In the spirit of “shameless self-promotion,” I am proud to say that this is not my first Gourmand award. The Wine Economist was recognized as best wine blog in 2015, for example, and Money Taste, and Wine received the 2016 award for best wine writing.
Wine Wars originally appeared in 2011, when it received several awards, including the Gourmand award for best American wine book. Wine Wars II updates the first volume and expands its argument with a new set of chapters organized around the theme of “Wine’s Triple Crisis.”
I suspect that this new section, which examines the wine industry’s intertwined economic, environmental, and identity crises, may have caught the Gourmand gurus’ attention by extending the idea of sustainability beyond the natural environment to include economic and social factors, too. As we all know, sustainability to a complicated balancing act, with few simple answers and lots of work to be done.
How much does that wine bottle weight? The answer, too often, is simply too much.
Everyone talks about sustainability in the wine business (or at least that’s what it feels like sometimes), but how much of it is backed up by action and how much amounts to little more than greenwashing? That’s an important question and a complicated one, since sustainability has so many aspects and complicated trade-offs. What can a wine producer do to improve sustainability and signal it clearly to consumers?
One simple action is this: use lighter bottles. Glass bottles are an important part of wine’s carbon footprint and reducing weight even a little can have a significant impact when multiplied by the billions of bottles of wine that are produced and sold each year.
Tale of the Scale?
I’d invite you to weigh the next ten wine bottles that you open just to see big the gap is between the heaviest and lightest bottles. I used to include a segment about wine bottle weight in one of my Wine Wars talks. I asked for a couple of volunteers to come forward to heft bottles of different weights. They usually expressed great surprise at the difference and wondered why very heavy bottles were needed when lighter-weight alternatives are available. Good question.
I was reminded of the heavy bottle issue when a press release from Alois Lageder, the famous Alto Adige wine producer, appeared in my email inbox. Lageder’s commitment to the environment is unquestioned — they are one of Italy’s leading biodynamic estates. Their search for improved operational sustainability caused them to start thinking about wine bottles back in 2013, when they reduced bottle weight from 750 grams per bottle to 650 grams.
Some winemakers I know think that the weight of the bottle is an important marketing factor — heavy bottles signal quality. But obviously this isn’t always the case, as Katie Jackson of Jackson Family Wines told us a couple of years ago at the Porto Climate Change Leadership Conference. Jackson moved to lighter glass and then waited for a negative reaction … that never came. So they did it again.
And Lageder is doing it again, with a special new Burgundy-style bottle that takes the weight down to just 450 grams, which allows the winery to reduce glass use by 17% or 87 tons. The bottle on the left in the image above is the old heavier bottle and the one on the right is the new sleeker product. The difference is subtle, but it is there.
“Of course, there are already lightweight bottles on the market, but there is hardly a Burgundy bottle that is so light and still meets the demands of a valuable wine. Strangely enough, many people still believe today that a valuable wine must be equipped with a heavy bottle,” says Alois Clemens Lageder. “The bottle also has a name. It is called Summa and is deliberately not patented so that many winemakers are motivated to switch to lightweight bottles,” adds Helena Lageder.
Lageder is also eliminating metal such as screwcaps and foil capsules that might make their bottles difficult to recycle. Putting a bottle in the recycle bin doesn’t guarantee that it will actually be recycled. A lot of “recycled” materials end up in the landfill. Lageder knows they can’t solve that problem, but they can take steps to help.
Tale of the Scale?
Bottle weight is a frequent topic of conversation at The Wine Economist dinner table. Sue hefts each bottle and makes the call. Unexpected heavy and lightweight bottles are swept away to be weighed and recorded at the end of the meal. Just for fun I got out the group of bottles and alternative packing that I used in the Wine Wars talks to provide context . Here is the range of weights from lightest to heaviest.
Wine can 375 ml: 16 grams (x 2 = 32 grams)
One liter tetra-pak wine container: 40 grams.
Plastic wine bottle 750 ml: 56 grams
Eco wine bottle 750mml: 426 grams
Lightweight wine bottle 750 ml: 444 grams
New Lageder wine bottle:750 ml: 450 grams
Previous Lageder wine bottle 750 ml: 650 grams
Older Lageder wine bottle 750 ml: 750 grams
Heavyweight wine bottle 750 ml: 1084
Super heavyweight wine bottle 750 ml: 1198 grams
An ultra-heavyweight bottle of a wine from China: 1218 grams.
