S. producers should adopt a “Machiavellian” strategy to seize control of import flows, especially important at the low-price end of the spectrum, and systematically shift U.S. products into up-market categories. The changes are coming, I’ve written, so the best bet is to think ahead and be well-positioned when the future finally comes around.

Bota Box Globalization

Not everyone agrees with this vision of the future and I’ll talk about alternative views in a moment. But first I want to show you  where things seem to be headed. Here for your consideration is a version of globalization that I think points the way.  I call it Bota Box Globalization.

Bota Box is a line of  3-liter bag-in-box and 500 ml  tetrapak wines from DFV. Jon Fredrikson named DFV winery of the year for 2011 at last year’s Unified and the company has been growing by leaps and bounds — it’s easy to see why.

When I’ve thought about Bota Box in the past, I’ve associated it with good value, alternative packaging and put it squarely in the “California wine” category. Why California wine? Well, because that’s the appellation I remember seeing on the boxes and also because DFV is a major California producer, making about 6 million cases of their own wine brands last year and about another 6 million cases for other firms.

(Data from the 2013 Wine Business Monthly top 30 U.S. producer report — DFV is #8 out of 30 if we take only their own brands into account, wedged between #7 Ste Michelle Wine Estates and #9 Jackson Family Wines.)

Sell Local, Source Global

I guess Bota Box is still a “California brand” and of course an American brand, but DFV is already doing with it what I think many large volume (and some smaller ) producers will do — sell the brand locally but source the wines globally.

The wines were attractively displayed at the Safeway on Proctor Street when I visited on Saturday — appealing enough that the 3-liter Cab boxes were sold out. The wines were priced at $24.99 for the box, which is equivalent to $6.25  per 750 ml bottle, but you could bring the cost down to $19.99 by flashing your Safeway Club Card and cut another $2 off if you purchase in quantity, as you might for a party.

This is good value, but not bottom-shelf cheap. Bota Box is a leader in the “premium box wine” category that represents a big step up from brands like Franzia.

The packaging, the brand and the grape variety are the main things you notice when you survey the color-coded Bota Box shelf, but a little investigation brings the global factor into focus. The Merlot, Riesling, Shiraz were all California wines at my store, but the rest were imports from Chile (Cabernet Sauvignon), France (the RedVolution red blend), Italy (Zinfandel!), Argentina (both  Malbec and Moscato) and South Africa (Chardonnay).

South African Chardonnay in a Bota Box? Wow! I didn’t see that coming.

Poking around the web, looking at Bota Box images, it is pretty clear that the sourcing is both flexible and global. Looks like the Malbec has come from exotic Lodi, for example, and that the Shiraz, Cab and Chard were once sourced from Australia, probably back before the Aussie dollar became so ridiculously over-valued.

And the Zinfandel once came from California instead of Puglia and probably still does in some of the containers — you sometimes find the same varieties from different countries on adjacent Bota Box shelves. The 3-liter RedVolution was from France and the big box Cab from Chile at my neighborhood Safeway, for example, but the 500 ml tetrapaks of the same wines wore a California designation.

Bota Bottom Line?

Brand, package and variety are the key factors in this business model  — the particular source of the wine is a secondary characteristic for Bota Box, so long the as quality is consistent, as I assume it is.

The bottom line of my series of posts is that I see the U.S. wine market continuing to grow and imports making up a larger and larger part of it as domestic supply constraints kick in, competition increases at the lower price levels and wine export momentum is sustained. Bota Box globalization illustrates one way that smart producers will position themselves to compete in this evolving market while controlling their own destiny.

Going back to an earlier post in this series where I compared the wine market to the apple market, I think we’ll see Juice Box Globalization at the bottom shelf of the wine wall, where pressure for global integration will be very strong indeed, Granny Smith (and Bota Box) Globalization in the middle and the highly differentiated products that represent Honey Crisp Globalization at the top. It’s already happening. Are you ready? It looks like DFV is!


