Anatomy of the Provence Pink Wine Tide

August 16, 2022 By Mike Veseth in wine, wine exports, wine markets 3 Comments

I don’t have to buy rosé. That’s not how I’ll earn enough to buy a little stone house overlooking the Mediterranean. Nor do I have to put up with the incredulous expressions on my clients’ faces when in the shop I recommend a rosé. “What do you take me for, a hick?” their expression demands. Or “Try that one on the next sucker, mister.” Or, “Let’s move on to something more serious.”

In the course of my buying trips I run across excellent wines with a rosé color. I don’t look for them. They appear. What can Ido?

So wrote wine importer extraordinaire Kermit Lynch nearly 40 years ago (quoted in the August 2022 issue of the famously readable Kermit Lynch newsletter). Pink wine is the People’s Choice in many markets but struggles for legitimacy among some wine drinkers.

I have read that Rosé outsells white wine in French supermarkets, for example, and American wine drinkers of a certain age will remember when the best-selling imported wines were Rosés from Portugal — Mateus and Lancers.

Rosé is once again getting a lot of attention. The Rosé tide has risen relatively speaking (the wine market has been pretty chaotic in the last few years), especially after 2021’s logistics struggles delayed some imports until the very end of the summer season or even later. Ugh.

The wines are even getting the critical attention they deserve. First Elizabeth Gabay MW published her 2018 book Rosé: The Pink Wine Revolution and now she and Ben Bernheim have released Rosés of Southern France. Taken together these two books provide anyone who wants to explore the Pink Wine World with a clear and critical roadmap.

50 Shades of Pink?

Gabay and Bernheim’s focus on Southern France in the new book is appropriate. Although Sue and I have enjoyed Pink wines from all around the world, France is the obvious reference point. France is the largest producers of Rosé wines in the world and the largest consumer of them, too, although they tend to export upscale Rosés into the global markets and import less expensive Spanish wines for ready drinking.

Southern France is general and Provence in particular is at the center of the action. Provence and its pale pink wines define the Rosé category for many consumers, although I agree with Gabay that focusing on a pale shade of pink is a waste of time. I think I remember that Tavel Rosés were popular when I first started paying attention to wine and they still have much to recommend. I like, therefore, the playful design of Gabay and Bernheim’s new book, which emphasizes the appeal of a range of hues.

The U.S. is the largest export market for Provence Rosé, accounting for more than a third of export sales. Recent NielsenIQ data reported in Wine Business Monthly places the average Rosé bottle price at $11.39, which is higher than Cabernet Sauvignon, for example, and much higher than the market average of $8.48.

American consumers might once have confused Rosé with “blush” wines like White Zinfandel (average bottle price $4.40), but that’s no longer true. Just look at the pink wall at your local wine shop or upscale supermarket and you will see what I mean.

Three Faces of Rosé

Sue and I were encouraged to probe deeper into the world of Provence Rosé when we received three editorial sample wines from Vins de Provence. The wines were sourced from the region’s three main appellations. Château L’Escarelle Rosé (in the Bordeaux-style bottle on the left) is from the AOP Côteaux Varois en Provence. The Ultimate Provence (UP) in the distinctive bottle, center, is Rosé AOP Côtes de Provence. And the attractive wine in the Burgundy-style bottle on the right is Famille Ravoire Costeval Rosé AOP Coteaux d’Aix-en-Provence.

These are premium products. Based on internet sources the price points appear to range from mid-teens for the Famille Ravoire Costeval to the high twenties for the Château L’Escarelle. It is not really fair to make a single wine represent an entire appellation, but Sue and I were game. Were the wines good representatives of Provence? Were they distinctive?

We paired the Ultimate Provence Rosé AOP Côtes de Provence with sausages and grilled vegetables from our garden. The Famille Ravoire Costeval Rosé AOP Coteaux d’Aix-en-Provence was paired with a Niçoise salad (grilled garden vegetables again) and the Château L’Escarelle Rosé AOP Côteaux Varois en Provence was terrific paired with a salad of fresh Dungeness crab and ripe garden tomatoes. Very different wine-food combinations.

Three Faces of Provence

We enjoyed all three wines — they represented Provence very well. They were very different from each other, however, as you would expect, so Provence isn’t a simple thing. The terroirs were different, of course, but so were the wine grape blends. Grenache led the list of grapes for one wine, and combinations of Syrah, Cinsault, and Grenache in the others. The Ultimate Provence, which was probably our favorite wine for its fruit and bright acidity, even included a bit of Rolle (aka Vermentino)!

Bottom line. Wine is pretty in pink. There is much to like if you just want to sit back and enjoy, but also a lot to learn if you take the exploration of regions, grape varieties, styles, etc. seriously. No wonder the Provence Pink tide is rising.

Anatomy of Georgia’s Wine Export Surge

December 8, 2020 By Mike Veseth in coronavirus, recession, wine, wine exports, wine history 1 Comment

Exports of wines from Georgia (the country — the cradle of wine — not the U.S. state — the cradle of Coca Cola) have surged in recently years, a fact that is both well-deserved and timely. Georgia deserves the increased recognition of its wine sector both because it really is the cradle of wine, with literally thousands of years of history, and because the wine industry and government have invested heavily in recently years to raise standards and promote products in key markets.

Ticking All the Boxes

Georgia wine’s success in 2020 is especially timely because travel and tourism — another important Georgian industry — has been hard hit by the global coronavirus pandemic. Ideally the wine and the tourism industries work together to generate needed income, especially in rural areas. Georgia is sort of running on one cylinder this year, so wine’s boost is especially appreciated.