Lageder is clearly taking a big step in the right direction with its new bottles, which are amongst the lightest glass bottles we have found. They seem very confident that going light won’t affect consumer perceptions of their wine and I think they are right.
Can you believe that some wine bottles weigh more than a kilo? The 1084 gram bottle on the list was a Chilean wine, so it is interesting to speculate the size of the carbon footprint it created. The bottle might have been made in China, for example, then shipped to Chile and then on to the U.S. Incredible when they are good alternatives. At 1218 grams,, the bottle alone of that Chinese wine weighs more than full bottles of wine in lightweight glass containers.
Is Heavy Glass Sustainable?
It seems to me that the weight of the glass bottle is a sustainability issue. I wonder, do any of the many sustainability certification protocols specify a maximum weight for wine bottles? I really don’t know — I’d appreciate it if you’d use the comments section below to provide information about this issue.
Sometimes too much is too much and I think we have reached that point with heavy glass wine bottles.
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.
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.
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.
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?
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.
Porto will host a global gathering next week devoted to the topic of Climate Change Leadership: Solutions for the Wine Industry. Sue and I will attend the meetings, including a session on “Economics & Efficiency: A Call to Action” where I will speak along with Stephen Rannekleiv of Rabobank and Robert Swaak of PriceWaterhouseCoopers.
The program is a who’s who of wine industry leaders who have chosen to have a dog in the climate change fight. The list begins with Adrian Bridge, CEO of Taylor’s Port, who was instrumental in organizing the event, and continues with Miguel Torres, Cristina Mariani-May, Pau Roca, Antonio Amorim, Greg Jones, Roger Boulton, Jamie Goode, Gerard Bertrand, and on and on. Some guy named Al Gore is giving the summit keynote. Anyone heard of him?
I will be very interested in how the conversation evolves both in the official sessions and in the informal discussions that are sometimes more important. Sue will be paying special attention to the associated trade show because she’s very interested in how talk about climate change and wine translates into action and both the nature of the vendor turnout and the quality of interaction will be a good indicator of potential success.
Groundhog Day Syndrome?
There are lots of meetings and conferences about the environment, sustainability, and climate change. Sometimes in the past they have reminded me of the 1993 film Groundhog Day, where the same talk and motions are repeated as if on an endless loop and little of substance seems to change (until, at last, it does). Climate change has reached a critical moment, however, which demands action over talk.
I’m hopeful that the Porto meeting will avoid the Groundhog Day syndrome and one reason why is the focus on solutions — concrete steps to address climate change issues. And that’s why the trade show will be important, too, because it will an indicator of how seriously the market has embraced the importance of climate change and the opportunity for solutions.
The Gulliver Problem
But then there is the Gulliver problem. Jonathan Swift’s Gulliver found himself in Lilliput where he was vastly larger and more powerful than the tiny citizens. His every action posed a threat to their world and their only hope was to work together to control the giant. Lacking a massive rope to tie the big guy down, the Lilliputians teamed up with thousands of tiny strands.
Climate change is a bit like Gulliver in that it is a huge force that none of us has the power to stop by ourselves. Top-down initiatives like the Paris Agreement are very important, but need to have bottom-up support. Grassroots. Tiny strands. Addressing climate change head on requires thousands of small concrete actions that taken together can have real meaning.
Why is Wine Different?
So where does the wine industry come in? What is different about wine that makes its Lilliputians think that they can take on Gulliver? This is one of the themes of my talk and, while I don’t want to give too much away just yet, let me share a little of my thinking.
There are many reasons why wine is particularly responsive to climate change issues (you have probably already thought of a few reasons as you read this sentence). But here is an important one. Climate change is an existential threat to civilization and the natural environment, but it is not taken seriously enough by many people because its impacts are uncertain, uneven, and projected into the future.
But wine really is different. The future is now for climate change and wine as the combination of higher temperatures and more frequent extreme weather events redraws the world wine map. Wine is fragile, vulnerable. Ultimately there is not escaping the climate change threat.
Wine people have little choice but to seize their Lilliputian tools and work to save their businesses, their vineyards, and ultimately themselves. Porto will be an opportunity to see both the small and the big. Hope to see you there.
