Argentinean Wine: Striking a Balance

Old and New at Mendel Wines

Balance is the key to great wine (and profitable wine business, too). I was reminded of this truth many times during our visit to Mendoza, where wine makers are trying to chart a course between and among several extremes:

  • Competitive export sales versus the challenging domestic market;
  • Reliable value wine sales versus potentially more profitable premium products;
  • Popular and successful Malbec versus TNGT — The (speculative and uncertain) Next Big Thing.

The key to long term success involves finding the right balance in this complex economic environment.

Thinking Global: Anabelle Sielecki

I want to use this post to consider three types of balance that I think are particularly interesting in Mendoza – the balance between crisis and opportunity,  local and international winemaking influences and the simple tension between the old and the new.  We learned about all three dimensions during our brief visit to Mendel Wines in Lujan de Cuyo.

Crisis and Opportunity

Mendel is both very old and quite new.  The vineyards are old, planted in 1928. Somehow these Malbec vines survived the ups and downs of the Argentinean economy. The winery is almost as old and has a certain decaying charm. It stands in stark contrast to Salentein, O. Fournier, the Catena Zapata pyramid and the many other starkly modernist structures that have sprung up in this part of the world.

The winery project is quite new. Mendel is a partnership between Anabelle Sielecki and Roberto de la Mota and is the result of a balance between crisis and opportunity. When economic crisis struck Argentina ten years ago, opportunities were created for those with vision and entrepreneurial spirit. Anabelle and Roberto seized the moment and purchased these old vines and well-worn structures for their new super premium winery project.

That their impulse was timely and wise may not have been obvious at the time (crises are like that), but it is perfectly clear now. Wine Advocate named Mendel one of nine “Best of the Best” Argentinean wineries in a recent issue.[1]

Old and New

The winemaking that goes on in Mendel is also a combination of old and new. The technology is modern, of course, with stainless steel and French oak very visible. The setting, however, constantly reminds you of the past and the vineyard’s and winery’s history. Walking through the winery, for example, I was struck by the big concrete (or were they adobe?) fermenting tanks – a blast from the past for sure.

No, we don’t use them to ferment the wines anymore, Cecilia Albino told us, but we put them to good use. Peek inside. Sure enough, the tanks were filled with oak barrels full of wine aging quietly in the cool environment.

[Interestingly, I saw concrete tanks again during our visit to Achaval Ferrer.  Roberto Cipresso, the winemaker there, built the tanks because he uses them at his winery in Montalcino.]

Mendel also illustrates the balance between local and global that characterizes wine in Argentina, where much of the capital and many of the winemakers come from abroad.  Roberto de la Mota, partner and chief winemaker at Mendel, personifies this balance. Roberto is the son of  Raúl de la Mota, who is sometimes said to be Argentina’s “winemaker of the century” so important was his work in developing quality wine in this country.

Roberto naturally grew up in the wine business both here and in France, where he sought advanced training on the advice of Emile Peynaud. He was the winemaker at Terrazas, Chandon’s still wine project in Mendoza, and then at Cheval des Andes, a winery with connections to Château Cheval Blanc. I think it is fair to say that Roberto’s resume represents a balance between local and global, between deep understanding of Mendoza terroir and knowledge that perhaps only international influences can provide.

Acting Local: Roberto de la Mota

Local and Global

I asked Roberto if it was important that Mendel is an Argentinean project and not owned by a foreign multinational. Yes of course, he said, but he hesitated a bit and I think I see why. Many of the influences and markets are international, but people, vines and inspiration are  purely local. Not one or another, but intertwined, balanced.

And this thirst for a complex balance defines the future. Talking with Anabelle over coffee in Buenos Aires, she was ambitious to break into new markets – Hong Kong, China, and so forth. Anabelle is an architect — another field where global and local intersect.  She is married to Héctor Timmerman, Argentina’s Foreign Minister and former Ambassador to the United States, so her international interest comes naturally.

Meeting with Roberto at the winery in Mendoza, he was interested in learning even more about his vines and terroir so as to better develop their potential. And to bring more of the classic Bordeaux grape varieties (like Petit Verdot) into the mix.

Mendel has charted its balanced course quickly, purposefully and well.  It is a perfect illustration of both the tensions that define wine in Argentina and the potential for success if a clear but balanced path is boldly taken.