Sue and I visited Georgia in 2016 and we were impressed by the friendly people. beautiful scenery, striking crafts and culture, delicious food, and excellent wine. We recently re-immersed ourselves in virtual experiences of Georgia through the third annual Ghvino Forum and a “Georgian Wines 101” trade tasting of six Georgian wines expertly led by Taylor Parsons with special guest winemaker Iago Bitarishvili of the iconic Iago’s Wines.

My particular focus for the Ghvino Forum was a presentation by Tornike Kodrzaia, Head of Research at TBC Capital on the economics of Georgian wine. Wine is important culturally in Georgia (a fact that a recent film Our Blood is Wine makes very clear), but it is also a key element of the economy.

A Complicated Situation

Kodrzaia presented data that showed the Georgian wine sector to be a complex mosaic. A survey of large- to medium-size wineries, for example, revealed high financial returns — about twice the average for Georgian businesses in general, he said. That is incredible. It would be interesting to dive deeper here, to see if the same is true about smaller wineries and if the returns to growers are also positive.

Georgian wine is not a single thing, so it is important to understand its components. Home production was very high during the Soviet era and is still large, especially compared to other countries we have visited. The foundation of Georgia’s high per capita wine consumption is wine made at home or by friends or family, although Kodrzaia noted that commercial wine sales have increased in the domestic market.

Georgian’s prefer white wine — and it is easy to see why if you sample a fine Chinuri, for example. But traditional export markets prefer red wine, so that is a production focus. Russia and the CIS markets demand semi-sweet red wines, which Georgia produces in abundance. Uncertain political relations, however, are behind a movement to diversity export markets and reduce dependence on Russia.

China has emerged as an important market for Georgian wines, but the Chinese prefer dry red wines over the semi-sweet products. Chinese consumers are drawn to the story of Georgian wine — its long history and Silk Road associations– as well as its quality. Many Georgian Wine Houses have opened in Chinese cities to tell the cultural story and promote the wines.

Rising Tide in the U.S. Market

The United States export market is growing quickly from a small base, with above-average prices. Over 800,000 bottles were exported to the U.S. through October 2020, for example, a substantial increase from 678,000 in 2019 and less than 200,000 in 2014, when the current surge began. The average ex-cellar price of exports to the U.S. was $5.11, according to Georgian statistics, more than double the export price for China and CIS countries. So you can see why the U.S. market is a focus.

Georgian wine is exceptionally diverse, so it will be interesting to see which of its many facets shines brightest in the U.S. market. Natural wine is a growing market niche and many Georgian products can fly that flag proudly. But many of the traditional producers are quite small, so critical mass is an issue. Iago Bitarishvili is an immensely important producer, for example, but only 5000 bottles of his amber Chinuri were made in 2019 according to the data we received.

Georgia is home to literally hundreds of native grape varieties, which creates a kaleidoscope of interesting choices for some consumers and a confusing blur to others. (Sue suggests an initial focus on red Saperavi and perhaps also white Chinuri — excellent wines that buyers will not be afraid to try to pronounce.) Many of the wines are hand-sells, however, which makes Covid closures of restaurants and wine bars in many areas an additional challenge. The six wines that were included in the Georgian Wine 101 tasting were made from these grape varieties: Tsitska-Tsolikouri, Kisi, Chinuri, Tsolikouri-Otskhanuri, Tavkveri, and Saperavi.

But Georgia, Georgians, and Georgian wine have survived these thousands of years because of their determination, commitment, and resilience, so they are unlikely to be defeated by these temporary challenges. We look forward to learning more and Georgia and its wines and to witnessing their continued export growth.

Georgia’s Lost Eden

Just as I was putting the final touches on this column a friend wrote to tell me about a new Georgian wine he sampled over Thanksgiving and really enjoyed. The project is called Lost Eden Red Blend and it ticks many of the boxes needed to break through in the crowded marketplace. It is a blend of 100% Saperavi from several vineyards — I’m guessing the marketing folks thought “red blend” would be more approachable that Saperavi. The wine is made by an 11th-generation (!) winemaker. The packaging is unique, don’t you think? You will remember this wine if you try it and like it.

The wine is “semi-dry” with 15.4 g/l residual sugar and 13% alcohol. 4500 cases made. Suggested retail $18.99. It is a type of wine we tasted and enjoyed in Georgia and that is popular here in the U.S. where many consumers talk dry and drink sweeter. The wine is modern in style, according to on-line documents, but pays its respects to tradition by blending in a portion of wine made in the traditional qvevri method of clay vessels buried in the ground.

Some of my friends will be disappointed that a wine like Lost Eden gets attention. They would like Georgia to be known in the U.S. exclusively for its traditional qvervi wines. But Georgia is a small country that punches above its weight in the wine world by leveraging all of its many advantages, including some high quality sweeter red wines.

We haven’t tasted the wine, but we have sampled the story told on the website, which draws on the people and country, their culture and history, and of course the food, too, including the iconic supra feast. Georgian wine is complicated, as noted above. This is only one side of Georgian wine, but one that seems likely to spark greater interest in the wine and the country in general.

Georgian wine is on the move. Let’s see where it goes next!

Wine, Tariffs, & Globalization

November 17, 2020 By Mike Veseth in coronavirus, economic crisis, globalization, recession, trade policy, trade wars, wine, wine exports, wine markets Leave a comment

The wine trade has always been as global as transportation technology and political economy have allowed. So it is no surprise that the economist David Ricardo sought to make his theory of international trade based on comparative advantage clear and obvious by choosing an example that all his readers would appreciate — Portuguese wine exchanged for British wool.

