Existential Threat? Anatomy of Italy’s Wine Crisis

It is cold comfort for U.S. winegrowers, producers, distributors, and retailers, but they are not alone in suffering a cascade of wine market woes. Recent reports from Italy, for example, paint an increasingly clear picture of a major wine-producing country in crisis.

UIV Analysis Focuses on Exports

The Unione Italiana Vini, which has more than 800 members and accounts for 85% of Italian wine exports, has been “the voice of Italian wine” since 1895. Recently that voice has sounded an alarm. A June 2025 press release focused on falling export demand for Italian wine. Italy’s domestic market for wine is large, of course, but production is very much larger, so many regions depend critically on export sales. Exports account for 63% of total sales in Piedmont, for example, 59.5% in Tuscany, and 58.7% in Abruzzo.

The U.S. is Italy’s biggest export market, so you can imagine that President Trump’s “Liberation Day” tariff announcements were not welcome news in Italy. As the UIV chart above shows, there was a surge of shipments to the U.S. in the first two months of 2025 as exports were accelerated in an attempt to build inventories before the tariffs went into force (Italy was not the only wine country to use this strategy). Then exports to the U.S. fell sharply in terms of both volume and value.

With substantial stocks in U.S. warehouses and unfavorable tariff and exchange rate conditions, the prospect of improved exports to the U.S. market for the rest of the year is not bright. And all this was driven by uncertainty about U.S. policy as the final tariff rate was not yet determined.

Trouble Beyond the U.S. Market

A second recent press release presented even more disturbing news.

The imbalance between potential output and market demand was highlighted in a report presented today by UIV’s Observatory, led by Carlo Flamini. Data from the first five months of 2025 show volume declines across Italy’s top four export markets: Italy (-1.8%), U.S. (-4.7%), UK (-3%), and Germany (-9.6%). These countries collectively account for 73% of Italian wine revenues. Overall retail sales are down 3.4%, with still and sparkling wines falling 5.3%. Only spumante bucked the trend, growing 4.9%. Despite the downturn, Italy remains the only major wine-producing country expanding its vineyard area – a growth that risks worsening oversupply.

Italy has been fortunate to experience several short harvests in recent years, which have masked the large structural wine surplus that is now impossible to ignore. What is to be done?

Internal and External Adjustment

One strategy is to focus on export markets by negotiating lower tariffs and reduced trade barriers generally. But, as the press release suggests, it would be all but impossible to replace lost U.S. sales by shifting focus to other markets. Some attractive non-EU export markets (think Brazil) have tariff barriers (27%) even higher than the 10% or 20% rates often discussed for the U.S. Border adjustments won’t solve Italy’s problems. Internal reforms are needed.

Here is the UIV’s agenda.

UIV is urging immediate structural changes to balance supply and demand. Key proposals include:

Lowering grape yields per hectare, including ending exemptions for generic wines.

Aligning DOC (controlled designation of origin) production limits with actual 5-year averages.

Reducing or eliminating the 20% overproduction allowance for DOC wines.

Revising reclassification mechanisms and accelerating production management tools.

Freezing new planting authorizations for one year.

UIV is also calling for a major reorganization of Italy’s appellation system. Although 529 DOC/IGT labels are officially recognized, just 20 account for 80% of national production.

There are two things to note on this reform agenda. The first is that it sensibly addresses the market surplus from both supply and demand perspectives. Fewer grapes and less wine should be produced on the supply side. And changes should be made to make the wine easier to understand and more consumer-friendly on the demand side.

Too Many Cheeses?

I especially support the movement to reduce the kaleidoscopic blur of regional designations. Charles de Gaulle famously said that it is impossible to govern a nation with 246 different kinds of cheese. Strong local identity isn’t always easily aligned with national purpose.

Italy is learning that having 529 regional wine identities can be a problem, too. (A lesson that might apply here in the U.S. as well.)

The second thing I would like you to note is that the reform agenda focuses on regulation, which is the way that Old World wine sectors tend to view things. Sometimes I think that the most important difference between Old World and New World is whether responsibility for change is located in the public or the private sector. (In this way of thinking many New World wine countries belong in the Old World.)

In any case, I agree that Italy’s current problems are due in part to the regulatory structure, which has sometimes aimed to protect producers from market forces rather than channeling those forces productively. So the UIV’s proposals for reform are appropriate. The question is, will they be implemented and then will they succeed?

Existential Threat?

The situation worsened last week when U.S. President Donald Trump threatened 30% tariffs on EU products including wine, an increase from the 20%, then 10%, then maybe 17% rates suggested earlier this year. The fact thast the dollar has fallen in value substantially against the euro this year magnifies the dilemma by increasing the cost of European wines to U.S. buyers regardless of the tariff rate.

The term “existential threat” is thrown around too casualy these days but it may perhaps apply to the Italian wine industry today. Here is the UIV response to the 30% tariff threat.

