Jon Fredrikson likes to say that there are no one-liners in wine. He isn’t saying that there aren’t any one-line jokes (take my White Zinfandel … please!) but rather that nothing in wine is cut and dry. Wine is always complicated — always this and that, too — so generalizing is a dangerous practice.
I was reminded of this twice during our recent California expedition. The first time was by Jon Fredrickson himself, who stated the case very well in his talk at the Unified Wine and Grape Symposium in Sacramento (North America’s largest wine industry trade show and seminar series). His dynamic analysis of how the wine market is evolving was widely reported in the press.
Winery of the Year
At the end of Jon’s report he always names a “winery of the year” and for 2011 it was DFV Wines of Manteca, California. DFV (for Delicato Family Vineyards) has its roots in the decision of Italian immigrant grape grower Gasparé Indelicato to try his hand at winemaking in early post-Prohibition California. His grandson, Chris Indelicato, has been CEO since 2004 and many other family members populate the company’s org-chart.
DFV sits in the #10 position in the Wine Business Monthly Top 30 American Wineries league table for 2011, producing more than 4.5 million cases. DFV owns more than 10,000 acres of vineyards (quite a change from Gasparé Indelicato’s first farm). But it is the business’s dramatic growth, not just its large size, that drew Jon Fredrikson’s attention and, well, everyone’s attention. “Delicato” was all that I heard in pre-announcement speculative conversations.
Gnarly and Twisted
You have probably seen Delicato wines on store shelves, but they are just the tip of the family business iceberg. Other DFV brands include Bota Box, Twisted, Gnarly Head and many more. I usually think of the DFV wine portfolio in terms of good value wines and I think this good value accounts for the company’s success.
But saying that a wine is a good value sometimes imposes a subconscious ceiling on perceived quality and distinctiveness. I admit that I tend to think of DFV wines as good, but not necessarily great. That’s because I sometimes forget Jon Fredrick’s line about one-liners. Good value doesn’t rule out distinctivenes — wine is too complicated for that.
On the Old Silverado Trail
This point was driven home to me for the second time as I stood at the tasting room bar at Black Stallion Estate Winery on Silverado Trail in Napa Valley — DFV’s newest venture, which it acquired just a couple of years ago. The winery itself resists being a one-liner as it is both historically significant (as an equestrian center) and an architectural beauty.
We drove by the winery a couple of years ago (on our way to a Stags Leap AVA event) but didn’t stop. We were impressed with the BSEW Cab at a tasting back home (it is a larger production wine that is widely distributed), so we came back to try the small production (4000 total cases) wines sold only at the winery.
Imagine my surprise to learn that the same company that makes Botta Box also makes a $150 red blend called Bucephalus. I’m interested to see what happens as the Indelicato family’s winemaking knowledge and resources are focused on this relatively new enterprise — perhaps even more distinctive wines like the Rockpile Zinandel that was my tasting room favorite?
I expect there will be lots of interesting wines to taste and things to say as DFV and Black Stallion continue to develop. But don’t expect to hear any one-liners.
“Do you trust me?” asks the hero in my favorite scene from the Disney cartoon Aladdin. The Princess hesitates (“What?) as if trusting anyone is a radical idea. “Yes” she finally says and holds out her hand.
Who do you trust?
I think of this scene every time I read wine reviews or wine competition results. “Do you trust me?” is the obvious question when it comes to the scores and medals that wine critics and judges award. If we do trust we are more likely to reach out our hands to make a purchase. But trust does not always come easily with a product as ironically opaque as wine.
The session on wine judging (see details below) was very interesting in terms of the research presented, not very encouraging from a trust standpoint. Previous studies that showed that wine judges at major competitions are not very consistent in their assessments were confirmed and attempts to improve their performance have not been very successful so far, according to expert analyst Robert Hodgson. The same wine can get very different ratings from the same experienced judge. It’s hard to “trust” a gold medal despite all the effort that goes into the judging process.
The Trouble with Economists
“If you put two economists in a room, you get two opinions, unless one of them is Lord Keynes, in which case you get three opinions.” according to Winston Churchill. Hard to trust any of them when they disagree so much.
Wine critics suffer the same problem as economists, according to research by Dom and Arnie Cicchetti, who compared ratings of the 2004 Bordeaux vintage by Jancis Robinson and Robert Parker and found a considerable lack of consensus. Two famous critics produced different opinions much of the time. Hard to know what to think or who to trust. Other presentations did little to increase the audience’s confidence in wine evaluators and their judgments.
Because tastes differ, wine enthusiasts are often advised to use good old trial and error methodology to find a critic with a similar palate — and then trust that critic’s recommendations. This conventional wisdom inspired Ömer Gökçekus and Dennis Nottebaum to compare ratings by major critics with “the peoples’ palate” as represented by CellarTracker ratings. CellarTracker lists almost 2 million individual wine reviews submitted by over 150,000 members.