A World of Wine

If you want to get a sense of wine’s global reach today I suggest you visit your local upscale supermarket or wine shop and survey the landscape there. I had my university students do this back in 2011 and reported the results in a Wine Economist column. The local Safeway store carried about 750 wines from a dozen different countries back them, which caught the students by surprise. The store has expanded its wine wall since then, with even more offerings, and the supermarket across the street has an even larger set of wine choices. Globalization delivers a world of wine to your doorstep!

Global trade in wine, both bottled and shipped in bulk, is incredibly important to wine producing countries. The largest producers — France, Italy, Spain, Portugal, Argentina, Australia, New Zealand, Chile, South Africa — could not possibly sell all the wine they produce in their domestic markets. The collapse of global wine trade would be a global wine catastrophe.

And the trade in wine isn’t the whole story. Global markets exist for corks, capsules, winemaking services (think “flying winemakers”), and bottles, too. We’ve visited wineries in South Africa, for example, that import glass bottles from Europe and then export the finished wine to the UK, China, and the US. That’s globalization! Chinese glass has an even broader global reach.

Peak Wine Globalization?

By some measures globalization generally — taking into account goods, services, and people — reached a peak about the time of the global financial crisis and has since shrunk as a percentage of global GDP. Global wine resisted the de-globalization trend, however, but perhaps now is catching up.

Some of the macroeconomic drivers of wine imports and exports such as rising disposable incomes and stable exchange rates have been impacted by the Covid recession. And of course Covid restrictions and behavioral changes have negatively affected both on-premise wine sales and travel and tourism vectors, too.

There are attractive pockets and niche markets for wine sales all around the world and smart producers have sought them out. But the three big wine targets in recent years have been the UK, US, and China and each of these has become more challenging.

The UK issue is Brexit and it is shocking that there is so much uncertainty about the nature of future trade arrangements with just a few weeks to go before the exit from the EU is final. Britain’s unsuccessful attempt to navigate the twists and turns of Covid have pushed the country into a recession that is likely to grow worse before it gets better — a bad thing for income- and price-sensitive wine demand. Add to this the possibility of a botched Brexit and you might see Britain’s status in world wine trade diminish substantially.

Tit for Tat

The US market is suffering from Covid and recession problems as well and its own set of trade issues. The Trump trade wars have increased tariffs on wine imports from the EU, for example, but also generated retaliatory tariffs on US exports to China.

Wine has been caught in the crossfire in the Boeing-Airbus trade dispute, as The Wine Curmudgeon recently reported. The WTO has ruled that the US can impose tariffs on EU products in response to Airbus subsidies and that the EU can put tariffs on US products because of subsidies to Boeing. Wine figured prominently on the US tariff list, but the EU plans to focus on US spirits instead of wine, with new duties on vodka, rum, etc. on top of previous tariffs on U.S. bourbon.

How did the US wine industry dodge the tariff bullet in this case? Trade policy is sometimes very personal when you think about it. EU tariffs on US wine would fall heaviest on California producers — think for a moment important politicians from California. (Does the name Nancy come to mind?) Not necessarily someone the EU wants to upset.

Tariffs on US spirits fall heavily on Kentucky bourbon producers. Can you think of an important political leader from Kentucky that EU officials might enjoy roughing up a bit? Maybe some guy named Mitch? Just thinking out loud …

China vs Oz

And then there’s China. Down in Australia there is more than a bit of concern about wine trade with China. China has grown to be Australia’s largest wine export market, so rumors that the Chinese government might impose tariffs on or even ban imports of Aussie wine entirely are serious concerns. It is not clear that the US and UK, the other big export markets, could easily absorb the resulting flood of unsold wine.

Since tariffs are as political as they are economic, there is hope that, with a changing US administration, the troops in the wine trade wars might stand down and a truce be agreed. This could start with both sides backing down over the Boeing-Airbus duties. That would certainly be a good outcome and I don’t think it is impossible.

No Easy Fixes

But tariffs aren’t the only factor preventing a return to the previous era of wine globalization as noted above, so don’t expect a quick fix. International producers seeking to penetrate the US market in particular need to be aware of how much the on-trade to off-trade shift has changed which wines American consumers buy, where they buy them, and how much they are willing to pay.

The process of restoring wine’s global reach seems likely to be a process and probably a slow one, with some firms and regions more successful than others. The faster the global economy returns to health, the faster the clouds will clear for global wine.

Global Wine Impacts of Coronavirus Crisis & Recession: OIV Update

April 28, 2020 By Mike Veseth in coronavirus, economic crisis, Economic impact, recession, wine, wine exports, wine markets Leave a comment

pau The OIV released their annual “State of the World” wine sector report last week (via social-distancing video conference, of course) and it is noteworthy both for its view of the recent past and its tentative analysis of present conditions and future trends. (Here are links to the report summary, the press release in pdf, and the presentation in pdf, and the report in pdf.)

Under normal circumstances, my focus here would be on the annual report itself and the recently-released special study of the sparkling wine boom, both of which are packed full of data and sound analysis. But, as OIV Director General Pau Roca would note, these are rear-view mirror reports that document a world that does not exist in the same way anymore. They are useful for sure (see below), but don’t directly address today’s most pressing questions about the future of the global wine sector.

So we must move from quantitative measure to qualitative assessments and informed speculation, and that’s what Pau Roca provided in the press conference and resultant video report (see YouTube video below). Herewith some of the OIV highlights with my commentary.

An Inconvenient Truth

It is an inconvenient truth that the countries that rank highest for total wine consumption (the United States, UK, Spain, Italy, France, etc.) are also the countries that have experienced the most severe impacts of the coronavirus pandemic. And they will likely to be among the hardest hit by the recession. The global impact on the wine sector will thus be much more serious than if any one or two of these markets were affected.

