“American wine drinkers seem much less cost-conscious ” (than their British cousins) according to a recent column by Jancis Robinson on good wines for coronavirus lock down era.  There is truth in this, but it isn’t simply that Americans don’t care about cost. British supermarkets trained their customers to look for “3 for £10” bargains for wine and many other things. That’s something they now regret.

Many American wine drinkers learned the opposite lesson. Unsure why seemingly similar products are sold for wildly different prices, they act as if guided by the idea that higher price always means better quality. Many dismiss value wines as a category and stubbornly purchase more expensive bottles that they might not like as much.

This seems like a good time to challenge the myth that the only good wines are the expensive ones. Last month the Wine Economist opened the “Ten Under $10 Challenge.” Readers were invited to nominate widely-distributed wines retailing for less than $10 that they would recommend to others for shelter-in-place enjoyment.

The Challenge is inspired by New York Times wine columnist Eric Asimov’s column on “15 Wines under $15: Inexpensive Bottles for Stay-at-Home Drinking.”  Fifteen bucks is a good target, but given the dire economic news, many readers will want to step down a shelf on the wine wall. What can you do for $10?

Bargain Wine Resources

The search for really good $10 wine is not new and the undisputed expert on the topic is Jeff Siegel, who for many years has published the Wine Curmudgeon $10 Hall of Fame. Each year Jeff reviews the list, adding a few new wines and dropping a few off the list, often because of availability issues. You might want to consult the Hall of Fame the next time you go shopping for good wine at a good price.

George Taber’s 2011 book A Toast to Bargain Wine is an another good resource even if the passage of time necessarily leaves it a bit dated. I like that Taber includes two recommendation lists for each wine type: $10 and less ($15 for sparklers) and then “splurge” selections that are just a bit more. Taber drank a lot of mediocre wine so that you won’t have to. Take advantage of his sacrifice.

You can see the complete list of nominated wines by consulting the Comments list on the original column. You will find an amended list below. I added a few nominations that came in via email and social media and I deleted a couple of wines that, while clearly good value, seemed either to be limited distribution or the result of special discounts and therefore not what we were looking for here.

Who, What, Where?

There are several interesting things about the wines on the list. Many readers reported both what they paid for the wines and where they bought them. Does it surprise you to know that Trader Joe’s, Total Wine, and Costco were frequently cited? These are retailers that make an effort to provide moderate cost wines and so they attract shoppers looking for good value. Supply (of good value wine) creates its own demand, as Gresham would probably say.

Imports account for about a third of the wine sold in the U.S. market, but they make up a larger share of the reader list. Why? A complicated question, but one factor is that many of these value wines are made to be competitively priced in the domestic markets of the producers. And prices abroad, as travelers frequently observe, can be much lower than prices here in the U.S. As a result, many foreign producers have become experts at hitting the low price target.

Take the Casa Santos Lima Red Blend Portugal that I nominated last month. It sells for just $5.99 in my local Costco and has a very large and enthusiastic following. How can they do it? Well, the fact that Costco has a lower wine mark up than most other stores is one factor — Costco can afford to do this because their customers pay membership fees.

How Do They Do It?

But maybe a bigger factor is this. The supermarket wine space in Portugal is intensely competitive and very low prices — two or three euro per bottle! — are common.  Portuguese producers in these markets learn must keep costs down or they will quickly fail. Costs add up quickly when foreign producers navigate their way to U.S. retail shelves, so this very low initial cost base is important.

Can American wineries make good, inexpensive wine? Yes, of course. There are lots of examples both on the list and on your store shelves. I held my breath waiting for a Bogle nomination to come in, for example. They are one of the California producers that is known for a good quality-price proposition.

Same with the Chateau Ste Michelle Dry Riesling. I can sometimes buy this wine for less than $6 a bottle at the supermarket. A steal! I was at a Riesling Rendezvous blind tasting a few years ago that brought together Riesling producers from all over the map. When this wine and its price were revealed, the Ste Michelle winemaker received a standing ovation. The Chateau, as we call it hereabouts, is the world’s largest producer of Riesling wines.

The U.S. is in the value wine game, for sure, but there is no denying that the domestic market center of gravity has shifted up a shelf on the wine wall. So more attention is given to upscale wines. That said, don’t ignore the fact that the portfolio of winery assets that Gallo is in the process of purchasing from Constellation includes a number of value brands. Gallo has done very well indeed with Barefoot. It will be interesting to see what they do with these new brands once the M&A dust settles.

Finally, I was pleased to see some overlap between the reader nominations, Jeff Siegel’s Hall of Fame, and George Taber’s list.  It demonstrates both that consumers know what they are looking for in good value wine, but also that this is a vast space with thousands of choices. Something for everyone? Almost. Everyone has a friend of two or won’t consider drinking a lower cost wine. That leaves more for the rest of us!

Nominated Wine List

Ok, here’s the Ten under $10 reader list (apologies if I accidentally left off your nomination or had to edit it for the reasons cited above).

