Global Wine Glut: The Return of Crisis Distillation

Crisis distillation is back in the news. For those unfamiliar with this wine business term, crisis distillation refers to government programs that buy surplus wine and distill it into industrial alcohol. The point isn’t to increase industrial alcohol supplies but to support prices and incomes in the wine sector by taking excess supply off the market.

Crisis distillation has a long history in the European Union. You might remember that some countries authorized crisis distillation just a few years ago during the COVID-19 pandemic. Public health restrictions hit on-trade wine very hard in some places where producers rely heavily on bar and restaurant sales (a more significant factor in Europe than here in the U.S.). The crisis was short-lived, but distillation was a significant factor while it lasted.

Distillation was a persistent feature twenty years ago, however. EU price support programs encouraged the production of low-quality wines that were poorly suited to highly competitive market conditions. Distillation programs bought the surplus wine that resulted. It was an expensive way to stabilize wine-grower income and, for a while at least, it seemed like it would go on forever, getting more and more costly each year.

It was reported at the time that Britain’s Prince (now King) Charles had his Aston Martin configured to run on a grape alcohol-rich fuel blend. Plonk power! I wonder what other uses they found for the enormous quantity of distilled wine that was produced?

The distillation policy was changing when The Wine Economist first appeared back in 2007. I have inserted a column below that was first posted on Christmas Eve of that year, which I think you might find useful to read for perspective on the current situation. The combination of supply adjustment and demand-based policy reforms did in fact address the critical issues and crisis distillation slowly disappeared from the wine business lexicon.

Distillation is back, but things are very different today. This wine glut today is caused more by stagnant and falling demand than by high supply, for example. And the quality issue is different, too. Back in the 2000s, the issue was poor quality wines that were hard to sell at any price. As you can read below, one part of the solution was an effort to eliminate these wines and raise quality and marketability. These efforts (magnified by the market premiumization trend) have been relatively successful. Now Sue and I routinely encounter excellent wines from regions that only a short while ago were better known for plonk.

What was important about the policies I discussed back in 2007 was that they addressed the causes of the problems that the EU wine industry faced. Crisis distillation today treats the impact of today’s issues in terms of surplus wine, but the causes (and therefore, I suppose, the cures) have not yet been directly addressed.

Distillation buys time. Spend it wisely. Here’s that 2007 column.

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Draining Europe’s Wine Lake

Wine Economist / December 24, 2007

Europe is afloat in a sea of bad wine and the European Union agriculture ministers agreed last week to do something about it. But is it too little and too late?

Marian Fischer Boel, the EU Agriculture Minister, proposed a number of fairly radical reforms in 2006 and these were the basis of the discussion. She wanted an immediate end to distillation subsidies and a vast program to encourage small winegrowers to pull up their vines — one million acres — replacing them with other crops or, in some cases, with more marketable grape varieties. Perhaps predictably, the policies agreed last week are much weaker than the original proposals. Distillation subsidies will be phased out over five years and as many as 400,000 acres of vines will be “grubbed up.” Four hundred thousand acres seems like a lot, but given the size of the problem is it, as Wine Spectator reported, just “a good start?”

Current EU policies are as useless as the old wine barrels shown above. At the top end of the market, national and EU policies tend to stifle innovation and prevent effective market adjustment (the counter argument is that they preserve tradition and prevent destructive commercialization). I have read any number of stories about high end European winemakers who have expanded abroad in part to escape regulations on what they can produce, where, and how they can market it.

In the mid-market, where current attention is focused, EU and national regulations seem to prevent winemakers from achieving the transparency that an increasing global market requires. It is hard enough to know what’s in a bottle of wine without the complicated rules that government European wine labeling. French wines are typically “branded” by place of origin, not grape varietal, for example. Buyers who are not confident about their French geographical knowledge and the relationship between place, grape variety and wine style, are likely to choose New World wines with more easily understood characteristics. Australian wines sell well in France partly for this reason.

At the low end of the market, EU policies designed to support farm incomes have produced the famous “wine lake.” Each year the EU spends about $2 billion to buy up unsold wines and turn them into industrial alcohol. This vast reliable market for poor quality wine keeps thousands of small scale producers in business. The distillation subsidy insulates low-end producers from market forces with the result that the vineyards remain uneconomically small, the practices favor quantity over quality, and the wine, while it may reflect local tradition, finds few buyers in the marketplace. Cheap New World wine is preferred to bad Old World plonk.

The new EU policies are designed to drain the wine lake by making the wine sector more responsive to market forces. Label laws and regulations will be reformed so that European wines can be sold by regional and grape varietal just like New World wines. The distillation subsidy will be phased out over four years, with some of the subsidy funds returned to regional groups to be used in wine marketing and promotion efforts. And up to 400,000 acres of vineyards will be included in the new “vine-pull scheme.” New plantings will be allowed over time, but they will be market-driven not subsidy-driven.

The top end of the market is unlikely to be affected very much by these policies, since by definition they already have established brands and distribution channels. New label laws and subsidy reductions will have few direct effects on these producers, although they may be able to gain indirectly as vineyard consolidation takes place and Australian-style brands grow in importance. I predict that the most visible early effect of the new rules will be expansion of European brands both at home and in export markets.