Good conferences succeed because they work on several levels at once. Keynote speakers, for example, are most useful if they stimulate discussion among conference participants to allow them to shape and share their own thinking.
My keynote is about “Wine Tourism for Sustainable Development: Opportunities, Strategies, Pitfalls” and my goal is not to tell people what to think and do but instead challenge them ask new questions and rethink the answers to old ones.
The UNWTO welcomes this kind of thinking and rethinking. The organization recently adopted the UNWTO Framework Convention on Tourism Ethics, for example., reflecting the fact that global tourism is now big business and its significant economic, social and cultural impacts must be fully considered.
Thinking and then acting — that’s what it’s about. Other speakers will share their experiences from around the world, giving us all a lot to think about!
The UNWTO has developed a wine tourism framework or prototype. Yolanda Perdomo, Director of the UNWTO Affiliate Members Program, will present the prototype and Gabriela Testa, President of Ente Mendoza Turismo, will discuss how it is being implemented in the Mendoza region.
Mendoza has enormous potential for wine tourism as I explained in my 2013 book Extreme Wine. I highlighted two very different wineries for their tourist experience: Tempus Alba and Salentein.
Situated close to Mendoza city, Tempus Alba hosts many young wine tourists who visit on bicycle. They enjoy the wines and food at the restaurant, of course, and receive an education about Malbec and the vineyard. The vibe is casual and fun, but the approach is seriously thoughtful. I’m a big fan of what Aldo Biondolillo and his family are doing at Tempus Alba.
Bodegas Salentein is located high in the Uco Valley and I don’t think many people bike there from Mendoza. It was the first destination winery in this now-booming wine region and features an art gallery, a stunning barrel room dubbed the “wine cathedral” and fine dining, too. As is the case of many Mendoza wineries, the architecture rivals and reinforces the dramatic Andes mountain scenery. Fantastic.
Theory and Practice
The UNWTO conference balances the theory and practice by including a number of local wine tourist experiences in the afternoon sessions. These winery visits will be a lot of fun, of course, but they will be most useful if participants give serious and critical consideration to what works (and why) and what could work better (and how can this be achieved). And then the trick is try to apply those sharpened critical skills to wine tourism offerings, strategies, and policies back home.
I will paste below the tentative list of wineries and experiences that will be available to the UNWTO conference participants and, by the way, to adventurous wine tourists generally when they visit Mendoza. The list gives a concrete sense of the diversity of wine tourism offerings available in this beautiful part of the world.
Come back in two weeks for more Wine Economist! Cheers (and adios!).
Bodega Norton: Restaurant La Vid, Chef Patricia Suárez Roggerone Experience: Winery bicycle tour
Bodega Renacer: Restaurant Renacer, Chef Sebastian Weingand Experience: Virtual reality and winery visit by an oenologist, The Appassimento
Susana Balbo Wines: Restaurant Osadía de Crear, Chef Marianela Pizzonia Experience: Blending competitions
Bodega Terraza de los Andes: Restaurant Residencia Terrazas de los Andes, Chef Noelia Scquizziatto Experience: Tasting from barrels and cooking class, deserts
Bodega Lagarde: Restaurant El Fogón, Chef Lucas Olcese Experience: Historic winery tour, which is DOC MALBEC certified and was the first denomination controlled by
Entrecielos Luxury Wines & Spa: Restaurant Katharina, Chef Federico Castro Experience: Limited Edition Vineyard Loft & Spa Hammam, traditional Turkish relaxation and leansing methods
Bodega Trivento: Restaurant Espacio de Arte, Chef Sebastián Flores Experience: Art & Wine; Delhez family wine exposition; Bicycle tasting tour in Finca Los Vientos through its sustainable irrigation system
Bodega Trapiche Restaurant Espacio Trapiche, Chef Lucas Busto Historic winery and the arrival of the railway. Re-creation of two programs that are part of the Wine Tourism Events Calendar: “Wine and Cinema” and “Tango in the Vineyards”
Casa Vigil: Restaurant Casa Vigil, Chefs Santiago Maestre and Federico Petit Experience: Dante Alighieri’s The Divine Comedy in the heart of Chachingo, The Inferno, The Purgatorio, and The Paradiso from Alejandro Vigil’s point of view
Bodega Vistalba: Restaurant Vistalba, Chef Jesus Cahiza Experience: Royal Staircase to Calicata and tasting of exotic varieties
Bodega A16: Restaurant Finca Papa Francisco, Chef Felipe Bakos Experience: Art exposition at Plaza de Esculturas, “Augure Stone” by local artist Alfredo Ceverino and Cooking Class, Regional Argentinian Cuisine
Bodega Chandon: Bistró Chandon, Chef Maitas Gil Experience: Travel through the paths of Chandon, the first subsidiary of Moet Chandon outside of France
Bodega Ruca Malen: Restaurant Ruca Malen, Chef Juan Garcia Ventureyra Experience: Brush & Bottle, Wine Cathedral
It is impossible to drive through the Alentejo region of Portugal without seeing the dark trees that dot the landscape. Pretty soon you notice the lines on the trunks where the bark has been harvested and then you know for sure that you are in a cork oak (Quercus suber) forest, the densest concentration of these trees in the world (see map above).
