The Cabernet Boom and Its Discontents

Our recent trip to the Napa Valley provokes two columns: this one about the Cabernet Sauvignon boom and next’s week’s about Zinfandel’s uncertain future.

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What winegrape variety comes to mind when I say “Napa Valley …”? There are lots of possibilities. Chardonnay. Merlot. Sauvignon Blanc, of course! Hey, Larkmead makes a tasty Tocai Friuliano.

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But I’ll bet that your “fill in the blank” answer was Cabernet Sauvignon and there are several good reasons for this. Cabernet is a noble grape and many of the world’s great wines are made from it or with it. American consumers are in love with this winegrape variety. Cabernet Sauvignon has recently overtaken Chardonnay as America’s #1 favorite.

Cabernet is #1

According to recent Nielsen data taken from the August 2018 issue of Wine Business Monthly, sales of Cab wines totaled more than $201 million in the most recent 4-week period, up 3.9% from the previous year. That compares with $190 million and 0.5% growth for Chardonnay, which has for years topped the league table.  Next in line but far behind, is Pinot Gris/Grigio ($96 million / 1.3% growth) and Pinot Noir ($82 million / 2.6%). The fastest-growing category is Rosé, as you might have guessed, with 67% growth on a relatively small $22 million sales base.

Consumers love Cabernet Sauvignon and growers love it, too, because they see it as a potential solution to the their financial squeeze. The costs of land, labor, equipment, and supplies keep rising, but the prices of many grape varieties have been stagnant, putting pressure on profits and, in some cases, generating rivers of red ink.

The Cabernet grape price premium can be substantial according to the 2017 California Grape Crush Report. Cabernet grapes fetched $700 per ton on average in Lodi, for example, compared with $552 for Merlot and Chardonnay. A ton of Cabernet sold for $2209 on average in Mendocino county, $2352 in Lake Country, and about $3000 in Sonoma County.

Premium Prices

Napa county topped the list with an average Cab price of $7,421 per ton. That average translates into a $70+ bottle price using the one-percent rule of thumb. And that’s the average. The very best Napa Cab grapes from exceptional sites sold for $10,000 per ton and more. Lesser Cab grapes sold for less, of course, but still generally for more than other grape varieties. Cab Rules.

And it’s not just a California thing. Cabernet is now the most-planted winegrape variety in Washington state, too, with 62,200 tons harvested in 2017 compated with #2 Chardonnay’s 39,300 tons.  The overall average price of Washington winegrapes was $1200 per ton, with Cabernet selling at a significant premium at $1500-$1600 per ton.

No wonder more and more Cabernet is being planted wherever it might possibly grow successfully. Jeff Bitter, recently appointed President of Allied Grape Growers, presented the results of the 2017 California Nursery Report at the Unified Wine & Grape Symposium meetings in January. Bottom line: Cabernet is big and getting bigger.

The Nursery Report provides insights about what grape varieties are being planted or grafted, which foretells shifts in winegrape production a few years from now when the vines are productive. The 2017 report showed that 72% of new vines were red varieties with only 28% white. Cabernet vines accounted for an incredible 37.4% of all new vines followed by 19.5% for Pinot Noir and 16.7% for Chardonnay.

Cab Pipeline is Full

If you combine Cabernet with other varieties that are often blended with it (such as Merlot, Malbec, Cabernet Franc, and Petit Verdot), they account for over 42 percent of all new California vines. I am not sure what the composition is of the vines they may have replaced, but I suspect the disproportionate emphasis on Cab and Cab blending grapes represents a significant net increase in future production.

Cabernet’s dominance is noteworthy, but the upward trend in Cab plantings is part of the long term trend that Benjamin Lewin MW described in his 2013 book Claret & Cabs: The Story of Cabernet Sauvignon. Zinfandel, not Cabernet, was the most-planted winegrape variety in the Napa Valley in the decades following Prohibition.