The clear gainers are the mid-market producers — the wines that sell for about $12. There is great potential profit in this part of the market, which is expanding rapidly in the New World. Freed from the constraints of tradition, European winemakers should be able to compete in this market quite well. It is, however, a hotly contested market segment. European producers will need to use their new freedom well to succeed and those who choose not to adjust may suffer as the European market realigns itself.

The real problem is at the bottom of the market. Losing the distillation subsidies will hurt many producers and I don’t know how enough about the cost-benefit of the vine-pulling schemes to comment. Pulling 400,000 acres out of wine production should help stabilize the market by reducing the annual surplus, but I don’t know if it is enough and I don’t know if the incentives provided are strong enough.

Four hundred thousand acres — how big is that? Huge if you are thinking New World — Australia had just 388,000 acres of vineyards altogether in 2003 according to my Oxford Companion. But tiny if you think Old World — and of course this is an Old World problem. Italy and France had more than 2 million acres of vines each in 2003. (The Languedoc region in the south of France has 528,000 acres by itself.) Taking 400,000 acres out of production in Europe is like removing Moldova and Switzerland from the market. The effect on the regions where the vines are grubbed up will be large, but the impact on the global market is likely to be quite small — reducing the global surplus, but not eliminating it. I don’t know if it will be enough.

Will it work? Much of the discussion that I have read focuses on the size of the vine-pull scheme — 400,000 acres versus the million acres that Marian Fischer Boel proposed two years ago. Although I think the size of the grubbing up program is important, I believe that the market-driven reforms and the elimination of distillation subsidies are more important. The 1988 vine-pull scheme took over a million acres out of production but, as we see today, didn’t eliminate the surplus because of the difficulty of selling the good wines and the incentives to keep make bad ones.

America’s Wine Regions: Surprising Michigan

Sue and I have spent the last two weeks tasting wines from two Michigan wineries, Good Harbor Vineyards and Aurora Cellars (both part of the Simpson Family Estates group). The wineries are located on the Leelanau Peninsula, a short drive from scenic Traverse City.

Michigan wines? Are you surprised? We discovered Michigan wine several years ago at an industry event called Riesling Rendezvous, organized by Ste Michelle Wines Estates, which was a regular stop on top world Riesling producer itineraries in the days before the covid pandemic.

The Riesling Belt

Riesling Rendezvous brought together the makers and their wines from all around the world and it helped teach us that here in North America, there is a northern Riesling belt that runs from Washington state (the Columbia Valley) and British Columbia (Okanagan Valley)  to Idaho (Snake River Valley), Michigan (Great Lakes), Canada’s Niagara Peninsula, and on to New York (Finger Lakes). Great Riesling wines can be found all along this northern belt, so it makes sense that great wines of other types are found there, too.

Michigan wineries always came to Riesling Rendezvous and turned skeptics into fans. Respect! Not everyone has the benefit of the Riesling Rendezvous experience, however, so the very fact of Michigan wine often comes as a surprise.

The idea that American wine comes from California is very strong and there is some logic in it. California’s nearly 5000 wineries produce about 90% of all U.S. wine. California is big in wine; there are lots of vineyards acres, wine producers, and some of the largest winery complexes in the world.

Michigan’s Surprising Wine Industry

Most of the over 6000 U.S. wineries not located in California are small producers that depend on loyal local consumers. The difference in scale means that they are often overlooked and many people, even some locals, are surprised to discover them.

That’s true with Michigan’s wine industry. According to American Wine by Jancis Robinson and Linda Murphy, Michigan’s wine history goes back to the 1600s. French explorers made wine from native grape varieties, and the settlements that followed made wine, too. Eventually, the Michigan wine industry emerged and gained steam in the mid-1800s.

Michigan wine recovered quickly from Prohibition, according to American Wine, but then pretty much collapsed. Why? Competition is the answer. Many early wines were made from Concord grapes, so winemakers had to compete with grape juice companies for grape supplies. Investment in vineyards was limited by the higher returns offered by conversion to apples and cherries. Only two wineries remained in 1970. The long book of Michigan wine history was seemingly writing its last chapter.

But the book goes on. Michigan boasts 233 wineries in 2023 according to the Wine Business Monthly, having experienced steady growth over the last ten years. Michigan ranks #9 among U.S. states in terms of winery count, wedged between North Carolina (205 wineries) and Ohio (329 wineries). Surprised by these numbers? I thought you would be!

Simpson Family Estates

The wines we sampled from Good Harbor Vineyards and Aurora Cellars have roots that go back more than 40 years,  which is a very long time in American wine. Founder Bruce Simpson aspired to make good, affordable wines in Michigan and, after studies at UC Davis, he and his wife Debbie established Good Harbor Vineyards in 1980. The operation remains in family hands today and has grown into Simpson Family Estates, which includes both Good Harbor and the Aurora Cellars wines. Harbor Hill Fruit Farms, which supplies grapes and winemaking services to the family wineries and other winemakers, too, is also family-owned and -operated.

Given our previous experience with Michigan wines, we weren’t surprised that the Dry Riesling and Gruner Veltliner wines we tasted were very good. But the quality of the sparkling wines and the Pinot Grigio caught us a bit off guard, as did the Kiwi-esque punch of the Sauvignon Blanc.

The red wines from Aurora were the real surprise. The Cabernet Franc was terrific and the Blaufrankisch was excellent, with a bit more soft grip than the Cabernet Franc and good fruit flavor, too.