Cork’s Medieval Roots
Planting a cork oak tree is a statement of faith in the future. The first harvest must wait for 15 years and then the cork will be of low quality, unsuitable for natural cork closures. The second and better harvest that yields more usable cork comes 9 years later. Only 9 years after that (and every 9 years into the future) can the highest quality cork be taken. Few other things in the world of wine (producing 40-year old Tawny Port, for example) can compare to cork in terms of optimistic forward thinking.
Sue and I visited both Porto and Alentejo during our recent trip to Portugal and Antonio Amorim and Carlos de Jesus of Corticeira Amorim, the world leader in cork closures, invited us to visit their factories in these two regions to see first-hand what I am calling the Three Ages of cork.
Cork is an ancient product — the Greeks, Egyptians and Romans all sealed their wine jars with cork. The harvesting of it is laborious hand work since each tree has its own configuration. Photos of modern cork harvests could easily be mistaken for medieval paintings.
Stepping into the Amorim factory in Coruche, you get an initial sense of moving forward in time to the industrial revolution. There is still a lot of hand work here. Sorting the processed cork bark pieces, for example, still requires human judgement as they are inspected and graded for quality one at a time. The key to making a profit in cork is to waste nothing, so each cork piece must go to its best use and the waste at each step recycled into a lower-priced product.
Almost nothing is thrown away. One item that was headed for the power-supplying waste burner was a piece of cork that was badly infected with TCA, the source of cork taint. What a horrible smell! Until a machine can consistently detect all the potential problems with cork including TCA, cracking, insect damage and so on, these workers’ jobs are very secure.
The factory was loud with the clamber of industrial machinery as every task that could be mechanized was mechanized. It gave me a sense of what those 19th century British textile mills must have been like.
Interestingly, the finest corks closures made from the best quality raw material are hand-punched by skilled craftsmen (see photo above). These corks need to be as close to perfect as possible and so far nothing can replace the human eye for seeing just where the cork’s sweet spot is (and what parts should be recycled down the line for other products).
NDtech: Cork for the 21st Century
It would be easy to think of cork just this way — a medieval product made using industrial revolution technology — but this viewpoint misses a lot as we learned when we visited Amorim’s second factory near Porto.
Here we saw many of the same processes as in the south, but the focus was different because Carlos and Antonio wanted us to see the progress that has been made at improving cork closures and addressing the issues that allowed synthetic stoppers and screw cap technology to make dramatic inroads in this market.
Innovative new production processes and seriously obsessive attention to detail have now all but eliminated the incidence of detectable TCA contamination in Amorim corks throughout the product line, which is a big deal and came only after intense and expensive research and process innovation. But that was not good enough and so earlier this year Amorim unveiled its latest innovation, NDtech corks.
Amorim scientists guided us into the controlled environment that you see in the video above and we saw the NDtech (think non-detectible TCA levels) process at work. ndTech really does individually-inspect each and every cork that goes through the process and guarantees then all to be TCA-free at human sensory threshold levels.
Amorim is convinced that the process works and we saw persuasive data about these and other Amorim cork closures. Now the challenge is to scale up to meet the demand for these, the very best corks that can be made.
Three Ages in One Product
I find it interesting that cork is so many things at once. It is a natural product, of course, but one that is necessarily harvested and then processed by hand and manufactured using machines and processes from a variety of periods. It is also increasingly a technological product.