Zin was thought to  make the best Claret, according to Lewin, which of course is interesting because Claret is the name the British gave to Cab- and Merlot-based Bordeaux wines. Ridge made a “Claret”  in 1981, for example, from Zinfandel, Petite Sirah and Carignan and I’ll bet it was delicious!claret

Cabernet Sauvignon was a minor player on Napa’s wine scene, Lewin notes, although it made some historic wines including the great Beringer Cabs of the 1930s and the Beaulieu Georges de Latour Private Reserve wines that André Tchelistcheff made between 1938 and 1973.

The Napa Cab boom really picked up speed in the 1970s as new quality-driven wineries (think Robert Mondavi) focused on Cabernet. The Judgement of Paris in 1976 put Napa Cab firmly on the wine world’s radar.

No wonder new investment flooded into Napa Valley and Cabernet plantings expanded rapidly, both in Napa and California generally. Now the steady rise has accelerated, taking on some boom-time characteristics. The cycle of higher Cab prices, higher vineyard valuations, and increased Cabernet plantings continues.

Stein’s Law

Cycles and booms are a common characteristic of agricultural and financial markets, both of which I have studied. There are two things I have learned about the booms. First, they are driven by internal logic that seems bullet-proof from inside the cycle.  People (like me) who try to call turns often end up looking like Chicken Little fools. So don’t expect me to forecast a Cabernet bust!

The other thing I have learned is that Stein’s Law always applies in the long run. Named for the famous economist Herb Stein, Stein’s Law is says that if something cannot go on forever … it will end. And I think that Cabernet prices cannot go on going up forever (especially with new plantings on the rise) any more than housing prices could defy gravity forever a dozen years ago, no matter how how much rising prices might seem baked in the cake at any particular moment.

That doesn’t mean that the boom must inevitably be followed by a bust — there are many possible adjustment patterns as Kym Anderson’s analysis of Australia’s winegrape cycles shows. In the meantime, Cabernet is crowding out other grape varieties, including those Zinfandel vines that were once the pride of Napa Valley winemakers. That’s where we are going in the next column.

Sue and I came to the Napa Valley with Zinfandel on our minds. Circle back next week to find out what we learned.

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The Boom Varietal image above comes from a 2011 Sky Pinnick documentary of the same name about Malbec, which is sort of the Cabernet Sauvignon of Argentina. I was pleased to be part of the cast for this award-winning film. The film talks about the rise of Malbec in Argentina and the understandable concern that the boom could go bust (Argentina has a history of boom and bust).

 

The American Wine Industry’s Achilles Heel: Labor

lodiI tell my friends that the wine business is a people business and it is really true. Relationships matter a lot in wine. One of the reasons that Sue and I so enjoy our work is the opportunity to meet and get to know so many wonderful people.

People are the wine industry’s strength, but they are also its Achilles heel and finding ways to adapt to a world with changing labor market conditions is perhaps wine’s greatest current challenge. We saw several aspects of the evolving labor crisis during a recent visit to the Napa Valley where I spoke at the California Association of Winegrape Growers’ (CAWG) summer conference.

Trouble in the Vineyards

We talked with a number of winegrowers who were understandably focused on their vineyards — how to get the hard work of winegrape farming done and the crop harvested efficiently in the current farm labor environment. Migrant labor policies are the main issue here and the impacts extend beyond winegrapes to virtually all California agriculture.

Farm labor generally means migrant labor, including a substantial proportion of undocumented workers. Current federal policy is decided unfavorable to the needs of farm employers and the progress is very slow to craft useful reforms.

Large-scale grape farming depends upon these workers, which is very risky because their work status and the policies that affect them are so uncertain. Mechanization — mechanical harvesting and also increasingly mechanical pruning — is the most direct response, which reduces labor uncertainty exposure even if it doesn’t eliminate the problem.

Matt Parker, the President of Silverado Investment Management Group, which farms 20,000 acres, told the CAWG audience about the strong mechanization dynamic driven by cost, uncertainty, and technical change. Mechanically-harvested grapes can be as good as hand-harvest grapes and are sometimes even better because an entire vineyard can be harvested quickly (and sometimes at night as in the photo above) with machines, whereas hand-harvest may take many days and grape quality can deteriorate.