• Angeline California Chardonnay
• Barnard Griffin Rose of Sangiovese
• Bellini Frascati
• Bogle varietal wines
• Caleo Salice Salentino
• Cantine Colosi Biano Grillo Sicily Italy
• Casa Santos Lima Red Blend Portugal
• Chateau Ste Michelle Dry Riesling
• Chopo Jumilla Monastrell
• Clean Slate Mosel Riesling Germany
• Danzante Red Blend (Tuscany)
• Domaine du Mistral Plan de Dieu Rhone Rouge
• Domaine St. George. (California)
• Castilla Syrah 2018 Spain
• Hedges CMS red blend, Columbia Valley
• Jules Larose Blanc de Blancs Brut Sparkling Wine France
• Kia Ora Marlborough Sauvignon Blanc
• Kirkland Signature Malbec
• Kirkland Signature Marlborough Sauvignon Blanc
• La Nervera Blanco 3L BIB
• Les Parcelles Marc Dupas Loire Sauvignon Blanc
• Lindeman’s Bin series
• Magic Box Red Blend Spain
• Mascota Vineyards Rose
• Martin’s Pick Up Australia Cabernet Sauvignon
• Mas Fi Cava
• Matua Sauvignon Blanc, Marlborough
• McManis Family Vineyards Petite Sirah
• Monte Antico Toscana Rosso
• Mont Gravet Carignon Vieilles Vigne France
• Mont Gravet Cotes de Gascogne Rose France
• Quinta do Gradil, Mula Velha Riserva (Portugal)
• Oxford Landing, Australia.
• Penfolds Koonunga Hill Shiraz-Cabernet
• Saladini Pilastri Pecorino from Offida DOC
• San Gregorio Single Vineyard Las Martas Garnacha
• Sauvignon Republic Sauvignon Blanc, New Zealand
• Trader Joe’s Pinot Grigio 3L BIB
• Trader Joe’s reserve Cabernet Sauvignon Columbia Valley
• Trapiche Broquel Malbec
• Upper Left Cabernet, Columbia Valley
• Vaga del Oragon gran reserva
• Vina Falernia Pedro Ximenez Elqui Valley, Chile
• Yalumba Y-series Viognier

The Envelope, Please …

So what wines are on the Ten under $10 list? Well, wine is very personal, so I think each of us will have our own list based on individual tastes and local distribution and pricing limitations. I invite you to name your own winners. In this spirit, here is The Wine Economist personal list to get the ball rolling.

• Barnard Griffin Rose of Sangiovese
• Casa Santos Lima Red Blend Portugal
• Chateau Ste Michelle Dry Riesling
• Clean Slate Mosel Riesling Germany
• Kirkland Signature Marlborough Sauvignon Blanc
• Matua Sauvignon Blanc, Marlborough
• McManis Family Vineyards Petite Sirah (or the Viognier!)
• Monte Antico Toscana Rosso
• Yalumba Y-series Viognier
• TBA

Wait, that’s only nine wines. I thought this was Ten under $10. Well, to be honest, I just can’t make up my mind. I guess I’ll just have to open a few more bottles — and the list gives me lots of options to explore and I think that’s the point. I hope you will experiment, too, and that you have found this exercise informative and that it will inspire you to enjoy the good values that the wine world offers us all.

“California’s Cabernet Glut Deepens” is the title of W. Blake Gray’s recent Wine-Searcher column, reporting on the Vineyard Economics Symposium discussion of current market trends. It makes good reading, with its useful mixture of threatening dark clouds and potential silver linings.

California (and Washington, too) was over-supplied with wine in tanks and vines in the ground before the coronavirus crisis hit. The lock-down booze-buying surge in March and April made a dent in the wine lake (a net increase in U.S. sales after considering lost on-trade sales). But there is concern that overall sales will fall once the second shoe drops and the impact of the recession is fully felt despite the eventual return of bar and restaurant activity.

Cabernet was the focus of a boom because it is the most popular red wine variety and can sell for a premium, especially in the Napa Valley.  It seemed like it was impossible to go wrong planting a few more acres of Cabernet, so plant we did. Economists see moral hazard in situations like this. Moral hazard is the notion that if you don’t think that an otherwise risky bet can fail, you will take more risk and make bigger bets.

Gray reports that there are rising bulk wine surpluses and falling prices. That sure thing turned out to be a fallacy of composition. What was true for an individual grower (profitable to plant more acres of Cab so long as everyone else holds steady) was not true when everyone planted more Cab. No wonder Allied Grape Growers President Jeff Bitter (that’s Jeff in the cartoon image above) told growers at this year’s Unified Wine & Grape Symposium meetings that it is time to pull out marginal vines.

But the fallacy of composition can apply to grubbing up, too. If everyone else is going to pull out Cab vines, the logic goes, then I’m better off keeping mine in the ground. But if no one pulls vines, the bust gets deeper. Fortunately there is evidence that some vines are coming out. But, as Gray’s report suggests, the problem persists.

Agricultural markets (and sometimes financial markets, too) go through cycles of boom and bust. The Turrentine Wine Wheel of Fortune captures very well the cycles in wine. People are often surprised  by the cycles because moral hazard or the fallacy of composition blinds them to the evidence that was always hidden in plain sight.

With this is mind we re-print below two Wine Economist columns,  a nervous report on the emerging Cabernet boom (August 2018)  and suggestions (some a bit tongue-in-cheek) about what to do with surplus Cabernet grapes (July 2019).

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The Cabernet Boom and Its Discontents

August 2018

What winegrape variety comes to mind when I say “Napa Valley …”? There are lots of possibilities. Chardonnay. Merlot. Sauvignon Blanc, of course! Hey, Larkmead makes a tasty Tocai Friuliano.

But I’ll bet that your “fill in the blank” answer was Cabernet Sauvignon and there are several good reasons for this. Cabernet is a noble grape and many of the world’s great wines are made from it or with it. American consumers are in love with this winegrape variety. Cabernet Sauvignon has recently overtaken Chardonnay as America’s #1 favorite.

Cabernet is #1

According to recent Nielsen data taken from the August 2018 issue of Wine Business Monthly, sales of Cab wines totaled more than $201 million in the most recent 4-week period, up 3.9% from the previous year. That compares with $190 million and 0.5% growth for Chardonnay, which has for years topped the league table.  Next in line but far behind, is Pinot Gris/Grigio ($96 million / 1.3% growth) and Pinot Noir ($82 million / 2.6%). The fastest-growing category is Rosé, as you might have guessed, with 67% growth on a relatively small $22 million sales base.