Making excellent cork closures is complicated as we saw at the Amorim factories and doing so profitably is even more complicated. We were impressed with the way that every scrap and bit of cork is put to use in closures and other cork products and every ounce of value realized. Environmental and economic sustainability go hand-in-hand.
Meeting the challenge of synthetic and screw-cap closures has not been easy for cork producers, who saw a some of their market share disappear. Hard work, expensive research and technical innovation has turned this around, however, and now many consumers and wineries who moved away from cork in the past are taking a new look.
Someone once accused the economist John Maynard Keynes of expressing a view that was inconsistent with his previous statements.” When the facts change,” Keynes replied, “I change my opinion. What do you do?” The facts about cork — especially the TCA situation — have changed in the past few years. No wonder many people in the industry have revised their views on cork.
Many thanks to Antonio Amorim and Carlos de Jesus for he opportunity to see the three ages of cork with our own eyes and learn about the scientific progress from the experts. This concludes the short series of past-present-future stories from the Alentejo. Come back next week for a look at some unexpected wine tourism opportunities we found in Portugal.
They say that you shouldn’t judge a book by its cover and I think this applies to wineries, too. We visited Adega de Borba as part of a brief tour of wineries active in the Alentejo vine and wine sustainability program and found ourselves led astray by our first impressions.
Adega de Borba is a cooperative winery founded in 1955 and was a pioneer at the time. All the economic incentives in those days were stacked against wine and in favor of grain production in this part of Portugal in those days. It took some effort and determination to nurture and expand wine production here.
Beyond the First Glance
At first glance the original 12,000 square meter facility was what I expected from a “mid-century modern” winery, but on closer inspection I began to realize that this was both more and different than it seemed. More because the winery is a surprisingly large operation. The 300 members together farm 2000 hectares of vineyards and the winery produces over 15 million bottles a year.
And different because while the winery dates from mid-century, the ideas are not frozen in time. Looking closely, we saw that everything was meticulously clean and well-maintained as it should be but so often is not in the case of “vintage” production facilities.
And the answers to our questions about economic incentives were the right ones, too. Do the members have to sell their grapes to the cooperative, or are they allowed to hold back some (usually the best ones)? No, they must sell to us. How are they paid? By weight, of course, but with substantial adjustments plus and minus based upon objective measures of quality. Are the premiums enough to motivate a movement to quality? Yes, they are very high for the finest grapes.
Adjusting to New Market Realities
The large scale is important because wine in Portugal is low-priced by U.S. standards and price pressure is increasingly intense. Consumers who bought €3 wine (that’s where the mass market is here) before the global financial crisis are spending €2 instead and margins for exports to some markets can be low as well. So efficient production is key as well as quality that will allow sales in the higher-price categories.
Former Portuguese colonies Angola and Brazil have been the largest export markets for Alentenjo wines in past years, but both are going through difficult times at the moment (especially Angola with its dependence on petroleum export income), so attention is shifting to other markets such as the U.S., Canada, and Switzerland, which demand higher quality, and Russia and China, where low price is a powerful factor.
Adega de Borda has moved in both directions. The Rótulo de Cortiça wines, which are easy to spot because the label is printed on a thin sheet of real cork (cortiça in Portuguese), are a good case in point. The winery sells about a million bottles of this wine each year at the astounding (for Portugal) price of €9 and even more for the reserve bottling.
That €9 price won’t seem like much to my Napa Valley friends, but it is a stunning achievement for this volume of wine in the context of the Portuguese market and is only possible because of the care and attention that goes into every stage of the process.
Uphill / Downhill
But this doesn’t explain how Adega de Borba is able to compete in markets where margins are razor thin and competition from other producers and other wine regions fierce. To understand that we had to walk up a gentle hillside to the biggest surprise of the day, a stunning 140,000 square meter state-of-the-art production and storage facility that was completed in 2011 at a cost of €12 million. A system of underground pipes connects the new winery with the old one down the hill so that the wines can be bottled there.
Everything is big about the new facility from its crushing capacity (1200 metric tons of grapes a day) to the fermentation and storage capabilities. But it is the technical efficiency that it creates that is most impressive since it allows both volume and margin-boosting quality to co-exist.
