Wine Economist Top 5 of 2018

December 20, 2018 By Mike Veseth in Charles Shaw, Shameless Self-Promotion, Trader Joe's, Washington wine, wine, wine markets, wine price 1 Comment

251626 This week’s Wine Economist looks back at the five columns first published in 2018 that captured the most interest among the wine industry audience that frequents this page.

Sometimes it is difficult to find a common thread among the top columns, but not this year. Readers were concerned about U.S. wine sales and they focused on analysis that they hoped might give them insights into the changing market place and especially how to deal with the changing wine consumer base. Take a look at the Top 5 and see if you agree.

#5 U.S. Wine Sales: Five Surprising Facts

Concerns about wine sales were obviously on readers’ minds when this September 2018 column appeared. The premise of the piece was simple: we are all pretty familiar with the conventional wisdom about the wine market but the conventional wisdom doesn’t always hold in a changing world. Sometimes you need to look more closely at the data (Nielsen data in this case) to see what’s actually going on.

There were plenty of surprises to be found (five of them, as the title indicates), including Zinfandel’s high average price (higher than Pinot or Cab), Cabernet’s move past Chardonnay in total sales, the resurgence of French wine (think pink), Australia’s real sales challenge (price, not quantity), and Washington wine’s unexpected prominence when you shift the frame of reference a bit.

#4 Beyond Boom & Bust: Taking a Closer Look at the SVB Report

The Silicon Valley Bank‘s annual wine industry report always gets a lot of attention and with good reason. Timely analysis + innovative thinking + clear presentation = required reading. But the complexity of the study is sometimes lost in the rush to report the headline conclusions. So I decided to take a deeper dive and shine a light on some of the aspects that weren’t getting the attention they deserved, especially with respect to the generational transition in the wine market.

This also gave me an opportunity to make a point of my own: sometimes the differences within generational cohorts are as important as the difference between them.

#3 Shaw Organic: Is This the Next Miracle from Bronco Wine & Trader Joe’s?

shaw1 Organic food has moved from a niche to an important market segment. A lot of us have been waiting for wine to catch up. Bronco Wine, the makers of Charles Shaw (a.k.a. Two Buck Chuck), apparently got tired of waiting and, working with Trader Joe’s stores, introduced Shaw Organic, a line of affordable wines made with organic grapes.

Bronco is the largest vineyard owner in the U.S. (40,000 acres at last count) and has quietly become the largest grower of organic grapes as well. Is Shaw Organic the breakout wine — the wine that will create a critical mass of consumers who look for organic wine the same way that Two Buck Chuck democratized the wine market more generally? Too soon to tell, but it is a trend to watch.

#2 The Changing Face of Wine in America: The Cooper’s Hawk Phenomenon

Direct-to-consumer wine sales are on everyone’s mind. With costs rising faster than prices in most cases, those full-margin wine club sales have become a very high priority. Some say that many Napa Valley producers couldn’t keep the lights on without their wine club sales.

So who has the largest wine club? Incredibly, it is an Illinois-based restaurant and winery business called Cooper’s Hawk, which counts about 300,000 wine club members who visit their local restaurants once a month to pick up the latest wine. What makes Cooper’s Hawk so successful (and how can wineries reach the market they’ve developed)? And can the lessons of Cooper’s Hawk be applied more generally? Timely questions. No wonder this is the #2 column of the year.

#1 Outlaw Wine: 19 Crimes Succeeds by Breaking All the Wine Marketing Rules.

Millennials. They are the wine market of the future and the future is now. But what do they want and how do you get their attention? This May 2018 column, which is top of the list, looks at an incredibly successful Treasury Wine Estates product that was specifically developed to appeal to millennial men.

It is called 19 Crimes, which is kind of a strange name for a wine, and while I am not a big fan of the wine itself (it wasn’t crafted to appeal to me), I am very impressed with the way it has succeeded beyond all reasonable expectations by breaking all the wine marketing rules.

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This is the final Wine Economist column of 2018. See you next year!

What’s Ahead for Romanian Wine?

December 18, 2018 By Mike Veseth in emerging wine regions, globalization, wine, wine markets 5 Comments

cotnari Sue and I did our best to learn all we could about the Romanian wine industry during our visit to participate in the International Wine Competition Bucharest in Iasi, but inevitably we only scratched the surface. Romania is a diverse country with a complicated wine industry. Impossible to understand with confidence on the basis of just a few days.

A Wine Region in Motion

So we are operating on first impressions, not detailed analysis, but first impressions can be important. One strong impression was of dynamism. It was hard to resist the enthusiasm of the people we met and their sense that Romanian wine is on the move, reaching new and higher levels.