[1] The other “Best of the Best” wineries in Wine Advocate issue 192 are Achaval Ferrer, Alta Vista, Catena Zapata, Viña Cobos, Colomé Reserva, Luca, Tikal and Yacochuya.

The Democratization of Wine

As a known “Wagnerian” sympathizer,  I am naturally in favor of the “democratization” of wine. Power to the People is good, Wine to the People is even better (and sometimes equally difficult to manage). Recently I’ve run into a couple of stories that suggest that good wine may be trickling down to the masses in interesting ways.

Le Froglet Wine

The first story comes from Britain, where “wine by the glass” now has a new meaning. I’m talking about Le Froglet wine, which comes in ready-to-drink stemmed plastic cups. The special “glass” is sealed by a patent-applied-for process that replaces oxygen with inert gas before a peel-away airtight foil seal is applied, thus keeping the wine fresh (in the short term) in its unlikely container

The 187 ml serving of French Shiraz (really?), Chardonnay or Rose wine sells for £2.25 at Marks & Spencer stores.  This is wine that you can take anywhere and consume as you please, even if you only want a single glass. It is sort of a wine juice box in functional terms, if you know what I mean, but classier, with a stemmed plastic glass in place of the cardboard box and sippy-straw. I have seen Le Froglet here in the U.S. selling in the $3.50-$4 range.

Expert Opinion?

Le Froglet is noteworthy for several reasons, First, it seems to be very popular in Britain, where it has created a new market category. That doesn’t happen very often.

It has succeeded despite highly publicized expert opinion that the idea of takeaway “cuppa wine” is totally lame. James Nash, the inventor of the packaging and process, appeared on the popular BBC television show Dragons’ Den where supersmart investors took his product and business plan apart brick by brick, leaving him standing in a pile of rubble. Fuggetaboutit, they told him in no uncertain terms.

Interestingly, the people at retailer Marks & Spencer saw the same idea and came to a different conclusion.  They viewed the single-serving glass as a perfect place to put their line of Le Froglet French wines. I suppose with a name like Le Froglet they weren’t taking themselves too seriously. Why not wine by the glass to go? Why not indeed? And so they gave it a try. They seem to be pleased with the results.

An M&S spokesman said: ‘The glasses are merchandised in our ‘Food on the Move’ section, which is obviously the aisle people on the go head to – particularly office workers. ‘We think that they are proving popular with people who want to perhaps enjoy the summer with a glass of wine in the park as part of an impromptu picnic – either after work or for a relaxing lunch.

‘They are also popular with commuters who want to enjoy a drink on the train home from work to wind down. We have found that they are very popular in locations popular with tourists.’  The M&S winemaker, Belinda Kleinig, said:  ‘This is a really exciting step for M&S – our research has shown that our customers really like the greater convenience of lighter weight bottles so we thought we’d take it one step further with great quality wine ready to drink from a glass.’

The Benefit of Low Expectations

I think one key to Le Froglet’s success is that it exceeds everyone’s expectations (except perhaps the grumpy Dragons’ Den gurus). You don’t really expect the packaging to work, for example. You expect the seal to leak or the plastic glass to break. But apparently it works pretty well. Surprise!

And then there’s the wine itself. You logically expect it to be crap since it comes in such a goofy container. Who’d put good wine in something like this? But apparently the wine is surprisingly good. In fact, Decanter magazine recently announced that Le Froglet Shiraz has won a hard-to-get  Gold Medal in its 2010 global wine competition.  The award is actually for the bottled version of the wine, which sells for £5.49.   Decanter’s editor reported that

‘The bottle is a great value find. It’s fragrant and complex, with lots of dark fruit and savoury chocolate. The plastic glass version is a great idea, but given that the bottled version has a screwcap, won a gold medal and works out cheaper per serve, I’d probably buy a bottle and find my own glasses.’

One element of the democratization of wine is making it more convenient and Le Froglet certainly does that. Of course this convenience comes at a price. One £5.49 bottle of Le Froglet holds four £2.25 single-serving glasses, making the bottled product the  better buy. But that glass-bottle price ratio is about what you find in most restaurants, where the rule of thumb is that the retail price of a glass of wine is equal to the wholesale cost of the whole bottle.

Good, cheap and convenient seem to form a trilemma with wine — difficult to get all three at once.  Cheers to Le Froglet for making decent wine more convenient, even if it isn’t really cheap.

Burger, Fries and Syrah?

What could be more democratic than fast food wine? Sounds perfect, but it is hard to imagine a fast food restaurant that could find a way to serve wine here in the U.S. with our Byzantine regulatory system.

