What’s Up with Italian Wine in the U.S. Market?

docItalian wine has a lot going for it in the U.S. market. Wines from Italy are by far the largest category of imported wines. Recent Nielsen figures (reported in Wine Business Monthly) show almost $1.2 billion in 52-week sales of Italian wines in the channels that Nielsen surveys — that is almost a third of all spending on wine imports and far more than #2 Australia ($720 million) and #3 New Zealand  ($496 million). France is #4 at $462 million.

Tariffs? Que Bello? Pazzo!

Italy has benefited from the hot market for sparkling wines in general and Prosecco in particular. And it gained an unexpected advantage over its European neighbors due to the peculiarities of the recently-imposed U.S. tariffs on European wines. Imports of many wines from France, Germany, Spain, and the U.K. are subject to a 25% tax.  What’s the tax on Italian wine imports? Zero. Zippo. Niente. Que bello!

(See Suzanne Mustacich’s excellent Wine Spectator article on the wine trade war for more details.)

How did Italy dodge the tariff bullet? I don’t think there is an official explanation or obvious economic rationale.  Pazzo! Must be politics, don’t you think? Maybe it has something to do with the high-level Trump administration officials with Italian-sounding names? Or maybe Italy’s not so closely associated with subsidies to Airbus, which provoked the WTO rulings and subsequent tariffs. Strange, but good for Italian producers trying to get their foot in the U.S. door (or working to open the door a little wider).

It would be a mistake to take these advantages for granted and the Italians are working hard to consolidate their market base and move forward. Or at least that’s what we think after attending the Seattle stop on the “Simply Italian Great Wines US Tour 2019.” We spent the day attending seminars sponsored by the European Union and wine region groups and meeting producers (many of whom were seeking local distribution) at a walk-around tasting.

[Two favorites from the walk-around tasting were Societa Agricola Sturm from Collio — fantastic Ribolla Gialla — and Cannonau di Sardegna from Sardina’s Cantina Giampietro Puggioni.]

Out of the Shadow

The Seattle event reminded us of how much we love the wines of Italy. But it also highlighted some of the challenges that Italy faces.

Italy is a complex mosaic of wine regions, styles, and brands. Although an amazing array of Italian wines can be found in the U.S. market, there are a few names that dominate the conversation: Chianti, for example, and Prosecco. It is easy for other wines from other regions to be over-shadowed. Sue and I saw the shadow effect when we stopped at a nearby Total Wine, which has a big selection of Italian wines. We were looking for wines from Friuli and we found just a hand-full  — mainly Pinot Grigio. The big regions crowd out the smaller ones on store shelves.

This is the challenge facing Vino Nobile di Montepulciano DOCG, for example.  Vino Nobile is a small and distinctive appellation located about 65 km south-east of Siena. The four wines we tasted at the seminar were terrific and made me think about this region as a sort of Tuscan Stags Leap District — one of my favorite U.S. wine appellations.

But excellent wines are not necessarily enough when you need to compete with famous Chianti Classico. You need to get glasses in consumer hands and give the wine and region a distinct identity. Tourism (and not simply wine tourism) is one way to do this. Come for the history, food, and culture and learn about the wonderful wines. This seems to be part of Vino Nobile’s strategy to get out from under the shadow of its more famous neighbor and to tell a distinctive story about the region and the wines.

Italians love to drink sparkling wines and they make some terrific ones. And although my friends in Conegliano hate to hear me say it, it is a shame that the only Italian sparkler that most Americans can name is Prosecco.

I wish they’d give more attention to Francicorta DOCG, which faces a similar challenge to Vino Nobile. Franciacorta is often said to be the “Champagne” of Italy. It is made using the classic method from mainly but not exclusively the traditional Chardonnay and Pinot Noir grapes . The comparison to Champagne is understandable and the wines stand up well compared to their French cousins.

But it is not always helpful to think of Franciacorta this way because if you want Champagne you want Champagne and not necessarily something else. Franciacorta needs to more clearly develop a distinctly Italian identity that positions it apart from French wines and also Prosecco. The two Franciacorta DOCG wines were tasted were delicious — and I don’t think the skilled presenter ever called them Italy’s Champagne. I know producers are working hard to build their market category because the current interest in sparkling wines presents a great opportunity.

A Grape or a Region?

One of the sessions focused on DOC Pinot Grigo delle Venezie. Pinot Grigio is one of white wine’s big success stories in the U.S. market. Pinot Grigio/Pinot Gris is the second largest selling white wine category in the U.S. market, according to Nielsen figures, far behind #1 Chardonnay but well ahead of #3 Sauvignon Blanc.

Some of the Italians I have met like to imagine that all the Pinot Grigio sold in the U.S. comes from Italy — and Italy might have dominated this category a few years ago — but now Pinot Grigio is grown just about everywhere. I made risotto a few nights ago with a nice little Pinot Grigio from Washington state. That is the problem with the “signature wine grape variety” strategy. The category may start associated with a particular place, but often the place fades and it is just about the grape and then it is anyone’s game.

Italian producers hope to stake a territorial claim to the Pinot Grigio market with DOC Pinot Grigio delle Venezie — Pinot Grigio from a specific region subject to DOC rules and regulations. The consorzio logo above is meant to establish the identity. Italy first — can you miss the green-white-red stripes? And then Venice and Venezie as symbolized by the stylized prow of a Venetian gondola. Italy, Venice, Gondolas. Get it? That’s Pinot Grigio.