Rome, July 12, 2025 – “It took just one letter to write the darkest page in the history of relations between two long-standing Western allies. A 30% tariff on wine, if confirmed, would amount to a near-embargo on 80% of Italian wine exports. At this point, the fate of our industry – and hundreds of thousands of jobs – hangs on what could be considered extra time, which will prove crucial. It’s unrealistic to think such volumes can be redirected elsewhere in the short term. At the same time, an extraordinary intervention from the EU will be absolutely necessary.” This was the stark warning issued by Lamberto Frescobaldi, President of Unione Italiana Vini (UIV), following the Trump administration’s announcement – delivered in a formal letter – of additional 30% tariffs on European Union wine imports, set to take effect on August 1.

Italian Prime Minister Georgia Meloni is sometimes said to be a “Trump whisperer,” able to talk sense to the U.S. President. I am sure Italy’s wine sector is hoping she will succeed in her efforts so that they can move ahead with their necessary reforms.

Bodegas Tradición & Gonzalez Byass: The Jerez File (Part 2)

July 1, 2025 By Mike Veseth in Spain, wine, wine history, wine markets Leave a comment

This is the second part of our report on the five very different wineries that Sue and I visited during our brief stay in Andalusia. Click here to read the first half of the story.

Bodegas Tradición and Bodega Gonzalez Byass

We’d like to finish with an exercise in compare and contrast involving the smallest winery we visited (Bodegas Tradición) and the largest (Bodega Gonzalez Byass).

Big barrel rooms and small libraries were featured in both wineries. The barrels are easy to understand. Sherry wine ages in ranks of barrels called soleras, which slowly transform the wine and develop its special character. It is impossible to produce great Sherry any other way.

But before we surveyed the barrels we visited the small rooms at both wineries where records are stored. Time is integral to Sherry production and so is history. They recognize that the company records are important historical documents.

Gonzalez Byass, the largest Sherry producer and the only one still in family hands, was founded in 1835 as a shipper focusing on the British market. You will probably recognize its famous Tio Pepe brand. Like Port and Bordeaux, Sherry’s development was shaped by the fact that export markets could be reached by sea more economically than domestic markets that (until the arrival of trains) required costly and cumbersome land transport. Amazingly, the business has remained in the Gonzalez family through seven generations!

All in the Timing

The roots of Bodegas Tradición go all the way back to 1650 when Bodegas CZ (for the initials of the founder) was formed. The records room was filled with antique ledgers that told the story of the winery and the region. Exports were key here, too. The winery was named supplier to the British crown (1771) even before it received the same honor from the Spanish royal family (1887). One entry (I think it was from the 17th century) detailed exports to China!

Bodegas Tradición did not have a smooth journey through the Sherry industry’s booms and busts and was re-founded in 1998 as Bodegas Tradición CZ by Joaquín Rivero, who located the winery in an old building in the historic center of Jerez. It was, as I understand it, an attempt to revive the producer and rescue a particular way of making Sherry and the old soleras necessary for that process. Production is small both because the firm is relatively small (especially compared with Gonzalez Byass) and also because so much volume is lost a little at a time to the “angel’s share” during the long aging process. Time is the essence of Bodegas Tradición.

The Gonzalez Byass campus, Bodega Tio Pepe, sits prominently on a hill, next door to the cathedral and just below the Alcázar de Jerez de la Frontera and Mezquita. Production is spread over a number of big buildings and there are tourist and hospitality facilities along with the Hotel Bodega Tio Pepe, where Sue and I stayed.

From Jerez to the World

It is interesting to compare and contrast the two producers by visiting their retail wine shops. Tradición radiates age and time. The Sherry wines and brandies are old and older (and almost insanely old) and command prices that are high when you think about it in bottle terms and cheap when you consider the time, history, and quality of the experience. It reminds me of a lunch we had in Seville at Bar Casa Plácido, where the proprietor was so proud to serve Tradición wines.

The wine shop of Bodega Tio Pepe is larger and brighter and reveals the company’s depth in Andalusia and breadth across Spain and increasingly around the world. The wall of wine and spirits brands from around the world (and the corresponding list you can find online) is really astonishing. Just as ships once set out from Seville and Cadiz to explore he world, Gonzalez Byass has charted a global course: Austria, Australia, Chile, Spain, France, Hungary, Italy, New Zealand, and South Africa. And that is just for wine. You can add the U.K. if you include spirits such as a Sherry-cask-aged gin!

Final Thoughts

The ships that forged Spain’s Age of Discovery set sail from this region (Seville and Cadiz). There is much exploration going on here now. Bodegas Tradición explores the past without losing touch with the present. Bodega Gonzalez Byass embraces the world of wine while firmly rooted in family and Jerez.

I thought I knew a bit about Sherry before we visited Jerez and maybe I did, but there is so much to learn and we love learning! But maybe the most surprising thing we discovered here is this: I have always seen Sherry as a special wine, something different from others in terms of both production and sensory perception. And it is unique.

But from an economic perspective, the Sherry industry is not so different from wine in other parts of Spain and the world. The booms and busts that the five Sherry houses we visited have navigated and the very different courses they have charted to their current success provide lessons that apply far beyond the Sherry Triangle.

Five Faces of Andalusia Wine (Part 1)

June 17, 2025 By Mike Veseth in Spain, wine, wine history, wine markets Leave a comment

Sue and I recently spent more than two weeks in Andalusia, Spain, about half of the time exploring the wine scene and the other half enjoying the region’s history and culture.