Blaufrankisch (a.k.a. Lemberger) is an under-appreciated grape variety and we are glad to see it getting attention in Michigan. The grape was planted here in Washington state in the early days but is slowly disappearing as vineyards are replanted to more profitable Cabernet Sauvignon. Lemberger sells out at the tasting room, one winemaker told me, but it is hard to sell through distribution.

We were surprised to see Blaufrankisch in Michigan. But then Michigan wine is full of surprises, isn’t it?

A Wine Emissary from Planet Bonny Doon

Sue and I had an unexpected visitor recently. He said he was an emissary from another world, a place called Bonny Doon Vineyard. He came in peace, bearing two very interesting Bonny Doon wines.

Was I happy to see the visitor? It doesn’t look like it from the photo shown here (and he looks pretty serious, too), but things aren’t always what they appear at first glance.

Wine from Planet Earth

The wines that the emissary brought were very good. Le Cigare Volant is fresh and delicious, a blend of Grenache, Syrah, Cinsault, and a bit of Petite Sirah. “Red wine of California’s Central Coast, USA, Earth” it said.

Le Cigare Orange, the second wine we tasted, is mostly Grenache Blanc with ten percent each of Grenache and Orange Muscat. “Skin-contact wine of the Earth,” the label explained. Nice peach aroma with the bit of tannins that orange wine lovers look for. I think someone has written that this is an entry or gateway orange wine and that’s not a bad description. A wine to appeal to both red and white wine drinkers.

Randall Grahm founded Boony Doon Vineyard nearly forty years ago. Its original mission was to make wines like those in Burgundy, but Grahm quickly shifted focus to Rhone-style wines. The first vintage of Le Cigare Volant was released in 1986 and it has headlined for Bonny Doon line-up ever since.

Flying Cigar?

Le Cigare Volant — the flying cigar? What kind of a name is that? It is complicated, so I will explain.

Grahm is serious about wine, but playfully creative, too. Le Cigare was meant to pay homage to the wines of Chateauneuf-du-Pape. It is a little-known fact that, during the flying saucer craze in 1954, the village of Chateauneuf-du-Pape adopted a law banning alien craft (called cigares volant in French) from landing, taking off, or flying over the vineyards. The label artwork shows a spacecraft casting a beam of light on a chateau and its vineyards. Beaming aliens down? No, I’ll bet they are beaming the wines back up!

Bonny Doon makes excellent wines and is a strong, distinctive brand. When Sue and I heard Grahm talk to a group of wine writers a few years ago, he seemed almost embarrassed by his ability to successfully build brands (he is also the creator of Big House wines, Cardinal Zin, and Pacific Rim wines). But there is no reason that good wines cannot exist along with popular brands.

Tale of Two Brands

Grahm sold off the brand rights to Big House, etc., to fund his various vineyard projects and in 2019 he did the same with Bonny Doon, selling it to WarRoom Cellars. WarRoom Cellars is in the business of building brands and making the brands that it acquires (like Bonny Doon) more marketable.

Brands are very important in the wine business and I will admit that it makes me nervous when brands are bought and sold like properties on a Monopoly board (which happens quite a lot these days). Some of the biggest wine industry transactions of recent years have involved the exchange of brand intellectual property with no vineyards or production assets attached. For example, Constellation Brands paid $285 million in 2016, the The Prisoner brand.

Sometimes brand transactions work out just fine, but I am haunted by the story of Paul Masson, which I recounted in a chapter called “Martians versus Wagnerians” in my book Wine Wars II. Once California’s most expensive wine, Paul Masson’s brand was sold and sold again, eventually becoming a cheap generic jug wine before slipping off the wine market map altogether. (The brand still exists, I’m told, in the form of Paul Masson traditional and flavored brandy). These days the wine is best remembered for its sometimes accidentally ridiculous television commercials featuring a possibly sober Orson Welles.

Good News Travels Fast

In this case, the good news is that the Bonny Doon brand transition seems to have worked out very well. The signature red wine is different, but certainly in the founder’s spirit. It is a bit lighter in weight and brighter, too, but has good fruit and some complexity. Significantly, it is a good deal cheaper, resting comfortably in the wine wall’s current sweet spot of $15 to $20 ($17.99 on the winery website).

It is not the wine that Grahm made when he first created the brand, but it is not ridiculous to think it might be the wine he’d make now if he were starting up today.

So cheers to Bonny Doon and its alien emissaries for making planet Earth a better place for wine lovers.

Independence Day Flashback: Have Some Madeira?

Today is the day we raise a glass to celebrate American independence and our friends and neighbors sometimes ask what wine is appropriate for this occasion. There are many possibilities. Sparkling wines are traditional for celebrations and pair well with picnic fare. We often favor Zinfandel because America is a nation of immigrants and,  while the Zin grape is not native to the United States, it has found its home here. Or perhaps a wine made from the Norton grape, a hybrid first grown in Richmond, Virginia, about 100 years ago? Tough to choose!

Today’s special Flashback Wine Economist column makes the case for Madeira, perhaps the most American wine of them all even though it isn’t produced in the United States. Why Madeira? Read on. And happy Independence Day to all.

Have Some Madeira?

Wine Economist (November 13, 2018)

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

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

Oh, Madeira!

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

O, Madeira. How far you have fallen!

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

Live Long and Prosper

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

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

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

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

You Don’t Know What You’re Missing

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

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

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

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

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

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

Back to the Future with Dry Rosé Wine?