Point / Counter-Point
Stephen Tanzer’s ratings correlate best to the CellarTracker crowd for the sample of 120 Bordeaux 2005 wines in the research database. But, as Ömer suggested in his presentation, it is important to remember that the data can contain a lot of noise. Clearly the CellarTracker critics are well informed — they know what Parker, Tanzer, Robinson and the rest have written about these wines and their ratings may reflect positive and negative reactions to what the big names have to say.
The researchers detected a certain “in your face, Robert Parker” attitude, for example. In cases where Parker gave a disappointing score, CellarTracker users were likely to rate it just a bit higher while giving high-scoring Parker wines lower relative ratings. CellarTracker users apparently value their independence and, at least in some cases, use their wine scores to assert it. This is an interesting effect if it holds generally, but it also introduces certain perverse biases into the data stream.
Bottom line: The research presented in Bolzano suggests that there are limits to how much we do trust and how much we should trust wine critics and judges. The power of critics to shape the world of wine may be overstated or, as Andrew Jefford notes in the current issue of Decanter, simply over-generalized. “Opinion-formers are highly significant — for a tiny segment of the wine-drinking population.” he writes. “They remain irrelevant for most drinkers.”
AAWE Conference Session #1B: Wine Judging / Chair: Mike Veseth, University of Puget Sound
Robert T. Hodgson (Fieldbrook Winery), How to improve wine judge consistency using the ABS matrix
Dom Cicchetti (Yale U), Arnie Cicchetti (San Anselmo), As Wine Experts Disagree, Consumers’ Taste Buds Flourish: The 2004 Bordeaux Vintage
Ömer Gökçekus (Seton Hall U), Dennis Nottebaum (U of Münster), The buyer’s dilemma – Whose rating should a wine drinker pay attention to?
Jing Cao (Southern Methodist U), Lynne Stokes Southern Methodist U), What We Can Do to Improve Wine Tasting Results?
Giovanni Caggiano (U of Padova) Matteo Galizzi (London School of Economics, U of Brescia), Leone Leonida (Queen Mary U of London), Who is the Expert? On the Determinants Of Quality Awards to Italian Wines
Decanter, the self-proclaimed “World’s Best Wine Magazine,” organizes the mother of all wine competitions each year. The results of the 2011 judging are out — you can read them here.
I think that the Decanter World Wine Awards is the largest and most comprehensive wine competition in the world. The press release proclaims that “This year a staggering 12,252 wines from 44 countries were tasted in the DWWA, with 8,327 medals awarded.” Staggering is right! That’s a lot of wine from a lot of places and a lot of awards, too.
Can you imagine a wine competition with more than 8000 winners (two thirds of all wines entered)? What an incredible undertaking.
Wine economists are suspicious of wine competitions. This is partly because economists are suspicious people in the first place, always looking for the dark dismal cloud whenever they spy a silver lining. But there are other reasons, too. De gustibus non est disputadumis the economists’ motto; everyone is entitled to her own opinion on matters of taste. The idea that anyone, even experienced judges, could objectively rank something as inherently subjective as wine runs against an economist’s nature, so you can imagine how suspicious we are about big competitions where thousands of wines are tasted and rated.
Richard Hodgson, a winemaker and retired statistics professor, was for many years a judge at the Mother of All American Wine Competitions, the California State Fair Commercial Wine Competition. California State Fair judges evaluated more than 3000 wines from 600 wineries in 2009. It’s a huge competition, although nothing compared to the Decanter contest. Hodgson’s analysis of raw data from wine judges suggests that they are only human after all and likely to suffer the sort of tasting inconsistencies that you would expect (if you are a suspicious-minded economist).
Hodgson and his colleague G.M. “Pooch” Pucilowski, California State Fair Wine Competition manager and chief wine judge discussed their findings at the 2010 meetings of the American Association of Wine Economists in Davis, California. Here’s a summary taken from the Wine Business Monthly report on the session.
Hodgson served as a judge in the California State Fair competition, and is now on the competition’s Wine Advisory Task Force working with Pucilowski to try to improve judging quality and consistency.
With Pucilowski’s assistance, Hodgson has been evaluating the competition judges since 2005 with trials that place three samples from the same wine bottle in one flight of judged wines to see if the judges ranked each sample consistently. Hodgson, who taught statistics at Humboldt State University, said, “Fewer than 10% of judges could judge the three wines and maintain consistency in their scores.” He added, “Some of the same wines received ratings that ranged from no award to gold.” When the study, “An Examination of Judge Reliabiity at a Major U.S. Wine Competition,” was published in the JWE, it received significant media attention and created a stir among wine judges and within the wine industry.
Pucilowski, who has managed the State Fair competition 25 years and often serves as a judge in other competitions, openly admits that his competition and all wine judging events are highly subjective. To his credit, he is constantly looking at ways to improve the competition and to help judges improve their abilities.