We covered a lot of territory and were a little surprised that the dominant feature of the landscape was not grape vines as you might expect, but olive trees! As far as the eye can see. Olives everywhere! We even visited an olive oil cooperative and learned that the main factors that lead an olive oil cooperative to either success or failure are much the same as those we observe in wine cooperatives.

But we came for wine. We tried to pick wineries that were very different from one another and so would together give us a more complete picture of this fascinating wine region. Let us tell you a bit about each one over the next two weeks.

Bodegas Alvear

Our first stop was Bodegas Alvear in the Montilla-Moriles region near Cordoba. The wines made here are much like Sherry but of course cannot be called Sherry because they are not in the Jerez D.O. (Confusingly, Pedro Ximenez grapes from Montilla can be made into Sherry wine by producers located in Jerez. PX grows really well in Montilla but struggles in Jerez.)

Alvear makes up for the absence of a famous appellation by having a famous brand. Indeed, Alvear is both the oldest winery in this area and one of the most respected in all of Spain. I haven’t seen many Montilla wines at local shops, but I have seen the Alvear PX Reserva, which I remember as the very first Robert Parker 100-point wine we tried (the current release is rated 98 points).

We had an excellent tour and tasting at Alvear and were impressed with the combination of tradition and innovation that we found there. The tradition is obviously the classic wine styles such as Fino and the PX. The innovation takes many forms. Important today is the development of non-fortified wines such as the refreshingly light El Rebate we sampled at the tasting and the complex red Palacio Quemado shown here that we were served a couple of nights before at La Montillana restaurant in Cordoba.

But maybe the most important innovation is the Alvear Vermut. Alvear is one of the pioneers in making Vermouth from Sherry-style wines. Alvear’s Vermut is popular (it was listed as “The Classic” at a Vermut bar we visited in Madrid) and has opened up opportunities for other producers in the region.

Bodegas Williams & Humbert

Bodegas Williams & Humbert occupies a vast industrial space on the edge of Jerez. The barrel room sort of takes your breath away. This is the home of famous brands such as Dry Sack (the go-to aprétif of White House dinners in the 1950s) and Canasta Cream Sherry among others.

We were there because of the memory of a dinner we had 20 years ago at a restaurant called La Madonnina del Pescatore in Senegalia, Italy. At the end of a fabulous seafood dinner we were served glasses of Don Zoilo PX. This was probably our first PX and it simply blew us away. You know how some wines are impossible to forget? That was the Don Zoilo PX and it is made by Williams & Humbert. We had to visit.

(Aside: According to their website, La Madoninna del Pescatore no longer serves the Don Zoilo PX. They offer a Williams & Humbert PX instead. The PX seems to have stood the test of time!)

We toured the winery and tasted through the wines. It was quite an experience because each of the many brands and styles and different aging treatments. Every time we thought we’d found our favorite we encountered something new and delicious. This is not a bad problem to have.

It was at Williams & Humbert that we first saw the light wood barrels surrounded by traditional black barrels. The black casks age Sherry (many of them were signed by celebrities including all four Beatles when they visited the winery years ago). The light wood barrels also contained Sherry, but the point was to condition the wood for eventual use in production of Sherry-barrel-aged Whiskey.

It was also at Williams & Humbert that we first realized the significance of Brandy to many Sherry producers. Sherry is a fortified wine, so stills are a common sight. Brandy is often produced in addition to the spirits that fortify Sherry. This Brandy is popular in Spain and other countries including Mexico and the Philippines. The Brandy market is so important for Williams & Humbert that the company is actually co-owned by a Spanish family and a Philippine firm that markets the Brandy there.

It is interesting to consider how a sip of PX at a restaurant on the Adriatic coast could lead us to such an interesting experience.

Bodegas Lustau

It wasn’t hard to convince us to visit Bodegas Lustau, which is a well-known brand in the United States. The bottles and labels are attractive, the wines are full of character, and the products are well-priced and widely available. Lustau was always on our list and our Jerez friends encouraged us as well because a visit to Lustau gives a glimpse of Sherry history and tradition. Our tour started in a conference room overlooking the big barrel cathedral. That’s got to be one of the best office views in the world.

Originally a family business, Lustau has weathered the booms and busts of the Sherry game. In 1990 it was acquired by the Luis Caballero Group, a Spanish family-owned company specializing in wine and spirits. With strong backing, Lustau has both expanded its Sherry business and also ventured into Vermut, Brandy de Jerez, vinegar, and Sherry casks for spirits.

The Lustau wines are impressive and we spent a very happy hour barrel-tasting with our host. But what I remember best is the importance of branding. Building the Lustau brand was important right from the start, especially in the export market. Indeed, Lustau was better known abroad than in Spain until recently. The advent of Sherry-based Lustau Vermut, wildly popular in Spain and now available in the U.S., too, brought the brand to the attention of the Spanish market.

I guess the success of Lustau Vermut shows that the company hasn’t lost its ability to create and develop successful brands. The winery hosts about 10,000 visitors a year, 40 percent from Spain and 60 percent from abroad.