Consumers love Cabernet Sauvignon and growers love it, too, because they see it as a potential solution to the their financial squeeze. The costs of land, labor, equipment, and supplies keep rising, but the prices of many grape varieties have been stagnant, putting pressure on profits and, in some cases, generating rivers of red ink.

The Cabernet grape price premium can be substantial according to the 2017 California Grape Crush Report. Cabernet grapes fetched $700 per ton on average in Lodi, for example, compared with $552 for Merlot and Chardonnay. A ton of Cabernet sold for $2209 on average in Mendocino county, $2352 in Lake Country, and about $3000 in Sonoma County.

Premium Prices

Napa county topped the list with an average Cab price of $7,421 per ton. That average translates into a $70+ bottle price using the one-percent rule of thumb. And that’s the average. The very best Napa Cab grapes from exceptional sites sold for $10,000 per ton and more. Lesser Cab grapes sold for less, of course, but still generally for more than other grape varieties. Cab Rules.

And it’s not just a California thing. Cabernet is now the most-planted winegrape variety in Washington state, too, with 62,200 tons harvested in 2017 compated with #2 Chardonnay’s 39,300 tons.  The overall average price of Washington winegrapes was $1200 per ton, with Cabernet selling at a significant premium at $1500-$1600 per ton.

No wonder more and more Cabernet is being planted wherever it might possibly grow successfully. Jeff Bitter, recently appointed President of Allied Grape Growers, presented the results of the 2017 California Nursery Report at the Unified Wine & Grape Symposium meetings in January. Bottom line: Cabernet is big and getting bigger.

The Nursery Report provides insights about what grape varieties are being planted or grafted, which foretells shifts in winegrape production a few years from now when the vines are productive. The 2017 report showed that 72% of new vines were red varieties with only 28% white. Cabernet vines accounted for an incredible 37.4% of all new vines followed by 19.5% for Pinot Noir and 16.7% for Chardonnay.

Cab Pipeline is Full

If you combine Cabernet with other varieties that are often blended with it (such as Merlot, Malbec, Cabernet Franc, and Petit Verdot), they account for over 42 percent of all new California vines. I am not sure what the composition is of the vines they may have replaced, but I suspect the disproportionate emphasis on Cab and Cab blending grapes represents a significant net increase in future production.

Cabernet’s dominance is noteworthy, but the upward trend in Cab plantings is part of the long term trend that Benjamin Lewin MW described in his 2013 book Claret & Cabs: The Story of Cabernet Sauvignon. Zinfandel, not Cabernet, was the most-planted winegrape variety in the Napa Valley in the decades following Prohibition.

Zin was thought to  make the best Claret, according to Lewin, which of course is interesting because Claret is the name the British gave to Cab- and Merlot-based Bordeaux wines. Ridge made a “Claret”  in 1981, for example, from Zinfandel, Petite Sirah and Carignan and I’ll bet it was delicious!

Cabernet Sauvignon was a minor player on Napa’s wine scene, Lewin notes, although it made some historic wines including the great Beringer Cabs of the 1930s and the Beaulieu Georges de Latour Private Reserve wines that André Tchelistcheff made between 1938 and 1973.

The Napa Cab boom really picked up speed in the 1970s as new quality-driven wineries (think Robert Mondavi) focused on Cabernet. The Judgement of Paris in 1976 put Napa Cab firmly on the wine world’s radar.

No wonder new investment flooded into Napa Valley and Cabernet plantings expanded rapidly, both in Napa and California generally. Now the steady rise has accelerated, taking on some boom-time characteristics. The cycle of higher Cab prices, higher vineyard valuations, and increased Cabernet plantings continues.

Stein’s Law

Cycles and booms are a common characteristic of agricultural and financial markets, both of which I have studied. There are two things I have learned about the booms. First, they are driven by internal logic that seems bullet-proof from inside the cycle.  People (like me) who try to call turns often end up looking like Chicken Little fools. So don’t expect me to forecast a Cabernet bust!

The other thing I have learned is that Stein’s Law always applies in the long run. Named for the famous economist Herb Stein, Stein’s Law is says that if something cannot go on forever … it will end. And I think that Cabernet prices cannot go on going up forever (especially with new plantings on the rise) any more than housing prices could defy gravity forever a dozen years ago, no matter how how much rising prices might seem baked in the cake at any particular moment.

That doesn’t mean that the boom must inevitably be followed by a bust — there are many possible adjustment patterns as Kym Anderson’s analysis of Australia’s winegrape cycles shows. In the meantime, Cabernet is crowding out other grape varieties, including those Zinfandel vines that were once the pride of Napa Valley winemakers. That’s where we are going in the next column.

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The Boom Varietal image above comes from a 2011 Sky Pinnick documentary of the same name about Malbec, which is sort of the Cabernet Sauvignon of Argentina. I was pleased to be part of the cast for this award-winning film. The film talks about the rise of Malbec in Argentina and the understandable concern that the boom could go bust (Argentina has a history of boom and bust).

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Six Things to Do with Surplus Cabernet Sauvignon Grapes

July 2019

The wine grape harvest is just around the corner in California and Washington State and, while that’s a great time of the year, it will present economic challenges to some winegrowers. There’s going to be an awful lot of Cabernet Sauvignon harvested this year. Most of these grapes are contracted, but some will be looking for buyers and it might not be so easy.

Cabernet has been the top choice for new plantings for the last several years and it is easy to understand why. It is a noble grape and can make terrific wine. Consumers love it, so growers have responded enthusiastically. The problem, as has been noted here before, is that wine demand generally has slackened just as new supply is reaching the market. For a few years at least there is likely to be a surplus of Cabernet Sauvignon in many regions.