Thought and Action
I said at the start that you shouldn’t judge a book by its cover, but this big modern building might be an exception to that rule because the exterior of the new building gives away something of its high-tech interior. It is blistering hot in this region in the summer, so the building is clad in white ceramic tiles to reflect the sun with horizontal rows of white marble from a nearby quarry that, a bit like radiator fins, provide a certain amount of natural heat control as well. Very cool (pun intended) and not necessarily what you would expect from a wine cooperative.
We came to Adega de Borba because it has embraced the Alentejo region’s sustainability initiative, but it is easy to see that this is part of an overall approach to wine growing and production, with attention to every detail and eyes firmly set on horizon. Cooperatives tend to struggle when they get the incentives wrong, fail to note changing market environments, and hesitate to invest for the future. Adega de Borba shows us how wine cooperatives must think and act to be relevant and successful in today’s markets. It is how all wine enterprises must think and act.
As you probably guessed, this column’s title was inspired by the Gilbert & Sullivan tune from Pirates of Penzance. Enjoy.
Sue and I recently returned from the Unified Wine & Grape Symposium in Sacramento and we noted several important themes in the meeting rooms, on the trade show floor and in our many conversations with wine industry colleagues. One significant recurring topic was sustainability, which was also on the lips and minds of the people we met last November at the SIMEI meeting in Milan. Here’s a brief report.
The week began with the announcement that the Sonoma County Winegrape Commission had received the Governor’s Award for Sustainability, California’s highest environmental honor. The group, which represents more than 1800 grape growers, set an ambitious goal two years ago — to have 100 percent of the county’s vineyards certified sustainable by 2019. Did I say ambitious? Make that very ambitious!
And yet they seem to be doing it, increasing the proportion of vineyards with third-party sustainable certification from one-third in 2015 to 48 percent this year. Overall 64 percent of the county’s vineyards have had a sustainability assessment and the proportion continues to grow. It is obvious that Sonoma County winegrowers appreciate the importance of sustainability and are making impressive progress.
Will they achieve 100 percent sustainability by 2019? That’s a big goal and complete compliance may be difficult to achieve. But who would have guessed that they could come so far so quickly. I would not bet against them.
Fred Franzia’s Lecture
The next day’s program featured a luncheon speech by Fred Franzia, the head of Bronco Wine Company and Mr. Two Buck Chuck to his legions of fans. Franzia doesn’t give many public speeches and this event sold out quickly. The room was packed with industry executives and winegrowers. (You might enjoy this article about the speech from the Italian wine press — I love the headline “Un Irriverente Fred Franzia Scalda Sacramento.”)
Franzia’s speech ranged over many topics. He honored important figures in California wine, talked about his own family’s long history in wine, and made some pointed comments about current wine policies. He also announced the sale of the one-billionth bottle of Charles Shaw wine and Bronco’s acquisition of the Petri Wine name from The Wine Group and the return of that name to Bronco’s historic Escalon winery. Petri was at one time the largest winery in the U.S., dwarfing current world production leader Gallo.
Bronco is involved in a number of important sustainability initiatives (for example it recently received a Zero Waste Gold certification), but Franzia’s speech focused on a topic of particular importance to the growers in the audience: water. Franzia noted that many growers in the San Joaquin Valley have been slow to adopt drip irrigation technology to their large vineyards. He explained the benefits of this technology and called upon the group to be better stewards of scarce water resources.
Sustainable State of the Industry
Once again this year I moderated and spoke at the big “State of the Industry” session on Wednesday. Last year all three of us who spoke talked about the importance of sustainability in different aspects of the wine business and the topic appeared again this year, but in a different guise.
Nat DiBuduo of Allied Grape Growers found himself with the unhappy task of telling the audience that it looked like thousands of acres of vines would need to be grubbed up in the San Joaquin Valley. Why? A combination of ageing vines, unmarketable grape varieties, falling demand in the value wine category and higher profits in other crops, especially tree nuts. Not the news Nat wanted to give. He planted some of those vineyards himself and hates to see them go.
Does the perfect storm of changing market dynamics spell doom for winegrapes in the Central Valley? A restructuring is needed, Nat said, but the key is to move the business upmarket to higher quality. There is a growing market for higher quality wine made from better grapes and sustainability is part of that package, he advised. Environmental and economic sustainability are not enemies, they need to be partners in this key winegrowing region.