More than five years ago, I wrote in these pages that “dry rosés are increasing in popularity not only among open-minded wine drinkers but also among California winemakers.”

If I could write these words today they’d make me look like a pretty savvy wine economist. Dry rosé wines have experienced a boom in recent years and not everyone was convinced back in 2018 that the pink wave was real.

But I didn’t write this sentence. Mark Bittman did in an article titled “The Perfect Summer Wine?” that appeared in the August 1998 issue of Cook’s Illustrated magazine. (This issue sort of fell into our hands when Sue found it in the Little Free Library down the street. Someone in the neighborhood must be cleaning magazines out of the basement.)

Tutti Fruity?

You might be surprised to know that dry rosé was fashionable back in 1998, but actually that’s not the point that Bittman makes in this article. You see way back in 1993, Bittman’s tasting panel found lots of dry rosés that pleased them. But by 1998 things were going downhill, he writes. Too many of the wines they tasted were sweet, not dry. “Tutti fruity” one tasting note reads. “Just drier than black cherry soda, not unlike it,” says another.

That’s not to say that Bittman’s team couldn’t find delicioous dry rosés for the 1998 tasting. The thing that struck them was that most of them came from France and only a few from California. Three out of four of the “not recommended” wines were California products. Not exactly a Judgement of Paris result.

All but one of the “recommended” and “highly recommended” wines came from France. The sole California selection? Heitz Cellars Napa Valley Grignolino Rosé!

The Curse of the White Zinfandel?

I wonder if this was a “white Zin” effect? There was a time when sweetish pink California wines were very popular and the leader of the pack was White Zinfandel. Do you suppose that the popularity of that style of wine influenced Calfifornia rosé wines generally the way that the success of Kendall-Jackson Private Reserve Chandronnay influenced a lot of California Chardonnay producers?

The sweet/dry cleavage isn’t the only one that Bittman’s article highlights. There is also pale and dark to consider.

The top rosé wine, according to the tasting panel, was the same in both 1993 and 1998: Chateau de Trinquevedel Tavel. Younger readers may wonder in what part of Provence is Tavel found? This is a trick question because Tavel is in the Rhone valley and the wines are dark and full-bodied. I have always thought of them, in my simplistic way, as pink wines for red wine drinkers. Pale Provencal wines (like the #2 wine in 1998: Domaine de la Gautiere en Provence) are, by contast, pinks that appeal a bit more to those who like white wine.

Delightful and Affordable

The wines were not especially cheap in 1998: $15 for the Tavel and $8 for Provence. That is much more than Beringer White Zin in those days, but worth every penny, Bittman assures us, and I am sure he was right. The most expensive wine reviewed cost $22 in 1998 prices, which was a lot for a rosé back then. But what a wine: Domaine Tempier Bandol 1996.

Dry rosé is back with the French in the vanguard. But darker rosés like the Tavel are hard to find (Tavel wines are very hard in my local market). Everyone tells me that consumers strongly prefer pale pink to dark pink, even though the experts say that color and hue don’t determine flavor and aroma. If the conventional wisdom is correct in this case, then I feel a certain loss. Those Tavel rosés and wines like them deserve more attention.

Mark Bittman concluded his 1998 Cook’s Illustrated article saying

I wish I could write, as I did in 1993, that this was a “group of delightful, affordable wines.” But there are some delightful and affordable wines in the group; you just have to be a little more picky than you did a few years ago.

I wonder what he’d write today? Certainly there are many more rosé wines and a lot of them are surely delightful (how affordable they are is a matter of judgement I leave to you, but the majority seem affordable by the standards of the 1998 tasting). You probably still need to be a bit picky, however, to find what you want.

Wine Book Review: History on a Plate (and in a Glass?)

Andreas Viestad, Dinner in Rome: A History of the World in One Meal. Reaktion Books, 2022.

All roads lead to Rome, they say, so the idea of a history of the world centered in Rome is not ridiculous. And, for food writer and activist Andreas Viestad, all pathways in Rome lead to his favorite restaurant, La Carbonara, so it is the only logical place to begin.

When in Rome …

Viestad (a favorite in the Wine Economist household for his television series New Scandinavian Cooking), takes us through a meal at La Carbonara, reflecting upon the experience as the courses follow their traditional sequence.

Viestad’s stories are not as intentionally global as the “history of the world in one meal” subtitle might lead you to expect (note that this is “a” history, not “the” history). Instead he talks mainly about Rome and Romans, and then Italy and Italians, leaving it mainly to the reader to connect dots to the world-wide implications and insights.  It’s fun! You learn a lot reading this book. And you get hungry, too.

The chapters are organized around the familiar elements of the Italy meal. Bread, antipasto, oil, and salt. Pasta, pepper, meat, fire, and lemon. And wine, of course, because this is dinner and this is Italy, so of course there is wine.

The best thing I can imagine would be to share a table at La Carbonara with Viestad and work through the  phases of the meal with him, listening to the stories he tells. (There would be room for a guest — in the book he dines alone!) And then, stuffed with pleasure, we would take the stroll around Rome he describes in the final chapter, ending with a soothing/shocking scoop of intense lemon sorbetto (lemons being the last topic discussed).

Since this first-person experience is unlikely to take place, I guess the second best thing is to take up the opportunity to read this creative and interesting book.