It is easy to be a little skeptical about the effort to re-brand Pinot Grigio this way since Americans generally know little about DOC and DOCG designations, but in this case there is reason for cautious optimism because many of the DOC Pinot Grigio wines have big marketing and distribution muscle behind them. The list of wines that were tasted in Seattle, for example, includes DOC wines from Lumina by Ruffino (Constellation Brands), Prophecy by Cantine di Mezzacorona (Gallo), Montresor (Total Wine & More), and Cupcake (The Wine Group).

Pinot Grigio won’t stop being a grape variety that could come from anywhere, but with some effort it can  also be a regional wine of Italy once again.

Italian wine makers are luckier than most. They face challenges, some of which are the product of their own success, but there is a tremendous reservoir of good will and affection for Italy and its wines.  The struggle for market attention is therefore not easy but still possible.  The Seattle event has inspired us to look more closely at the Italian wine mosaic and to try to appreciate a bit more its many shapes, colors, and styles.

Wine Book Review: Ian D’Agata on Italy’s Native Wine Grape Terroirs

Ian D’Agata, Italy’s Native Wine Grape Terroirs. University of California Press, 2019.dagata

Italy’s Native Wine Grape Terroirs is Ian D’Agata’s sequel to his fascinating 2014 book on the Native Wine Grapes of Italy. (Here’s a link to that book’s Wine Economist review).

D’Agata’s 2014 book was all about balancing breadth and depth by … providing both. He wanted to tell you as much as possible about as many of Italy’s native grape varieties as he could. This is an almost impossible task because of Italy’s vast wealth of indigenous grapes, but he pulled it off. What knowledge! That book sits on my bookshelf in a place of honor.

Aglianico to Zibibbo

Italy’s Native Wine Grape Terroirs takes the next logical step and will appeal to readers like me who enjoy a deep dive into the world of Italian wine. The most important native Italian wine grapes from A (Aglianico) to Z (Zibibbo, better known as Moscato di Alessandria) and their regional and local terroirs are analyzed in detail.

Some grapes get a lot of space (Sangiovese of course) and others only a couple of pages (Pecoriino), but the entries are uniformly readable, informative, and interesting. I learned something new on every page.

Understanding Vermentino 

Sue and I recently visited Sardinia and Friuli and I wish this book had been available to help us prepare. The entry on Vermentino tells me all about the grape, of course, and about the important differences in terroir between the Vermentino di Sardinia and Vermentino di Gallura.

Then D’Agata dives deeper, explaining why a few extra days on the vine makes a big difference in the character of the Gallura wines. We tasted the difference when we visited Vigne Surrau in May and now I understand where it came from and can appreciate better its importance. It’s a detail that increases understanding and makes a difference.

There are no real tasting notes here, but each chapter includes a short list of “Benchmark Wines” that would be a great checklist for anyone studying a particular region and its wines or to add to a serious wine tourist’s agenda.

Friuli U-Turn

I was particularly interested in the entries for Friulian native wine grapes. These wines are favorites of ours because they are so delicious and distinctive.  We have just returned from this region, but now I want to turn around and go right back because D’Agata has given me so many more questions to examine, nuances to explore, and wines to taste.

D’Agata helps me appreciate that the Italian north-east is a treasure house of native wine grapes and wonderful wines. It is a region that  deserves more attention that it currently gets. D’Agata is clearly enthusiastic about this region, too. It is his terroir — the area where he spent summers growing up and to which he returns frequently.

Bravo. But …

I am grateful to the University of California Press for making these books available. Wine book publishing (along with print publishing more generally) is not especially a growth industry — a fact that my wine writer friends sadly note. Opportunities to publish fine books like this one are not abundant and UC Press has done a good job here. Bravo! And thanks.

But … while I appreciate that UC Press is keeping the lights on and making fine works like D’Agata’s books available, I wish they’d find a way to price them more like trade books than academic books, so that they can reach a wider audience.

Highly recommended.

Is Sustainable Winegrowing Sustainable?

Is sustainable winegrowing sustainable? Yes. But there are headwinds and challenges to overcome before this expanding movement will achieve its full potential. Here’s my report.

sonoma

Sustainability is a powerful movement in northeast Italy where Sue and I participated in a program sponsored by the Consorzio Collio. I spoke on a roundtable panel on sustainable winegrowing’s many sides. One of the other speakers had recently converted his family vineyards to organic viticulture and he talked about the experience and his commitment to sustainable winegrowing.

A hand went up. Now that you are spending less on chemicals and so forth, a journalist asked, will be you passing along the cost savings to consumers?

Wow — I didn’t see that question coming. Implicit in the query was the assumption that organic or sustainable wines should be cheaper than other wines, not simply better for the environment. Most winegrowers, however, hope that sustainable practices will be rewarded in the market place — that consumers will be willing to pay higher prices for sustainably-produced wines, not demand a discount. Environmental sustainability needs to be economically sustainable to survive.

Survey Says …

I would like to say that wines that are certified as sustainable or organic or biodynamic do command a price premium, but I don’t have the data to support this broad conclusion. Wine is a complicated product category and it isn’t easy to compare sustainably-produced wines with similar wines made using conventional practices in order to extract the existence and size of a general price differential (more about this below).