Indications of this ambition were all around us, but perhaps most clearly visible when the competition crew took a break to visit the Cotnari region. We got a late start getting out of Iasi because the morning’s judging session had gone into over-time (one of the juror groups — mine! — moved much slower than the rest). So the light was fading by the time our coach rolled into Cotnari.

S.C. Cotnari S.A. is one of Romania’s largest wineries and we saw its name everywhere during our visit — on the wines, of course, on banners at lunch, and as sponsor of a wine, food, and music festival in the square in front of our hotel. The big sign above the winery shined like a beacon as night fell. cotnari

Cotnari was founded in 1948, during the collective era of Romanian wine, rebuilt in 1968, and then taken private in a management buyout in 2000. Cotnari dominates the region it is named for, with 1360 heactares of vines. Several ranges of wines, focusing on native grape varieties, are produced starting with box wines and ending with library selections of Grasa de Cotnari wines called Vinoteque.

Thinking Big

The winery was impressive for the breadth of production as well as the sheer scale (our hosts were proud of the rows of big stainless steel tanks we saw). The visitor facilities, which seem to cater to groups, caught our attention. The restaurant was buzzing when we arrived, with live traditional music and generous servings of local dishes (sarmale — yum!) to pair with the Cotnari wine.

The people at Cotnari clearly think big, which is important. But we saw more evidence of dynamism before we entered the restaurant door. Our first stop was actually another winery with a similar name: Casa de Vinuri Cotnari . The Cotnari House of Wine is much younger than its big brother — founded just a few years ago in 2011 — but represents the next generation of wine here. I say this not just because it focuses exclusively on quality native-variety wines, but also because it is a project of the next generation of the family that runs Cotnari — founded and developed with their parents’ support.

tanks Casa de Vinuri Cotnari is a work in progress, with modern facilities build over and around an old cellar where the barrels are still stored. Walking through the construction site, the ranks of huge stainless steel tanks glimmered in the moonlight. There is scale here, too, with 350 hectares of vines, but clear focus on upscale market opportunities.

Sources of Dynamism

Sue and I were fortunate to learn about several other wineries — Domenile Averesti, Licorna Winehouse, LacertA Winery, Davino, and the exciting Mierla Alba project — that are leaders in various ways of the dynamic movement we sensed. Based on the wines we tasted and the people we met, it is hard to resist the feeling that Romanian wine is on the move.

What accounts for the dynamism? No single factor, of course. Clearly there is a sense that there are opportunities to be seized among those inside the wine bubble. But there are also important investments coming from ambitious individuals and firms outside the domestic wine scene and outside of Romania, too.

Romanians and Italians have a lot in common (you can hear it in the language) and that extends to wine. Vitis Metamorfosis, a leading Dealu Mare region premium wine producer, is an Antinori family wine project.

The European Union is also an important part of the story. We were frequently shown shiny new tanks and bottling equipment, for example, and our hosts said simply “EU” and smiled. Money from the EU, meant to help modernize the Romanian wine industry and make it more competitive, has funded a fair number of these projects.

Inevitable Headwinds

What factors could push back the rising tide of Romanian wine? Based on first impressions, here is a briefly list of things that I would worry about. The domestic market is intensely important for Romanian producers and it is never easy to guide consumers to more premium products. The fact of high consumption of home-produced wine combined with increased imports makes the local market a tough competitive environment (no wonder Cotnari makes sure their name is everywhere!).

I am not sure how important exports are at this point because the domestic market is so large, but eventually they will be a factor and then Romanian producers will need to be even more concerned about establishing “Brand Romania” and making sure that there is a high overall level of quality since one bad bottle can ruin reputation for everyone.

I won’t open the subject of what “Brand Romania” could or should be, but it is fair to say that building it will require a good deal of cooperation and teamwork. And this is one area where there are obvious challenges. Indeed, every time we asked about teamwork among wine producers or regions we were met with a sad shaking of heads. Hasn’t happened. Not going to happen. It is a shame, they said.

Everyone knows that it is important to work together, but making it happen is still a problem, we were told. Why is cooperation so difficult? It is hard to say and I am sure it is a complicated situation that goes beyond first impressions. Some have written that the stubborn independence of Romanian wine producers is an understandable reaction to the bad old government collective days. But no one we talked with saw that as the source of the problem.

If everyone looks out only for themselves, who looks after the big picture? That’s a question still seeking an answer, but not a uniquely Romanian question. We’ve visited many wine regions where producers are still trying to figure out how to work together toward a common goal instead of arguing over what that goal might be or just turning their backs.

Sue and I are optimistic about Romania’s success. Excellent wines, smart, determined people. We raise our glasses to the future of Romanian wine!