Globally, we are looking at two important changes: a shift in sales channels and a fall in demand, immediately in some regions and eventually in others (see below). Wine sales via bars, restaurants, and travel and tourism-related vectors (think cruise ships and duty free shops) have collapsed and it is unclear how quickly these market will recover even when the green light is given to re-open.

Supermarket and e-commerce sales have risen. In some regions there is a net gain in sales at least in the short run, but this is not true everywhere. In the U.S., for example, off-premise sales have surged enough recently to produce a net gain in wine revenues in the short run.

Net decreases in both volumes and sales values are projected for parts of Europe where bar and restaurant sales are especially important and travel and tourism are big factors, however, with a resultant rising surplus of wine. Crisis distillation, which we think of as an artifact of the bad old days of the EU wine lake, seems likely to return, and in a big way, in order to stabilize wine producer and grower incomes. Maybe the industrial alcohol that will result can be used for hand sanitizer?

The shift to e-commerce will be welcomed by many small and medium-sized producers who have lost on-trade accounts and cannot compete effectively for high-volume supermarket sales. The crisis is an accelerant in this regard, speeding up an existing trend. Taken together, these impacts present many challenges and some opportunities, creating losers and some winners.

Recession Effects

The emerging economic crisis has been compared with the Great Depression here in the U.S. and with the severe economic dislocations following World War II in Europe, but in truth we don’t yet know how deep the decline will be or how long it will last. That will only be clear somewhere down the road when the rear-view mirror image comes into focus.

sparkling

But the mirror can reveal trends to look for on the road ahead. Here are OIV charts for global sparkling wine consumption. The top chart shows volume and value trends indexed to 2002 = 100. The lower chart shows average bottle price. Focus on the the shift in sparkling wine volumes before and after the 2008-2009 global financial crisis to see how an economic crisis can alter consumption trends.

In terms of volume of sales, sparkling wine took a big dip in 2008-2009 and then returned to its rising trend, but from the lower base. It never caught up to where it would have been without the crisis. That recession dip resulted in a persistently lower volumes against the previous trend.

And — and this is an important point — this is true even though the later years included the global Prosecco boom, which raised sparkling wine volumes even as it lowered average bottle price. Without the Prosecco boom (and the lower average sparkling wine prices it produced), the sustained recessionary impact would be even more pronounced.

Now sparkling wine isn’t all wine and the past isn’t necessarily the future — your mileage may vary, as they say — but this figure shows that recessions can have enduring impacts on global wine markets.

How Not to Waste a Crisis

They say that it is important not to waste a crisis because sometimes important changes can happen in turbulent times that would otherwise be impossible. As suggested above, many wine firms are taking the crisis as an opportunity to shift to e-commerce channels or to diversify their revenue streams. They might never have gotten around to this without the crisis. Now there is little choice.

There are good uses of this crisis, as Pau Roca noted in his comments. This global public health emergency, for example, shows us the importance of scientific expertise and collective action when faced with a global issue. It would be good if coronavirus caused us to think and act more seriously in this way about other global threats, especially the global climate change emergency, which will not go away when the coronavirus crisis is resolved.

On the other hand, Pau Roca notes, it is a wrong use of the crisis to either cynically promote alcohol consumption at this time or to do the opposite, to take this as an opportunity to advance a prohibitionist agenda. It is easy for wine to get caught in the crossfire in this crisis, as in South Africa where, for several weeks, it was forbidden to sell wine in the domestic market (because of concerns about alcohol abuse) and illegal to export it either, because of a ban on non-essential transport. Yikes!

Thanks to Pau Roca and the OIV for their work on these issues. Here’s a video of Pau’s report.

Liquid Assets Podcast: Can U.S. Wine Win Back Its Mojo?

February 19, 2020 By Mike Veseth in Rabobank, Shameless Self-Promotion, wine, wine exports, wine markets 5 Comments

“Can U.S. Wine Win Back Its Mojo?” That’s the title of the lastest Rabobank Liquid Assets podcast, which I recorded along with Rabobank’s Global Strategist Stephen Rannekleiv and Analyst Bourcard Nesin in Sacramento during the annual Unified Wine & Grape Symposium meetings earlier this month.

The mojo question was at the front of our minds because earlier that day the speakers at the State of the Industry session had painted a complicated picture of American wine’s prospects. There are still opportunties in the U.S. market (the rumors of wine’s death are exaggerated, I said in my presentaiton, paraphrasing Mark Twain), but there are undeniable problems, too.

The best guess is that 200,000 tons of wine grapes were left on the vines in California in 2019 for lack of buyers. Perhaps 30,000 acres of wine grapes need to be taken out of production to balance demand and supply. So it is no surprise that our discussion centered on ways to boost demand and therefore lesson the supply-side pain.

The podcast is fast-paced and raises interesting points about the potential for wine exports (my contribution to the discussion), the need for increased attention to e-commerce sales (Bourcard’s point) and Stephen’s analysis of the challenges of building brands for a changing market environment.

Interested? Follow this link to “Can U.S. Wine Win Back Its Mojo?”

Wine Book Review: Adventures on the China Wine Trail

February 18, 2020 By Mike Veseth in book reviews, China wine, Economic impact, emerging wine regions, extreme wine, wine, wine exports 2 Comments

china Cynthia Howson & Pierre Ly, Adventures on the China Wine Trail: How Farmers, Local Governments, Teachers, and Entrepreneurs Are Rocking the Wine World. (Rowman & Littlefield, 2020).

I remember my first taste of Chinese wine very well. My university student Brian brought a bottle of 1999 Changyu Cabernet Sauvignon back from his study abroad semester in Beijing. It didn’t really taste much like Cabernet, but it was the smell that really got me. “Ashtray, coffee grounds, urinal crust” was the tasting note I found on the internet. Exactly. Quite an experience.