In fact, the surplus is already here, or at least that’s how I read the recent reports from Turrentine Brokerage. Turrentine data show the highest level of Cabernet on the bulk market for many years. Add the 2019 harvest to the current market and you have a problem — not for everyone, but for those who are left with unsold grapes or wine.

Econ 101 Meets Yao Ming

What do you do when you have too much Cabernet? Econ 101 suggests price adjustment — cheaper grapes, cheaper wine, and so on. But there are limits to this strategy, especially since the lower price tiers of the retail market are in decline.

Export sales are another Econ 101 solution and certainly there is an opportunity here, especially if President Trump succeeds in talking the dollar’s exchange value down. But the president’s trade wars have had an offsetting impact on wine exports.

Countries that compete with us in the export markets, notably Australia and Chile, have aggressively sought out free trade agreements to boost sales. The U.S. has recently taken the opposite strategy. U.S. wines are therefore a tough sale today in many export markets including especially China, where Australian and Chilean wines find great success.

Yao Ming, the Chinese basketball legend, has trouble selling his signature Napa Cab back home because of 93% tariffs imposed in response to the Trump administration’s policies. If Yao can’t sell Cab in China, there is not much hope for the rest of us. Export markets are unlikely to absorb very much of the surplus Cab. Other options?

Searching for alternatives, I consulted the most recent Nielsen market figures in the current issue of Wine Business Monthly and found a few ideas to consider if you find yourself holding excess Cabernet this year.

#6 Two Words: Red Blends

Red blends are a useful market category because you can blend away unfashionable or surplus grape varieties without consumers necessarily noticing what’s up. Syrah and Merlot are not as popular as they once were as varietal wines, for example, but blend them together, call the result a Red Blend, and consumers snap them up. Cabernet blends would be very competitive at the right price. This market segment is fairly large but, unfortunately according to the Nielsen data, its growth has stalled a bit this year. That means we need to think about …

#5 Three Words: Sweet Red Blends

See “Red Blends” above but add some residual sugar.  I don’t have a lot of personal experience with these wines, but I see them everywhere. 19 Crimes, which tastes sweet to me, has a successful varietal Cabernet Sauvignon, so this is not uncharted territory. Even better, why not try …

#4 Rosé of Cabernet

Rosé is the fastest growing market segment in the Nielsen table. A lot of that Rosé comes from France, to be sure, but the market is large and fluid.  Picked at the right time, Cabernet makes a nice Rosé and in fact there are a great many produced both here in the U.S. and around the world.

As I noted here earlier this year, there are tricks to the Rosé trade to consider. Rosé is not that easy to make, since color is a concern, and can be tricky to sell because consumers prefer the most recent vintage and demand seasonality is a factor, too. If you like the idea of Rosé of Cabernet, then I think you will also like …

#3 Sparkling Rosé of Cabernet 

Take two fast-growing categories — sparkling and Rosé — make the wines from Cabernet  and you are ready to go. The only thing that could be better is …

#2 Canned Sparkling Rosé of Cabernet 

… because canned wine is also a thing (watch for a report here in the near future) and it is growing fast. Have you seen all the new canned wine displays in the supermarkets? Don’t dismiss canned wine too quickly.

Canned sparkling Rosé of Cabernet leverages three hot trends to use up your excess Cab. It is a perfect storm of wine. What could be better? And while you have the mobile canning equipment hooked up, you might consider …

#1 Canned Sparkling Cabernet + Black Currant Spritz

Seriously!

I am paying more attention to the canned wine displays and one thing I note is that canned wine spritz is generally right beside the other canned wines. These seem generally to be mixtures of wine, fruit flavors, and carbonated water. They sound refreshing and they have less than half the alcohol of regular wine. A Cabernet and Black Currant spritz sounds drinkable to me on a hot day, but you might prefer blackberry or some other fruit flavor.

Since the consumer segment that is interested in low alcohol products is growing, I can see how this trend might persist.  Something to consider.

Seems Like a Stretch?

Bottom line. The U.S. industry is going to need to find uses for its  excess Cabernet Sauvignon if the potential surplus materializes. These examples are ways to take advantage of the small number of growing wine market segments. If it seems like getting Cab products into these segments is a stretch, then it shows how much more pressure there will be on the traditional product markets.

I hope the market can absorb all the Cabernet that’s coming its way. Fingers crossed.

Are you the sort of person who looks at every new garment to see where it’s made (and of what material) and studies the nutritional information on the back labels of the groceries that you buy? Me, too, although I don’t claim to be consistent in these investigations and I am sure that I miss a lot.

FDA Meets TTB

Many people take an intense interest in the products they buy, especially food and drink since they go into our bodies.  Calories per serving, along with sodium, carbohydrates, and protein, are important to many people.

It is interesting – and maybe a problem – that wine and other alcoholic beverages are for the most part exempt from nutritional reporting. Wine labels must tell consumers alcohol by volume and warn them of health dangers, but not display ingredients, calories, or other factors that are required for juices, sodas, milk, and other beverages.

This label from a bottle of Stella Rosa wine is an exception to the current rule — calories, carbs, and so forth are clearly listed. Why? As I understand it the reason is that because  Stella’s alcohol is just 5% abv (below a 7% regulatory threshold) it is regulated by the FDA as food (nutritional facts) as well as by the TTB as alcohol (government health warning). (Note that the product is described as “partially fermented grape must!”)

Label of the Future?