Misunderstanding Romanian Wine

December 11, 2018 By Mike Veseth in emerging wine regions, wine, wine bargains, wine history, wine markets 3 Comments

It is easy to misunderstand Romania and its wine industry.

Romania is a very old culture but a surprisingly young nation-state. The Great Unification of 1918 finally brought all the historical provinces together under one roof a hundred years ago, an act that Romanians celebrated on December 1, their Great Union Day.

Contemporary Romania is even younger, dating to the end of the Soviet era in 1989. It entered the European Union in 2007 — another important date. Romania is a country with deep roots and vigorous new growth. It is both very old and very new, a work in progress (like the rest of us).

It is tempting to view Romanian wine as both old and new, too. Wine has been made in Romania for six or seven thousand years and the culture both embraces wine and consumes it with gusto.

Romanian wine today is also a work in progress and Sue and I learned as much as we could about its current status and future prospects when we spent a week there last month. We participated in the International Wine Competition Bucharest (held in Iasi this year) and I gave a lecture to students and faculty at the University of Agricultural Sciences and and Veterinary Medicine.

King of Wines

73205 One particular Romanian sweet wine — Grasa de Cotnari — has an important place in wine history. Grasa de Cotnari, Tokaji of Hungary, and Constantia of South Africa were once the most celebrated wines in the world. King of wines, wines of kings, they were the kings of the hill in a world where luscious sweet wines were treasured above all others. Time have changed, however, and wines like these no long rule as they once did.

The thing about Romanian wine is that just when you think you understand it, you discover that there’s another layer and you have to start over. Sue and I wanted to taste a few Romanian wines before our trip and I hit pay dirt at a local Total Wine store where I discovered several wines made by Cramele Recas, one of Romania’s largest producers (and a Total Wine Winery Direct partner). Two were international varieties (Pinot Gris and Pinot Noir) and two were native Romanian varieties (Feteasca Negra and Feteasca Regala). All were inexpensive — typically $5.99 per bottle or $5.39 as part of a Winery Direct six-bottle purchase.

The Recas wines were clean and well made, with good acidity and varietal character. We shared some with our neighbors, who were surprised at the Pinot Noir given its price. The Recas winemaker has lots of experience producing commercial quality wine at affordable prices. He divides his time between Recas in Romania and a winery in Australia that you might have heard of. It’s called Yellowtail.

But Wait … There’s More

So Romanian wine is cheap but pretty good — a bottom shelf bargain. Is that right? Well, yes it is, but as soon as we arrived in Iasi we discovered another layer. There has been a very strong movement to higher quality since the end of the Communist era and especially since Romania joined the European Union and opened its doors more widely to international competition.

The semi-sweet wines that were a mainstay during the Soviet era remain popular. Sugar can be used to cover up a variety of wine flaws, and so sweet wines are often suspect, but we tasted some that were well-made and delicious. Many producers make both dry and semi-sweet versions of their wines to satisfy the diverse consumer audience. I don’t think these sweetish wines will or should go away, but dry wines are clearly the future and a lot of effort is going into their production.

But which dry wines? Romania is fortunate to have a wine grape treasury that includes a number of indigenous varieties that make distinctive, delicious wines. In the right hands, Feteasca Regala (white), Feteasca Neagra (red) and Busuioaca de Bohotin (rosé) produce exciting wines, for example, and there are other promising varieties. I admit that my prejudice is for the native grape varieties and not the international varieties that you see everywhere, but it is important to have an open mind.

davino We spent a day in the Delau Mare region near Bucharest, which is known for its excellent red wines. Our last stop was Davino, which was Romania’s second privately-owned winery (S.E.R.V.E. was the first). We tasted the Purpura Valahica, which is made from Feteasca Negra clones specifically selected for the local terroir. It was terrific — a wonderful example of just the sort of terroir wine I had my heart set on finding. Romanian grapes, Romanian soil, Romanian wine-maker, even Romanian oak.

But then we tasted a Cabernet Sauvignon and it was wonderful, too, and impressed me even though I was not really interested in international grape varieties. And then came the Domaine Ceptura Rouge — Cab, Merlot, and Feteasca Negra. It was a fascinating fusion. Bottom line: Romanian wine does and should focus on its native varietals, but in an open context that allows winemakers to make the best wines they can.

No One-Liners in Wine

The wine that fills Romanian glasses represents an interesting mixture of past, present, and future, dry and sweet, native and international. No wonder it is hard to pin it down. But that’s not all. Home-made wine is very important in terms of total consumption and I understand that some of this is made with the hybrid grape varieties that were introduced here after phylloxera.

The popularity of the home-made stuff is a bit of a problem, since it can be so different from commercial production using vitis vinifera grape varieties. Convincing thrifty buyers to pay more for a very different product is a challenge.