Last week we analyzed the strategies that Andalusian wineries use to broaden and deepen their businesses while avoiding the boom-bust cycle. It is interesting to see these strategies at work at Alvear, Williams & Humbert, and Lustau. It is even more interesting to see the power of brands in this industry. Each of these wineries has succeeded in part by creating and maintaining powerful brand identities, some with global reach.

How Sherry Went from Boom to Bust to Today

June 10, 2025 By Mike Veseth in Spain, wine, wine history, wine markets 1 Comment

We published an article here at The Wine Economist a few years ago, asking “Can Sherry be the Next Big Thing?” “Probably not,” we said. “But it doesn’t have to be. It is a timeless wine waiting to be re-discovered by a new generation of wine drinkers.”

I’m glad we didn’t go too far in our assessment of Sherry’s potential back in 2017 because Sherry producers who have been around for a while are cautious about booms because they know they can be followed by busts. That was one message we heard when we met with César Saldaña, the President of the Sherry D.O. Consejo Regulador, the industry organization that makes and enforces the rules that govern Sherry production and promotes the product, too.

A Sherry boom? Not a good idea, he told us. Sherry has a history of booms and busts, and what it needs today is stability to build a foundation for the future.

UK Supermarket Boom

Sherry’s most recent boom occurred in the 1980s when British supermarket wine sales were growing so fast. Britain has long been the key export market for Sherry wines, and the surge in sales of inexpensive private label Sherry combined with government subsidies to encourage exports caused the industry to explode. How big was the boom? Vineyard area increased from about 7000 hectares to over 20,000 hectares!

Booms are often followed by busts, and Sherry sales have fallen. The crisis came in 1986-87 when Spain entered the European Union and the flow of subsidies suddenly dried up. Sherry’s diminished reputation made it difficult to command prices necessary to sustain production without government assistance.

It has taken a while, but vineyard areas are finally back in the 6000 to 7000 hectare range again. Consolidation has occurred, with the large bodegas growing and acquiring brands as the number of independent producers has fallen. Cooperatives, which account for about half of total production according to my sources, sell young base wines to the big bodegas where they are aged, blended, bottled, and sold.

Sherry Crystal Ball

What does the future look like for the Sherry industry in this market environment? We will answer this question in more detail next week, when we look at five specific wineries and their particular strategies. But here are some general patterns we observed.

Innovation: Think about Sherry as an ingredient and not just a beverage. Sherry-based cocktails were featured in that Financial Times article about Sherry’s chic appeal, for example, and a popular drink hereabouts is Fino and Sprite or 7-Up. It is called Rebujito.

And then there is Croft Twist Fino Spritz, a delicious white spritz wine that blends Fino Sherry with elder flower, lemon, and mint cordials, along with sparkling water. It reminded us a little of the White Port Spritz drinks we enjoy in Porto. Finally, Sherry can be the base of delicious Vermut (Vermouth) drinks, which is another growing category.

Non-fortified wines. If fortified wines have plateaued, as they have in Spain and also in Portugal, attention naturally shifts to unfortified wines, which are seen as an opportunity for both growth and diversification. As noted last week, Sue and I found the red wines we sampled (made by Alvear and Gonzalez Byass wineries) more interesting than the white wines we sampled with a couple of exceptions (Forlong Blanco from Cadiz, for example).

Spanish brandy. Sherry wines are fortified with spirits, so stills are everywhere in the Sherry Triangle, and brandy production is common. Spanish brandy is popular both in Spain and in the Spanish-speaking world. In fact, I think brandy from Jerez is probably better known and more popular in some places than the region’s signature Sherry wine. It is an important source of revenue for the Sherry producers we met.

Sherry barrels. Forget the wine. Sometimes it is the barrel customers want. If you have ever toured a Sherry house you know that the barrels are painted black, so when you see a bunch of unpainted barrels they really stand out. And we saw many of these barrels because whiskey aged in Sherry barrels is a popular beverage these days. Sherry firms age their wines for a period in new barrels that they profitably sell to whiskey makers. It is interesting that some consumers who would probably not drink Sherry wine want to enjoy Sherry’s influence in this way.

Wine tourism. Jerez is a popular destination with good tourist facilities. The sherry bodegas receive about 240,000 visitors today. The region hosts many fairs and festivals and, when we were there, MotoGP races at the Jerez circuit that once was home to Formula One competitions. You can find Jerez wine tours out of both Seville to the north and Cadiz, a popular cruise ship port, to the south. Many Sherry houses have ambitious wine tours and hospitality programs with restaurants and even hotels (we stayed at the Hotel Bodega Tio Pepe, for example, and dined at the winery’s Pedro Nolasco Restaurant).

Multi-region wine businesses. Finally, we have noticed in Spain (and in Italy, too) the tendency of wine businesses to build a portfolio of wineries across different regions. The ability to fill efficient production and distribution pipelines with a variety of products can be an advantage if done well. The addition of Sherry to a Spanish wine portfolio makes as much sense today as linking Port and Sherry producers together (think Sandeman or Osborne) did at an earlier stage.