Much of the research on this subject, therefore, has involved surveys that ask consumers how much they hypothetically would be willing to pay for sustainablly-produced wines compared to others.

pay-more-for-eco-certified-wines

A good example of this research is a study that Sonoma State Professor Liz Thach MW reported in 2017, which is the source of the graph above. The survey sample of 301 wine consumers, which was weighted towards women (74%) and Millennials (65%), found a generally strong willingness to pay more for wines with sustainable certifications.

payup

Recently Lullie Halstead, CEO of Wine Intelligence, presented the results of a larger study of U.S. wine drinkers that both reinforced a strong willingness to pay and uncovered significant generational diversity among Gen Z, Millennial, Gen X, and Baby Boom consumers. Millennials in the study, for example, were more than twice as likely as Baby Boomers to say they would be willing to pay a $5+ sustainability premium while 43 percent of Boomers said they wouldn’t pay any extra at all.

The study suggests that consumers would be willing to pay about $3 more per bottle for a sustainably-produced wine. What do you think? How much more would you be willing to pay?

Walking it Back to the Vineyard

Since it is hard to determine if sustainable wine actually receives a price premium in the market, I decided to work backwards. If sustainable wine sells for an average $3 premium, then sustainably-grown grapes should sell for a premium, too. How much? The Law of 100 holds that in general if grapes cost $1000 per ton more, then the wine has to sell for at least $10 more per bottle ($1000/100) to pay the bills. It’s a back of the envelope sort of calculation — a long way from rocket science, but useful here.

Working backwards, the Law of 100 rule of thumb suggests that a $3 higher bottle price should translate into a maximum of $300 per ton grape price premium. That could be a substantial incentive for winegrowers to farm sustainably depending on the region.

What is the sustainable premium for wine grapes? Once again it is hard to generalize because there are all sorts of special cases in grape contracts. But I consulted two well-connected California colleagues and the answers they provided were very consistent. In general, sustainably-farmed wine grapes receive a premium of $15-$25 (average of about $20) per ton. That’s a lot less than I was expecting. It implies a very small potential bottle price premium — nothing like the $3 survey result.

Some contracts provide a premium up to 7.5 percent, I’m told, which can be valuable depending on the underlying grape price and yield. In many cases, however, the premium is exactly zero. Grape buyers specify sustainably-farmed fruit, but are not willing to pay extra for it. Bottom line: growers generally farm sustainably because these are sound practices, not (yet) for the money.

Why is the Sustainability Premium So Low?

Why is the sustainable grape premium so low? One answer is that premiums are low because it is a buyers’ market for some grape categories these days. With surplus grape supplies and wine in tanks from previous vintages, buyers don’t pay more because they don’t have to. That is bad news for growers in the short run but better news in the long run because the supply-demand imbalance is likely to adjust over time and perhaps improved prices will follow.

A second answer is that the grape premium is low because the premium for sustainable wines is low — much lower than the $3 per bottle estimate. How can this be? Are the survey-takers fibbing? Well, sometimes people do give “aspirational” answers to survey questions. But there’s another answer. Consumers may be willing to pay more for sustainable wines, but they can’t tell for sure which ones they are.

Organic and biodynamic are very clearly defined wine terms (although consumers may not fully understand them — especially biodynamic), but sustainable does not have a single meaning or certification standard. Most of the regions we visit have their own sustainability certification programs, each tailored to local conditions. So the term sustainable shows up a lot and doesn’t always mean the same thing. This is one reason why it is hard to calculate the price premium for sustainable wines.

My colleague Danny Brager tells me that his team at the Nielsen Company tries to track sustainable wines (by their measure they account for about 2.1 percent of the table wine market by value, growing at a fast 8.1 percent rate), but the lack of a clear definition means that anything that has “sustainable” on the label gets counted. That’s probably as good as most consumers can do because they don’t fully understand the difference between certified and non-certified wines or the variations among certification programs themselves. But it makes deeper analysis difficult.

Why Can’t Wine Be More Like Fish?fish2

The term sustainable is popular in part because of this ambiguity. I found one wine that boasted “Sustainably Dry Farmed” on the front label. On the back label I learned that this meant that the vines were actually irrigated (which seems like the opposite of dry farming to me) … but only as necessary to sustain the vines themselves. The fluid nature of the term “sustainable” makes all the difference.

Does that mean a one-size-fits-all certification program? No. I actually think that the fact that there are many regional sustainability programs is a good thing, even if it confuses consumers a bit, because it increases the proportion of the industry that adopts sustainable practices.

Sue points out that consumers support sustainable practices in other sectors when they understand them and appreciate their importance. Sustainable fisheries are important, for example, and many retailers and restaurants make a point of featuring sustainably-harvested seafood. The existence of different certification programs doesn’t seem to diminish the impact.

What? How? Why?

We meed to make sustainable wine as transparent and appealing as sustainable fish. Perhaps the key is to focus less on the what and how — what we are doing (certification) and how it is done — and more on the why. The why is pretty clear when it comes to sustainable fisheries. Maybe we can make the why of sustainable wine clearer, too.

Sustainability would be more sustainable from an economic standpoint if we could communicate better with wine buyers so that the sustainability premium is greater and trickles down to growers better than it does today. Sustainable sustainability? That’s a goal worth pursuing.

The Trouble with Being King of the Hill

mappa-collio

For a long time Collio and its neighboring regions in Italy’s upper right-hand corner have been King of the Hill when it comes to Italian white wines. It started in the 1960s when Collio, which had long been known for its excellent hillside terroir, abolished the old share cropping system, which favored quantity over quality, and got a head start on many competitors in the adoption of modern temperature-controlled white wine fermentation practices.

Exceptional grapes were combined with winemaking techniques that preserved fruit and aromas. The results were some stunning mono-variety white wines — Pinot Grigio, Sauvignon Blanc, Chardonnay, and native varieties, too — that established the region’s reputation.