The Romanian case reminds me a bit of the challenge that U.S. winemakers faced in the 1930s when Prohibition finally ended. Home-made wine production had surged dramatically during Prohibition, encouraged by a loophole in the law that allowed limited home wine production. The quality of the wine was, um, variable and its taste is how consumers came to think of wine, which is perhaps why they focused more attention on beer and spirits. It took decades to fully overcome that memory.

Jon Fredrikson always says that there are no one-liners in wine, so perhaps this multi-layer aspect is what makes Romania akin to other regions, not different from them. But the tendency to be misunderstood is particularly powerful in Romania based on our experience. Resist any attempt to over-simplify the country or its wines!

What lies ahead for the Romanian wine industry? The future looks bright, but there will be headwinds. Come back next week to learn more.

Confessions of a Rookie Wine Judge

November 27, 2018 By Mike Veseth in wine, wine awards, Wine Competitions, wine critics, wine ratings 2 Comments

I have declined several invitations to serve on wine competition juries, but when Catalin Paduraru asked me to be be part of the International Wine Competition Bucharest I just couldn’t say no.

Sue and I had never visited Romania and there was much I wanted to learn about the country and its wines. Besides, Catalin (along with Lucian Marcu) had somehow managed to publish a Romanian version of my book Wine Wars. So we headed to Iași, Romania’s cultural capital, where this year’s competition was held.

Reservations? I had a few because of my lack of formal training in wine tasting and my rookie juror status, so I asked a few experienced friends for advice. It’s not so hard, one veteran juror told me. You know how to taste wine, just concentrate and focus. Taste them one at a time. A Master of Wine advised me to be generous in general, except when there were clear faults, and then to cut no slack.

Wine by the Numbers

The wine competition was organized according to OIV regulations. We were grouped into three teams or “commissions” of five jurors each, three internationals and two from the home country Romania. We used the “Australian” system, I was told, where we could talk a bit amongst ourselves rather than sitting solo. As in the old days of figure skating scoring, the highest and lowest scores are thrown out for each wine and the three middle ones averaged.

The wines were evaluated on a 100-point scale divided into a number of different categories. The tablet-based OIV software made it easy to focus on thinking about the wine and my friend was right — if you think about one wine and one sensory element at a time the task is difficult, but not overwhelming.

The software gave each juror a report of his or her score for a wine along with the average score. Wines that received an average between 82 and 84.99 points earned a silver medal. 85 to 91.99 point wines were gold. 92 points and over received the Great Gold Medal. This is a pretty tough grading curve, but with many elements evaluated critically and individually, maximum scores are hard to achieve.

My team tasted 50 to 60 wines over the course of about 3 hours each morning for three days in a row. Lunch followed the judging and the wines were revealed, giving us an opportunity to see what labels were inside the closed bags.

60 wines in three hours does not leave much time for chit-chat and if you watch the video above you will notice how serious we all were. Staying focused for so long and moving through the wines so quickly was a challenge.

Rookie Mistakes

There were several aspects of the competition that took some time for this rookie to figure out. The wines were assembled by category not region (or country of origin) or grape variety. So a flight of dry white wines might include several different grape varieties and countries or regions of origin. It was therefore important to approach each wine with an open mind because the variation from glass to glass was sometimes dramatic.

Because the software reported both my score for each wine and also the team average, I was initially tempted to see the average as the “right answer” and try to think about what I must have missed if I was far off the mark. There was a certain satisfaction when we all gave a wine exactly the same total score, but I’ll bet we differed in the details.

Eventually I realized that this second-guessing was another rookie mistake since there really isn’t a right answer. Or, rather, it wasn’t my job to try to guess what the other jurors thought, but to provide my own careful judgement. The economists’ motto is degustibus non est disputandum! iwcb1

Mining Gold and Silver

Sue had the best view of the process. She and an official OIV observer sat apart from the rest of us. They got to taste the wines along with one of the commissions (not mine) and they could see all of the scores come in and follow the dynamics of the tasting. It was interesting, she told me when it was all over, to see how different jurors reacted to particular wines and how the individual scores were forged into gold and silver medals.

My fellow wine economists often criticize wine competitions in general because they make seemingly objective awards on the basis of necessarily subjective and sometimes inconsistent sensory evaluation. The jurors I spoke with were aware of this problem and familiar with the research on the issue, but committed to the project nonetheless, which might account for the serious concentration and focused work ethic they all displayed. I was impressed.

Would I agree to serve on a jury again? It would depend on the circumstances. But I have already started to think about what I would do differently — how I would organize my scoring so that the final number better reflects what I sense in the glass.