The second taste was not much better. Matt, another student, found a case of Dragon’s Hollow Riesling in a Grocery Outlet store in McMinneville, Oregon. He gave me a couple of bottles that I tried (but failed) to serve at a student tasting. The smell (something rotten?) got in the way of tasting and the wine went down the drain.

I learned two things from these tastings. First, maybe my students were out to kill me! And second, Chinese wine had a long way to go.

And a long way it has come, too, in only a few years. That’s one of the messages of Cynthia Howson’s and Pierre Ly’s fast-paced new book, Adventures on the China Wine Trail. Howson and Ly, partners in life as well as wine research, might have been initially attracted to Chinese wine by its peculiar taste and unexpected existence. But as they have immersed (I nearly said marinated) themselves in the wine, the people, the geography, and the culture they have discovered so much more, which they enthusiastically share with their readers.

Adventures on the China Wine Trail works on many levels. It is in part the record of the authors’ personal journeys and it is interesting to travel with them as they lug their seemingly-bottomless wine suitcase from place to place. The authors have an amazing mastery of the detail of the people and places, food and wine. It’s almost like being there.

In fact, the book works as a travel guide as well wine journey account, providing information of where to go, what to do, where to stay, and so on. But beware: Howson and Ly aren’t your typical tourists, so while they do take us on a walk along part of the Great Wall, this is only because they took part in a wine conference quite close by. They still haven’t seen the famous Terracotta soldiers despite spending time in that region. They couldn’t pull themselves away from the wineries. Maybe next time, they sigh.

More practical advice appears in the closing chapters. Where should you go to buy or drink excellent Chinese wine if you visit China? They have recommendations for you. And when will you be able to enjoy Chinese wines (good ones, not the drain-cleaner stuff) at home? Sooner than you think, they say.

Some of the wines are already here, including the $300 Ao Yun that Pierre bought at a Total Wine in Washington State. But that is just the iceberg’s tip and if you are reading this in London or Paris you may know that Chinese wines are no longer the shocking discovery that they were just a few years ago.

And how are the wines? They vary in quality, just like wines from any place else. But many of them (more each year) are excellent and even distinctive. I know this both because Howson and Ly tell us about the wines and also because Sue and I have been fortunate to share some of their Chinese finds — including that luxury Ao Yun.

There’s a final layer to the story that I can’t forget. Howson and Ly are both professors and serious scholars. Although the book doesn’t read like an academic treatise, it has a serious purpose. The authors began their study of the Chinese wine industry wondering where it might lead? Could wine possibly be the basis of sustainable rural economic development? Or was it an alcoholic dead end in terms of a greater purpose?

Chinese wine’s journey has been anything but simple or smooth and continues today. It will be a long time, I suspect, before we know for sure how the story will end. But as for economic development, Howson and Ly have overcome their doubts. Wine in China is the real deal, whatever specific shape it takes in the future. All the hard work of the farmers, government officials, teachers and entrepreneurs we meet in the book has succceeded in building a viable industry.

So here’s my tasting note: Adventures on the China Wine Trail is a fast-paced journey through the world of Chinese wines that will appeal to readers who love wine, China, travel, or who just looking a good adventure yarn. Highly recommended.

Air Provence: Provence Rosé Takes Flight

December 12, 2019 By Mike Veseth in wine, wine exports, wine markets Leave a comment

airp2 The list of regions around the world that make good Rosé wine is very long because Rosé is a style of wine, not a wine grape variety. But the word-association game answer is easy: Rosé? Provence.

And although my friends in California and the Languedoc and other places that have nice Rosé hate it when I say this, if you are talking Rosé here in the United States the conversation begins with Provence.

#1 Export Market: USA

The wine producers in Provence are understandably happy with this situation because they have come to depend on the U.S. market to drink up their Rosé wine exports. According to data provided by the Conseil Interprofessionnel des Vins de Provence (CIVP), the U.S. was Provence’s #1 export market in 2018, happily emptying 26.3 million bottles of Provençal wine, 98% of which was Rosé.

Rosé is one of the hot segments of the U.S. wine market and the Rosé from Provence is very strong. But it would be a mistake for the Provençal producers to become complacent about their signature wine’s position in its most important export market.

This is especially true given that the overall U.S. wine market seems to be reaching a plateau and that the current trade war environment is not friendly to Rosé wines from France that have less that 14% abv and so are subject to the recently implemented 25% tariff. And then there is the threat of more tariffs in 2020. Yikes!

Now Boarding: Air Provence

So the Provençial producers have organized an ambitious trade event called Air Provence that is scheduled for April 6 – 7, 2020 to keep their wines on U.S. radars and deepen market penetration. Incredibly, given their success in the U.S. market, they have even more to share. The program offers wine trade members an intense immersion in the region and its wines, with 200 producers and more than a thousand wines on offer in addition to dinners, masterclasses, and so on. The event website summarizes the program like this:

The very first edition of AIR PROVENCE, organized by the Provence Wine Council for Côtes de Provence estates, invites you to take off on a unique immersive journey at the heart of the leading rosé wines appellation. For two days, experience a business class trip to meet producers and wine merchants, discover terroirs and landscapes, and taste wines as well as Provence art de vivre.

I’m interested in Air Provence in the context of the recent discussions about generic wine promotion in the U.S. We often focus on consumer-facing strategies (the “Got Milk?” approach), but there are many places in the product chain where leverage can be applied, either as a substitute for or complement to other tactics. The Provence producers are working to get the attention of trade actors (importers, buyers, etc.) who can become active partners in selling their wines.