What’s wrong with my analysis? Well, prediction is difficult — especially about the future — and so there is a lot of room for error. One criticism is that my analysis is fairly simplified and a much more nuanced approach is needed. Fair enough. Fortunately Jim Lapsley has already provided that in an enlightening analysis he prepared in 2010.  Click here to download the pdf — it is well worth reading if you are interested in this issue.  Jim concludes that

The U.S. wine market will look different in 2030. On the demand side, per capita consumption will increase as acculturated Hispanics adopt wine and as wine becomes a more integral part of the American culture. Increased per capita consumption combined with population growth could quite possibly increase total table wine sales to 3.60 billion liters.

California will remain the dominant producer within the United States, but it is likely to lose market to inexpensive bulk-wine imports. These wines are likely to be marketed as global brands, with the location of grape supply of little importance to consumers. This article has also discussed the supply and demand picture for higher priced wine for which location of production is a dominant marketing attribute. These wines, which are largely produced from coastal grapes, face quite different economic drivers on both the supply and demand sides of the market

Jim’s analysis is more sophisticated than what I have posted on The Wine Economist, but we see many of the same factors at work.  I see the global integration as being a more powerful factor, but maybe that’s because I’m a globalization expert and pre-disposed to see globalization wherever I look.

Another set of reader comments essentially argues that I am too influenced by recent events and conditions — the relatively weak dollar, for example, the recent surge in bulk wine trade and current supply-demand balance trends and conditions. All these factors could and probably will change. Will they change enough to alter my conclusions?

Good point. They might! But I’m not convinced they will. I guess we will have to wait and see, but in the meantime I don’t think if would be a mistake to get ready for the increasingly global future of U.S. wine if  and when it comes around.

Machiavellian Global Strategies for U.S. Wine

What’s the best strategy for the U.S. wine industry as it enters the increasingly global market environment that I’ve described in my two recent posts on Juice Box globalization and the prospect of a coming 50-50 import-domestic split?

I’ll use this post to make a few observations inspired by the buzz at this year’s Unified Symposium and then return to the topic again next week to synthesize the emails and comments I’ve received on this topic.

Whenever I think about strategy I always ask myself “What would Machiavelli say?” because the famous Florentine’s advice has held up pretty well over the years.  Since, as the sage Jon Fredrikson likes to say, “there are no one-liners in wine,” here are three elements of a Machiavelli-inspired battle plan.

“Wisdom consists of knowing how to distinguish the nature of trouble and in choosing the lesser evil.”

Machiavelli seems pre-occupied with trouble, which is both good and bad when we try to apply his insights to the changing global wine scene. The wise part of this saying is that the nature of trouble may not always be obvious and you’ve got to be careful not to jump to conclusions.

The continued growth of the imported wine category in the U.S., for example, isn’t simply a matter of lost market share, as I suggested in my last post.  The whole business of wine is changing and rising imports are only  part of an emerging syndrome that  presents both challenges (trouble for the Tuscan strategist) and also opportunities for the thoughtful entrepreneur.

“It is better to do willingly what you will otherwise be compelled to do.”

The idea of course is that if resistance really is futile, then you may be able to get better terms through cooperation. I think this rule might apply to the basic wine category in the United States, which faces double jeopardy from competition at home and abroad. Although wine imports are likely to increase in all market segments, the biggest impact may be for inexpensive “bottom shelf” wines, where the combination of bulk shipping economies and “drawback” credits are most significant.

Basic wines will also face competition on the input side. Nut crops promise higher profits than wine grapes for some farmers, especially at the low price part of the grape market. Many wine growers will need to move up-market if they want to stay in the wine grape business and this has implications for bargain basement wines. If you want to know why Two Buck Chuck has raised its price to $2.49 in its California home market, this is part of the answer.

Where will these trends lead us? Well, if I wanted to shock you I’d say that California will be forced to retreat and to concede the bottom shelf of the wine wall to imports.  Basic wines won’t come mainly from California as they have for decades, but will adopt a modified version of the “juice box globalization” mode, where branded products are sourced from all around the world as needed to minimize cost for standard quality.

This is vision of the future is actually current practice in the “premium box wine” segment, but I think it will appear in even sharper focus among in the basic wine segment.

If “retreat” is inevitable, Machiavelli suggests that U.S. producers embrace rather than resist the trend — and I think this is already under way now, too. Some wine companies are seizing the initiative to make sure that the brands that the imported wine goes into are theirs and not those owned by foreign producers and of course a retreat in the basic category is not a defeat if it can be leveraged into an advance in higher margin categories.