Everyone we spoke with wanted to see the migrant worker situation resolved so that the cloud of uncertainty that hangs over their businesses and the lives of the workers might be lifted. But I didn’t hear many optimistic voices. Stay tuned.

Beyond the Vineyards

Harvest and vineyard workers are not the only labor market issue we found in Napa. A friend with talked with runs a business that is a major supplier of packaging products to the wine industry, with a large warehouse and light manufacturing facility south of the city. Labor was on his mind as he showed us around his operation.

Labor constraints limited the efficiency of the business, which was running one shift instead of the two or three that it could handle. Rising wages were a concern, of course, but availability was a bigger long term issue. Housing shortages and cost, transportation bottlenecks, and immigration policy all contributed to the uncertain availability of workers.

His solution was automation and his company is making major technology investments both to increase production flexibility and efficiency and to reduce exposure to labor cost and availability risk.

Truckloads of Trouble

One of the CAWG conference’s most interesting speakers was Yvonne Sams of G3 Trucking, a company that many vineyards and wineries rely upon to get grapes to the cellar quickly and at affordable cost during harvest.

“Do the math,” people say, and here is the stunning winegrape trucking math. California produces about 4 million tons of grapes in a typical year (if there is such a thing). That is equivalent to 170,000 truck loads of grapes over the harvest season, according to Sams, with about 2000 truck loads on peak harvest days. The typical load travels about 40 miles. That is a lot of trucks, highway miles, and driver shifts.

Everything about this process is closely monitored and some elements, such as driver cab-time and break periods, is tightly regulated. Driver regulation is about to get more strict, with the result that each driver will be able to manage fewer loads than in the past. Thus the current driver shortage will likely increase. Sams reported that one trucking company now advertises on television specifically targeting women, who are under-represented in the industry, in the hopes of expanding the potential driver pool.

What’s the solution? No one wants to see their grapes rotting in bins waiting for a truck and driver to appear! Sams reported a number of initiatives. More trailers, for example, could increase efficiency by reducing the time that drivers spend waiting to load and unload. Ideally the truck and driver would appear just as the trailer is filled and then drop it off at the other end, picking up a new load while the trailed waits to be unloaded.

We also heard the basic outline of what you might think of as an Uber for truckers, which would allow truckers with available time to more efficiently match up with waiting loads.

Finally there is Elon Musk’s favorite strategy — autonomous trucks (Musk’s would be electric, of course) that need no driver but do require pretty sophisticated software and, as we heard from a representative of Verizon, would benefit by the roll-out of 5G cellular systems.

Napa at the Forefront

Many U.S. industries are struggling to cope with labor issues today. Agriculture, including wine grapes, struggles a bit more because of the traditional labor-intensive model and the relatively short half-life of freshly-harvested goods compared with manufactured products.

Napa, because of its high housing costs and transportation bottlenecks, is particularly affected. Napa’s wealth insulates it a bit, I suppose, but also provides resources for technological labor-replacing systems. As these case studies show, there is no escaping the wine industry labor crisis because it is not one problem, but many, that all negatively impact production, cost, and profitability.

As I wrote in a 2017 column on vineyard labor issues

Are the machines coming to a vineyard near  you? No, they are probably  already there and, as vineyards — even those in iconic regions — are replanted or renewed, you can be sure that one factor that will be considered is the potential to maximize technological compatibility.

Hand work in the vineyards is not going to disappear and many wineries will continue to rely upon  their teams of highly-skilled vineyard workers for years to come. But what we are seeing is that the business model associated with vineyard labor is changing rapidly. Technology, economics and anti-globalization politics are all part of the dynamic.

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Thanks to Sue Veseth for the photo of workers and machines at a night harvest in Lodi.

 

 

 

Lost in Translation? Misunderstanding Old World and New World Wine

mv5bmti2ndi5odk4n15bml5banbnxkftztywmti3nte3-_v1_ux182_cr00182268_al_The idea that important things can get “lost in translation” holds true on many levels. Sometimes it is literally a translation problem, as Sue and I tried to switch between French and English on our recent trip to Languedoc, Roussillon, and the Loire Valley. For someone like me, who doesn’t speak French so much as just try to say some French words, there is a lot of potential for misunderstanding.