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Sue and I would like to thank all the wonderful people we met in Iasi. Special thanks to Catalin and Lucian, of course, and to my fellow jurors Diana Lazar, Richard Pfister, Roberto Gaudio, and Carole Cliche. Thanks as well to Prof. Valeriu Cotea, who gently coached me through my rookie experience and to Cristian Ionescu, who kept the technology working efficiently and made life easy for all of us.

Sue took these photos at one of the post-jury luncheons, where the wines were revealed and we could finally see the labels behind our scores.

Have Some Madeira?

November 13, 2018 By Mike Veseth in wine, wine history, wine markets 8 Comments

madeira It is in a way the most American of wines, even though it actually comes from a Portuguese island off the African coast. When it came time to toast the signing of the Declaration of Independence in Philadelphia, this is the wine that filled the Founding Fathers’ glasses.

Workers at the Liberty Hall Museum in New Jersey recently discovered three cases of the stuff dating from 1796 — too young to be the wine that Franklin, Jefferson, and Adams raised for their toast, but old enough that they might have sipped it a few years later.

Oh, Madeira!

Madeira (because you have already guessed the name of the wine I’m talking about) has a glorious history here in the United States. Once upon a time you could find it prominently displayed on the top shelf of any reputable drinks shop, it was that popular. But when I went looking for a bottle at my local upscale supermarket I had to go deep into the corner where the fortified and dessert wines are kept and then stoop down to the bottom shelf.

O, Madeira. How far you have fallen!

But looks can deceive and Madeira is alive and well even if its not as prominent as it was in 1776. Madeira was America’s wine back then in part because America didn’t make much wine of its own and imported wine often suffered badly on the long sea trip from Europe to North America.

Live Long and Prosper

Madeira’s secret was (and is) its unique production process, where the wine is both heated and oxidized. The wines used to be conditioned by sending the barrels on round-trip ocean voyages in hot cargo holds. The movement of the ship and the heat below deck did the job very well.

Now it’s done shore-side in the lodges. The wines start out with high acidity (the island soils are part of that) and end up both fresh and nearly invincible. A bottle of Madeira has an almost long half-life after its been uncorked. You’ll certainly drink it up before it goes off.

There’s not a lot of Madeira wine produced, which is one reason you don’t see oceans of it in the shops. Vineyard land is not plentiful on Madeira — about 500 hectares in total cling to the steep mountainsides. Just enough to provide raw material to eight producers. 1928

France is the number one market for Madeira wine, where it is a popular aperitif (France is the top market for Port wines, too, for the same reason). Tourists visiting Madeira enjoy enough of the wine there to make it the number two market followed by Germany, the UK, Japan, and the United States. U.S. demand has been slowly ratcheting up in recent years, now accounting for about seven percent of total production.

You Don’t Know What You’re Missing

Sue and I traveled to Madeira about a year ago and learned a lot by visiting Blandy’s and Justino’s, two of the most important producers. We were fortunate to be invited to refresh our memories last month at a seminar and trade tasting in Seattle. We tasted the range of Madeira wine types including the one pictured here from 1928. Here are some impressions from that experience.

If you haven’t tasted Madeira in a while, you need to get to work. Chances are you’ve forgotten the balance and lifting acidity that characterize the wines. These aren’t sticky sweet fruitcake wines, (although there is such a thing as a Madeira cake, which is meant to be eaten with a glass of Madeira.)

You can make Madeira as simple or complicated as you like — it is up to you. By far the majority of the wines are sweet or semi-sweet 3-year-old blends. Sweetish or drier — those are your basic choices. Drier Madeira, like Fino sherry, is pretty versatile and might surprise you.

Only small amounts of aged Madeira is made from white grape varieties like the Sercial in the photo and these wines have very distinctive characteristics that anyone who wants to take a deeper dive would appreciate. Because the wines basically last forever once opened, you can pull the cork on several different ones and enjoy the kind of comparative tasting that we experienced in Seattle without being anxious about finishing up the bottles before they goes off. On-trade readers take note!

1776 and All That

I am glad we attended the seminar and tasting, but having said all these positive things about Madeira wines, I have to report that Sue and I came away a little bit disappointed. Not with the excellent presentation. And not with the wines themselves.

We were hoping for something more in the way of a hook to draw consumers into the world of Madeira wines and we couldn’t find one. The history is great and even important, which is why I used it as the hook for this column, but is it enough to make an significant impact in the crowded wine marketplace?

Madeira was once the Big Thing in American wine. Is it The Next Big Thing today? No — can’t be. There’s not enough of it to go around. But it is a unique wine of time and place that deserves a closer look.

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Special thanks to Bartholomew Broadbent for his help with this column.

Wine Book Review: Getting Up to Speed on Romania, Bulgaria, and Moldova

October 23, 2018 By Mike Veseth in book reviews, emerging wine regions, wine, wine markets 7 Comments

gilby Caroline Gilby, MW, The Wines of Bulgaria, Romania, and Moldova. (Infinite Ideas/Classic Wine Library, 2018).