The Problem with Wine

But there’s a problem. Taken as a food book or a history book or a cultural guide for anyone who loves Italy or Rome, it is hard to deny Dinner in Rome‘s charm. But from a wine perspective it is hard not to be disappointed.

This may be because, as I read other parts of the book, I was mentally writing the chapter I hoped Viestad would write about wine. That chapter, I thought, might mirror in some ways the chapter on pasta, which invokes the Italian idea of “the civilization of the table” that Viestad suggests might easily be confused with the idea of civilization itself.

Is there a civilization of the glass that we might raise up along with the civilization of the table? Some think so, I believe, and there is even an Italian journal devoted to the idea. It is called Civilta del Bere (the civilization of drinking). So, you see, I was thinking about a chapter that might stress the ways that wine brings people together and both shapes and reflects relationships, both at the table and in other ways.

While the chapter that Viestad writes addresses many aspects of wine, his main point is that wine is alcohol and the point of alcohol is inebriation much of the time. The idea that wine is just the local alcohol makes me sad, since I think wine has much more to offer than that, but it is a problem since there are many who have this view.  My latest book Wine Wars II finishes with a section on “Wine’s Triple Crisis,” which examines the wine = alcohol syndrome and concludes that it is a threat to the future of wine as we know it. If wine is just alcohol, who needs it? There are cheaper ways to get numb!

Civilization of the Glass

Would it be possible to write a history of the world that framed wine and the civilization of the glass in a different way? Yes, I know it is possible because it has already been done. Economist editor Tom Standage’s 2005 book A History of the World in 6 Glasses uses beer, wine, spirits, coffee, tea, and Coca-Cola to trace an outline of global history.

It is interesting that Standage and Viestad focus on the same places and periods when it comes to wine: ancient Greece and Rome. But Standage tells very different stories. The Greek symposium, which in Viestad is all about getting drunk, is for Standage all about philosophy and, if the alcoholic temptation of drink is there (and it is), it is a passion to be resisted and controlled — a process that we might call civilization.

As Greek trade took wine throughout the Mediterranean, Greek culture and civilization tagged along. The civilization of wine and civilization — hard to tell where one ends and the other begins.

Wine in Rome, in Standage’s telling, has many layers. Taste, class, power, and empire all appear. If wine were just its alcoholic component it would not have been so important. I guess I stand with Standage in my thinking about the civilization of the glass and I feel a little bit sorry for Viestad that he doesn’t find more interesting stories in his half-full glass.

Highly Recommended

I wonder — would it be possible to write a book that tried to tell a history of the world in one wineglass the way that Viestad has done with one meal? Yes, I think it might work, although you’d need to break things down a bit so that the grapes, glass, bottle, cork, and the forces that spread them around the world and then brought them all back together wineglass could tell their stories.

But deconstructing your glass of wine wouldn’t be enough, as Viestad demonstrates with his Roman dinner. You also have to consider the whole and its significance. The civilizations of the table … and the glass.

Dinner in Rome by Andreas Viestad is highly recommended. A fine addition to your food and wine bookshelf.

Rioja to Walla Walla: Celebrating Tempranillo Day

There are a lot of holidays that are centered around wine. The one that we most often celebrate here at Wine Economist world headquarters is Open That Bottle Night — the excuse to open special bottles for no particular reason other than to enjoy them. It comes around every year on the last Saturday in February, although you really don’t need to wait if you don’t want to.

This year we are adding Tempranillo Day to our holiday list. It’s coming right up — Thursday, November 10, 2022 — so get your corkscrews out and ready to go!

Tempranillo World on the Rise

Tempranillo is most closely associate with Spain and its famouos Rioja wines, of course, but it has become a global phenomenon according to the 2022 edition of Which Winegrape Varieties are Grown Where? by Kym Anderson and Signe Nelgen.   Tempranillo was the grape variety with largest expanded plantings during the 2000 to 2016 period of their study (see table above taken from the Anderson-Nelgen report).

The new Tempranillo plantings are concentrated in Spain, where it has become even more important than in previous years as winegrowers have upgraded their vineyards, but also Portugal and Argentina.  Australia, the United States, Chile, and even France have seen significant new plantings of this popular grape variety.

Tempranillo #1 — ahead of Cabernet, Syrah, and Sauvignon Blanc in the new-planting league table. Incredible. But maybe it really shouldn’t be a surprise. Tempranillo is a very versatile wine grape that can take on a number of guises depending upon where it is grown and how the wine is made.

New World Tempranillo

Tempranillo has a history in California, according to the standard reference, Wine Grapes. It was planted in the Central Valley alongside (and sometimes inter-mingled with) heat loving Zinfandel. Artesa Winery (owned by Spain’s famous Raventós Codorníu family) has recently planted Tempranillo vines in its higher-elevation estate vineyard. Sue and I are looking forward to tasting this wine when it is released.

Tempranillo gets a lot of attention here in the Pacific Northwest. Walla Walla’s cult winemaker Cayuse Vineyards has made a Tempranillo called Impulsivo since 2002 and it gets consistently rave reviews. Critic Jeb Dunnock says of the 2019 vintage that “You’re not going to find a better Tempranillo in the US, and it will stand toe to toe with the best out there,” by which I think he invites comparison with the best of Spain.  That’s quite a challenge.