That’s America for You!

But sometimes the translations are from one culture to another and it is the built-in stereotypes that are the barrier, not the language itself. At one point, for example, I was telling a British wine writer about a recent Wine Economist column on the Illinois-based Cooper’s Hawk Winery and Restaurant, which has a wine club numbering almost 300,000 members — probably the biggest wine club in the world.

“Well, that’s America for you,” my new friend replied. “Everything’s big.” Well, actually, that’s not true. America certainly is big in many ways — it is the world’s largest wine market, for example — but that’s not an explanation in this case. Cooper’s Hawk’s massive wine club isn’t typical of wine clubs in the U.S. or anywhere else. It is an exception and invites further study precisely because it is unique for the U.S. or any wine market. Viewing it through a “big America” lens doesn’t really help at all.

Which brings me to this: we were gathered in Perpignan for a briefing and tasting of some of the wines from Roussillon. The English/French translation was going pretty well, but cultural elements were still problematic. At one point one of the appellation ambassadors was explaining the rules of the local wine game. The wine grapes used in the AOP wines were specified and the proportions dictated too — no less than x percent and no more than y percent of this or that grape.

Everything’s Mandatory or Forbidden

An American journalist in the back of the room raised his hand and asked the obvious question. Why require these particular proportions of the specified grapes? The New World subtext was clear (I am fairly fluent in New World, so trust me about this): why make the particular blend mandatory?  To an American, the AOP system sometimes seems a bit like the old Soviet Union, where (according to an old joke) everything was either mandatory or forbidden. Why not just let the winegrowers be free to make the best wines that they can using whatever proportions they think best?

But that’s not the question that the local experts heard because they were steeped in Old World wine culture, where requirements like this are baked in the AOP cake and more blending freedoms comes with a lesser IGP designation. So they answered the Wine 101 question they thought they heard, which was why blend grape varieties at all and  talked about the benefits of blending vs single grape variety — not why require a particular grape blend. Needless to say, neither side of the conversation found the exchange very satisfying and happily everyone quickly moved on.

(The American journalist vented that he planned to write a column titled “Stupid French Wine Laws,” but I am glad to say that he didn’t.)

The problem is, in part, is a question of the importance of typicity. Making good or at least marketable wine is the aim in the New World, the idea of crafting the wine to be  typical of a  particular region is literally a foreign concept.

In the New World, in fact, “typical” is sometimes used as a put down — that’s so typical! In the Old World, however, typical often means true-to-type, satisfying a standard, and is a good thing. When we were in Carcassone, home of cassoulet, the thing I wanted most was typical cassoulet, not some fusion mashup, as good as it might be.

Old versus New World Regulations

AOP rules are meant to assure that designated wines are true to the local standard. American appellation rules,  on the other hand, are geographic indicators that have little to say about what’s in the bottle apart from where the grapes are grown and the wine itself made (the Cooper’s Hawk winery is in Illinois, for example, and it therefore cannot put “Napa Valley” on the label of a wine that is made entirely from Napa Valley grapes — it must use an American appellation).

I do not see much evidence that Old World appellation rules are invading the New World (although there are some who advocate greater regulation), but we met a number of Old World producers who are learning to think and speak New World. Sue and I have seen more and more emphasis on the less restrictive IGP wines, for example, and there are several reasons for this.

Lesser is More?

One reason for the move to IGP and other “lesser” designations is that many winemakers simply want to freedom to make interesting rather than typical wines and this can be a good thing. Don’t forget the influence Super Tuscan wines have had in Italy. Sometimes, as we saw in Valpolicella a few years ago, the IGP wines are produced to fill unexploited market niches.

Climate change is another reason for winemakers to look beyond AOP rules. Changing climate undermines the logic of winemaking rules established decades ago when growing condition might have been much different. We heard this discussed on our trip to France, but I can’t really tell how much it is driving this particular movement compared with market forces, which are surely very strong.