The Trouble with Hills

As I noted last week, Sue and I have been coming to Collio since 2000 and the wines have gotten more and more interesting — strength built on strength. But the trouble with being King of the Hill is that you must constantly defend your position against determined competitors and this has been Collio’s challenge.

Collio’s distinctive terroir is impossible to copy, but other wine regions have worked hard to reel in Collio’s early lead in vineyard and cellar practices. Now there are excellent white wines from many regions of Italy north, south, east, and west. Some of the Vermentino di Gallura wines we tasted recently in Sardinia, for example, were absolutely world class.

And of course there are competitors from all over the world to be considered starting of course with New Zealand, which was only a fly speck on the world wine map back in the 1960s. There is a lot of competition today for the title of King of the White Wine Hill.

Grape Expectations

Collio’s challenge is ironically made more difficult today because of its focus on mono-variety wines. Pinot Grigio was easy to understand in the early days compared with wines identified by appellation. That was an advantage. But today there are Pinot Grigio (and Sauvignon and Chardonnay) wines from all over the world and the Collio brand is perhaps overshadowed in New World consumer minds, which often focus on grape variety more than region.

The focus on grape variety unexpectedly puts Collio in directly competition with New Zealand, California, Australia, France, and a host of other regions. The advantage of a hilltop position is diminished. The fact that Friulano, the region’s signature native wine grape, has been serially rebranded (Tocai, Tocai Friulano, Friulano) under orders from the intellectual property police hasn’t helped.

So Collio is facing increased competition from other parts of Italy and other parts of the world. There is also more competition within Friuli itself. We heard reports of massive new plantings out on the plains that threaten to flood the market with cheaper wines and drive down precious margins. They won’t be Collio appellation wines, but they will still compete. Yikes!

Collio Bottleneck

There are as many responses to the the increased competition as their are growers and producers. One important initiative is Collio Bianco, a signature white wine blend that producers hope can help establish the region’s brand more concretely in consumers minds. Think Collio (not just the grape varieties) for exceptional white wines .

bianco

The official definition of Collio Bianco has evolved. Once this wine was a simple field blend. Then it because a loosely regulated blend of native grape varieties that was noteworthy for its lack of distinctiveness. Kitchen sink wine, made with leftovers not used in the favored varietal bottlings.

More recently Collio Bianco was been defined as a white blend made from just about any mixture of native and international grape varieties. The idea is to give winemakers freedom to make the very best wines and have them bear the Collio label and fly the region’s flag.

A special bottle shape was created to further distinguish this wine from others on the shelf. What do you think?  The longer, thinner neck requires a special cork. Choosing this bottle (it is a voluntary program and the special bottle is not required) is a commitment to promoting the region’s brand as well as the individual producers’ products.

One Blend to Rule Them All?

Our hosts arranged for our press group to taste 24 examples of Collio Bianco. Vintages ranged from a 2013 (Primosic Klin  — it was spectacular) to several 2018s (bottled earlier than usual especially for Vinitaly and maybe not at their very best when we tasted them).

Some of the blends focused on the native grape varieties. Gradis’ciutta, for example, presented a Friulano, Malvasia, Ribolla Gialla blend.  Others producers combined native and international grapes. Venica & Venica’s Tre Vigne blended Friulano, Chardonnay, and Sauvignon. Ronco Blanchis blended Friulano, Malvasia, Sauvignon, and Chardonnay. Marco Felluga’s Molamatta combined Friulano, Pinot Bianco, and Ribolla Gialla. It was, as you might guess, a pretty interesting experience, especially since we tasted the wines blind.

The Weight

The question now is what is Collio Bianco and can it bear the weight of expectations? The wines we tasted showed high quality but, given that they come from different producers, sub-regions, and vintages using different grape combinations, we struggled to find any other defining characteristic. And I guess that was the point of the exercise. Only after the fact did I realize why the tasting was titled “Characterized by not being characterized.”

So Collio Bianco wines have quality and they are diverse. Each is a bit different from the rest and consumer experimentation is richly rewarded. This is surely something, especially since the wines from some other regions sometimes seem to all taste alike. But is it enough? I’m not sure.

The good news is that many Collio producers recognize that the challenge of being King of the Hill and they have determined that quality and distinctiveness is the right response. The region also benefits from a consorzio organization with strong leadership and, just as important, pretty good follower-ship — not something that we always find. The greatest mistake would be to rest on past accomplishments, ignoring the competition’s gains,  or to think in terms of quantity instead of quality. That’s the fast track from the top of the hill to the bottom.

Rediscovering Collio’s Iconic White Wines

 

Collio, the beautiful wine region in Italy’s upper right-hand corner near Slovenia, along with its neighbor Colli Orientali del Friuli, is one of our favorite places to visit and makes some of our favorite wines, too.  We’ve been there three times and each visit has revealed something new.

Flashback to 2000

We were lucky on our first visit in 2000 because we stayed at Venica & Venica, a top producer that was just getting started developing its hospitality program.  We happened to arrive on Cantine Aperte day when all the wineries in the region were open and welcoming guests. Ornella Venica gave us the key to our room and handed us a map. Get going, she said, You have a lot of work to do today! And so we did. What fun.

A few days later we moved to a rustic cabin at the Sirk family’s La Subida. The cabin was great because we could eat at the famous restaurant when we wanted to but also use our little kitchen to create our own meals. This gave us the chance we were looking for to explore the markets and try even more local delicacies.

The wines we found were a revelation — mainly white wines with a few reds (notably Merlot) mixed in. We were especially drawn to Sauvignon (as they call Sauvignon Blanc here), which had a fascinating brightness and precision. We found ourselves on a beautiful island of great white wines in what seemed like a vast sea of Italian reds.