Sue and I are heading off to Romania in a few days for the 2018 International Wine Contest Bucharest, which will be held in Iasi, Romania this year. I’ve been searching for a good book to get me up to speed.

I hit pay-dirt with Caroline Gilby’s new survey of Bulgaria, Romania,, and Moldova. I have only read the Romanian section so far, but I am very impressed. (Gilby says that it is important to read about all three countries because their histories are quite different and inform one-another. I will catch up with Bulgaria and Moldova on the flights to Iasi.)

Gilby’s book has answered many of the questions I had about the Romanian wine industry and given me some new topics to explore while we are there. I like books that make me question and think and this volume really does the job.

Wine books about particular countries or regions often follow a fairly standard format. History, climate and terroir, grape varieties, regions, producers, wines. All these important topics are covered very well in Gilby’s book. But there’s a lot more, too.

The evolution of the Romania wine sector has been punctuated by a number of important events. Phylloxera is one that is common to many regions, of course, and it is noteworthy that many local grape varieties were replanted and therefore preserved while others were replaced with international varieties.

Wines made from international varieties are popular in Romania, while wines made from the indigenous grapes get more attention abroad, where another Sauvignon Blanc is nothing new but Feteasca Regală can be something to get excited about.

The communist era and its collapse have left Romania a real puzzle that I hope to begin to unlock during our short visit. Wine is old in Romania, for example, but the wine industry is surprisingly young, with many important projects dating from just the last 20 years.

Romania’s vineyard area is quite large, but the average plot is tiny. There are more than 800,000 winegrowers, for example, who have less than half a hectare planted to vine on average. This is a legacy of the collective farm system, where families had tiny plots to farm for themselves. Putting together large enough vineyards for commercial farming has been a struggle, but progress is being made.

International influences extend beyond grape varieties. There are flying winemakers, of course, as there are everywhere these days, but also a good deal of investment from abroad. It is not every country that can count both the Antinori family and also Pepsi Cola as important participants in the wine sector’s development.

Romanians drink a lot of wine (in fact, they have been net importers for the last few years), but they are not always the target market for new projects because much of the domestic consumption is of home-made wine (this reminds me of Georgia). The new winery projects, with higher quality but also higher costs, have to compete with both home-made wine and cheaper imports from Spain and elsewhere.

Hence a focus on exports to the EU and beyond, which is where we come in, I think, because my book Wine Wars analyzes the forces driving the global wine markets and some in Romania think it can be useful in thinking about strategies for their next step. They commissioned a translation of Wine Wars titled Războaiele Vinului or “War of the Wine.” I’m flattered by the attention and pleased to help out.

I’ll give a talk about Romania and the wine wars at the university in Iasi in addition to our work at the IWCB wine contest and some cellar and vineyard visits. Should be a good trip! Looking forward to meeting everyone and learning more about Romanian wine.

In the meantime, let me recommend Caroline Gilby’s new book. The stories she tells about Romania are fascinating. She writes with style and authority. I’m very impressed and looking forward to learning more as I read about Bulgaria and Moldova.

The Future of Italian Wine is in Good Hands

October 16, 2018 By Mike Veseth in Italian wine, wine, wine awards, wine education, wine research, wine science 1 Comment

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

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

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

Who is Deborah Gelisi?

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

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

Why Was Everyone Crying? Bad news?

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

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

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

What’s the Significance of the Award?

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

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

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

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

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

Is the Prosecco Boom Sustainable?

October 9, 2018 By Mike Veseth in globalization, Italian wine, The Next Big Thing, wine, wine price 3 Comments

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

U.S. Sparkling Wine Imports January-June 2018

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

Beyond Bubbles for Birthdays

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

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

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

Pretty in Pink?

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

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

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

No One Laughed

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

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

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

What a Mouthful!

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

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

Glass by Glass by Glass

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

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

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

Wine Book Reviews: Colorful Rosé & Dynamic New Zealand

October 2, 2018 By Mike Veseth in book reviews, history, New Zealand, The Next Big Thing, wine, wine markets Leave a comment

Elizabeth Gabay, Rosé: Understanding the Pink Wine Revolution (Infinite Ideas/Classic Wine Library, 2018). Reviewed by Sue Veseth.

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Once upon a time, “proper” rosé was French, very pale pink, dry, served young and fresh, and not serious. Today, rosé is serious. Consumers can find rosé from all over world; from the palest pink to almost red in color; made from grape varieties that may be familiar or unfamiliar; made in a variety of styles and sweetness levels; and that range from simple to complex. How is a wine drinker supposed to navigate the world of rosé?