I am not sure there is much that can be done about the translation problem, but I am going to try a bit harder to see things from both the Old and New World sides, so that less  understanding is lost along the way.

Discovering the “Invisible” Cooperative Wineries of Languedoc and Roussillion

caramanyThey say that there is strength in numbers, which may explain why wine cooperatives tend to emerge during periods of crisis, when individual winegrowers are practically powerless to defend themselves and only collective action holds hope.

The cooperative in Caramany, the Vignerons de Caramany, was founded in 1924 in response to the Phylloxera crisis. It experienced ups and downs in the century that followed and seems to be thriving today — a good sign for Caramany and for French cooperatives generally.

Strength in Numbers

Caramany is a village of 150 inhabitants in the Pyrénées-Orientales scenic L’Agly valley in Roussillon. It has its own appellation:  Côtes du Roussillon Village Caramany. The cooperative has 50 members, some of them quite small holders,  growing mainly Carignan, Grenache and Syrah.

We were in Caramany to learn about its cooperative and its wines during our recent press tour to Languedoc, Roussillon, and the Loire Valley. Cooperatives were on our radar because they are very important in all these regions as they are in Europe generally. Cooperatives produce about 70% of all wine in Languedoc, for example, making their success critically important to the wine industry.

You sometimes have to look closely at a wine label to know that a cooperative has made the wine — seeing Caves Coopérative for a French wine or Cantina Sociale Cooperativa for an Italian one is a sure indicator, but sometimes the link isn’t clear, especially if the wine is sold through a negociant or, as is increasingly the case, made for a private label customer such as a supermarket.

Invisible but Important

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According to the latest edition of the Oxford Companion to Wine, cooperatives probably account for more than half of all the wine produced in the big three Old World wine countries: France, Italy, and Spain. These “invisible wineries,” as I have called them, are one of the most under-appreciated elements of the global wine market despite the commercial success of some of the wines. One of the top-selling Prosecco wines on today’s market — La Marca — is produced by a second-level cooperative — a cooperative of cooperatives.

Some Italian cooperatives — I am thinking Alto Adige and Piemonte in particular — are know for their high quality. But cooperatives in the south of France have the opposite reputation, which they continue to battle to change. It is easier to produce new, better wines that a new reputation.

The Vignerons of Caramany impressed us with their commitment to making delicious, market-friendly wines, which we sampled while eating a Catalan barbeque lunch that included snails grilled over live coals, grilled meats (including delicious blood sausage), and a variety of salads. One wine (see top photo) was a tribute to the past, but others looked to the future.

tremoineThe Reserve Rouge Carmin, for example, is a blend of Grenache, Syrah, and Carignan (the Carignan was vinified with carbonic maceration while the Grenache and Syrah use conventional methods) that was one of my favorites. Delicious with the food we were served and impressive generally. Its packaging is modern and appealing and it sells for a premium price — about 8 to 10  euro, as I recall, which is impressive for a wine from this region.

There were wines from other cooperatives at the lunch and they were also noteworthy. The Rivesaltes Ambré from the Vignerons de Trémoine is a terrific sweet wine that I could sip  all day.

Sleep No More

So what has changed to make these cooperatives (and many others that we learned about) so different from the stereotype of sleepy, inefficient (and sometimes not very clean) cooperative cellars? Well, it isn’t that the cooperatives have simply become stronger — more strength through more numbers — because that’s not the recent trend. Cooperatives seem to be under attack to a certain extent, with the next generation of winegrowers looking beyond old practices to new market opportunities. An association of independent producers has been formed in Languedoc, providing a different sort of strength in numbers through collective marketing not production investment.

Some of the new independent projects are inspired, I was told, by Department 66, a wine project initiated by Dave Phinney and located in the Maury appellation of Roussillon. Its Grenache, Syrah, Carignan blend D66 wine sells for $38, which is a super-premium price for this region. A special old vines Grenache-Syrah blend received a 95-point score from Robert Parker and retails for $175. That would sure get my attention.