The transition will be difficult, but less so if U.S. producers plan for it rather than just watching it happen to them. I’m reminded of what happened in Washington State when the California Wine Bill was passed in 1969. Cheaper California wine flooded into the state, crowding out the cheapest Washington products and forcing Washington to become much more tightly focused on premium products. A tough transition in the short run, but it’s been great for Washington wine in the long run.

“It is better to be feared that to be loved.”

It’s not about love or hate, it’s about control. It is better to be feared than loved, Machiavelli said, because you can control if you are feared far better than you can control if others love you and controlling your own destiny is the key.

Hence the sentiment I heard on several occasions in Sacramento that U.S. producers need to take command of the import levers so that the bulk wine imports go into their brands rather than foreign brands. The goal is to defend hard-won territory on wine walls and distributors’ lists. Although many of the people who talked to me would rather have American wine sold in American brands, they could live with imported wine in American brands if that’s what is necessary.

Perhaps Machiavelli is a control freak and exaggerates its importance, but I think the control issue is worth considering. Certainly there is some concern among New World wine exporters about lost control of quality and reputation when wines are shipped in bulk versus packaged goods. Shipping wine in bulk to yourself in foreign markets and bottling there (to gain economies but preserve control) is a rising trend.

If you wants to see where the control trend might lead, read this article about China’s Great Wall brand wine’s global strategy in on  Great Wall seems to be going beyond purchasing foreign wine to fill their domestic brand bottles — they are actually buying the foreign vineyards themselves and securing the production facilities!

“We will announce that Great Wall is not only China, and we will make a French Great Wall, a Chilean Great Wall and an Australian Great Wall,” he said.  …  “You will probably find these wines in the market next year… Great Wall will use global sourcing for the Chinese domestic market.”

Now that’s control! Machiavelli would be pleased!


I’ll consider alternative viewpoints and try to sum up next time.

Will Imports Take Half of the U.S. Wine Market in 2025?

Required reading?

Will half the wine sold in the United States in 2025 be imported? No — that’s crazy talk. But 40 percent seems very likely and 45 percent isn’t out of the question. The trend towards half imports is fairly strong even if the day we hit the 50-50 import – domestic milestone is likely to be a bit further down the road.

Not a River in Egypt

I want to talk about the forces that are driving the 50-50 trend in this post and then focus on changing U.S. strategy next week.

Imports accounted for about 35 percent of U.S. wine sales in 2012 — enough of a jump from previous years to get everyone’s attention. And even though it is easy to say that this is just a short term blip that will disappear now that 2012’s big vintage is in the tank, I think that we need to take the trend seriously

As I tell my students, Denial isn’t just a river is Egypt. It’s a good idea to face the facts. Here are five reasons for the rising import trend.

Five Steps Toward 50-50

1. The U.S. is now the world’s largest single wine market and continued growth is likely, but not guaranteed. Macroeconomic uncertainty is still high and competition from ciders and craft beers could certainly eat into wine’s expanding market. The trend is up, but lots could still go wrong.

2. Because the U.S. market is growing (and Europe continues to stagnate), we are clearly in the cross-hairs of every wine producing region on earth. Everyone wants to get into our restaurants and onto store shelves and many will succeed, which is where the 50-50 trend begins.

The Almond Alternative

3. U.S. wine producers will find it difficult to meet all of the rising domestic demand, which will create an opening for imports. Yes, great efforts are being made to expand vineyard capacity to make up for the many years when such investments were uneconomic. But it might not be enough. Water availability and cost will limit expansion at some point, for example.

What economists call “opportunity cost” is a more immediate factor in some parts of California — vineyard land in some areas could be more profitably used to produce almonds and pistachios and that’s what will happen if current trends continue. The competition isn’t domestic wine versus imported wine, as you might expect, it is profits from wine grapes versus alternative crops. And wine grapes no longer have the upper hand in many cases.