The Cayuse team also makes a remarkably delicious and well-balanced Tempranillo for their No Girls label, which Sue declared to be even better than  the Impulsivo at this stage of development when we tasted them both. The Impulsivo was very good, she said, but the No Girls was great — very memorable.

There are several others you will find in the Walla Walla, many making good use of grapes from The Rocks District of Milton-Freewater. One that we found particularly interesting on our last visit was The Walls winery’s Wonderful Nightmare.

Oregon’s Other Signature Grape?

If you are telling the story of premium Tempranillo in America, a good place to start is about 40 years ago when Earl Jones began his quest to make quality Tempranillo on U.S. soil. He considered Washington and Idaho but was discouraged by the (very real) possibility of vine-killing freezing temperatures.  Jones’s path ended in an unexpected place: south-west Oregon’s Umpqua Valley and his Abacela Winery.

Abacela’s success with Spanish wine grape varieties clearly demonstrates the folly of the idea that a state or region must be defined by a particular signature grape. Oregon may be Pinot Noir to many wine enthusiasts, but that’s far from the whole story. Taste the Abacela wines and you will know what I mean.

And then there is Idaho Tempranillo. If you visit Boise, Idaho you will probably be directed to the Basque Block, a downtown area that honors the state’s active Basque community (food tip: Bar Gernika for the Solomo sandwich). Maybe that Iberian connection is one reason Tempranillo was planted some years ago in the Skyline vineyard and several wineries make a Tempranillo wine today. Look for award-winning Cinder Tempranillo and for  Fujishin Family Cellars Tempranillo, too, both from the Snake River Valley AVA.

The Tempranillo boom extends to Texas, according to Wine Grapes, and also includes regions Canada, Mexico, New Zealand, Switzerland, Turkey, and Malta.  Winegrowers and wine-drinkers around the world can’t seem to resist it. Tempranillo is one of global wine’s success stories, so it is worth pulling a cork on Thursday and celebrating Tempranillo Day!

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Thanks to the crew at Bionic Wines for samples of the Cayuse and No Girls Tempranillo wines. Special thanks to Jim Thomssen for information about Tempranillo in Idaho.

The Judgment of Paris and Napa Valley’s Road Not Taken

A journalist recently asked me to comment on the impact of the famous 1976 “Judgment of Paris” tasting of California and French wines. The California wines were very competitive, according to the scores given by the panel of French judges, and wines from the Napa Valley actually topped both the Cabernet and Chardonnay lists. Amazing.

Time magazine reporter George M. Taber was the only journalist in attendance and his exclusive story about the unexpected American victory was a shot heard round the world. His 2005 book, Judgment of Paris is worth reading and even re-reading today.

What if … ?

Would Napa Valley have grown and developed if the Judgment of Paris had not taken place? Well, yes, I answered, there was already a good deal of momentum stimulated by, among other things, the successful opening in 1966 of the Robert Mondavi Winery, the first major new winery in the valley since Prohibition.

In fact, local residents were already concerned about the masses of wine tourists clogging local roads and highways and over-whelming winery facilities back in 1972 when a KPIX Eyewitness News reporter paid a visit to see what was happening. Click here or on the image below to watch the vintage video report.

And there was already international attention, too. Domaine Chandon, the Yountville outpost of the famous French Champagne house Môet Chandon, opened in 1973, three years before the famous Paris tasting.

On the Road Again

So the Napa Valley was already on the road to big things even before the Paris tasting. But just about everyone agrees that the international recognition changed things.

It changed things for Napa and for California, but the impact didn’t stop there. Towards the end of his book, George Taber takes a bit of a global tour, showing us how the world of wine broadened as the result of a number of forces including, of course, the new perspective on New World wine that the 1976 tasting provoked.

Second Thoughts?

Revisiting the Napa Valley years after the Paris tasting, to gather insights for his 2005 book, Taber could see the result of the intense focus that his astute reporting helped create. There was growth, for sure, and lots of new investment, both domestic and by a long list of international wine luminaries including, of course, the Rothschilds who partnered with Robert Mondavi in 1978, just two years after the Judgment, to build Opus One.

Taber was concerned about how the boom was unfolding. Enormous wealth, vanity vineyards, trophy wines. “The Napa Valley unfortunately became another proof of the maxim that nothing succeeds like excess.” And a good indicator of excess, he proposed, was the price of vineyard land. Warren Winiarski paid about $2000 per acre in 1970 for the first Stag’s Leap vineyard, Taber reported.  In 1999 the owner of Far Niente winery paid $100,000 an acre for a 42-acres vineyard, which seemed like a lot. Francis Ford Coppola raised the stakes just a few years later, paying $300,000 an acre, a jaw-dropping price at the time.

Now, of course, $300,000 an acre for Napa Valley vineyards is not noteworthy or exceptional. $300,000 to $500,000 per vineyard acre (adjusting for the value of any production or housing assets) seems to be the norm, with some particular parcels going for even more.  The excess that Taber saw 20 years ago has not diminished.

Money, Taste, and Wine

Naturally this is reflected in the wine. Not all of it, of course, but it is easy to see a pattern. The focus in Napa is increasingly on its signature grape variety, Cabernet Sauvignon. I am sure this is about taste — the best Napa Cabs I’ve tried are really good — but it is also about money, I think.