Fast Forward to 2015

Somehow it took 15 years for us to return to this part of Italy, but we finally found an opportunity when I was invited to give some talks at the Conegliano wine school in 2015.  This time we stayed at BorgoSanDaniele in Cormons and then, at the urging of friends, at Il Roncal in Cividale del Friuli. It was not Cantine Aperte day, alas, but we visited a number of memorable wineries, which I wrote about in articles for The Wine Economist.

A lot had changed in 15  years. Revisiting Venica & Venica we discovered a much expanded winery and an ambitious winery resort hospitality complex.  The region was growing into its potential as a wine tourism destination. We tasted more sparkling wines than on our first visit, a reaction to the changing market conditions created by Prosecco’s success. And we encountered more (and I think better) red wines. Climate change at work, we were told.

We still loved the Sauvignon wines (including one from Tiare that had recently been named the best such wine in the world), but this time we were drawn to the native grape varieties, especially Ribolla Gialla, Malvasia, and Tocai Friulano among the white wines and the various varieties of Refosco among the reds.

Enjoy Collio Experience 2019

We vowed not to let so much time pass between visits to this region, so we were delighted to receive an invitation to participate in the Consorzio Collio’s  Enjoy Collio Experience 2019.  We took part in the activities of a press and trade tour and I spoke briefly for a roundtable discussion on sustainability.

We stayed at the elegant Castello di Spessa, which includes vineyards, winery, golf course, restaurants, rooms, and of course a castle all just a few minutes from Cormons. Giacomo Casanova lived here at one point and his name and image are everywhere.

The focus of this event was clearly on Collio, so we were able to explore its special terroir in more depth (see Stephen Quinn‘s excellent video above) and get to know the wines and winemakers at blind tastings led by Richard Baudins and through winery visits, dinners, and other events.

What stood out in these experiences? Well, we were attracted to certain producers we didn’t know before including Primosic, Gradis’ciutta, Livon, Bracco, and Ronco Blanchis. (A tasting of 12 vintages of Friulano at Ronco Blanchis, which has a very special terroir, was memorable.) And we had an opportunity to learn much more about the region’s designated white wine ambassador, which is called Collio Bianco.

Once upon a time Collio Bianco was a simple field blend, but then it evolved into a sort of kitchen sink wine. Winemakers took their native white wine leftovers and mixed them up. I am not sure it was a really bad wine, but it didn’t represent the best that could be done.

Starting in the 1990s, however, there has been a determined effort to remake Collio Bianco into the region’s flagship wine. Winemakers were given more freedom to blend their best grapes in order to produce distinctive white wines that are brilliant when young and have the potential to evolve over time.

The Collio producers are so proud of their Collio Bianco that we devoted one complete morning to blind-tasting 24 of the wines from different producers in different parts of the region, made with different combinations of native and international varieties, and from a number of different vintage years.

How were the wines? And why is Collio Bianco important to the region’s future? Good questions! Come back next week for analysis.

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Video credit: Magic soils of Collio from Stephen Quinn on Vimeo.

Many thanks to the Consorzio Collio for inviting us to participate in Enjoy Collio Experience 2019. Special thanks to Klementina Koren and Matteo Bellotto for their help and hospitality. Cheers to all the Collio winemakers and international journalists we met along the wine road. We hope to see you again!

Pocos, Locos, y Mal Unidos: The Paradox of Sardinian Wine

cervoPocos, locos y mal unidos. This description of Sardinia and its people (often wrongly attributed to Charles V) is a useful way to think about Sardinia’s wine sector and the headwinds it faces today.

Sardinian wine is a relatively small (pocos) player in Italian wine with perhaps 20,000 hectares of vines out of Italy’s vast 750,000 hectare total. The winemakers are crazy (locos), but that’s a given and not meant as an insult. I think we all agree that you’ve got to be at least a little crazy to try to make a living growing grapes or  making wine.

Small (and Crazy) can be Beautiful

Being small and a little crazy is not an insurmountable disadvantage in global wine. In fact, it can be a good place to begin. Take New Zealand as an example.

New Zealand’s wine sector is big in terms of its global reach and reputation, but pocos in other ways. There are more than 35,000 hectares of vines today (data from the Oxford Companion to Wine), but that’s after a couple of decades of rapid growth. Flash back twenty years and Sardinia had more grape vines than New Zealand and produced more wine.

I think the first Kiwi producers to take their wines to international markets (people like Ernie Hunter, who I wrote about in Wine Wars) must have been more than a little nuts to think that wine from a tiny faraway island could ever make an impact. But they brought their distinctive wines first to the UK and then the world and they found a ready audience. Now New Zealand is a wine export machine with market growth every year at premium price points. Being small and crazy worked for the Kiwis.

Is Sardinian Vermentino the next Marlborough Sauvignon Blanc. Well, as I suggested last week, the wines are excellent and distinctive, too. They deserve to be better known than they are. The next New Zealand? No, that’s too big an ask if only because times have changed and that gap in the market has been filled. But there is certainly potential for Sardinia to grow.

surrauVigne Surrau Case Study

Sue and I learned first hand about Sardinia’s potential when we visited Vigne Surrau, an ambitious 400,000 bottle producer located just outside of Porto Cervo in northeast Sardinia.