I  am not sure that anyone buys Stella Rosa because of the nutrition information (it is one of the hottest wine brands today), but maybe the lack of such information is already affecting sales of wines in some market spaces.  Consumers purchase a lot of different products and they don’t really need to buy anything that doesn’t take responsibility and own its list of ingredients and nutritional profile.

I believe that wine, beer, and spirits will eventually be required to list their ingredients and nutritional data. I wonder what would happen if wine were to take a voluntary step and be more transparent now as a way to shape the narrative? I know there are some who think transparency would backfire – consumers would turn away if they knew what a bottle of wine really contains or how many calories are in a serving a Chardonnay.  But look at Stella’s sales …

White Claw, the ridiculously popular alcoholic seltzer product, has a nutrition label, too, and it is clear that it uses this to its advantage by exactly hitting the critical “100 calories per serving” number.

Limiting Label Clutter

There are several areas where wine could improve its transparency and I’ve been learning how technology can help. QR codes have the potential to lead consumers to sites where they can satisfy their thirst for more information, for example. I think everyone has a QR code reader on their smartphone, although I am not sure how many people use it.

The Treasury Wine brand 19 Crimes has had success with its special augmented reality app that consumers focus on the labels to animate the 19 criminals, so we know that consumers will use apps to get more content about wine in some cases. Perhaps this is a way to be more transparent and accountable without filling the back label with even more boilerplate.

Giving consumers access to useful information doesn’t have to be very intrusive. For example, Italian DOCG wines and South African Integrity & Sustainability Certified wines feature simple codes that allow individual bottles to be traced back to the producer.

Ferret Out the Fakes

Blockchain technology has the potential to improve transparency and accountability in ways that can be important to the wine industry in the long run. People always think of Bitcoin when I mention blockchain, but it is important to understand that Bitcoin is an application of blockchain, not the technology itself.

It is an oversimplification, but I like to compare blockchain to those tracking codes we use for package delivery. Everyone who touches the package scans in information, which is attached to the package record you view on line. You can see where the package is at any particular moment and — hopefully — track it down if there is a mistake.  Airlines use this technology now to track checked bags and I am always relieved to know that my suitcase full of wine is safely in the hold of my jet as we take off.

The difference with blockchain is that it isn’t just about location. All sorts of information can be attached to the record, which can be analyzed in many ways.

Thus a simple but very useful application of blockchain is to verify the authenticity and provenance of the sort of fine wines that are sold at auction — and to help ferret out the many fakes. A company called Everledger, for example, developed a system to use blockchain to verify the provenance and authenticity of diamonds and colored gem stones and is applying it to wine as the video above shows.

To Authenticity … and Beyond!

Everledger and others who are working in this space use blockchain and other sophisticated technologies to assure the authenticity of wine and other applications in wine are sure to be found because the blockchain blocks can record many types of information.

In response to the Porto Protocol and other initiatives, for example, many wine companies are working to reduce their environmental impact. Blockchain technology can collect this information all along the wine product chain, potentially allowing interested consumers to quickly assess the climate change impacts of their wine choices.

And that’s just the start. I have argued that wine companies need to own their supply chains when it comes to climate change and sustainability. Many companies focus on their own actions plus those of their grape suppliers. But wine’s product chains are pretty long in this day of efficient bulk wine shipments and Made-in-China glass.

This Changes Everything?

I can imagine a blockchain ledger that tracks useful information all along wine’s complex product chain and programs that would allow consumers and others to analyze and evaluate it. And, of course, wine is just one product where such a system would be welcome.

I’m not saying the blockchain and other technologies will change everything, but I will say this: transparency and accountability are only going to become more important in wine as consumer expectations evolve and wine is held to the same standard as other consumer goods.

We might think wine is special — and it is in many ways — but we shouldn’t assume that it is immune to the forces that are making transparency, accountability, and technology more important every day.

Războaiele Vinului, the Romanian version of my book Wine Wars, has received the prestigious Gourmand award for best wine book translation at a gala ceremony in Macau.

Congratulations to the Romanian team who made this volume possible including especially Cătălin Păduraru, Lucian Marcu, and Radu Rizea. Here is a photo of Cătălin, me, and the world’s largest copy of Războaiele vinului taken in Iasi last fall.

And thanks to Gourmand for this recognition of my Romanian friends’ efforts. I am grateful to Gourmand  for previous awards including Best Wine Blog (for The Wine Economist in 2015) and Best Wine Writing (for Money, Taste, and Wine in 2016).

My colleagues Pierre Ly and Cynthia Howson interrupted their research in China to journey to Macau to receive the Gourmand award. Here is a photo of Cynthia on the big Gourmand stage.

Wouldn’t it be cool if you could travel back in time and tweak events just a little so that the past’s future (our present) would be better? That was the idea behind Steven Speilberg’s hit 1985 film “Back to the Future” and its many sequels.

Scientists are not optimistic that this time-bending strategy would work. They question whether a souped-up DeLorean sports car is the ideal time travel vehicle. And they warn of the dangers of changing history even a little. It’s dangerous to tinker with the past because of potential unintended consequences further down the road.

Tweaking the Judgement of Paris?

As I wrote in last week’s column, the present in Napa Valley is intensely focused on Cabernet Sauvignon, crowding out winegrape varieties like Zinfandel and Petite Sirah that once dominated vineyards here. What if we could go back to 1976 and alter the famous Judgement of Paris so that Napa Cabernet wasn’t the surprise victor of that France vs California taste-off? What would Napa Zinfandel be today if Cabernet Sauvignon didn’t so completely over-shadow it?

Zinandel, once the numero uno  wine grape variety in the Napa Valley, now accounts for only about 5 percent of vineyard acreage. Petite Sirah is just half a percent. But some of the wines that are made tell a fascinating “back to the future” story of what could have been.