More than anything I think it has been competition that has stirred French cooperatives to raise their game — competition in the retail market and also competition between and among the cooperatives for the declining group of potential grower-members. Competition is disruptive but has obviously been a good thing and the results are clear when you consider the achievements of a relatively small cooperative in a tiny appellation such as the Vignerons de Caramany.

If other cooperatives are moving in the same direction as the ones we learned about on this trip. then the future of the “invisible wineries” is bright.

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Thanks to everyone we met on our trip to France and to the wine regions of Languedoc, Roussillon, and the Loire for hosting us.

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

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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vinovip1The 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

gajaAngelo 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.

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Thanks to Alessandro Torcoli and everyone at VinoVIP for their hospitality during the conference. Special thanks to Sylvia Conti and Maria Gilli of the Italian Trade Agency for their help and support. Sue and I clearly enjoyed ourselves and learned a lot from everyone we met! Here’s a photo of the two of us taken by Megumi Nishida at the post-conference lunch.

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

shaw1“It’s very popular — one of the varietals is nearly sold out already.” That was my friend Kelly’s response to a question about a new wine at her Trader Joe’s store: Shaw Organic. It is the latest wine from the people who brought you Charles Shaw (a.k.a. Two Buck Chuck) and I think it might say something about where the wine market could be going in the U.S.

Two Billion Buck Chuck

I wrote about the “miracle of Two Buck Chuck” in my 2011 book Wine Wars. The miracle, I said, wasn’t that the Bronco Wine Co.  could make a wine that Trader Joe’s could sell for just $1.99 (the price has gone up over the years, but it is still inexpensive). Making value wine is all about controlling cost and there are many ways of doing that. In Europe some hypermarkets have sold what I call One Buck Chuck:  one liter for one Euro in a tetrapack container. That’s about a dollar per 750 ml bottle equivalent.

No, there’s no miracle in making a wine to sell for two bucks. The miracle is getting people to buy it because they tend to confuse price with quality and are suspicious that anything that costs so little could be any good.

I gave credit to Bronco for making clean, consistent, drinkable wines and Trader Joe’s for backing the wines with their reputation for quality and value. The miracle continues — Fred Franzia announced in 2016 that Bronco/Trader Joe’s had reached the one billion bottle milestone, which provoked  Paul Franson to christen Franzia “two billion buck Chuck” for the massive total expenditure on this modest wine.

Organic Wine vs “Made with Organic Grapes”

shaw2Shaw Organic is an extension of the Charles Shaw / Two Buck Chuck line that is noteworthy in several respects. First, there is the organic element. Bronco is very careful not to call this an organic wine, noting correctly that it is wine “made with organic grapes.”

What’s the difference? To be certified an organic wine by the USDA it must use only organic grapes and be produced with no  added sulfites in a certified facility. Wine that is “made with organic grapes” is allowed up to use  100 ppm of added sulfites, which is how Shaw Organic is made. Most but not all conventional wines have less than 100 ppm of added sulfites, according to my quick wine wine literature review.

The Shaw Organic wines we saw were priced at $3.99 per bottle for Rosé, Cabernet Sauvignon, Chardonnay, Pinot Noir, and Pinot Grigio. How is it possible to make a sell a wine made with organic grapes at such a low price? Well, as with Two Buck Chuck, economies of scale are part of the answer. In this case, the story starts in the vineyards.

You may know that Bronco is America’s largest vineyard owner, with about 40,000 acres of grape vines. You may not know that Bronco is also the largest grower of organic wine grapes in the United States. According to a 2016 article by Deborah Parker Wong (pdf)  Bronco has converted more than 5000 acres of vines to certified organic status — enough to produce 400,000 cases of wine. That’s roughly a third of all the organic wine grapes produced in the U.S.

Unscrew the Cork? 

Alternative packaging is a hot trend in wine markets these days and Shaw Organic features the latest twist from Amorim Cork: a twist-cork closure called Helix that allows consumers to have the cork stoppers that research shows they often associate with wine quality along with the convenience that comes with a screw cap.

shaw3The Helix cork closure  is a special cork and bottle combination. You grab the cork, which looks a bit like a fat sparkling wine cork, and twist it out to open. Reverse to re-close the bottle. Helix has been around for a couple of years, but not everyone has seen it yet. The Shaw Organic wines we saw had informative tags on the bottle necks to explain the how cork system works.