Surrau’s first vintage was 2004-2005 and it has been part of the recent move from quantity to quality in Sardinian wine. Growth has been so fast they they are now operating in their second-generation winery and tasting facility with room to grow to perhaps 700,000 bottles in the future. Sardinia itself (60%) and the rest of Italy (20%) are the biggest markets, with 20% exported. Demand is strong and export sales are carefully allocated so that the home market can be accommodated.

Wine tourism is a significant focus at Surrau with about 12,000 visitors per year. The beautiful tasting area, which looks out over the vineyards and the mountains beyond, has room for seated tastings, with food pairing if you wish, as well space for local food and crafts and an art gallery. A small conference center provides space for corporate events. Very well designed. Nothing remotely locos about it.

Vermentino di Gallura DOCG, elegant and complex, accounts for 65% of production. Red wines, especially Cannonou but also some Cabernet Sauvignon and Syrah, fill out the line.  Tasting the Branu (Vertmetino di Gallura DOCG), Sciala (Vermentino di Gallura DOCG Superiore from a different terroir than Branu) and Sciala VT (late harvest, but not a sweet wine with only 4 grams per liter of residual sugar) was a delightful introduction to the potential of Vermentino in this part of Sardinia.

Surrau highlighted the positive qualities we found in many of the best wines we tasted in Sardinia. Focus and commitment to quality on the business side. Balance, finesse, and distinction in the glass. They may be small and crazy, but there is great potential here. What could hold them back?

The Mal Unidos Syndrome

That’s where Mal Unidos comes in.  Almost everyone we talked with bemoaned the lack of unity and teamwork in Sardinia. Sue and I were skeptical. Disfunctional wine sectors are not that unusual. We see them all the time in our wine  travels.

No, you don’t understand, people told us. It is much worse here. It’s not just wine. It’s everything. Factions. Dialects. Everything. We have met the enemy and it is us. It is a real problem.  Regional consortio organizations are weak, they say, which is unfortunate since they are one way that reputation is built and sustained, and cooperation of all sorts is limited.

Small and crazy — that’s not necessarily a problem in wine. But discord and fragmentation can be barrier to greater success. Sardinia might not be able to match New Zealand’s tremendous growth, but it has unrealized potential that it would be great to see unlocked.

The new world of quality Sardinian wine has yet to be discovered in many markets. I hope the people who complained to us about the lack of cooperation are either exaggerating the situation or will find a way to work together to solve this problem and raise both regional reputation and the quality standard even higher.

In the meantime, put Sardinia and its wines on your personal radar. You would be locos to pass them by.

First Impressions of Sardinian Wine

porscheSue and I travelled to Sardinia at the invitation of Alessandro Torcoli, editor of the quarterly journal Civilta del Bere (where Wine Economist columns, translated into Italian, sometimes appear). Alessandro organized a series of trade and press workshops and a wine competition to accompany the Porto Cervo Wine & Food Festival this year.

We were delighted to attend to speak about global trends and opportunities, help with the judging,  and to learn more about Sardinia and its wine sector.

Porto Cervo, on the beautiful Costa Smeralda in the northeast of the island, is more luxury resort than sleepy village, so there was a lot going on besides the wine, including an international press launch event for the new Porsche 911 Speedster sports car. I’ll bet the corkscrew island roads made for exciting driving. I admit that I was distracted a bit by that blue Porsche pictured here.

We only visited this one corner of Sardinia over just a few days, so a comprehensive report is impossible. But we met many winemakers and tasted their wines both at the festival and the dinners, so we have some strong first impressions to share. Here they are.

Sardinia at a Crossroads

The idea of a crossroads applies to Sardinia in several ways. As the second largest island in the Mediterranean (after Sicily) it has been an important economic and political crossroads for centuries and the local culture and even the cuisine reflect this fact.

torbatoSardinian wine features a treasure house of native grapes plus many international varieties that have been grown here so long that they are firmly part of the tradition. Sue and I enjoyed tasting wines that we will probably never find outside of Sardinia, such as the Torbato from Sella & Mosca. The origins of Tobato are controversial, with some arguing that it was introduced from Spain in the 14th or 15th century and others insisting just the opposite. It’s that crossroad thing.

The most important red varietal is Cannonau, which you probably know as Garnacha. Sardinians claim ownership of this varietal and we tasted many fine examples. I am not going to wade into the debate as to whether it is native or introduced by the Spanish, but I will say that it is a shame that people don’t take more of an interest in these wines.

Garnacha and Grenache are having a well-deserved moment and Cannonau should share the love. But, one winemaker said with a deep sigh, Cannonau isn’t generally included when Garnacha and Grenache wines are put in the spotlight. That needs to change.

Very Vermentino (and a Surprise)

Vermentino, the most important white grape variety, makes a lovely wine in Sardinia and I think this might be the island’s best opportunity for attention on international markets. Vermentino di Sardegna is pretty much consistently tangy and delicious, with some outstanding examples such as the wines from Pala. Sauvignon Blanc drinkers should give Sardinian Vermentino a try — I think they will be surprised and delighted.

jankaraVermintino di Gallura DOCG, from the northern region near our location in Porto Cervo, takes the quality up a notch, adding complexity driven by terroir. We tasted wines from sandy zones near the beach and rocky soils at higher altitude. We even tasted a vertical that showed the influence of different vintages and an ability to age.

Such an interesting wine with so much to offer! Favorites included Surrau, Siddura, and Jankara. Worth searching out.

Every wine region holds a surprise and for me Sardinia’s surprise wine is its Carignano di Sulcis DOC — Carignan grapes grown on sandy soils on the island’s south-west coast. The best of these wines are simply fantastic, with impressive body, balance, and flavor.