Provence Rosé wines are hot, but the trade wars are creating turbulence and headwinds for the wine market generally and for French wines in particular. Provence Rosé producers are smart to be proactive, using programs like Air Provence to build on their successful market foundation at this moment of uncertainty. I wish them good fortune, but as Bette Davis said in All About Eve, better fasten your seat belts!

What’s Up with Italian Wine in the U.S. Market?

November 19, 2019 By Mike Veseth in Italian wine, wine, wine exports 2 Comments

doc Italian wine has a lot going for it in the U.S. market. Wines from Italy are by far the largest category of imported wines. Recent Nielsen figures (reported in Wine Business Monthly) show almost $1.2 billion in 52-week sales of Italian wines in the channels that Nielsen surveys — that is almost a third of all spending on wine imports and far more than #2 Australia ($720 million) and #3 New Zealand ($496 million). France is #4 at $462 million.

Tariffs? Que Bello? Pazzo!

Italy has benefited from the hot market for sparkling wines in general and Prosecco in particular. And it gained an unexpected advantage over its European neighbors due to the peculiarities of the recently-imposed U.S. tariffs on European wines. Imports of many wines from France, Germany, Spain, and the U.K. are subject to a 25% tax. What’s the tax on Italian wine imports? Zero. Zippo. Niente. Que bello!

(See Suzanne Mustacich’s excellent Wine Spectator article on the wine trade war for more details.)

How did Italy dodge the tariff bullet? I don’t think there is an official explanation or obvious economic rationale. Pazzo! Must be politics, don’t you think? Maybe it has something to do with the high-level Trump administration officials with Italian-sounding names? Or maybe Italy’s not so closely associated with subsidies to Airbus, which provoked the WTO rulings and subsequent tariffs. Strange, but good for Italian producers trying to get their foot in the U.S. door (or working to open the door a little wider).

It would be a mistake to take these advantages for granted and the Italians are working hard to consolidate their market base and move forward. Or at least that’s what we think after attending the Seattle stop on the “Simply Italian Great Wines US Tour 2019.” We spent the day attending seminars sponsored by the European Union and wine region groups and meeting producers (many of whom were seeking local distribution) at a walk-around tasting.

[Two favorites from the walk-around tasting were Societa Agricola Sturm from Collio — fantastic Ribolla Gialla — and Cannonau di Sardegna from Sardina’s Cantina Giampietro Puggioni.]

Out of the Shadow

The Seattle event reminded us of how much we love the wines of Italy. But it also highlighted some of the challenges that Italy faces.

Italy is a complex mosaic of wine regions, styles, and brands. Although an amazing array of Italian wines can be found in the U.S. market, there are a few names that dominate the conversation: Chianti, for example, and Prosecco. It is easy for other wines from other regions to be over-shadowed. Sue and I saw the shadow effect when we stopped at a nearby Total Wine, which has a big selection of Italian wines. We were looking for wines from Friuli and we found just a hand-full — mainly Pinot Grigio. The big regions crowd out the smaller ones on store shelves.

This is the challenge facing Vino Nobile di Montepulciano DOCG, for example. Vino Nobile is a small and distinctive appellation located about 65 km south-east of Siena. The four wines we tasted at the seminar were terrific and made me think about this region as a sort of Tuscan Stags Leap District — one of my favorite U.S. wine appellations.

But excellent wines are not necessarily enough when you need to compete with famous Chianti Classico. You need to get glasses in consumer hands and give the wine and region a distinct identity. Tourism (and not simply wine tourism) is one way to do this. Come for the history, food, and culture and learn about the wonderful wines. This seems to be part of Vino Nobile’s strategy to get out from under the shadow of its more famous neighbor and to tell a distinctive story about the region and the wines.

Italians love to drink sparkling wines and they make some terrific ones. And although my friends in Conegliano hate to hear me say it, it is a shame that the only Italian sparkler that most Americans can name is Prosecco.

I wish they’d give more attention to Francicorta DOCG, which faces a similar challenge to Vino Nobile. Franciacorta is often said to be the “Champagne” of Italy. It is made using the classic method from mainly but not exclusively the traditional Chardonnay and Pinot Noir grapes . The comparison to Champagne is understandable and the wines stand up well compared to their French cousins.

But it is not always helpful to think of Franciacorta this way because if you want Champagne you want Champagne and not necessarily something else. Franciacorta needs to more clearly develop a distinctly Italian identity that positions it apart from French wines and also Prosecco. The two Franciacorta DOCG wines were tasted were delicious — and I don’t think the skilled presenter ever called them Italy’s Champagne. I know producers are working hard to build their market category because the current interest in sparkling wines presents a great opportunity.

A Grape or a Region?

One of the sessions focused on DOC Pinot Grigo delle Venezie. Pinot Grigio is one of white wine’s big success stories in the U.S. market. Pinot Grigio/Pinot Gris is the second largest selling white wine category in the U.S. market, according to Nielsen figures, far behind #1 Chardonnay but well ahead of #3 Sauvignon Blanc.

Some of the Italians I have met like to imagine that all the Pinot Grigio sold in the U.S. comes from Italy — and Italy might have dominated this category a few years ago — but now Pinot Grigio is grown just about everywhere. I made risotto a few nights ago with a nice little Pinot Grigio from Washington state. That is the problem with the “signature wine grape variety” strategy. The category may start associated with a particular place, but often the place fades and it is just about the grape and then it is anyone’s game.

Italian producers hope to stake a territorial claim to the Pinot Grigio market with DOC Pinot Grigio delle Venezie — Pinot Grigio from a specific region subject to DOC rules and regulations. The consorzio logo above is meant to establish the identity. Italy first — can you miss the green-white-red stripes? And then Venice and Venezie as symbolized by the stylized prow of a Venetian gondola. Italy, Venice, Gondolas. Get it? That’s Pinot Grigio.