4. So domestic wine demand may grow faster than domestic wine supply. Can imports fill the gap? Yes, now more than ever. The surge in global bulk wine trade over the last five years — bulk wine shipments now account for 45 percent of all New World wine trade — convincingly demonstrates that global wine production has become a tightly integrated industry. As one wine executive told me a few years ago, it’s a small world after all. Very small. And it’s smaller still today.

Pull Ahead then Draw Back

5. U.S. wine exports are likely to add to the trend, but not necessarily in the way you might suspect.

U.S. exports have risen and although  this is a difficult sector to forecast because so many factors (such as exchange rates, foreign economic trends, etc.) are involved, I think growth will continue. Higher exports increase the import ratio both directly (selling the wine at home would crowd out foreign sales) and indirectly through import duty and excise tax drawbacks. (Click here to read a 2012 UC/Davis report on the drawback program.)

The wine drawback program allows a refund of 99% of import duties and excise taxes on wine for which the importer has matching exports of commercially “interchangeable” wine. Because per-unit import duty and excise tax rates are substantial compared to the price of bulk wine, use of the program is high for bulk wine imports, which compete with wine from low-price Central Valley grapes. Bulk wine exports dominated imports until 2009 and the program stimulated import growth. Now, with imports and exports roughly in balance, the program stimulates both exports and imports—leaving net trade in bulk wine roughly in balance.

— Summary of the U.C. Davis Report

Now I know what you’re thinking: who’s going to import wine and then export it — that’s nuts. Ah, but it doesn’t have to be the very same wine — you can import Moscato from Argentina, for example, and export a different variety to Britain or somewhere else and so long as certain rules are respected, the drawback will kick in. The focus is on inexpensive bulk wines, as the report suggests, because that’s where the relative impact of both duties and drawbacks is greatest.

Unexpected Consequences

Getting the full advantage of drawbacks requires a careful balancing of imports and exports by individual firms. If you import a lot, then you have a strong incentive to export to get the tax paybacks. And if you increase exports as I think U.S. wine producers will, you have a strong incentive to import more, too. If both imports and exports increase, as the UC/Davis report cited above suggests, then import market share rises.

How strong is the import incentive? Well, it depends on the particular case of course, but one of the speakers at the Unified cited a case where the drawback payment was almost equal to the price of the wine being imported. For a firm that was already exporting, the imported wine was nearly free. (I don’t have details of this transaction, but the source of the story is completely reliable; I wish I had been there when the deal went down!)

Bottom line. More and more of the wines on store shelves will be imports as the U.S. wine market continues to expand and evolve. What will this mean for domestic producer strategies? Come back next week to find out.


Note: this is the second of three posts where I try to make sense of what I learned at this year’s Unified Wine & Grape Symposium. Thanks to everyone I met at the Unified for giving me their views about current wine trends and future prospects.

Juice Box Globalization: Is this the Future of Wine?

applegrapeI’m back from the Unified Wine & Grape Symposium and busy trying to process all that I’ve learned while simultaneously catching up on the work that seems to have piled up while I was away. You know the feeling …

One theme of the seminars this year was the impact of globalization on the U.S. wine industry. I thought I would approach this topic in two parts. First, let me tell you a little of what I said on the Tuesday Globalization panel and then I’ll try to synthesize what learned from the discussion in a follow-up post.

Thinking Outside the [Juice] Box

My remarks were an attempt to get the audience to think about the impact of globalization in a broader context (it’s that liberal arts thing I do in my day  job as a college professor). Globalization isn’t a simple thing, I told the audience, and it isn’t a one-way street, either.

Don’t think that globalization is just competition from imports from other countries (although that’s part of it, of course) or just export opportunities abroad (as important as they can be). Globalization is both of them and many more influences, too.

One way to understand wine globalization a bit better is to look at globalization in another industry and seek out parallels and note contrasts, too. The apple industry is a bit further along the globalization process than wine, so maybe it reveals something about the road ahead.

The apple market has always been segmented, for example, but globalization has magnified the category distinctions and intensified competition within them.  Maybe that’s happening to wine? Here are three flavors of apple globalization that may or may not have lessons for wine business in the future.


Juice Box Globalization

Consider the common juice box. If you have children or grandchildren or pack your own lunch you probably have these things around you all the time. Who knew that they embody an extreme form of globalization?