César Saldaña is right. Sherry doesn’t need to boom (and bust) to succeed. There are many ways for the industry to broaden and deepen without supercharging sales. Next week, we will examine several case studies to see what paths individual producers are taking to move beyond boom and bust.

Field Notes from a Visit to the Sherry Triangle

June 3, 2025 By Mike Veseth in Spain, wine, wine history, wine markets, wine tourism 1 Comment

Sue and I recently returned from three weeks in Spain. We spent a few days in Madrid (where we dropped in at FEV General Assembly meetings), but most of the time in Andalusia, home of Sherry and Montilla-Moriles wines. Great wines, good food, and welcoming people. We soaked up a lot of information (and wine, too).

This is the first of a brief series of Wine Economist columns about our experiences and what they tell us about these wines and their wine market more generally. We begin with a “field notes” column, a kaleidoscopic collection of observations meant to give you a sense of what we saw and heard on the wine road in Spain. More focused articles will follow shortly.

>>><<<

Sherry, which is fortified, is from the Jerez-Xérès-Sherry region and made from Palomino, Pedro Ximénes, and Moscatel grapes. The Sherry Triangle is the name given to the Jerez D.O., the only region where true Sherry wines are made. The “triangle” is roughly defined by lines connecting the cities of Jerez de la Frontera, Sanlucar de Barrameda, and El Puero de Santa Maria, where the wineries are located.

>>><<<

People like to say that wine is made in the vineyard, but in the case of Sherry, what happens in the cellar is key. It is difference in cellar processes more than grape quality or variety that determines what type of Sherry will be in your glass. In this regard, Sherry may be more like Champagne and Port.

>>><<<

About half of our time in Spain was focused on wine; the other half on the history, culture, and people of Andalusia. We visited five wineries chosen to give us a view of the wine industry’s diversity in this region.

Bodegas Williams & Humbert, the producer of Dry Sack, Don Zoilo, Canasta, and other brands.
Bodegas Lustau, whose Sherry wines are widely available in the U.S. market.
Bodega Gonzalez Byass, maker of a wide range of products both in Spain and around the world, including the famous Tío Pepe brand.
Bodegas Tradición, a relatively young winery making very old wines.
Bodegas Alvear in the Montilla-Moriles region near Cordoba. The Montilla wines are kissing cousins of Sherry, but can’t wear the official Sherry seal.

We enjoyed conversations with many wine industry people including Susana Garcia Dolla of OIVE, César Saldaña of the Sherry D.O. Consej0 Regulador, and Mauricio Gonzalez-Gordon of Gonzalez Byass. We benefited from advice from our friend George Sandeman. Many thanks to everyone who hosted us, answered our questions, and helped us get the most out of our visit.

>>><<<

We usually taste wines with trade groups, not “civilian” consumers, so we were very interested to see what would happen when we accompanied a typical tour group to Bodegas Alvear. We first tasted a light, fruity unfortified white wine and then three of the traditional wines: Fino, Olorosso, and Pedro Ximenez. At the end of the tasting the question was asked: Which ones do you like? All hands went up for the fruity white. Only a few hands were raised for Fino and Olorosso with a few more for the PX.

The wines were great (Alvear is the oldest winery in Montilla and one of the best in Spain). The wines from Montilla-Moriles focus more on Pedro Ximenez, which grows there the best, with similar techniques but they not generally fortified. Very hot temperatures, very ripe grapes, high natural alcohol levels. That’s the story of Montilla.

The fruity white, which is called “El Rebate” after the step at the entrance of a Montilla house, is meant a welcoming gateway to the world of wine. It was a familiar taste to our touring friends and they loved it.

The Fino and Olorosso presented them with unfamiliar tastes, dryer, nutty, without fruit notes. The excellent PX, an Alvear speciality, was really well balanced, but sweeter than our new friends were accustomed too. Sue and I loved it. Most of our friends didn’t understand it or the other traditional wines very well.

The same wines at a trade tasting would probably have an entirely different ranking from the civilian group. We report these results because they help explain why Sherry (and the similar Montilla) wines are unlikely candidates for broad consumption. They are different and it takes a little effort to understand and appreciate them. It is effort well spent, but a barrier nonetheless.

>><<<

Sherry is not one specific wine. Many styles, many aging regimes: Fino, Amontillado, Manzanilla, Oloroso, Palo Cortado, Pedro Ximénez. Cream sherry (made sweet by the addition of rectified grape must or, even better, sweet PX wine) is what people think Sherry is, but isn’t. Lucious PX is sweet but balanced. One of the most memorable tastes of the trip was at a Taberna la Montillana in Córdoba where we were served a Bodegas Toro Alba Don PX 1955 at the end of the meal. Amazing.

However, Sherry is often stereotyped as a sticky, sweet apéritif that granny drinks at Christmas, which might be an insult to Sherry, granny, and Christmas! But most Sherry wine produced is dry, the style preferred in Andalusia. It reminds us of the problem that Riesling confronts. Riesling is too sweet, people say before they have even tasted it. But most Riesling that we encounter today is dry or off-dry.

Some Sherry wines are sweet, of course, just as some Riesling wines are sweet. In Sherry’s case the stereotype probably results from very popular and widely distributed brands like Harvey’s Bristol Cream, which are sweet; people generalize from that experience. Getting people to embrace dry Sherry can be as hard as getting them to try dry Riesling.