It is easy to be a little skeptical about the effort to re-brand Pinot Grigio this way since Americans generally know little about DOC and DOCG designations, but in this case there is reason for cautious optimism because many of the DOC Pinot Grigio wines have big marketing and distribution muscle behind them. The list of wines that were tasted in Seattle, for example, includes DOC wines from Lumina by Ruffino (Constellation Brands), Prophecy by Cantine di Mezzacorona (Gallo), Montresor (Total Wine & More), and Cupcake (The Wine Group).

Pinot Grigio won’t stop being a grape variety that could come from anywhere, but with some effort it can also be a regional wine of Italy once again.

Italian wine makers are luckier than most. They face challenges, some of which are the product of their own success, but there is a tremendous reservoir of good will and affection for Italy and its wines. The struggle for market attention is therefore not easy but still possible. The Seattle event has inspired us to look more closely at the Italian wine mosaic and to try to appreciate a bit more its many shapes, colors, and styles.

Pocos, Locos, y Mal Unidos: The Paradox of Sardinian Wine

June 18, 2019 By Mike Veseth in Italian wine, wine, wine exports, wine markets Leave a comment

Pocos, locos y mal unidos. This description of Sardinia and its people (often wrongly attributed to Charles V) is a useful way to think about Sardinia’s wine sector and the headwinds it faces today.

Sardinian wine is a relatively small (pocos) player in Italian wine with perhaps 20,000 hectares of vines out of Italy’s vast 750,000 hectare total. The winemakers are crazy (locos), but that’s a given and not meant as an insult. I think we all agree that you’ve got to be at least a little crazy to try to make a living growing grapes or making wine.

Small (and Crazy) can be Beautiful

Being small and a little crazy is not an insurmountable disadvantage in global wine. In fact, it can be a good place to begin. Take New Zealand as an example.

New Zealand’s wine sector is big in terms of its global reach and reputation, but pocos in other ways. There are more than 35,000 hectares of vines today (data from the Oxford Companion to Wine), but that’s after a couple of decades of rapid growth. Flash back twenty years and Sardinia had more grape vines than New Zealand and produced more wine.

I think the first Kiwi producers to take their wines to international markets (people like Ernie Hunter, who I wrote about in Wine Wars) must have been more than a little nuts to think that wine from a tiny faraway island could ever make an impact. But they brought their distinctive wines first to the UK and then the world and they found a ready audience. Now New Zealand is a wine export machine with market growth every year at premium price points. Being small and crazy worked for the Kiwis.

Is Sardinian Vermentino the next Marlborough Sauvignon Blanc. Well, as I suggested last week, the wines are excellent and distinctive, too. They deserve to be better known than they are. The next New Zealand? No, that’s too big an ask if only because times have changed and that gap in the market has been filled. But there is certainly potential for Sardinia to grow.

Vigne Surrau Case Study

Sue and I learned first hand about Sardinia’s potential when we visited Vigne Surrau, an ambitious 400,000 bottle producer located just outside of Porto Cervo in northeast Sardinia.

Surrau’s first vintage was 2004-2005 and it has been part of the recent move from quantity to quality in Sardinian wine. Growth has been so fast they they are now operating in their second-generation winery and tasting facility with room to grow to perhaps 700,000 bottles in the future. Sardinia itself (60%) and the rest of Italy (20%) are the biggest markets, with 20% exported. Demand is strong and export sales are carefully allocated so that the home market can be accommodated.

Wine tourism is a significant focus at Surrau with about 12,000 visitors per year. The beautiful tasting area, which looks out over the vineyards and the mountains beyond, has room for seated tastings, with food pairing if you wish, as well space for local food and crafts and an art gallery. A small conference center provides space for corporate events. Very well designed. Nothing remotely locos about it.

Vermentino di Gallura DOCG, elegant and complex, accounts for 65% of production. Red wines, especially Cannonou but also some Cabernet Sauvignon and Syrah, fill out the line. Tasting the Branu (Vertmetino di Gallura DOCG), Sciala (Vermentino di Gallura DOCG Superiore from a different terroir than Branu) and Sciala VT (late harvest, but not a sweet wine with only 4 grams per liter of residual sugar) was a delightful introduction to the potential of Vermentino in this part of Sardinia.

Surrau highlighted the positive qualities we found in many of the best wines we tasted in Sardinia. Focus and commitment to quality on the business side. Balance, finesse, and distinction in the glass. They may be small and crazy, but there is great potential here. What could hold them back?

The Mal Unidos Syndrome

That’s where Mal Unidos comes in. Almost everyone we talked with bemoaned the lack of unity and teamwork in Sardinia. Sue and I were skeptical. Disfunctional wine sectors are not that unusual. We see them all the time in our wine travels.

No, you don’t understand, people told us. It is much worse here. It’s not just wine. It’s everything. Factions. Dialects. Everything. We have met the enemy and it is us. It is a real problem. Regional consortio organizations are weak, they say, which is unfortunate since they are one way that reputation is built and sustained, and cooperation of all sorts is limited.

Small and crazy — that’s not necessarily a problem in wine. But discord and fragmentation can be barrier to greater success. Sardinia might not be able to match New Zealand’s tremendous growth, but it has unrealized potential that it would be great to see unlocked.

The new world of quality Sardinian wine has yet to be discovered in many markets. I hope the people who complained to us about the lack of cooperation are either exaggerating the situation or will find a way to work together to solve this problem and raise both regional reputation and the quality standard even higher.

In the meantime, put Sardinia and its wines on your personal radar. You would be locos to pass them by.