We tasted outstanding Carignano di Sulcis wines from several makers including Cantina Santadi, Cantina Mesa, and Cantina Giba.  The Sulcis region is high on my list of places to visit if/when we return to Sardinia.

Another Crossroads

Sardinia is at a crossroads in another way.  It has long produced wines for export and been whip-lashed by shifting market conditions much like its sister island Sicily (with which is it often confused by the geographically challenged). (See The World of Sicilian Wine by Bill Nesto MW and Frances Di Savio for a comprehensive analysis of Sicilian wine market twists and turns.)

Twenty years ago Sardinia was more or less defined by the commercial quality bulk wine production of large cooperatives. As demand has shifted and new competitors appeared, the market for these wines has suffered. Sardinian wine grape acreage has fallen dramatically and the momentum has shifted from quantity to quality.  That’s a difficult transition to make, especially since reputation generally lags the reality.

As you can tell from this quick report, we were looking for quality in Sardinia, which is the key to success today, and we found plenty of it. But there is still a lot of work to be done before Sardinia can confidently put this crossroads behind it and move forward into the future.

Come back next week for a case study of success and analysis of headwinds.

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Thanks to Alessandro for inviting us to Porto Cervo and to everyone we met there for their help and hospitality. Special thanks to the staff at Cervo Hotel for making our stay so enjoyable. Now if only I had found a way to disguise myself as an auto journalist to get a shot at driving the new Speedster!

The Future of Italian Wine is in Good Hands

awardDeborah Gelisi wiped the tears from her face, took a deep breath, and continued with her presentation on the importance of sustainability for Italian wine producers. It wasn’t an easy thing to do.

Deborah’s audience was in tears, too. Her classmates and teachers at the Scuola Enologica di Conegliano.  Her winegrower parents.  Even her 12-year old brother, the fearless goalkeeper of his youth soccer team. Over at the head table the city’s  mayor was misty, the school’s director was teary, Rai Uno journalist Camilla Nata was a little choked up, and I was a pretty emotional myself. There wasn’t a dry eye in the house.

Stories about rooms full tearful people don’t usually feature on The Wine Economist, so you probably have some questions about what was going on and how this relates to this column’s optimistic title. I’ll try to answer the questions one by one.

Who is Deborah Gelisi?

Deborah Gelisi is an 18 year old student at the Conegliano Wine School, which is Italy’s oldest enology and viticulture school and, according to our friend Paul Wagner, probably the largest wine school in the world. Founded by Antonio Carpenè in 1876, it provides education and training for young students who have chosen to work in the wine industry. The school has a long list of distinguished alumni including notable Romeo Bragato, who was instrumental in the development of wine industries in Australia and New Zealand in the 19th Century.

Deborah comes from a wine-growing family. She gets up early each day to work at Podere Gelisi Antonio, then takes the train from Pordenone to Conegliano for classes, reversing the commute in the afternoon for more work and, of course, study. I don’t know when she sleeps.

Why Was Everyone Crying? Bad news?

Deborah was being honored as the first recipient of the “Etilia Carpenè Larivera International Scholarship,“ which will provide her  with the opportunity to expand and deepen her wine knowledge through international travel  and study and jump-start her career in wine.efx-s

The scholarship was inaugurated this year to mark the 150th anniversary of the founding of Carpenè Malvolti, one of Italy’s most distinguished wine producers. Its founder, Antonio Carpenè was the inventor of the process of secondary fermentation in autoclaves that gives us Prosecco.

Carpenè Malvolti honors its past in many ways, which you will discover if you spend some time at the new visitor center in Conegliano, but as a family wine business it is all about building for future generations. That’s why the photo above shows Deborah with Rosann Carpenè Larivera, the fifth generation of the famous family, along with her daughter Etilla, the rising sixth generation, for whom the scholarship is named.

What’s the Significance of the Award?

It is good to honor students and to provide valuable educational opportunities, of course, but it is important to see this award in broader context. Deborah’s award was part of a project called Generazione DOCG, which aims to invest in the future of the region through its  young people. Everyone was crying (and then celebrating) because this isn’t an ending but a beginning, both for Deborah and for the region.

The next generation of Italian wine producers will face many challenges, as we discussed at the VinoVIP meetings in Forte dei Marmi in June. The industry is fragmented, lacking the strong brands that could build help open markets and build margins. It won’t be easy to make progress given intense competition everywhere.

But there is real hope. Rising wine professionals like Deborah Gelisi and her student colleagues can make a difference in the vineyards, cellars, and markets. If Deborah is an indication, they have the knowledge, drive, determination, and entrepreneurial spirit that will be  needed.

And they have the backing of their families, communities, and forward-looking wine firms such as Carpenè Malvolti. With this team supporting and encouraging them, it is easy to see that the future of Italian wine is in good hands.

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Congratulations to Deborah Gelisi. Special thanks to Carpenè Malvolti for inviting me to speak at this awards ceremony. It was an honor and a pleasure.

 

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.

The IKEA of Italian Food & Wine? Welcome to FICO Eataly World

eataly1If you have ever visited an IKEA store I’m sure you have vivid memories of the experience. The stores are huge (30,000 square meters on average, I’m told, although there’s one in South Korea  that’s almost twice that size).

Each store is organized around a journey that customers take from room to room, space to space, category to category, pausing only at the restaurant for Swedish meatballs before passing through the check stands, their bags and carts filled with Scandinavian-inspired home goods.

IKEA of Food and Wine?