A good start is Rosé: Understanding the pink wine revolution by Elizabeth Gabay, MW. This comprehensive study of rosé will open your eyes — and your palate — to the infinite variety and pleasure of rosé. Her book covers the liberal arts of rosé: history, geography, science, political science, economics, art, and literature.

It is impossible in the wine business these days to dismiss rosé, as Gabay makes clear in the chapter of her book on the business of rosé. In the United States, rosé is the fastest growing category and is now a year-round option, not just a summer wine. And, like it or not, what happens in the U.S. wine market can affect wine production worldwide.

The issue of color permeates the book because of the traditional notion that paler is better. And, after all, the name “rosé” is all about color. Gabay’s explorations demonstrate that color does not indicate quality, but style. She goes as far to say, “I am no longer so sure that our division of wine into red, white and pink is appropriate. With some rosé wines almost red in colour and style, and others almost white, the divisions are blurred. Add in rosé made in an orange wine style, and the blurring increases. The obsession with the colour pink should perhaps start to take a back seat.”

Gabay describes her book as a journey of exploration, and she transmits this journey for both the serious wine student and the casual consumer. An early chapter on viticulture and winemaking, for example, has a lot of detail for the science-minded and is also accessible to the more casual reader. Similarly, her discussions of rosé from various parts of the world are presented in detail, with specific examples from the region. More maps would be helpful for the novice rosé drinker.

Rosé: Understanding the pink wine revolution is a valuable addition to the library of any wine lover who is ready for a journey of exploration.

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Rebecca Gibb, The Wines of New Zealand (Infinite Ideas/Classic Wine Library, 2018). Reviewed by Mike Veseth.

kiwi Rebecca Gibb’s The Wines of New Zealand is “designed to provide a comprehensive overview of the New Zealand wine scene,” according to its author, “a reference for locals, international visitors and students alike.” Gibb gets it right on all counts — what a great resource for anyone who wants to learn about New Zealand and its wine industry.

The book’s 300+ pages are packed full of stories, personalities, facts, and figures. The organization is conventional: history, climate and grapes first, then a survey of the regions (10 of them, which will come as a surprise to those who only know Marlborough and its Sauvignon Blanc), then a final pair of chapters on tourism and current issues.

Gibb’s mastery of this material is easy to appreciate, but it is her contagious enthusiasm that comes through most clearly. A chapter on grape varieties could easily become mundane but not here. Each grape is an excuse to talk about history, geography, vine science, and to introduce or reprise some of the noteworthy characters who shaped Kiwi wine history.

What do I like best about this book? The sense of energy and dynamism that permeates it in both style and content. The story of New Zealand wine is a story of change, starting from the early British and French pioneers through the Dalmatian gum-diggers and on to today’s multinational corporations. Gibb sees dynamism everywhere in New Zealand wine and she doesn’t think this is likely to change.

What would I change about The Wines of New Zealand? Well, the beginning of the book, a fantastic historical overview, is so strong that it makes the end feel a bit weak. Gibb’s final chapter does a great job informing the reader about Kiwi tourism opportunities — both wine and otherwise. But it doesn’t bring the book together the way I would like.

What I’d really like to see — and maybe it will appear in the next edition? — is a chapter that draws together the many strands and looks ahead to where New Zealand wine is headed and what might stop it from getting there. That would end the book on the same dynamic note I enjoyed throughout.

It would also make it a bit less of a reference book, which is its intended function. Maybe the best solution is to DIY — read this excellent book and then make up your mind where you think New Zealand wine is headed next! Highly recommended.

U.S. Wine Sales: Five Surprising Facts

September 11, 2018 By Mike Veseth in wine, wine markets, wine price 6 Comments

wbm_cover_2018-9-1 The September 2018 issue of Wine Business Monthly is out and as usual it is full of interesting articles and useful information. As a wine economist, I have to admit that the first thing I look at with each new issue is the Retail Sales Analysis page, which presents recent U.S. wine market data as reported by Nielsen.

I suspect that many readers skip over this section, seeing it as a big table full of dreary gray numbers. How boring! But not to me. I thought you might be interested in five surprising facts I found as I combed through this issue.

But first a quick disclaimer. My old boss when I worked at a presidential commission in Washington DC used to say that there were three kinds of data: out-of-date, incomplete, and forthcoming. In other words, data is never as perfect as you want. I would add a fourth characteristic: expensive. The Nielsen data in Wine Business Monthly isn’t as complete or timely as you might like (data are for the 52 weeks ending May 19, 2018), but they are free, which I appreciate, and tell an important story. OK, here are the five facts.

#1 America’s Wine?