>>><<<

Sue and I had an “ah ha” moment at Bodegas Tradición. We were tasting through their wonderful wines. Did we want to try the Cream Sherry? We hesitated (which is not like us). Maybe not, we said. Cream Sherry has a bad reputation (see above). Well, try our Cream Sherry. And it was great, a blend of Amontillado and PX with superb balance. We had to abandon our prejudice. Back home, we bought and enjoyed some Harvey’s, too. Time to review stereotypes for Sherry and more generally!

>>><<<

As in the Douro Valley, there is a movement in Andalusia to produce more non-fortified wines using the traditional grape varieties. Sue and I were on the lookout for these table wines during our visit and we were a bit surprised by what we found. We expected white wines because Sherry grapes are white. But we were disappointed with the white wines we found. It seems that Palomino does not ready yield really great wines (I am sure there are exceptions because we only had time to taste a few of them.

The red wines we tried surprised us. First came a Palacio Quemado Crianza produced by Bodegas Alvear from an old vine Tempranillo vineyard north of Seville. Distinctive, wonderful with the traditional foods of Córdoba. Then we enjoyed the Finca Moncloa, produced by Gonzalez Byass in the Cadiz region. It is a special project designed to preserve and promote the native Tintilla de Rota grape. The blend of native and international grape varieties was terrific both times, especially with roast lamb.

Tenuta Licinia: In Praise of Philosophers & their Wines

May 22, 2025 By Mike Veseth in Italian wine, wine, wine markets 1 Comment

If you flip to the back of my 2017 book Around the World in Eighty Wines, you’ll find a list of the wines from my global adventures. I didn’t want to just list them alphabetically or sort by price or critic rating. Organizing them by country of origin didn’t seem right, either. So I invented categories that would link wines with similar characteristics.

The Joy of Lists

The first category, “Wines of the People,” includes Two Buck Chuck, Mateus Rosé, Mouton Cadet Rouge, and Four Cousins Sweet Rosé from South Africa, among others. These are very different wines united by their popular appeal and market success. Do you see the connection?

Next up is “Noble Wines,” and it starts with Chateau Petrus and continues with Henschke’s “Hill of Grace” from Australia and several others. You can probably think of the wines that you’d add to the Noble list. I admit the lists are totally subjective. I’d probably include different wines today. That’s part of the joy of wine (and of lists).

One of my favorite groups is called “Philosopher Wines.” Sometimes we encounter wines that demand more attention than others and provoke a certain amount of introspection, too. You don’t drink them so much as contemplate them. And we are sad when the glass is finally empty.

Philosopher vs Philosopher’s

These are the “Philosopher Wines” and just reading the list (which starts with a 100-year-old Tawny from Seppeltsfield in Australia and ends with Methode Ancienne Cabernet Sauvignon from Springfield Estate in South Africa) gives me a special feeling.

I don’t plan to revise or update my 80-wine journey but, if I were to update the list, I think I’d have to add a new category. In addition to “Philosopher Wines” I’d have “Philosopher’s Wine,” wines made by philosophers. I’ll bet there are more than a few (didn’t Warren Winiarski of Stag’s Leap Wine Cellars study political philosophy at the University of Chicago before he went down the wine rabbit hole?).

This thought is provoked by an online tasting of Tenuta Licinia wines that Sue and I took part in a few weeks ago. Tenuta Licinia is a small (6.5 hectares of vineyards) winery in a part of Tuscany that doesn’t get too much attention. This particular area near Lucignano had a long history of wine that faded in the 20th Century. Now it is coming back.

A Certain Idea of Wine

The project started about 50 years ago as the personal mission of Jacques de Liedekerke, a prominent Belgian attorney. He recognized the potential of certain vineyard plots in the region and, over 20 years, slowly brought them back to life. His vineyards and his mission eventually passed to his grandson, James Marshall, who, like Winiarski, has followed a path from the serious study of philosophy to the serious study of viticulture and enology.

Talking with Marshall via Zoom reminded me (in a good way, I want to point out) of any number of conversations I have had with philosophers during my academic years. There were thoughtful pauses and occasional clouds of self-doubt mixed with sure statements of principle and intent.

Marshall has for sure a certain idea of wine (to paraphrase Charles De Gaulle), which is based on particular sites with their aspects and soil profiles and particular grape varieties and getting the combinations just right. Winemakers, like philosophers, need to have strong principles that they constantly question, I guess.

Marshall has a number of provocative ideas about wine and one that I like a lot is that his wines should be so good that they appeal to novices, people who don’t know much about wine or don’t have much experience with it. This struck me as odd at first because we normally think of novices as having simple tastes that need to be developed over time to appreciate the best wine.

The Magic Words

But then he said the magic words, Chateau d’Yquem. D’Yquem is widely recognized as one of the world’s greatest wines (indeed, it is often named the world’s best). Yet, Marshall noted, it is immediately appealing to both experts and rookies. His goal isn’t to make a Tuscan d’Yquem, but to make wines as delicious and appealing in their own ways as d’Yquem is in its way.