So you can appreciate my pleasant surprise when I was able to order wine with my dine-in meal at the Burgerville fast food outlet near Vancouver, Washington. Burgerville is a popular Oregon-based fast food chain that specializes in fresh, local and sustainable products.

Burgerville is designed to exceed your expectations about what a fast food meal can be and if you pay a bit more for the food you probably get more, too. The restaurants have always been very busy when I have visited, so people must think they are a good value. I certainly do.

Here is the sales receipt from our meal at the Salmon Creek Burgerville (the only store in the chain to offer wine by the glass so far). I passed on the upscale burger / fries / shake part of the menu this time to take advantage of seasonal offerings: a mound of Walla Walla Sweet Onion Rings (yum!) and two Full Sail Amber Ale Battered Albacore fillets with a side of Oregon cranberry-studded summer slaw. My beverage of choice, a $5.95 glass of flavorful and refreshing A to Z Wine Works Oregon Pinot Gris. Heaven! Fast food taken to a new level.

Burgerville offers three red wines and three white wines by the glass at this location priced at $5.95 and $6.95. I think I’ll have a glass of the Syrah with a bacon cheeseburger on my next visit!

Small Steps [in the Right Direction]

The wines sell pretty well, I was told, which is of course what I hoped to hear. The Salmon Creek store is testing the concept of what you might call premium fast food wine. This store was apparently chosen because it has a large and well organized dine-in area that made it possible to meet regulatory requirements.  (Don’t look for wine at the drive through window just yet, although with Le Froglet I suppose it isn’t completely out of the question!).

The democratization of wine?  We’re not there yet — wine is still more difficult to buy, sell and consume than it needs to be — but Le Froglet and Burgerville show what we are headed in the right direction. Wagnerians, rejoice!

The Bottleneck Bottleneck

Bottlenecks are always problematic.  It seems like they are always too narrow or not narrow enough.

We ran into an unusual bottleneck last week when were went to Wenatchee to help our friends Mike and Karen Wade bottle the 2008 vintage at the Fielding Hills Winery.  FHW is award winning 800-case operation and the bottling is done by a volunteer crew of friends, family and wine club members. I wrote about it in one of my first blog posts, comparing the wine bottle assembly line to Adam Smith’s famous pin factory.

Bottleneck Bottleneck

The division of labor does improve efficiency,  just as Smith said, but anyone who’s worked an assembly line knows about bottlenecks – the whole process only moves as fast as the slowest work station.  If the corker is slow, for example, nothing else will go very fast. (The corker was no slacker on our shift – John Sosnowy of the Wine Peeps blog.)

Our crew worked very well, but there was still a bottleneck, albeit an invisible one. The capsules that fit over the bottle’s neck hadn’t arrive (a bottleneck bottleneck!) – they were held up somewhere in customs in a container that must contain hundreds  of thousands of capsules for many wineries. We bottled the wine, but when the capsules finally arrive it will be necessary to open each of the 800 cases, pull out every bottle, affix the capsule, return and reseal. That’s about 10,000 bottles. What a headache! I hate bottlenecks.

The biggest bottleneck in the American wine business, of course, is distribution. With 51 different sets of state rules and regulations and the three-tier winery/distributor/retailer/consumer system, it sometimes seems like making wine is the easy part – getting it to customers is the bigger problem. Widening the distribution bottleneck seems to me to be a key to expanding the wine market and building a more robust American wine culture.

Tightening the Distribution Bottleneck

The Obama administration seems to want to build up the U.S. wine industry – that’s why he sent Commerce Secretary Gary Locke to Hong Kong to sign an agreement to ease the wine export process and open that bottleneck a bit.

But Congress is moving in the opposite direction. Wine Spectator reports that more than 100 members of Congress have announced support for H.R. 5034, a bill that would further restrict direct wine sales in American. It would make it (even) harder to ship wine across state lines. Wine Spectator reports that wine distributors (who benefit from their key position in the three tier bottleneck) actively support the bill.

The supporters of H.R. 5034 argue that direct shipping undercuts the power of states to regulate alcohol distribution and sales, and I understand this logic. But the winery owners I know actually go to extremes to satisfy state regulations because the penalties for making a mistake are often extremely onerous. (I know one winery that has stopped all interstate sales for now because of compliance concerns.)