FICO Eataly World, located just outside of Bologna, Italy, reminds be a bit of IKEA, especially because of the journey its visitors take. But there are many differences, too. Eataly World is much larger than an IKEA store. At 100,000 square meters (over 1 million square feet!), it is more than three times the size of your typical IKEA and almost twice as large as that Korean super-IKEA. Food (and wine) are at the center of the experience. And Italy, not Sweden, is the guiding star.

Sue and I visited  FICO Eataly World during a recent stop in Bologna, where we lived for a semester some 20  years ago when I taught at the Johns Hopkins School of Advanced International Studies Center there. We’ve visited other Eataly locations in the past — New York City, Milan, and the much smaller Eataly Bologna located in the historic center’s famous market, just steps from our old apartment on Via Pescherie Vecchie. But this one was different in more ways than scale.

FICO (Fabbrica Italiana Cantadina) Eataly World is located outside the city core, close to the convention centers that draw thousands of visitors to Bologna each year. Lots of free parking and regular bus service from the train station makes it easy to access. But the location on the outskirts changes things a bit — Eataly World is a stand alone culinary theme park destination where the other Eatalys we’ve visited have been more integrated into their neighborhoods.

The Eataly stores in New York and Milan bring a whole Italian market, with shops, restaurants, and vendors of fish, cheese, salumi, fruits and vegetables and so forth, all under one roof with all the hustle and bustle you would expect. The central Bologna Eataly is a little different — the bookshop is the main feature that I remember — but that’s because it is embedded in a historic bustling market just off Piazza Maggiore and does not need to recreate one. The food court, located across the alley from the main store, is a fine addition since our last visit.

Eataly World’s vast scale suggests a grander vision. There are dozens of shops and stalls featuring distinctive foods from all over Italy, and 45 “eating points” — kiosks, cafes, restaurants — serving regional cuisine. There are 20 acres of small demonstration farms and vineyards, so you can meet the pigs and squeeze the grapes, and some of the final products are actually produced on site. We ran into a group of small children who watched in fascinating through a glass wall as a robotic baker made batch after batch of tasty cookies.

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You can make of Eataly World what you like — a place to shop or hang out, a place to eat and drink, or even an opportunity to exercise (you can rent bikes to shorten your journey time inside the big building). But education is an important function, too, both the organized classes that are always on offer and the one-to-one conversations with staff at each stand.

What About the Wine?

One of our goals in visiting FICO Eataly World was to see how they dealt with Italian wine. This is a big task as Italy is home to hundreds of grape varieties and thousands of wineries. I nearly went crazy trying to narrow the wine list down to a few important wines in my book Around the World in Eighty Wines. It would take an IKEA-sized facility to do real justice to the diversity of the wines of Italy — and that is more space than even Eataly World has to spare.

That said, the wine program we found was very good. There were 2000 wines for sale, organized by Italian region as they should be, ranging from modest to noble. More to the point, there were 100 different wines available by the glass or in flights.

A knowledgeable young staff member ascertained our interest in learning about Lambrusco and arranged a small tasting of two completely different ideas of the wine, both quite dry but one dark and powerful and the other lighter and fruity (see photo below). It was a good experience and a good way to learn about the wines and have fun, too.

Wine calls for food and there was a nice Bolognese restaurant attached to the wine shop — one food/wine option among many at Eataly World. We had lunch at a foccacia shop (we saw the foccacia being made in front of us). I had a sandwich with Mortadella and a glass of that dark Lambrusco — great combination.

So What?

So what should we think of FICO Eataly World and its ambitious wine program? Well, what do you think of IKEA? Personally, I find it kind of bewildering with the crowds, noise, and its cornicopia of products, most of which are irrelevant to my life. But I like to go there — yes, for the meatballs — because it isa place where I can get ideas and stumble upon things that I didn’t know I would like. It surprises and delights more than it confuses, I guess.

I kind of like FICO Eataly World in the same way I kind of like IKEA. Based on our single visit, it seems full of stuff that overwhelms but gives me ideas and a chance to stumble on something I wasn’t looking for (the Sicilian shop and its great cannoli and espresso).

But there is a big difference between IKEA and FICO Eataly World. Ultimately IKEA succeeds when it allows its visitors to find their own voice, in a way, through the designs that they choose and the products that they bring into their homes. That’s a big challenge and it says something about IKEA that it is so successful.

But Eataly World sets even a bigger challenge. It wants to tell the story of Italian food and wine and that topic is so vast and complex that it makes IKEA seem simple by comparison. I am not convinced that Eataly World really does justice to its mission, but how could it? It was fun to visit and see which elements of Italian food and wine culture stood out and which ones did not.

Sue’s take on Eataly World was quite positive. It was like a giant first-class IKEA food court where you wanted to try everything even though that would be impossible to do. She especially appreciated the educational components and loved the family-friendly animal exhibits. She thought that, taken on its own terms in both the food and wine components, Eataly World represents Italy very well.

Will we go back to Eataly World on our next visit to Bologna? I dunno. We were there on a quiet Friday morning. I’d like to visit the place when it is busier just to see if it feels like the Bologna market when it is crowded, which is pretty much all the time. But that Bologna market neighborhood is fantastic — Italy World — and I’m not sure Eataly World can compete with it!

If I had to choose between Eataly World markets and the real markets in the centro storico of Bologna, there is no question where I would go. I’d be having a glass of Pignoletto frizzante wine and a plate of Mortadella at Simoni’s  Laboratorio on Via Pescherie Vecchie every time rather than taking the red bus out to the fiera district.

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Here is Sue’s photo of two very different ideas of Lambrusco. Enjoy!

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