EcoVolt Waste Water Innovation
Sustainability has many faces and we found lots of them on the trade show floor. The Unified is the western hemisphere’s largest wine industry gathering, so it attracts a diverse crowd, including entrepreneurs working on projects to help wineries that are committed to sustainability to achieve their goals.
We saw a number of interesting products, but the one that especially caught my attention was the EcoVolt Sustainable Wastewater Treatment system from Cambrian Innovation. Cambrian is a biotech company that was spun out of MIT labs in 2006. The EcoVolt product uses a proprietary bio-electric process to remove more than 99 percent of contaminants from waste water (and wineries generate a lot of waste water), in the process producing methane gas, which an integrated co-generation process converts into heat and power. Microbes do the heavy lifting, cleaning the water and producing the gas, and innovative technology brings all the pieces together.
I was particularly interested in the EcoVolt Mini, which is housed in a standard 53-foot shipping container (see image below) and scaled for wineries producing 200,000 to 500,000 cases per year. Bigger units scaled to larger needs are also available. With so much water used in the cellar, the need for products like this is clear.
Four Faces and More
I like that Cambrian’s product addresses several aspects of sustainability — water, power, cost — in this innovative way. If the goal of a sustainable wine industry is going to be reached we are gong to need a lot of faces involved — of regional organizations, growers and winemakers beyond the North Coast and innovators both inside the wine sector and those bringing ideas from other areas.
For a long time it has seemed to many of us that sustainability was often more talk than action. Lots of people talked about sustainability, but real progress was sometimes hard to see. Have we turned a corner? Are we really moving ahead? We saw positive signs in Sacramento.
Sue and I recently returned from the biennial SIMEI trade show in Milan. SIMEI stands for Salone Internazionale Macchine per EnologIi e Imbottigiiamento, which translates as International Enological and Bottling Equipment Exhibition.
SIMEI By the Numbers
The trade show’s focus is narrow (equipment and technology) compared to the all-things-wine Unified Wine & Grape Symposium here in the U.S, which is my point of reference for these things. But its scope is broad, including not just the wine industry since tanks, bottling equipment, etc. are used in other sectors such as olive oil and so forth. No wonder so many people found a reason to attend.
By the numbers (according to SIMEI’s press release) there were 46,000 visitors from 90 countries, 600 exhibitors from 28 countries, and 12,000 tons of equipment and products displayed. The trade show took up 4 huge halls in the vast Fieromilano Rho exhibition center. The video below gives you a sense of the scale and scene.
Technology was the star of the show and one of the highlights was a gala dinner where awards were presented for outstanding new innovations. Wines & Vinesreported on the top innovations.
Sustainability Congress: Theory vs Practice
SIMEI is organized by the Unione Italiana Vini (Italian Wine Association), whose members account for 70 percent of wine production in Italy. They organized two international congresses in conjunction with the trade show as well as a number of presentations and demonstrations that took place in the halls among the big machines.
The congress on “Sustainable Viticulture as a Tribute to Wine Quality” followed up on a similar session in SIMEI 2013. The earlier meeting worked to agree a universal definition of sustainability in the wine industry, which is either easy or difficult depending upon how you approach the question.
It is easy to agree in theory that sustainability includes economic sustainability, environmental sustainability, and social sustainability “pillars” — this is now conventional wisdom. But just what exactly is meant by each concept and how can they be evaluated in practice? Not so easy.
The 2015 meeting probed some of the issues and trade-offs between and among the three pillars. One line of discussion noted the need for sustainability to be certified according to objective criteria, which is important if the concept is to mean anything. But what and whose criteria should be used?
I think there was a consensus in the room that a common or universal set of standards was needed (“harmonization” is a term often used here). Although I am probably wrong about this as I am about many things, I spoke in opposition to the single-minded pursuit of universal standards.
I see each country or region starting from a different base and often facing different economic, environmental, and social issues and constraints. I argued that at this moment it is more important that each region make the most progress it can towards sustainability. I cited programs in South Africa and New Zealand as good examples.
I worry that putting the main emphasis on having universal standards will result either in diluted “least common denominator” rules or will squeeze stakeholders out of the sustainability movement altogether, limiting its reach and effectiveness, because the common rules do not address their particular situations and concerns.