Focus on Direct Sales

The slack economy has put direct sales in the spotlight. With wine sales down in many categories and price points still eroding, wineries are trying to boost the yield per bottle and increasing direct sales and reducing the flow that goes through distributors is one way to do that. Isenhower Cellars in  Walla Walla  has actually reorganized itself (and opened an off-site tasting room) so that it can rely entirely on direct sales. Their website announced that

Isenhower Cellars is no longer selling wine to restaurants, wine shops, or grocery outlets in Washington State. Our wines are now exclusively available from the winery in Walla Walla, Washington, our tasting room in Woodinville, Washington, or here on our web site. We treasure the past relationships with our Washington State distributors and friends in the wine trade. However a complete focus on quality limits production to 2,000 cases of wine and the success of our wine club and second tasting room leaves no extra Isenhower wines available for sale outside of our winery’s embrace.

Even E&J Gallo, which has done quite well thank you during the recession, is trying to increase direct sales. I’m on a couple of email lists for Gallo wine brands that I follow and they frequently offer nice discounts or low cost shipping to try to encourage orders from their online wine shop, The Barrel Room.

It seems inconsistent to send Gary Locke to China to expand wine exports and then discourage the equivalent interstate trade. As an economist, I am naturally biased toward more choice and freer trade. I hope the attempt to tighten the wine shipping bottleneck gets caught in some legislative bottleneck somewhere down the line and never reaches President Obama’s desk.

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Thanks to Karen, Mike and Robin Wade for their hospitality and great wine. Thanks to the members of the 2008 FHW Cabernet Franc bottling crew both a fun and productive afternoon.

Wine Spectator 100: North and South

The lists of the Top 100 wines have started to appear — just in time for holiday buying. Wine Spectator released their Top 100 last week and now Wine Enthusiast has followed suit. Other lists are showing up, too, such as Paul Gregutt’s list of the 100 best Washington wines.  Fun and informative, these lists provide wine lovers with endless opportunities to discuss, debate and of course pull corks. Gotta love ’em.

But you’ve gotta hate ’em, too. Top 100 lists are a mixed blessing on the supply side of the market. Although they do promote wine and wine drinking generally, they necessarily privilege some wines over others and this is always problematic given the thousands and thousands of good wines that are produced each year. Why this wine and not that one? It’s an inevitable question that matters because wines on the list get more attention than the wines that don’t for some reason make the cut.

Dancing in the Streets

Top 100 lists slice up the market in many ways and this year my email inbox has revealed a North-South divide. Here in Washington State we are very happy with the 2009 Wine Spectator league table. Nine Washington wines made the list — more than any previous year — including the #1 spot, which went to the 2005 Columbia Crest Reserve Cabernet Sauvignon (95 points, $27 dollars). Two Oregon wines were also listed, so altogether this was a banner year for the Pacific Northwest.

While they are dancing in the streets in Woodinville and Walla Walla, the mood is more sober down south in Mendoza.  Two Argentinian wines appear on the WS100, which is welcome recognition of course, but that’s down from four last year. This is really Argentina’s year to shine in the U.S. wine market, with overall sales surging by more than 40% in dollar value according to Nielsen ScanTrack data. But only half as many WS100 wines! You can’t blame members of the Argentinian industry for kinda hoping to see their success more enthusiastically celebrated in the Top 100 lists. Hmmm. Maybe next year.

A Nobel Prize for Wine?

It seems to me that these top 100 wine lists are a little bit like the Nobel Peace Prize. Highly publicized awards like the Nobel and the Top 100  end up being both reflections of excellence and opportunities for the judges to send a message (political, economic or otherwise). There are many worthy nominees for each award so the final choice is always arbitrary — and the opportunity to send a message is irresistible. Or at least I wouldn’t be able to resist it.

There are obviously many factors that go into a Top 100 wine list and a wine’s objective quality  is just one of them. This is easy to see if you take numerical ratings seriously. The WS100 #1 wine this year earned a 95 score, for example, but the #2 wine received a higher score (96) and the #8 wine’s score was even higher (99). A 100-point wine was placed in the 21st spot last year. This is a numbers game but not just a numbers game.

Don’t Cry for Argentina

Wine Spectator uses four criteria in making their list: quality (the score), value (the price), availability (the volume) and excitement (the X-factor). The Columbia Crest wines (both the Reserve that won this year and their other wines) generally do very well on the first three factors year in and year out. The X-factor this year, I believe, was the recession and the desire to inspire some excitement among American buyers by giving them a #1 wine they could find and afford. That $27 Columbia Crest wine says that American wine drinkers can enjoy truly excellent wines at relatively affordable prices. Time to start pulling those corks! A good message to send in this economic climate.