VinoVip al Forte: Money, Taste, & the Future of the Italian Wine Industry

July 10, 2018 By Mike Veseth in brands, wine, wine exports, wine markets, wine price 3 Comments

What’s holding back the Italian wine industry and how can it change to be more successful in the hyper-competitive global market environment? These questions brought us to a Tuscan seaside resort last month. Read on to see what we discovered.

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vinovip1 The icons of Italian wine gather in Cortina D’Ampezzo for a few days every other summer to spend some time thinking, talking (and, inevitably, eating and drinking) in contemplation and celebration of their wines. The event, VinoVIP Cortina, has always focused on taste, wine, and the inspirations and sacrifices that winemaking entails.

What Do We Talk About?

This year the event moved to the Tuscan coast, the famous resort town of Forte dei Marmi. The focus of VinoVIP al Forte shifted, too, from taste and wine to money and wine. We always talk about taste, someone told me, now we need to discuss the business side of wine with equal passion, candor, and serious purpose.

Alessandro Torcoli, editor of Civiltà del Bere, which organizes VinoVIP, invited me to lead off the program, inspired (or maybe provoked) by my book Money, Taste, and Wine: It’s Complicated. I was honored to be on the roster, which included Angelo Gaja, Prof. Attilio Scienza, Allegra Antinori, and Piero Mastroberardino and other notables. Quite a line up!

My presentation analyzed key trends in the global wine markets and one of the points I made concerned brands. Brands are a powerful tool for wine marketing, I argued, because consumers find them so useful. It can be easier for a consumer to understand (and remember) a brand in a crowded retail setting. Trustworthy brands encourage consumers to open their wallets and pull more corks. If you approach the topic of money and wine from the consumer’s point of view, it is impossible to ignore the importance the brand.

Branded Wine and Its Discontents

But there is a risk. Branding can go too far in making wine user-friendly, I argued, citing what I have called Einstein’s Theory of Brands (Einstein said that everything should be as simple as possible, but no simpler — can you see how this could apply to wine?). Brands are back as a key wine marketing element, I said, although they are evolving along with wine buying consumers.

Italian wine features some iconic brands, including Gaja, Antinori, and Mastroberardino, of course. But the single most powerful Italian wine brand based upon volume of sales in the U.S. market is actually Riunite Lambrusco, a sweetish sparkling red wine made by a cooperative winery in Emilia Romagna and imported into the U.S. market by marketing powerhouse Banfi. It is the best-selling imported wine in U.S. history.

Brands and their power were on the minds of other speakers as well and formed one interesting theme of the conference.

Italian Wines at French Prices

gaja Angelo Gaja is famous for the high prices he asked for wines early in his career. People thought he was crazy and some, he told the audience, were even angry with him for asking French prices for his Italian wines. French wines benefited from a reputation for higher quality. Italian wines, even excellent ones like Gaja made, were thought to be in a different, lower class.

No one is shocked by Gaja prices now — he has proved his wines to be worth what he asks — but, he said, the same status upgrade cannot be said about Italian wine more generally.

Gaja stressed the importance of raising average bottle price of Italian wine exports and building stronger brands is part of that process. Cooperative wineries, he proposed as an example, should focus less on producing anonymous private label wines for foreign retailers and invest more in building their own brands so as to increase average bottle price and raise margins.

This was the first time that I have heard Angelo Gaja speak and I can report that he is a powerful orator who is not shy about stating his opinions. He presented a to-do list of things that the Italian wine industry needs to change, and quickly. Quite an experience!

Beyond “Small is Beautiful”

Piero Mastroberardino’s brief concluding presentation was much different in style from Gaja’s (much more professorial — in a good way), but no less of a challenge to the status quo. Mastroberardino’s topic was the Italian wine system — the industrial organization of the wine sector– which is made up primarily of cooperatives and small family firms. Indeed, it is not too much of an oversimplification to say that the family vineyard or cellar is the fundamental economic unit of the wine industry.

Family ownership presents a trade-off, Mastroberardino noted. As I discussed in Around the World in Eighty Wines, family wine firms have many advantages over corporate structures, which is why the wine sector generally has more family firms (some of them quite large — think Gallo) than other global industries.

But there are disadvantages, too, which was Mastroberardino’s point here. Scale can be limited and the strength of the brand affected by the fact that it is so closely associated with the founding family. In a world where scale and strong brands are important, family firm limitations sometimes get in the way. It is time, Mastroberardino said, to move beyond the “small is beautiful” idea of the Italian wine sector.

Mastroberardino called for more attention to building scale and strengthening brands to increase the competitiveness of the Italian wine sector and there was some evidence during the conference that others appreciate this point. Allegra Antinori, for example, spoke about how the Antinori family have adopted a new ownership structure in order to strengthen the firm’s long-term financial sustainability. A trust locks up ownership for a 90 year period, giving the firm stability and accumulating resources for future needs.

Theory & Practice

Sue and I spoke with Gianluca Bisol about Bisol’s partnership with Lunelli, which was initiated in 2014 in order in part to give family-owned Bisol the leverage it needed to expand forcefully into global markets. Bisol’s Prosecco and Lunelli-owned Ferrari Trento’s sparkling wines may sometimes compete with each other for shelf space, but they mainly work strategically to open market doors. It’s the sort of initiative the Mastroberardino’s analysis suggests is a necessary next step.

Gianluca expressed great satisfaction with the partnership and early indications are that the winery’s recent rebranding efforts, which stress history and terroir, are enjoying success.

The conference ended with a grand tasting at La Capannina di Franceschi, a famous disco located right on the beach. What a blast! Based on this sample of Italian wines, which featured many white and sparkling wines because of the summer seaside location, the Italian wine sector has no trouble with taste and wine. It is important that they now give more attention to money and wine and we are glad to have made a small contribution to the emerging conversation.