Sue and I met with two devoted Zinfandel producers, Julie Johnson of Tres Sabores winery in the Rutherford district and Bob Biale of Robert Biale Vineyards in the Oak Knoll district to learn more about Zinfandel’s present and its potential future.

The Curse of Big Zin

Julie Johnson dry farms 40+ year old Zinfandel vines in a foothill vineyard niche that is shaded from the afternoon sun. The wine is aromatic, balanced, medium-bodied, with delicious fruit and spice. Such wines are not easy to grow or make, Johnson told us, and selling them is also a bit of a problem.

Recent Nielsen data reported in the August 2018 issue of Wine Business Monthly shows how far Zinfandel has fallen in terms of retail sales. Zinfandel is the 11th most popular varietal wine on the Nielsen list, wedged between Riesling and Syrah/Shiraz at bottom of the table. White Zinfandel outsells red Zinfandel by a substantial margin. Ouch! That really hurts.

Zinfandel buyers often expect big, ripe, boozy Zin, which is not a style that’s on the Tres Sabores radar. Store shelves are peppered with California appellation Zinfandels that are dark and strong (and sometimes a little sweet, too). They are the market’s idea of Zinfandel.

Wines like this sell in part because they can fit into the popular red blend or dark red category pretty easily. But the Tres Sabores Zin is a horse of a different color and many restaurant wine programs hesitate to take on wines like this, despite their quality, because they differ so dramatically from what they think consumers expect from a Zinfandel wine. The idea of Zinfandel with finesse is fading fast.

All In on Zin?

And so you have to be pretty committed to go all in on Zinfandel as Robert Biale Vineyard has done. Sue and I met with Bob Biale at his beautiful winery and tasting room in the Oak Knoll district. Bob’s father Aldo and the family’s heritage as winegrowers are the inspiration for the business, which makes 15 different Zinfandel wines as well as other varietals including a surprising Greco Bianco we were served directly upon arrival.

Bob is devoted to preserving Napa’s Zinfandel DNA through many efforts, including especially his work with the Historic Vineyard Society, which seeks to identify and preserve producing vineyards that are 50 or more years old. Tegan Passalaqua, who specializes in single vineyard old vine Zinfandel at Turley,  is also active in this group.

A few of these historic vineyards provide grapes for Biale’s wines, such as the Valsecchi Vineyards Carneros Zinfandel we tasted.  There’s just an acre or so of 100-year old vines, Bob told us, and they produce just 95 cases of wine. But the wine is very special — elegant and balanced like all the Biale wines. Fantastic. Seriously, some of these old vine Zinfandel wines made me think of elegant Pinot Noir. I wonder if these wines would age like a fine Burgundy? Hmmm.

Occasionally Biale is able to persuade a grower to plant a bit of Zinfandel when it is time to renew a vineyard rather than the more certainly profitable Cabernet . Maybe the site just isn’t right for Cab. Or maybe the winegrower has been influenced by Bob’s obvious devotion to the wine and its history. Doesn’t matter — with a little luck these could be the historic vines of the future.

Back to the Future?

I don’t think I can manage the Marty McFly trick and rewrite the past, so the legacy of the Judgement of Paris is safe. Napa is Cabernet Sauvignon territory and the valley has developed around the production and sale of luxury wines. The history of the pioneers and their Zinfandel and Petite Sirah is there, however, hidden in plain sight and ever-threatened by the Cab boom.

Maybe it had to be that way, but it is interesting to imagine an alternative universe where Zinfandel’s heritage is honored and celebrated to a greaert extent. I am glad that there are people like Julie Johnson and Bob Biale who are keeping the old vines and their memories of Napa days long past alive for us to taste today.

19 Crimes, the popular brand from Treasury Wine Estates, does everything wrong. It breaks all the “conventional wisdom” rules. It is everything that shouldn’t sell in the U.S. market. And yet it flies off the shelves. What’s going on?

19 Crimes is an Australian wine brand, which is the first problem. Sales of Aussie wines have been in decline here in the U.S. for years. The Australian section of my local upscale supermarket’s wine wall has shrunk to a shadow of its former self.

Sad and Doubly Cursed

Although 19 Crimes has evolved into a lineup of 7 different wines,  including Cabernet Sauvignon and Chardonnay, the core grape variety is Shiraz, and that’s the second problem. American consumers drink plenty of Syrah and Shiraz in red blends, but they don’t seem to want to buy it as a varietal wine. Sales of Shiraz have been sinking right along with Australian wine in general — a double curse!

And then there is the branding. 19 Crimes — outlaw wine! The name comes Australian history (history wine — oh no!). Great Britain once expelled its most hardened criminals to Australia. Any of 19 crimes could get you sentenced to transportation to Australia — banished to the end of the earth. Who wants to buy a criminal wine?

And, each label, of the core brand features a photo of a sad man — the mug shot of a convicted criminal. Who wants to buy a sad man wine? Who wants to associate themselves with a loser? How in the world can a wine like this get on the shelf, much less sell more than a million cases?

Wine by Design

Well, the answer is that 19 Crimes seems to have been rather precisely engineered to appeal to an important demographic — millennial men, especially those who see themselves as a bit of a rogue. Outlaws, if you know what I mean, who identify with others who defy convention.  Outlaw wine for self-styled renegades? Now you are beginning to see the 19 Crimes logic.

I bought a bottle of the red blend and, after I stared at the sad man for a while, I tasted it. Sweet and tannic, that was my reaction, and better chilled sangria-style than straight up. Not to my taste, but I am not the target audience.

Some of the most popular brands on the market today totally succeed with tannic sweet red blends pitched at a particular market segment. A friend who seems to have some inside information told me that the 19 Crimes flavor profile is no accident but rather the result of lots of careful research and consumer testing. No surprise there!