We were lucky to receive four wines to sample. The Tenuta Licinia Montepolli (named for the vineyard) is an IGT Toscana blend of Merlot and Petit Verdot that was elegant and delicious. The IGT Toscana Sasso di Fato, a blend of Cabernet Sauvignon, Cabernet Franc, and Petit Verdot, was complex, elegant, and memorable. One of the best wines of the year so far. Both wines were light and bright and refreshing, but serious at their core.

Sue and I agreed that the wines did not especially remind us of their component grape varieties. They tasted like … well, I guess they tasted of the place more than the grape and, if this is true, it reflects Marshall’s intent and his attention to detail.

The Petit Verdot Question

We also received half bottles of varietal Cabernet Franc and Sangiovese and we are working on a sampling strategy for them. But the wine that I would love to taste is the 100% Petit Verdot Sasso di Licinia because Marshall brought it up so often in the Zoom interview.

He really doesn’t like the Petit Verdot, he said a couple of times. Wrong grape, wrong place. Subsoils not exactly right. Not what he wants to do. But it is really good with the local Tuscan steak and in fact a neighborhood restaurant wants him to put some in bag-in-box for by-the-glass sales, which makes sense. Marshall really doesn’t like the idea of bag-in-box any more than he likes the Petit Verdot itself, but the wine is really nice with the steak. That’s a fact. So maybe he should do it.

And so on, around and around. Maybe yes, maybe no. It’s kind of fun to turn it over in your mind and see where you come out. Oh, philosophers, you are so interesting! And some of you make really good wine. I’d love to hear from other philosopher winemakers in the comments section.

Don Melchor & Chile’s Good Value Curse

May 20, 2025 By Mike Veseth in Chilean wines, economic crisis, trade wars, wine, wine markets 4 Comments

Sue and I have been looking for the right excuse to open a bottle of Don Melchor, the famous Chilean Cabernet Sauvignon that was named 2024 Wine of the Year by Wine Spectator magazine. Finally, we decided that the act of pulling the cork was excuse enough, and we enjoyed the wine with a nice steak.

Don Melchor is the flagship winery of Concha y Toro, one of the world’s most respected wine producers. The wine was world class, balanced and elegant, and paired perfectly with a dry-aged steak. I admit that I don’t really know what it means to be “wine of the year,” but this wine (and everyone who helped make it) deserves whatever recognition they receive. Bravo!

Message in a Bottle?

You would think that the year’s top wine could be the wine with the highest score, but if you pay attention to these things, you have already noticed that, while all the highlighted wines have high scores, the final rankings are not simply by the numbers.

Sometimes, it seems to me, the people who put together Top 10 or Top 100 lists (and not just Wine Spectator) want to send a message. Sometimes it is to highlight particular regions or to balance Old World and New World recognition. In 2009, in the aftermath of the global financial crisis, for example, a Reserve Cabernet Sauvignon from Columbia Crest was Wine Spectator’s top wine. It was an excellent wine (a friend opened a bottle for us last year), but I think it was chosen in part to send a message that excellent wines didn’t have to cost a fortune (the release price of the Columbia Crest was just $27) or come from Bordeaux or Napa, either.

In the same way, I suspect that the Don Melchor was chosen at least in part to draw attention to Chile’s excellent wines and the fact that they can command high prices. (The Don Melchor we enjoyed was an editorial sample, but the local Total Wine has it in stock for $140.) Chilean wines have long been filed under “good value,” which is much better than a “bad value” label that some other regions have earned. But I think many producers see good value as a barrier to their quest for higher status. The Wine Spectator award helped in this regard, and the Don Melchor wine has the quality to make the label stick, if you know what I mean.

The Good Value Curse

You can see the good value curse in the numbers. U.S. wine market data in the most recent issue of Wine Business Monthly put the average bottle-equivalent price for Chilean wine at $5.04 for the previous 12 months, lower than the import average of $9.66 and even lower than Australia’s $5.49.

Not surprisingly, measured U.S. sales of Chilean wine are down with the rest of the market, falling 3.6% by volume and 0.3% by value. (These declines are actually less than the overall market’s decline.)

Chile is more dependent on export markets than most other major producing countries, so wine market contractions in the U.S., U.K., and perhaps especially China have been a major blow. Factor in the uncertainty caused by the Trump tariffs and the list of Chilean wine’s challenges grows.

It is, therefore shocking, but perhaps not surprising to see this graph from the OIV database, which shows that the vineyard area in Chile has quite suddenly declined back to levels last seen at the turn of the century. Wine grapes are unprofitable, especially in the O’Higgins region, according to a Department of Agriculture report. Growers are shifting to cherries, citrus, and other crops with better prospects and margins.

Quality and Diversity

Sue and I have sampled many Chilean wines and we have been impressed by both the surprising diversity of wine types and styles and the steady rise in quality. The challenge, or perhaps one of the challenges, is to bring the best of Chile’s wine into sharper focus for consumers who confront a dazzling array of wine choices. Not an easy task, especially in this market environment.

Don Melchor has a role to play here as a sort of beacon to draw consumers closer to the world of quality Chilean wines.