Amorim and Bronco worked closely on this project so I asked Antonio Amorim to comment on the partnership. “Shaw Organic features an innovative packaging that seamlessly matches the unique sustainability of cork with easy-to-open, consumer-driven convenience,” he said.  “All this is now available enhancing the premium aspects of an organic wine ”

Sue and I have been on a Rosè wine binge recently, so we bought a bottle of the Shaw Organic Rosè to try at home. We were surprised at the quality, especially given the $3.99 price tag. The Shaw Organic Rosè was subtle but refreshing and opened up a bit with time. It’s quite dry, which I didn’t expect. I’d be pleased to have it in my glass at a party or reception or just sitting on the patio any time.

Do You Believe in Miracles?

So will I be writing about the Miracle of Shaw Organic in my next book? Well … maybe. But if it does perform a miracle, it will be a different one from Two Buck Chuck. TBC democratized wine — the low price and consistent quality gave millions of consumers the confidence to try wine. Many of them stuck with TBC, but others moved up the wine wall to more expensive products.

Can Shaw Organics do the same thing for consumers who are interested in organic products? Maybe. It will certainly draw consumer attention to the organic category for wine. The conventional wisdom is that there are so few mass market wines with “organic” anywhere on the label because producers fear that buyers will be turned off by the designation. (It’s a complicated problem — I wrote about the “Organic Wine Paradox” here.)

Bronco and Trader Joe’s are bold to push the concept to the fore. Maybe they will give other producers confidence to “go organic” and it would be great if they could expand the overall market for these wines the way that Two Buck Chuck did for wine generally.

Three Faces of Languedoc Wine: Aimé Guibert, Robert Skalli & Gérard Bertrand

rosesAimé Guibert and Robert Skalli — these were the key protagonists in my analysis of globalization and wine in the Languedoc in my 2011 book Wine Wars.  Both Guilbert and Skalli revolutionized Languedoc wine, but in different ways. And they had different opinions of globalization, too.

If I were writing a second edition of Wine Wars today (readers: do you think I should?) I would add a third name — a champion of Languedoc wine who is revolutionizing it in another way today. That name is Gérard Bertrand.  Here’s the story.

Mondovino meets Mondavi-no

Aimé Guibert starred as one of the heros of the 2004 anti-globalization wine documentary Mondovino (flying winemaker Michel Rolland was one of the villians!).  Guibert helped revolutionize Languedoc wine at his estate Mas de Daumas Gassac  Working with Emile Peynaud and others, Guibert produced exceptional wines that changed the way that many viewed the Languedoc and its potential for fine wine. An impressive achievement and a great story.

That’s not the story that Mondovino told, however. The film was more interested in his opposition to Robert Mondavi’s plans to invest in the Languedoc and produce large quantities of branded varietal wine to be sold around the world. The local uproar eventually discouraged Mondavi, who turned his attention elsewhere. Did Guibert and his activist colleagues win? Mondavi was gone, but not the market strategy he represented.

That’s because, as I argued in Wine Wars, Robert Skalli was already at work to revolutionize Languedoc wines in a Mondavi-esque way. Skalli met Mondavi in California and was inspired by both his modern wine-making and by his marketing strategy, which focused on easy-to-understand varietal labels rather than sometimes-obscure appellations. Skalli was so impressed that he opened his own Napa winery (St. Supery, sold a few years ago to French icon Chanel) and invested in clean, modern, market friendly varietal wines at home including especially the popular brand Fortant de France.

Skalli embraced globalization just as Guibert shunned it, but they both drove change in a region that surely needed it and helped set the stage for the emergence of the new Languedoc wine world that Sue and I discovered during our recent visit. They also helped pave the way for the Languedoc’s current global market champion, Gérard Bertrand.