Take a look at the list of ingredients. Water, juice concentrate, etc. — no surprises there. But look where the juice concentrate comes from: USA of course but also Argentina, Austria, Chile, China, Germany and Turkey.  The apple juice concentrate that supplies the juicy fruit taste could come from any of five countries on four continents. Wow! That’s globalization for you.

The concentrate is a completely generic product (simply apple — not some particular variety of apple) traded in highly competitive global markets where cost (for standardized quality) is king and minor changes in exchange rates, transport costs and trade fees can have big effects.

As we consider the major increase in bulk wine shipments around the world — 45 percent of all New World wine exports are now big bag – big box bulk shipments — you can’t help but wonder if Juice Box globalization might be on the horizon.

Granny Smith Globalization

I’m old enough to remember when Granny Smith apples entered the U.S. market in 1971 (from New Zealand, as I recall) as a premium product. The Granny Smith was developed nearly 150 years ago by a grandmotherly Australian woman named Smith who discovered the natural cross in  her garden  and propagated it.

Initially, I think, the appeal of Granny Smith was that it was a premium Southern Hemisphere apple that filled a seasonal market niche in United States. Now however, Granny Smiths are grown pretty much everywhere and have lost some of their premium appeal. Highly integrated international apple companies source them from everywhere and distribute them everywhere.

Granny Smith globalization is not nearly so extreme as Juice Box globalization, but it is still quite dramatic. It reminds me of some of the bulk wine trade today, where certain varietal wine brands at certain price points are increasingly sourced from all over the world. Product differentiation in some segments is increasingly based upon brand rather than appellation or country of origin — which can change from California to Chile to Italy and beyond from year to year — just like the  Granny Smiths.

Honeycrisp Globalization

The best margins in the apple business today are probably found in what I call the Honeycrisp market segment where innovative super-premium products command high prices. The Honeycrisp apple was developed by the Agricultural Experiment Station at the University of Minnesota to be an eating apple with distinctive flavor and especially texture profiles that consumers seem to love. Patented and licensed, it has been a very profitable product.

The plant patent on the Honeycrisp has apparently expired, so production is increasing and prices have fallen a bit, but the idea behind it is still strong. Plant scientists in Europe have developed new specialized patent apple products to take over where Honeycrisp left off. Sue is especially fond of  Kiku and Kanzi, which I think are variations on the Fuji variety from Japan that were developed in Northern Italy and the Netherlands respectively and are grown in limited quantities here in Washington State.

Honeycrisp globalization is about product innovation and product differentiation. Follow the money: the tight margins created by Juice Box and Granny Smith globalization have nudged the Honeycrisp strategy into the spotlight.

Apples, Oranges and Wine

Is there anything to be learned about wine by thinking about apples? Or is it an “apples and oranges” thing? Well, my goal was to get people thinking and I admit that when I asked the big audience if they thought that there was something to the Juice Box (or Granny Smith or Honeycrisp) idea of wine I saw many heads nodding “yes.”

Not a surprise, of course. Apples and wine are specialized industries, but they are both businesses, too, and perhaps the similarities that people see are because of that. Maybe this little lecture has got you thinking, too. If so, come back next time when I’ll talk about some of the interesting ideas I heard from other speakers regarding globalization and U.S. wine.


Here’s a video about Kiku — about as far from a Juice Box (in terms of product differentiation) as you can get.  Enjoy!

The Unified Symposium: Globalization, State of the Industry and Book Signing

I hope to see many Wine Economist readers next week at the Unified Wine and Grape Symposium in Sacramento, California. The Unified is North America’s biggest wine industry gathering. Here’s how the website describes it.

Built with the joint input of growers, vintners and allied industry members, the Unified Wine & Grape Symposium is held annually in Sacramento, California and is the largest event of its kind in the western hemisphere. Serving as a clearinghouse for practical information important to wine and grape industry professionals, the Unified Symposium also hosts a trade show with over 650 suppliers displaying their products and services to the more than 12,400 people who attend annually.

It’s a Really Big Show (as Ed Sullivan might have said) and I’ll be part of three events: two sessions and a book signing. I’ll paste the details of the sessions at the end of this post.