Every bit of the package is carefully linked to the brand identity and I’d encourage you to take a close look the next time you buy wine. But you will have to purchase and open the bottle to see my favorite part of the branding system — the cork!

The cork? Well, that breaks another stereotype, of course, since we sometimes think of Australia and New Zealand wines being topped by screwcaps. But there are many reasons why cork is so popular today and 19 Crimes cleverly adds a new advantage to the list: collectibility!

You see each cork is printed with one of the 19 crimes — my cork is #11: stealing roots, trees or plants or destroying them. That seems like a pretty petty crime to get my sad guy shipped to Australia, but it might be just the thing to start someone more into it to buy bottles and pull corks relentlessly until all 19 crime corks are captured.

Virtual Story-telling

19 Crimes is a story wine designed to appeal to a particular consumer category and Treasury has taken the next logical step by creating a virtual reality app that animates the sad men (and the sad woman on the Chardonnay label), so that they can tell their own sad stories.

Bringing the inanimate to life is a feat with a long artistic tradition — think Pygmalion, Pinocchio, or — especially relevant in this context — the scene in Gilbert and Sullivan’s comic opera “Ruddygore” where painted figures step out of their frames to deliver a stern warning.

The 19 Crimes figures tell their stories, humanizing their identities, and then step back onto the label. Art may be served by this, but marketing in the form of consumer engagement is the clear intent. If you want to hear all the stories, I suppose, you need to collect all seven wines in the lineup. It must work — I’ve heard that Treasury has  expanded its virtual reality program.

19 Crimes provides many lessons for anyone trying to understand today’s wine market, but perhaps the most important is that it is dangerous to generalize about generations when it comes to specific products such as wine. Many have written that millennials seek authenticity in products and experiences — and this is an important trend. But one size doesn’t necessarily fit all and some millennials (and probably consumers in other generational categories, too) obviously see themselves in a different light.

Identity trumps authenticity. Outlaw! You don’t need no stinking badges. And now there is a wine for you.

Congratulations to Treasury and 19 Crimes for their remarkable success. What’s next? Arrr, Matey. I’m thinkin’ Pirate wine is a pretty good bet!

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Here is that scene from Ruddygore. Enjoy!

I am in Kennewick, Washington today and tomorrow to speak at the Washington Winegrowers Association 2018 Convention & Trade Show.  Tomorrow I’ll share some thoughts about wine premiumization in the “State of the Industry” session, but today’s focus is wine tourism. I’ll give a global perspective on wine tourism as part of a program on  “The Business Side of Your Tasting Room.”

Grape Expectations?

Increasingly the tasting room’s business is not just pouring samples, selling wine, and promoting wine club memberships. Although winery visitors clearly expect to taste wines and perhaps tour the winery or walk vineyard paths, they often come expecting (or hoping for) something more.  That’s because sophisticated winery visitors don’t only visit wineries. They have many interests and develop expectations based upon their broader experiences. Wineries that want to attract these visitors need to step up to meet rising expectations.

Wine tourists and their rising standards have always been a priority at Chateau Ste Michelle, Washington state’s largest wine producer. When the current Woodinville production facility was constructed in 1976 the choice was made to locate it close to the Seattle population center, a few hours’ drive from the vineyards on the other side of the Cascade Mountains. The winery was built on the grounds of Hollywood Farm, the old Stimson Estate, and the main building was designed to closely resemble an iconic French chateau.

“The Chateau,” as we call it hereabouts, celebrated its 50th anniversary in 2017 and used that opportunity to give its visitor center a major renovation. Sue and I first visited this facility shortly after it opened in the late 1970s, when it was one of the most welcoming wine tourism destinations we found. But as the years have flown by a lot has changed. The number of visitors has increased and they have become more numerous, more diverse in terms of their wine knowledge  and also more sophisticated in terms of their expectations for a tourism experience. Inevitably, the tasting room itself had to change, too. And it has.

When I say that the wine tourism experience here has “grown up” I mean more than that it has matured and is now able to accommodate more visitors. One element of the growing up is to accommodate more diversity of tourist expectations and experiences.  The result is a textured program with many layers of opportunities.

For first time visitors, for example, the free (free!) tour and tasting is available as it has been here for as long as I can remember.  Visitors can upgrade their experience at the tasting room bar, where a variety of elevated tasting options are available for $10 to $15 per person — a bargain by Napa Valley standards.

Are You Experienced?

Winery visits in the old days were focused on tasting (and hopefully buying the wines) — a transactions approach. Now the state of the art is about relationships and creating opportunities to draw visitors more closely into the winery and its story so that they become both long term patrons and active brand ambassadors. I wrote in Around the World in Eighty Wines about the huge variety of experiences on offer at the Napa’s Robert Mondavi Winery and Chateau Ste Michelle has programs to match.

The Chateau Ste Michelle wine experience menu includes the above mentioned tours and tastings and moves on to a special small group single-vineyard and limited release tasting ($30 per person or $25 for winery club members), Cabernet-themed food and wine pairing experience ($100/$85), a”Sensory Sojourn” workshop ($65/$55), and a wine blending experience ($125/$95).

Small groups can also arrange to attend a sparkling wine seminar and tasting with food pairings ($55/$45), an opportunity to taste older vintage of Washington Bordeaux blends and Riesling wines ($55/$45), or grab a chance to learn how to blind taste like a Master Sommelier ($125/$95).