The Value of Wine Competitions
So it seems like there is good reason to be skeptical about wine competition results. Why, then, do winemakers enter these competitions, given that they are the people who are most likely to know when their wines are scored too high or low compared with others? Ego may have something to do with it, but the obvious answer is that there is commercial value in a gold medal and the attention it receives, although I don’t know how much a medal is really worth — probably depends upon the circumstances. I noticed, for example, that the Achaval Ferrer Malbec that was the top wine last year in Decanter’s big comparative tasting of Argentinean Malbec did not receive a medal at DWWA. I’ll bet that’s because it wasn’t entered. Nothing to gain for this famous (and probably sold-out) wine.
Some wine producers probably enter competitions on the theory that they might win a medal in at least one of them, which gives them bragging rights. There has been a medal on the label of every bottle of Gallo’s value-priced Barefoot wines that I’ve ever seen, for example. A medal gives the cautious bargain-buyer some assurance of quality. Three non-vintage Barefoot wines — Merlot, Pinot Grigio and Moscato — earned “commended” medals in this year’s Decanter competition.
The Charles Shaw 2005 California chardonnay (yes, the $1.99 “Two Buck Chuck” made by Bronco Wine Company sold at Trader Joe’s) was judged Best Chardonnay from California at California State Fair Commercial Wine Competition.
The chardonnay received 98 points, a double gold, with accolades of Best of California and Best of Class.
As the video above shows, Decanter (like the California State Fair competition) goes to great lengths to overcome the inherently problematic elements of wine judging. This makes sense since there is so much at stake, both for the winemakers and for Decanter itself, which puts its reputation on the line. The Decanter awards probably have more commercial value than most because the Decanter name has credibility, especially in the U.K. Decanter sells colorful foil medals to decorate winning bottles and the decorations sell the wine, the magazine and, well, the whole enterprise.
Winning a medal is good, but perhaps the biggest prize for many wineries is winning distribution. Making good wines is often easier than getting them into consumer hands, both here in the U.S. where our fragmented three-tier system creates many obstacles, and also in Great Britain, where the big supermarket chains dominate. Scrolling through the online winner lists I notice that a lot of the wines that are received medals in the competition aren’t currently sold in the UK. Perhaps that’s the point of entering — to get distributor attention and break into the market.
Thick and Thin
Wine competitions are fun, but I admit that I don’t take the results too seriously since they depend on so many uncontrollable factors, including which particular wines are entered and which (like the Achaval Ferrer Malbec) are held out. I do, however, find the Decanter results worth careful study because they have some important stories to tell.
The wine world is very broad but the world wine market surprisingly thin and uneven. Looking at the award list, it is interesting to see the large number of countries (44, including India, China and Thailand) that sent wine to London for the judging. As someone who writes about the globalization of wine, it is great to see evidence of the world wine web’s continuing expansion.
But the list of entries is also relatively thin and uneven in some respects, even with more than 12,000 entries, reflecting the fact that the British market is difficult to break into and so not everyone sees value in entering Decanter’s competition.
If you search for U.S. award winners, for example, I think you will be a bit puzzled by the long list of wineries that result, both in terms of the wines that appear and those that are missing, probably because they were not entered in the competition. There are affordable wines from large scale producers (like Gallo’s Barefoot noted above) and some expensive boutique ones, too, but much of America’s vast middle kingdom of wine, which is in many ways the country’s great strength, is under-represented. Not interested in the award because not represented in the British market, I suspect.
The U.S. Medal Count
This perhaps accounts for the odd showing of American wines on the Award league table. Only four U.S. wines earned top awards in 2011 (many more earned Silver, Bronze and Commended medals, however). The top four are:
Vina Robles Cabernet Sauvignon Huerhuero Estate 2008 (Paso Robles, San Louis Obispo County) earned a regional trophy (second only to an international trophy in Decanter’s galaxy of awards). It was the top U.S. wine. No U.S. wine earned an international trophy.
Three wines earned gold medals: Chateau Ste. Michelle Artist Series Meritage 2007 (Columbia Valley, Washington State), Justin Justification 2008 (Paso Robles. SLO) and the Silverado Vineyards Estate Cab 2008 (Napa Valley).
Are you surprised? I’ll bet this isn’t the list you were expecting. And it is interesting that none of the American wines made the highest level of awards.
Is four a good medal count? Not compared to Argentina, which received almost 20 gold medals and nine regional trophies. Why the big difference? Perhaps the judging panels applied different standards or maybe there just aren’t as many really good wines from the U.S. these days, but I think it has something to do with the intensity of Argentina’s export drive and the importance they attach to Decanter’s international reputation compared with producers from the United States.
I’ve been asked to chair the session on wine competitions at the annual meetings of the American Association of Wine Economists later in the month. It will be interesting to see shat new insights the panelists will provide. Watch this space for a report.
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.
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.
 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.
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.
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!
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.
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.
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.
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!
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.
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.
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.
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.
A 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.
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.
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.
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.]