Europeans think of wine in terms of regions, according to conventional wisdom, but many Americans focus on grape variety. So which varietal wine is #1: Chardonnay or Cabernet Sauvignon?

The answer is … both! Or rather, the varietal that tops the table depends on which table you look at. If you are interested in volume sales, Chardonnay is still number one, and by a large margin — 30.6 million cases in the 52 weeks of the survey for Chardonnay versus 24.6 million cases for Cabernet Sauvignon. Pinot Gris/Grigio comes in third with 17.1 million cases.

But if dollar value of sales is your focus, Cabernet narrowly edges out Chardonnay with about $2.56 billion in sales for Cab versus $2.54 billion for Chard. This result reflects Cabernet’s higher average bottle-equivalent price of $8.66 versus Chardonnay’s average price of $6.91.

#2 Most Expensive Varietal Wine?

Cabernet’s average price is higher than Chardonnay, but it isn’t the highest price that Nielsen reports. What varietal wine is #1 in terms of average bottle price? You might think Pinot Noir and you would be almost right. The average bottle-equivalent retail price of Pinot for the survey period was $10.43.

That’s a good average price, but not as high as #1 Zinfandel’s $11.19! Zinfandel? This really caught me by surprise because Zinfandel’s sales are relatively low. Pinot Noir’s sales by volume are more than four times Zinfandel’s. But obviously not all the Pinot sales are in the $20+ range and the lower-priced products bring the average down. I trust the data, but I am still surprised. More research needed here.

#3 France Strikes Back

I might have written “The Empire Strikes Back” because France is the empire of wine in terms of history and reputation. But French wines struggled to compete in the last dozen years and have fallen below Italy, Australia and New Zealand when measured by total sales value and below Australia, Italy, Chile, Argentina, and New Zealand when measured by volume.

But France is surging back into contention, with 17.3% value growth and 14.4 % volume growth in the 52 weeks reported here. France’s average bottle price is $12.85, higher even than New Zealand’s $11.52.

Some of France’s exports to the U.S. market are quite expensive — Champagne in particular and high-end Burgundy and Bordeaux. But the French sales surge is largely powered by Rosé, which is the fastest growing wine category, up 54% by value and 32.7% by volume. Cowabunga — France is riding the Great Pink Wave back into the U.S. marketplace!

#4 Australia’s Real Challenge

Australian wine imports are a puzzle. Australia is the #2 import behind Italy measured by sales value and #1 ahead of Italy in the Nielsen data when measured by volume (12 million cases versus 10 million cases). But both value and volume fell during the 52 weeks measured here, continuing a trend we’ve seen in recent years. Aussie wine got a bad reputation a few years ago, the usual story goes. Buttery Chardonnay, sweet Shiraz. Australian wines went out of fashion.

My Australian industry friends now have the U.S. market in their sights once again, having successfully penetrated the Chinese market. Australian sales to China now outpace their exports to the U.S. and the U.K. markets.

I expect that the new sales effort will yield results, but the Nielsen data suggest to me that selling more wine in the U.S. market is not the real issue. Australia already sells lots of wine here. The problem is price. The average bottle price of Australian wine reported here is just $4.97, which is the lowest average bottle price of any of the countries that appear in the report. Price, not volume, should be the target and raising price is never very easy.

#5 Washington is Like a Foreign Country

Everyone knows that I am a big fan of Washington State’s wine industry, which doesn’t always get the respect that it deserves. It’s that #2 thing. Washington State lives in the shadow of its big wine neighbor, California. California’s 114 million case sale dwarf’s Washington’s 5 million cases in the Nielsen data.

Washington is small compared to California, but it doesn’t seem too tiny if we switch the frame of reference a bit. If we think of Washington as a foreign country, then the perception of its size changes a bit. At 5 million cases sold, Washington’s impact on the U.S. market is less than Australia and Italy, of course, but it is larger than Argentina (4 million cases in the U.S.), Chile (3.9 million cases) or New Zealand (3.1 million cases), and even bigger than Spain and France put together in terms of their U.S. sales volume.

Washington’s importance is also apparent if we look at sales value rather than case volume. With $602 million in annual sales, Washington’s U.S. sales are larger than all import countries except Italy and Australia. Looking just at U.S. sales spins the data to magnify Washington’s impact, of course, but comparing it just with California spins it the opposite way.

What’s the right way to think of Washington’s wine industry? Maybe we should compare it to New Zealand. Both regions have developed vibrant wine industries in just a few decades. Both punch above their weight with average bottle prices ($11.52 for New Zealand and $9.92 for Washington) well above the U.S. average of $7.21 or the California average of $6.85. And both, of course, are important competitors in the U.S. market.

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The Wine Economist will take a short break so that Sue and I can attend an important wine celebration in Italy. We’ll give you a full report when we return.