It is also possible to schedule visits to the Col Solare Bottega, where Red Mountain wines  produced in partnership with Tuscany’s Antinori family can be sampled, or a visit to the Enoteca, which highlights wines from Ste Michelle Wine Estate’s wineries and partners in Washington, Oregon, California, and around the world. I was pleased to see some famous Torres wines from Spain on the shelves when we visited. SMWE imports and distributes Torres wines in the U.S. as it does for Antinori, New Zealand’s Villa Maria, and French Champagne house Nicholas Feuillatte among others.

Bottom line: visitors cannot help but be impressed by the beautiful, welcoming grounds and imposing chateau facility and the delightful array of programs on offer. No wonder about 300,000 of them come each year both to visit the winery and to attend outdoor concerts on the big lawn behind the visitor center. Chateau Ste Michelle was conceived as a destination winery that’s what it is today.

The recent remodel has made it possible to expand the offerings to wine tourists so that they can custom-tailor a visit to get the experience that they seek.  Is this a model for the wine industry generally? No … and yes.

The No is easy. Most wineries don’t have the scale of production, volume of visitors, and the financial resources to make the sort of investment we see at Chateau Se Michelle possible. Only a few wineries around the globe can provide this level of service. In the last year of our travels, for example, I think only four wineries in Spain were at the same level: Freixenet, Codorníu, Torres, and Marqués Riscal.

But, Yes, this model is important for the industry to consider. Smaller wineries can offer a smaller range of experiences that are closely linked with locale, their history, and identity. Many visitors will appreciate the taste of authentic engagement as much as they do the wine itself.

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Congratulations to Chateau Ste Michelle on their 50th anniversary and wonderful new visitor center. Special thanks to Lynda Eller and Linda Chauncey for their hospitality during or visit and to Hermes Navarro del Valle for his insights.

I’m busy getting ready for the Unified Wine & Grape Symposium, which takes place in Sacramento later this month. It is the biggest wine industry meeting and trade show in North America, with over 14,000 attendees expected for the event’s three-day run from January 23 to 25.

Sacramento Dreaming

There’s a lot to see and do at the Unified. The trade show itself is fantastic, with the full range of wine industry goods and services — from tractors to raptors to bottles and corks to finance and insurance — on display. The seminars are especially interesting this year. Gina Gallo will kick off the program with a much-anticipated keynote address at the luncheon on Tuesday.

Other sessions will look closely at wine-growing and wine-making issues, including a special program on Cabernet Sauvignon, which is the hottest thing there is in California wine these days. There are several parallel programs in English and Spanish, A very timely addition to the program this year is a series of seminars on preparing for and dealing with emergency conditions. Lots to see, hear, and learn.

I will be speaking at and moderating the “State of the Industry” general session on Wednesday morning. This will be a very intense session, featuring analysis by Danny Brager (The Nielsen Company), Steve Fredricks (Turrentine Brokerage), merger and acquisition expert Mario Zepponi (Zepponi & Company), and Allied Grape Growers’ Jeff Bitter. You really don’t want to miss this session — or any of the others.

Mother Nature Strikes Back

What’s ahead for the U.S. and global wine industries in 2018? Looking back at my notes from previous “State of the Industry” sessions, I see that in 2016 I suggested that the wine market looked very good … if the economic clouds on the horizon stayed away. They did and it was a good year for wine. In 2017 I proposed that the issue was more political than economic – lots of political uncertainty with the Brexit vote, Donald Trump’s new administration, and upcoming elections in France, Germany and elsewhere. If the political system can hold together, I speculated, it could be a good year for wine.

I might have been right at the time to focus on politics, but in retrospect it is clear that the real threat to the wine industry wasn’t economic or political … it was Mother Nature herself. 2017 (now extending into the 2018 harvest in the Southern Hemisphere) will be the smallest global wine grape harvest in a generation and, in some areas, the smallest since at least 1945.

Wildfires, both in California and in Portugal and Spain, are the iconic image of the year, but they are not the only or even the principal cause of the global grape squeeze. 2017 produced a perfect storm of different challenges in different places. Heat here, drought there, frost, freeze, hail. Sometimes it seemed like everything that could go wrong did. The impact on the global market will be significant. In fact, as I will explain next week, it could be game-changing.

Winegrowers are no strangers to bad weather or unfavorable conditions. What makes 2017 different is the fact that so many regions were affected during the same growing season – that’s what is causing the Big Squeeze. Typically small harvests in one region of the world are offset at least to some extent by abundant harvests elsewhere. This time was different – most of the world’s important wine growing regions were hit at once, albeit by different factors.

The Biggest Losers

The biggest wine producers were also the biggest losers. OIV harvest estimates released on October showed a global reduction in wine production of about 8 percent compared with 2016 (see pdf here). Italy, France, and Spain – the three largest producers accounting for about half of global wine production – were down 23 percent, 19 percent, and 15 percent respectively.

There were only a few bright notes among major producers. Argentina’s 2017 harvest, for example, was 25 percent greater than in 2016. But the 2016 harvest, while good in terms of quality, was very small and not a really good point of comparison. In fact, Argentina’s 2017 crop was much lower than harvests in 2013, 2014, and 2015.

South Africa’s 2017 harvest was relatively good, up 2 percent from 2016, putting South Africa just ahead of Chile and behind Australia and China in the OIV wine league table. But the good news has not lasted. The 2018 harvest that will begin in just a few weeks looks to be the smallest in years due to very dry conditions through the growing cycle.

If you add the small 2018 southern hemisphere harvest to the northern hemisphere’s weak 2017, you get a dramatic shock to the global wine market environment – a sharp decline of 10 percent or more in global wine grape production.

What are the implications of this Big Squeeze? Your Econ 101 professor taught you that shortages cause prices to rise and that certainly in in the cards. But the wine economy is complicated, so it should be no surprise that the Big Squeeze will have complicated impacts. Come back next week for analysis.