What about Argentina? Well, I understand their situation. No problem with quality, volume or availability. But I think the market excitement is already there and doesn’t need any help from the wine lists at this point (as much as the Argentinian makers would love to have it). The U.S. industry (like President Obama?) could use some encouragement right now, which may be a good enough reason to draw attention to its outstanding, good value wines like the Columbia Crest Reserve.

Note: Congratulations to Juan Manuel Muñoz Oca, the 34-year old Argentinian winemaker who made the #1 Columbia Crest Washington State wine. What a great North-South connection!

Wine Economist Top 100

This is the Wine Economist‘s 100th post.  The idea of a Wine Economist Top 100 — my 100 best blog posts — is therefore kinda ridiculous.

But my wine enthusiast friends hungrily devour Top 50 and Top 100 wine lists even though the idea that it is possible to identify and rank the Top X [fill in the number] wines is kinda ridiculous, too, although in a different way. This provokes a digression on wine rankings and a brief report on what I’ve learned so far from writing this blog.

Supply and Demand

Ranking wines from 1 to 100 is certainly not an exact science; there are literally  thousands of wines on the market, so narrowing down the list to 100 and then actually ranking them from bottom to top (with no ties) is necessarily a problematic exercise when examined closely.

Individual tastes differ significantly and consumers are not uniformly able to detect even objective qualities in wine (much less make comparable subjective judgments), so it is hard to see why so many people take these ratings so very seriously. But they do.  It’s a matter of demand and supply.

Consumers demand wine rankings.  They use Top X lists as guides to shopping (or investing) and sometimes as a means to establish status or credibility with other wine enthusiasts.  This makes top wine lists a really useful tool for wine merchants and distributors, who supply what consumers demand (and sometimes try to help the demand along a little, too).

Wine critics must feel some pressure to supply what buyers and merchants want.   The Top X lists get so much attention that any critic who fails to issue a ranking must be a little bit concerned about the effect of this action in the crowded wine opinion marketplace. If I ranked wines, which I don’t, I’d sure want to publish a Top X list of some sort if only to draw attention to my other work. Everyone has an interest in these lists, so it’s no wonder they are so popular.

Winner-Take-All

It is interesting to consider how Top X lists and the attention they receive  may have invisibly shaped the wine world. Cornell economist Robert H. Frank has written two books that are worth reading in this regard.  The Winner-Take-All Society (co-authored by Philip J. Cook, 1995) looks at what happens when market attention is focused on a few top-rated products.  The result, not surprisingly, is that everyone wants the best (or what is rated the best) and the nearly-as-good and really-quite-pleasant are left behind. Who wants to drink pretty good Chardonnay when you can get a 90+ bottle for the same price (even if you cannot really taste the difference yourself)?

The book’s subtitle tells you where the argument goes: “How more and more Americans compete for fewer and bigger prizes, encouraging economic waste, income inequality and an impoverished cultural life.” If you’ve seen Mondovino, you know what Frank and Cook are talking about.

Frank’s 1999 book Luxury Fever continues the argument, looking more deeply at the impact of a world where status, identity and satisfaction are linked to money and the purchase of top-rated products.  Frank talks about the high price that some consumers will pay for goods that are just a little bit better or harder to get.  He calls it the “charm premium.”  Unsurprisingly, he cites the “charm premium” that highly rated ultra-premium wines receive as an important example (pp. 29-30).

Elite winemakers can mine the charm premium effect by offering increasing expensive variations on their main product: regular bottling, reserve, single-vineyard and so on. Each increase in perceived quality (or decrease in general availability) produces a disproportionate increase in price.  Or at least that’s how it is supposed to work.

Some wine merchants and producers see the charm premium in a different light.  Wines that get 95+ points sell out immediately — they essentially don’t exist.  Ultra-premium wines that receive less than 90 points are hard to sell, because no one wants a merely very good wine when they can get an apparently excellent one.  (I understand that there is at least one wine store that automatically discounts any wine that is cursed with an otherwise unsellable 89-point rating.) That just leaves the 90-94 point wines and large charm premiums are sometimes paid for what must be impossibly small absolute quality differences within this range.