Celebrity Wine?

laforge.jpg

It didn’t take long for Gérard Bertrand’s name to come up. We landed in Toulouse and on the road to our hotel in Carcassone our well-informed driver pointed to a vineyard on the right and said that he’d been there the day when the crowds gathered and a helicopter descended carrying Bertrand and his special guests, rocker Jon Bon Jovi and his son. Bon Jovi is famous for his music. Bertrand is possibly more famous (at least in this part of France) for his exploits for club and country on the rugby field.

Sport, music, and wine — a potent mix! Bertrand’s father was in both businesses– wine and rugby.  Besides running the family estate he was a professional referee; his son learned both disciplines from the earliest age.

The helicopter gathering was the launch of a joint Bon Jovi-Bertrand project — a Rosè wine called Diving into Hampton Water. A limited edition celebrity wine, for sure, its first vintage sold out on allocation in short order.  The wine lists for $20-$25 here in the U.S. when you can find it.

I don’t know much about Diving into Hampton Water, which has received mixed reviews, but I’m pretty familiar with another Gérard Bertrand Rosé, the Cotes des Roses pictured above. It’s a lovely wine in a distinctively graceful bottle that is easily found on the shelves of upscale supermarkets and even in Costco bins in my region. There is a red and a white wine in the Cotes des Roses portfolio, according to the website, but I see only the pink one in my market.

tj

You can think of the Cotes des Roses as an upscale evolution of the Robert Skalli idea of Languedoc wine. It is a wine made for the market, that represents the Languedoc very well, but does so by reaching out to consumers with a clear image and strong brand. That’s kind of how I thought of Gérard Bertrand wine at the start of my visit — and the Bon Jovi connection reinforced that perspective. But I soon learned that there is a good deal more.

The first formal masterclass in Carcassone was devoted to tasting a cross section of Cru du Languedoc wines and one of the favorites was the Gérard Bertrand 2011 La Forge.  This was very different from Cotes des Roses — it was a serious wine of origin and it made me rethink the whole Bertrand project. Bertrand is Cotes des Roses and Hampton Water, but it is also a collection of very well made wines that celebrate and explore the multiple regions and terriors of Languedoc and Roussillon, Gérard Bertrand’s home (he first played rugby for Narbonne).

legendAmbassador Bertrand

Bertrand’s wines appeared twice more in our program, reinforcing this more complex view. Tasting through a lineup of Crèmant de Limoux sparkling wines, I stumbled across Gérard Bertrand Cuvée Thomas Jefferson. Jefferson fell in love with Crèmant de Limoux when he was U.S. ambassador to France and championed the wine, shipping quantities back home to Virginia.

Bertrand’s bottling honors the appellation and its historic connection to Jefferson. I was beginning to think of Gérard Bertrand as more of an ambassador (like Jefferson) of the Langeudoc than a simple celebrity. His project includes many of these terroir wines that together paint a picture of the region.

Then, at a gala dinner at Château de Pennautier, we were served a lovely mature sweet wine, the 1974 Gérard Bertrand Legend Vintage Rivesaltes. What a wine! And a wonderful tribute to this appellation. The Legend Wine series includes select Rivesaltes vintages going back to 1875! Bottled history.

I’ve Got a Little List

And so I think you can see why I have added Gérard Bertrand to my Languedoc icons list. He seems determined to push Languedoc forward, but not just in one direction and always with an eye on his roots. A fine ambassador indeed.

Every emerging wine region needs a brand ambassador to help break into the market and get attention. Napa had Mondavi, for example. Strong brands, if linked to time and place, can open doors a bit wider. As Languedoc and Roussillon re-emerge in their contemporary form, effective ambassadors like Bertrand are especially important.

Languedoc has many faces and these three tell a story of the ways that the region has changed to adapt to new market conditions. Bertrand’s complex inks to and respect for the past make him a particularly interesting addition to my little list. But there are many more faces to consider — you should pull some corks and see for yourself.

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The Wine Economist will pause for a couple of weeks while Sue and I are in Italy. We’ll visit old friends in Bologna (I taught at the Johns Hopkins/SAIS Center there years ago) and tour Eataly World before heading to Forte dei Marmi, where I’m speaking about Money and Wine at VinoVIP on June 18.