Cabernet is the grape of Bordeaux, too, and some people are happy to pay much more for Cabernet than they would for Zinfandel, which was once widely grown in the valley but now not-so-much. Sky-high land prices require high grape prices which mean high bottle prices for the wine. King Cabernet is the surest bet, many believe, and so it increasingly carpets the valley floor.

Many of the wines are really distinctive — Sue and I have tasted some real stunners! — but some of them taste the same to my amateur palate. I call them Napa Valley Red Wine. Maybe this is true of all wine regions, even the great ones? In Napa they often sell for more than $100 a bottle and seem to satisfy the thirst of buyers looking for the taste of Napa.

They Think I’m Bragging

I am not the only one who is concerned about how the wines of Napa Valley have changed and how the flood of tourist dollars and investor wealth has led to excess. But whenever I bemoan certain aspects of the Napa wine industry environment to international audiences, they think that I am just bragging. All those tourists and fancy restaurants! All the celebrities and trophy wines! Such economic success and pure opulence!

Napa Valley is a dream to international wine visitors, and for foreign winery owners who long for their own Napa moment, their own Judgment of Paris. Who can blame them?

But what if the Judgment never happened? If you know the story, you can appreciate that it could easily not have taken place (of the results could have turned out differently).  Napa Valley would still have grown the thrived, I think, but it would be different today. What might it look like? Come back next week to see what might have been … and is.

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Thanks to Tony Correia for his help nailing down vineyard valuations. Thanks to Silicon Valley Bank’s Rob McMillan for his help locating the KPIX video, which was originally featured in a very memorable post on Rob’s blog.

Lessons from Catena & the Argentina Wine Miracle

The press release begins this way:

MENDOZA, Argentina – February 8, 2022 – Dr. Nicolás Catena Zapata of Catena Zapata winery received the Lifetime Achievement Award at the 22nd Annual Wine Enthusiast Wine Star Awards held last night at the Eden Roc Hotel in Miami. This prestigious industry event recognizes individuals and companies for their exceptional contributions to the success of the wine and beverage alcohol industry.

Dr. Catena’s life in wine is indeed worth celebrating. He was a leading protagonist in what I call the Argentina wine miracle. An economist by training, Dr. Catena was a visiting professor at UC Berkeley in the early 1980s when he was inspired by what he saw happening in California. These were the exciting days that followed the 1976 Judgement of Paris, so there was energy and confidence in the air.

California Lessons in Argentina

Catena took this vision back to Argentina, where he exchanged academic tweeds for vineyard and winery clothes. The family firm, Bodega Catena Zapata, and Argentina’s wine industry in general, faced a dire crisis.

Sue and I visited the Catena Zapa “Pyramid” winery a few years ago and, because I am an economist like Dr. Catena, we were ushered into his personal library. I recognized many of the books because they were the same ones that I was studying in the 1970s and 1980s, when stagflation was a global problem, and the debt crisis was on everyone’s minds.

These were more than academic issues for the wine business in Argentina at the time. Having evolved in the “old world” style to make inexpensive commodity wine for the domestic market, Argentina wineries were caught in a squeeze when inflation pumped up costs at the same time that domestic recession caused demand to slump. Could the surplus wine be diverted to export? Not likely, because the quality of much of the wine was below international standards. Argentina’s economic crisis was a wine crisis, too.

That Argentina wine found the energy and confidence to turn the corner, to make wines of constantly rising quality in the face of daunting headwinds, is noteworthy indeed and Dr. Catena more than deserves his lifetime achievement award for his role in making Argentina a world-class wine producing nation. A miracle? I don’t think it is wrong to apply this term to Argentina’s dramatic transformation.

I think it is important to keep these past achievements in our minds today because the challenges that wine faces, while different from the past, are not so different that important lessons cannot be gleaned. History may not repeat itself but sometimes, as Mark Twain observed, it rhymes.

Dividends from the Argentina Wine Miracle

Argentina is experiencing economic crisis again today, overwhelmed by external debt and internal inflation. Perhaps the single best indicator of the depth of the crisis is this graph of the Argentina peso against the US dollar for the decade 2011 to 2021. Fewer than 5 pesos were needed to purchase a dollar in 2011. The rate was about 15 pesos per dollar when we visited five years later in 2016 — that’s a very substantial decrease in the currency’s value in such a short period of time.

But the exchange rate today is much worse — it takes more than 100 pesos to buy a dollar now. And that’s the official exchange rate. I’m guessing that the peso is much cheaper on the unofficial market. This is what an (official) inflation rate of over 50% a year (even higher than inflation in Turkey!) will do.

Although Argentina’s economy is bouncing back from its covid-induced decline, domestic economic conditions are very challenging — not as bad as in the 1980s perhaps, but difficult indeed.  The uncertainty about what policies will be result from continuing debt negotiations with the IMF cloud the horizon. Argentina wine is not immune to these problems, but it is much better positioned today to ride out the storm. Exports were up in 2021. The miracle continues to pay dividends.

Lessons for the U.S. and Beyond

But the lessons don’t end there. I think it is important for wine business leaders in the United States and elsewhere to study Argentina’s wine history and remember that sometimes it is necessary to radically re-think arrangements to adapt to changing circumstances. “They say that time changes things,” according to one of my favorite maxims, “but sometimes you have to change them yourself.”