Wine buyers are a diverse group and so it is dangerous to generalize, but a lot of them search not just for good wine, but for the best wine (or the best wine value).  For better or worse, Top 100 lists have evolved to satisfy that demand and have therefore helped spread luxury fever and create the winner-take-all wine market segments we see today.

Lessons Learned

I’ve been writing this blog for about a year and a half and it has been a great experience — I’ve met a lot of thoughtful, interesting people and had some great wine conversations.  Because my posts are a bit longer than most — about 900 words on average — the total 100-post output is equivalent to a short book.  What have I learned from this process?  Well, I know a little more about what internet wine readers are looking for.

The most popular Wine Economist article in its 100-post history is my piece on Decanter magazine (The World’s Best Wine Magazine?), part of an occasional series on wine critics.  This post gets a lot of hits because the web is crawling with people searching for “best wine,” “best wine magazine” and “world’s best wine.”  The winner-take-all dynamic this represents shows up everywhere, even in my blog stats.

Almost as many readers are searching for the best wine value, which   explains why my posts on[Yellow Tail] Tales and Costco and Global Wine are the second and third most read articles on this blog.

Wine industry readers are worried about the future, as most of us are in this economic environment.  This helps explain why How will the Economic Crisis affect Wine? and Big Trouble Down Under: Crisis in Australian Wine receive so many hits.

Finally, many readers come here looking to unlock the mysteries of the wine buying experience.  What do the ratings mean?  Who are the most credible wine authorities?   This search leads them to posts onWine by the Numbers and Masters of Wine (and Economics), which get dozens of hits each week.

Thanks for reading The Wine Economist.  I’ll give an update on trends in reader interests and concerns in a few months, when I published the Wine Economist Top 150.

Fair Trade Wine

p11802461A Sam’s Club purchase provokes some thoughts on a new wine movement.

The Economics of Ethical Consumption

Fair Trade products attempt to use globalization to offset some of the negative potential effects of globalization.  Global market forces can sometimes lead to the exploitation of natural resources and unskilled labor, for example. The “sympathy” that Adam Smith thought would condition market relations breaks down when producer and consumer are separated by thousands of miles and multiple commodity chain links.

Fair Trade products and other ethical consumption goods seek to create a global market for products that provide more benefits to those at the first stages of the global product chain.  Some consumers are willing to pay a bit more for such products once they are aware of the problem and even a small slice of a global market can have real economic clout.  Global markets for ethical good thus have the potential to offset somewhat any “race to the bottom” forces and to educate consumers in the bargain. You have almost certainly seen Fair Trade coffee and I think Fair Trade chocolates are pretty widely available, too. Look for Fair Trade roses on Valentine’s Day.

Enter Wal-Mart

Sam’s Club, the membership warehouse store arm of Wal-Mart, is currently selling a Fair Trade wine called Neu Direction.  It is a 2005 Malbec from Argentina and I think it illustrates the potential of Fair Trade.  It is a very nice wine, much more interesting than its $9.99 price tag would lead you to believe.  It was judged the best Fair Trade certified red wine at a competition organized by The Independent of London in February 2008. Sam’s Club is the exclusive U.S. distributor.

According to their website,

Neu Direction Malbec benefits the local farmers of Viña de la Solidaridad (Vine of Solidarity), an association based on preserving the rich, cultural heritage of the contratista-landowner relationship.  Ten small vineyard owners and nine contratistas make up the association.  The contratistas lives on the land with their families and are paid a percentage of the grape harvest by the vineyard owners.  The association currently owns 200 acres of vineyards with about a third certified organic, with plans to convert more over the coming years.

The association members receive a guaranteed minimum payment for their grapes and revenues are also channeled to community development projects such as schools.  2008 was the first year of the U.S. Fair Trade wine certification program, which is administered by a NGO called TransFair.

Neu Direction makes the positive case for Fair Trade wine very well.  It is, first of all, an excellent wine at a good price and so can attract buyers on these merits alone.  It is distributed in about 450 Sam’s Clubs across the U.S.  and benefits from the built-in market that Sam’s Club members represent.  Sam’s Club (and Wal-Mart) gains in some small way through its association with “ethical” productions (Fair Trade, sustainable and organic products) and so has a reason to promote them.

Leigh Barrick, one of my students who has studied both Fair Trade coffee and Fair Trade wine, argues that wine may be well suited to Fair Trade markets because consumers are often better informed and more interested in the origins of and production conditions associated with wine than for most other consumer goods.  Wine enthusiasts are thirsty for information about where wines come from, who made them and how.  Fair Trade provides this information in a way that informs, educates and potentially produces social and economic change.  A good fit, Leigh says, and I agree.