  • I’ll be on the panel for the general session on globalization and the U.S. wine industry that starts at 9 am on Tuesday, January 29,
  • I’ll be moderator for the “State of the Industry” panel that starts at 8:30 am on Wednesday, January 30, and
  • I’ll be signing copies of Wine Wars at the Wine Appreciation Guild booth in the trade show from 12:30 – 2 pm on Wednesday.  Please stop by Booth # 1620 and say hello if you are there.

Here are the details:

How the Global Wine Market Affects U.S. Production

U.S. growers and wineries are directly or indirectly impacted by the global wine market. Bulk wine movements ebb and flow based upon changes in currency valuations, relative costs of production, transportation costs, and supply and consumer demand. U.S. producers are accustomed to competition from branded imports, but numerous U.S. brands also source bulk wine internationally to meet cost-of-goods targets or to satisfy consumer demand for popular wine styles or varietal grapes in short supply. These trends affect U.S. grapegrowers and wineries, and this session will help you understand the market forces that will likely affect your business.


Jeff O’Neill, O’Neill Vintners & Distillers, California

Kym Anderson, University of Adelaide, Australia
Greg Livengood, Ciatti Company, California
Stephen Rannekleiv, Rabobank, New York
Mike Veseth, The Wine Economist Blog and The University of Puget Sound, Washington

State of the Industry

The State of the Industry session will provide a comprehensive look at every aspect of the wine industry, from what’s being planted to what’s selling. This 2½ hour session features highly regarded speakers and delivers incredible value for attendees who need to understand the market dynamics of the past year and are seeking insight into the market trends that will define the year ahead.

Mike Veseth, The Wine Economist Blog and The University of Puget Sound, Washington

Nat DiBuduo, Allied Grape Growers, California
Jon Fredrikson,
 Gomberg, Fredrikson & Associates, California
Charles Gill, Wine Metrics, Connecticut
Glenn Proctor, Ciatti Company, California

Red Mountain: Think Global, Drink Local

Red Mountain is Washington’s smallest AVA and perhaps its most distinctive. This compact patch of dirt (see larger map below) has produced the grapes for some of the state’s most celebrated red wines. There’s a real sense of place in the wines according to critics, so the “drink local” part of this post’s title makes sense. But think global?

Well, yes. The wine world is very interconnected; international influences are surprisingly common and take many forms. A visit to Red Mountain (Sue and I were joined by research assistants Bonnie and Richard) revealed two of globalization’s many local faces.

The Italian Job: Col Solare

You might not expect to find one of the legendary names of Italian wine here on Red Mountain, but as you motor up Antinori Drive towards the beautiful winery at the top of the road the association becomes clearer. Col Solare (Italian for Shining Hill) is a joint venture of Tuscany’s Marchesi Antinori and Washington State’s Ste Michelle Wine Estates (SMWE). There has to be a story. Here it is.

It must have been about 20 years ago that Piero Antinori came to America, looking for a wine-producing partner. He wasn’t interested in making an American super-Tuscan. He wanted to do what he thought America did best: Cabernet. So, as the Ghost Busters used to say, “who ya gonna call?” if you want to make great Cabernet? The answer was obviously André Tchelistcheff, the legendary wine maker at Napa Valley’s Beaulieu Vineyards and consultant to many important wineries (including Chateau Ste Michelle).


Where in America can I make distinctive Cabernet? Tchelistcheff knew what advice to give because in fact he had already given it to his nephew Alex Golitzin who founded Quilceda Creek winery, which makes some of Washington’s highest-rated Cabernets. Tchelistcheff’s advice to Antinori was much the same and resulted in the partnership with Ste Michelle Wine Estates and the Col Solare winery we see today.

The first wines, starting with the 1995 vintage, were made with grapes sourced from several Columbia Valley vineyard sites and produced at a nearby SMWE facility, but eventually the focus on Red Mountain grew stronger and the showcase winery was finished just in time for the 2006 crush. The estate vineyards radiate like the rays of the sun on the hillside below the winery.