In the US, for example, inflation has returned as an economic concern and, for the wine industry, the fact of stagnant demand cannot be ignored. There is no debt crisis at present, but with gross debt levels at record highs and rising interest rates on the horizon, it is foolish to think that cracks in debt markets will not eventually appear. Small increases in interest rates can translate into trillions of dollars of additional interest obligation very quickly with so much public and private debt in play at high levels of risk.

Foreign debt is especially vulnerable because so much of it is denominated in dollars and the dollar is likely to appreciate as U.S. interest rates rise. That’s double jeopardy.

For the wine industry, stagnant demand is a problem that is on the minds of many, just as it was in Argentina four decades ago. The Argentina miracle was to shift from low- to high-quality to escape a race-to-the-bottom scenario. For the U.S., the challenge may well be to produce good quality but more affordable wines to appeal to potential consumers who are put off by wine’s relatively high price compared with other beverages.

I note without comment that Wall Street Journal wine columnist Lettie Teague’s recent column on good $10 wines did not include any U.S. product recommendation. “Sadly,” Teague writes, “I couldn’t find any wines made in the U.S. that fit all my criteria.” That’s pretty much the flip side of Argentina back in the day.

I believe in miracles and in wine’s ability to transform itself without losing its soul. And so I offer a toast to Dr. Nicolás Catena Zapata, the economics professor who became a transformational winemaker and whose miracle offers lessons that are relevant today.

Scratching the Surface of Sicilian Wine

I was intrigued when we were asked if we’d like to sample wines from a Sicilian cooperative winery. The history of Sicily’s wine industry — and the role of cooperatives within it — is a roller-coaster tale and such sagas in wine do not always have happy endings. I was thirsty to learn more about the situation today.

I learned about the history of Sicily’s wine sector from The World of Sicilian Wine by Bill Nesto MW and Frances Di Savio (see the Wine Economist review here). Wine in Sicily has been buffeted by a combination of shifts in the external markets and changing domestic incentives. It is no wonder that cooperatives arose to help growers navigate the ups and downs and gain a measure of control over their own destinies.  Cooperatives spring up in times of crisis, but it is their ability to adapt when conditions change that is most important.

Incentives Matter

Sometimes the economic incentives the cooperatives and other wine actors faced favored quality, but all too often quantity was the dominant strategy. This was particularly true during the years when EU wine policy unintentionally encouraged over-production of low-quality wines with no obvious market potential. These unsalable wines, the source of the famous EU “wine lake,” were bought up and distilled into industrial alcohol, a process that was not sustainable in economic, political, or environmental terms.

The wine lake days are gone — EU incentives now favor market-driven wine production — and the wines have changed faster than their reputations in many cases. Not all wineries have raised their game, however, and that inconsistency is a headwind.

The wines we sampled were from the Cantine Ermes cooperative, which was founded in 1998 in the Belice Valley in northwest Sicily. The cooperative is very large with 2373 members farming more than 12,000 hectares and operating 11 winemaking facilities.  In total Cantine Ermes produces 11.5 million bottles annually, which are sold in 29 countries around the world. Does this surprise you? Cooperatives are important in Italian wine, more important than most people realize.

Beyond Low-Hanging Fruit

One criticism I have heard of many Italian cooperatives is that they cut their own throats by focusing too much on bulk wine and private label products — they take this low-hanging fruit and fail to build the brands that might yield higher margins that would improve their economic sustainability.

Some of the deep dark red wine made in Sicily, for example, is sold off to be blended with lighter Italian reds to give the result more body, color, and alcohol — a practice that has been going on for a long time. Cantine Ermes gives attention to several brands, however, including the Vento di Mare wines that we sampled.

Vento di Mare means sea winds and so it was inevitable that we would ask our friends R and M to sample the wines with us. Their visit to Sicily was punctuated by gale force sea winds that nearly blew them off the island and caused sea foam to pile up on the shoreline like drifts of snow.

The three wines we tasted were screwcap-topped bottles of Grillo DOC, Nerello Mascalese IGT, and Moscato Frizzante that retail for about $12 here in the US — right about the center of the retail wine wall in today’s market.  The Grillo had nice varietal flavor and good balance. It seemed very versatile and would pair with many dishes as well as on its own. It was probably our favorite wine.

The red Nerello Mascalese was more intense and called out for a bold food pairing. Nerello Mascalese is the most-planted red winegrape in Sicilty according to my sources, and it was easy to see how it could be the foundation of a number of interesting blends as well as a single-variety wine.

The Moscato was fizzy and slightly sweet. Just 10.5% abv, the wine has a secondary fermentation for two months in an autoclave and then ages another two months on its lees. Aromatic (think orange blossoms) and nicely balanced. Like the Grillo it would work in a number of situations. Very pleasant indeed.

Sicilian Wine Ambassadors

We were impressed with the Vento di Mare wines and a bit surprised at the affordable entry-level price point. Other Cantine Ermes brands probe the higher reaches of the wine wall. I hope the attractive packaging and price point encourage consumers to give these wines a try (and that some restaurants see the potential for wine-by-the-glass sales). These wines are good ambassadors for Sicily and its cooperative wineries.

Since we aren’t able to travel to explore the wine world these days as we did in pre-pandemic times, we find it useful to focus on invitations like the one we received from Cantina Ermes. Clearly we have just scratched the surface of the wines of Sicily and the progress of Sicilian cooperatives, but we are encouraged, nonetheless. These are good wines that chart a path out of Sicily’s quantity-driven past towards a more sustainable future.