A Case of Trade-offs

But Fair Trade wines aren’t automatically going to be winners.  First, not every Fair Trade wine is likely to be as good or as inexpensive as Neu Direction – or to have the Wal-Mart distribution system behind it.  More important, however, the Fair Trade system itself is full of trade-offs.

Fair Trade certification is necessary, it seems, to prevent the designation from being exploited or debased. But certification is often expensive and time consuming (this problem applies to organic or biodynamic certification processes, too) so many small producers may be unable to bear the cost. The benefits of Fair Trade wine are therefore likely to be unevenly distributed and may required financial sacrifice in the short run to achieve gain in the long run.

That’s not to say that Fair Trade isn’ta positive force,  just that it is not a panacea. It is just one new direction — a progressive one– among many in the world of wine today.

Photo by Michael Morrell, my chief inexpensive wine research assistant.We’d like to thank Michael and Nancy for their hospitality during our stay with them in Tucson.

The French Have a Word For It

Old Europe is afraid of change, afraid to take chances.  That’s what President Bush is supposed to have said a few years ago in a conversation almost certainly not about wine.  Why the French, he said, they don’t even have a word for entrepreneur!

Innovator of the Year

But apparently they do.  Or at least that is the impression of the editors of Wine Enthusiast magazine. They recently announced the winners of their Wine Star 2008 awards and the Innovator of the Year is French, Jean-Charles Boisset, President of Boisset Family Estates.  The citation reads:

Tetra-Paks, aluminum and PET plastic bottles are all part of Boisset Family Estate’s drive to reduce their carbon footprint. The launch this November of Mommessin and Bouchard Aîné Beaujolais Nouveau in PET bottles has not only created a stir in the traditional wine industry, but has also continued a serious commitment. Jean-Charles Boisset, president of Boisset Family Estates, whose headquarters are in Nuits-Saint-Georges, Burgundy, France, launched Tetra-Paks of French Rabbit wine in 2005. Infinitely recyclable, the aluminum packs weigh less than half the weight of a conventional bottle. For his contribution to the environment through his company’s innovative use of packaging, Jean-Charles Boisset has been awarded Wine Enthusiast’s first Wine Star Award for Innovation.

Boisset Family Estates is a multinational wine company with roots in Burgundy and interests in Italy (Batasiolo) and California (several properties including DeLoach and Lyeth).  I follow Boisset because it seems to me that they are real entrepreneurs — moving in many directions at once, reflecting the many forces at work in wine world today.

The Wine Star 2008 award highlights sustainability-driven innovations, for example, but Boisset is also moving seriously toward biodynamic viticulture (at DeLoach, for example) and experimenting with new marketing models. It’s easy to be cynical about wine innovations, but it is pretty clear that new ideas can prevail in the wine market if they are very good ideas. And if the time is right. This is the lesson the screw cap’s success. Maybe more environmentally friendly “bottles” will be next.

The 70-70-70 Rule

Jean-Charles Boisset argues that using traditional glass containers with cork closures makes little sense — either environmentally or economically — for most of the wine sold today.  He observes that at least 70 percent of wine retails for $12-$10 or less (probably much  more than 70 percent, I suspect) and 70 percent is consumed within three hours of purchase.  Finally, 70 percent of the production cost of these low price wines is in the packaging, not the wine itself.

These wines are quotidian pleasures, purchased for quick consumption. Heavy, expensive “traditional” packaging makes little sense for 70-70-70 wines.  Producers, consumers and their environment would all likely benefit if these wines were packaged and sold in ways that reflect their real consumer product function, not a false elite identity.  Wine will have come of age, some argue, when it no longer needs the borrowed prestige of the heavy bottle or a faux-tradition label.

False Dichotomy

What I most appreciate about Boisset is the fact that it is difficult to put the company in a box.  Is it an Old World winery?  Well, yes of course, based on geography.  Is it New World?  Well, yes but not just because it owns properties in California. Its marketing innovations have a distinct New World flavor and its entrepreneurial spirit would make Adam Smith smile.

There is nothing particular Old World about quality and terroir or New World about innovation.  It’s all part of the blend and always has been — even in France.  No wonder they have a word for it.

[Note: In case you missed the irony of the opening paragraph, entrepreneur is a French term.]