One size does not necessarily fit all, even if there is some wiggle room built in. It took only a moment for an EU representative to rise and explain to the audience why I was wrong, but I will stick to my viewpoint.
I admit that my views are based on an American way of looking at things (I love the grand Federalist laboratory that is the United States), but I don’t think this is exclusively an American attitude. I do not see universal wine sustainability rules happening soon within the US much less on a global scale.
Amorim’s Sustainability Initiative
If turning theory into practice was not easily accomplished in the congress center, there was plenty of evidence of strong efforts out in the trade show. Sustainability isn’t just ethics or philosophy, it is also good business and many of the exhibitors have embraced this concept.
An example is Amorim, the innovative Portuguese producer of corks for the global wine industry and many other cork products. We stopped by the Amorim exhibit and talked with Carlos de Jesus, marketing director of Amorim, and Carlos Santos, the head of Amorim Cork Italia. They were both excited to tell us about Amorim’s cork recycling programs, which tick all three sustainability boxes.
Cork is a natural product so it would seem that recycling it in a sustainable way would be easy, but it is not. You cannot, for example, simply re-use a wine cork on another bottle of wine — health and safety laws as well as common sense rule that out.
So the challenge is to collect the used corks and then repurpose them in some way that adds value to society without bankrupting all involved. The Amorim approach (which is implemented in different specific ways in each country where it has been rolled out) partners with local non-profit groups to collect the corks, keeping them out of the landfill.
Amorim pays these groups for the corks (thus supporting their social programs) and then grinds up the cork and partners with various producers to make useful products. In the U.S. you might have seen shoes with soles made from recycled cork, for example.
In Italy the cork is used to make the sort of building insulation panels that would otherwise by made out of foam. Cork is an excellent insulator and the price is competitive with the conventional product.
The Amorim program promotes social and environmental goals. What about economics? Well, I was told, this isn’t designed to be a profit center for Amorim. The idea is not to make a lot of middleman money reselling the corks that the non-profits have collected, but rather to facilitate the recycling system itself.
Many Small Steps Can Add Up
But that doesn’t mean that it isn’t good for business, Carlos de Jesus stressed. Amorim mainly markets to its direct buyers — the wineries — and doesn’t have as much interaction as they would like with the people who ultimately open the bottles. Programs like this give Amorim an opportunity to tell cork’s sustainability story directly to consumers and to establish a very positive image of cork with them. And since producers want their products to appeal to consumers, if consumers have a reason to choose cork … well you can see where this can lead.
Amorin’s program is important even if it is a small step toward the goal of sustainability. If each sector of the industry can search out an appropriate strategy (and each region of the wine world do the same), then all these small steps can potentially add up to the more sustainable future that is the goal.
I will be leading a discussion of the economic elements of sustainability in wine on Tuesday and then taking part in a panel that looks at the role of sensory analysis in sustainability on Wednesday.
One of the themes of the conference is that sustainability is not simply an ethical matter but also a key to wine quality and wine market success. I am looking forward to meeting the international group of speakers and participants.
I was asked to prepare a quick “ice breaker” presentation to jump-start the discussion of the economic aspects of sustainability in wine and I thought I would share its outline with you here. I begin with the conventional wisdom of the “triple bottom line” analysis: sustainability must take into account the natural, social and business environments. The question is how are these three related. The answer is “it’s complicated.”
Some people see these simply as discrete goals and focus on trade-offs. Others see sustainability as a trilemma — pick two and the third is eliminated. I can understand this logic, but I think it is possible to design for sustainability and I will try to direct the discussion towards strategies for synergy and success.
I plan to get the ball rolling by talking about the case of Durbanville Hills winery in South Africa, a success story in terms of both wine quality and sustainability. Durbanville Hills isn’t sustainable by accident but rather results from the combination of effective leadership, a progressive organizational design and strong institutional commitment by all stakeholders. Inspiring! I hope the participants will contribute other success stories that will collectively point the way forward.
The key, of course, is to bridge the gap between theory and practice. and to identify the key pressure points. Sustainability is important in wine both for the success of the industry and as a beacon to other sectors. Wine, with its strong social and cultural connections and its deep agricultural roots, presents a clear example of how complex thinking about sustainability pays off.