The partnership has grown since that first step. SMWE is now the sole importer of Antinori wines into the U.S. market and in 2oo7 the two partnered again to purchase the Judgment of Paris champion Stag’s Leap Wine Cellars. Quite a successful partnership — you’ve got to believe that Tchelistcheff earned his consulting fee.

Col Solare is interesting to me because of the global-local connection. The wine is Cabernet-based, as Antinori wanted, but with a distinct Red Mountain twist, which means that it includes a little bit of Syrah in addition to the usual Bordeaux suspects since Syrah does so well here.


Col Solare is an impressive achievement. Everyone we talked with on Red Mountain seemed glad to have them there. SMWE and Antinori are good neighbors, good customers for the local growers and good advocates of Red Mountain and its wines.

Red Mountain isn’t a first class wine tourist destination yet — the infrastructure needs further development and another couple of winery tasting rooms wouldn’t hurt either — but Col Solare is already a destination winery and worth the trip.

The Swedish Solution: Hedges Family Estates

Another destination Red Mountain winery, Hedges Family Estates, shows a different aspect of the local-global connection. Tom Hedges is a local boy, who grew up in the Tri-Cities area before the region became known for wine. He studied international business at the University of Puget Sound and then at the Thunderbird grad school in Arizona. I guess you could say that he got into the wine business through the side door — through the business side. Here’s how the Hedges website explains what happened next. 

In 1986 … Tom and Anne-Marie created an export company called American Wine Trade, Inc., based out of Kirkland, Washington State; they began selling wine to foreign importers. As the company grew, it began to source Washington wines for a larger clientele leading to the establishment of a negociant-inspired wine called Hedges Cellars. This 1987 blend of Cabernet Sauvignon and Merlot was sold to the Swedish Wine and Spirit Monopoly, Vin & Sprit Centralen, the company’s first major client.

So you could say that Hedges Cellars was created to satisfy a global demand. Soon Hedges was breaking ground on his Red Mountain estate. Today Hedges is the largest family winery in Washington and was instrumental in establishing the Red Mountain AVA.

It really is a family operations. Tom and his French-born wife Anne-Marie are proprietors, brother Pete Hedges makes the wines, Tom and Anne-Marie’s daughter Sarah is assistant winemaker and son Christophe is director of sales and marketing. The wine portfolio ranges from the Hedges Red Mountain estate wine (a Bordeaux blend, but with a bit a Syrah) to the popular CMS blends and the House of Independent Producers wines.

Taken together I think Col Solare and Hedges Family Estates show the local-global nexus at its best, bringing international attention and expertise  to local wines and taking those wines to global markets. We are often told that globalization suffocates local enterprise, but these wineries show that it can, in the right circumstances, breathe life into them.



I can’t leave Red Mountain without mentioning two other stops we made that day. It was about time for lunch when we finished our visit to Col Solare and that can be a problem since I don’t think there are any restaurants on Red Mountain.  But we had planned ahead for a picnic and so we headed to Fidélitas, where we bought a bottle of Charlie Hoppes’ delicious Semillon and dined out on the patio overlooking the vineyards. Turns out we didn’t need to bring food — Charlie had arranged for a local barbeque food truck to be available for weekend visitors like us — nice touch!

Our next stop was the world’s best vineyard tour. Michael and Lauri Corliss (of Corliss Estates) had arranged for us to meet Mike McClaren and James Bukovinsky, who were working in one of  the Corliss Red Mountain vineyards just up the road from Fidélitas  supervising  the mid-October harvest. We spent the best part of two hours with Mike and James, visiting every nook and cranny of the complicated site, learning about the careful matching of grape variety and terroir and tasting the perfectly ripe fruit. A real taste of Red Mountain.


Thanks to Bonnie and Richard for their able assistance. Thanks to Wysteria Rush and Marcus Notaro at Col Solare and Tom Hedges and Deborah Culverhouse at Hedges Family Estates. Thanks to Michael and Lauri Corliss and Mike McClaren and James Bukovinsky for their hospitality.

Photos: (1) Col Solare winemaker Marcus Notaro (in his  classic Inter “Roberto Baggio” jersey), (2) the view down Red Mountain from Hedges, and (3) Mike, Tom and Richard in discussion at Hedges. You can see how tiny Red Mountain is on the map below.