Wine & the Trump Tariffs: A Cloudy Crystal Ball

May 13, 2025 By Mike Veseth in economic crisis, Economic impact, trade policy, trade wars, wine, wine markets Leave a comment

I’ve received emails asking me to write about the Trump tariff regime (and other policies) and how they will affect the wine industry. I have resisted so far because there is not enough information on which to base an argument or opinion. There is lots of speculation, but not yet much solid fact.

Beyond Speculation?

“Wine and the Age of Uncertainty” was the title of my remarks at the State of the Industry session at this year’s Unified Wine & Grape Symposium (which I previewed on The Wine Economist a few weeks before the event). Uncertainty is a constant factor in agriculture in general and wine in particular, I argued, but 2025 is different because there are so many unknowns to consider.

I illustrated this point with the slide above. Looking narrowly at the trade situation, there are lots of questions that need answers in order to get beyond speculation. I highlighted a few of the most important ones in red. None of the questions had firm answers back in January and they still don’t today.

So uncertainty prevails in the realm of “known unknowns,” which are the things that you know you don’t know. And that doesn’t even consider the bigger domain of “unknown unknowns,” which are the things you don’t know you don’t know (but should).

They say that what you don’t know can’t hurt you, but what you don’t know you don’t know can bite you in the butt.

The View from Abroad

How are foreign producers reacting to this unstable trade environment? No surprise, considering all the unknowns, there is no single dominant strategy. A common tactic, both in wine and more generally, has been to get as many products into the country as possible before full tariffs kick in. This will keep the distribution pipeline going at least for a while. It is not a permanent solution, but no one knows what the next step in trade policy might be. Maybe the tariffs will disappear as quickly as they appeared? An import surge buys time even if it comes at a cost.

Sue and I were in Spain last month and we encountered two very different reactions from producers there. Some accepted the fact of tariffs, but were relieved that they would be 10% instead of the 120% rates previously threatened. We can live with 10%, they said, and they are working out the appropriate business model for these circumstances. The wine industry has lots of problems (see below) and a 10% U.S. tariff is not the most serious of them. Ten percent is the new zero, as some have said, and many accept that so long as they can be sure that that’s what will prevail.

But not everyone agrees with this sentiment. We talked to one producer who said his firm was walking away from the U.S. market. Ten percent, 100 percent, 20 percent, what next? The uncertainty is simply too great to justify long-term investment. There are other markets where the risk-reward equation has a better balance.

Zero-Sum Solution?

Several European producers asked if the tariffs were benefiting U.S. wine producers. That’s a natural question if you think about tariffs and trade as a zero-sum game, where my loss is your gain. But in fact wine seems to be a negative-sum game at the moment as the global industry adjusts to a new normal. Demographic shifts do not favor alcoholic beverages generally. Neither do health concerns.

Economic uncertainty is undermining demand for many categories of luxury goods (and wine, for most people, is more affordable luxury than basic necessity). The threat of tariffs only serves to make the situation worse by raising costs and shrinking the already narrow distribution channel.

One way to think about the situation is in terms of what I call “pie economics.” What’s happening to the market pie? Is it growing or shrinking? What’s happening to your share of the pie? Is it getting bigger or smaller?

When markets are growing, distribution issues are often less important. The growing pie can make up for any small cut in your share. But when the pie is shrinking, the dominant strategy is to focus on share. That’s when zero-sum thinking kicks in. But in the case of tariffs, it is really a negative-sum game because higher import costs can sometimes shrink the pie so much that no one is better off.

The wine market pie was already shrinking, of course, so tariffs just make things worse. How it will turn out, and if anyone will be a winner, is still not clear.

So, wine and tariffs? My crystal ball’s all steamed up. Can’t see a thing. How about yours?

>>><<<

Some say that economics is the “science of unintended consequences” and a recent Financial Times article bears this out in the case of the Trump tariffs. One of the potential winners of the current trade war, according to the article, might be Vinarchy, which was created when Australia’s Accolade Wines merged with Pernod Ricard’s wine operations to create te world’s second largest specialist wine producer.

Vinarchy’s brands will be subject to tariffs on U.S. sales like everyone else, which is not good news. But the anti-American wine sentiment that the Trump tariffs have stirred up might create opportunities, too. They see openings for Jacob’s Creek in Canada, for example, and Campo Viejo in Mexico and the rest of Latin America, for example, as consumers look for alternatives to California wine.

Wine Economist Flashback: Stumbling into Sherry in Madrid

April 14, 2025 By Mike Veseth in Spain, The Next Big Thing, wine, wine markets 1 Comment

Sue and I are traveling in Spain and one of our goals is to learn more about what’s happening in the Sherry industry. It is our first visit to Andalucia, but not our first exposure to the world of Sherry wines. I thought you might be interested in this “Flashback” column from 2017 that reports on our very successful search for Sherry in Madrid. This flasback might especially timely given a recent Financial Times article on “How Sherry Got Chic Again.”

>>><<<

Can Sherry Be the Next Big Thing?

The Wine Economist / May 16, 2017

tio Can Sherry be the “Next Big Thing” in wine? I know what you are thinking. Sherry? C’mon! That’ll never catch fire in a big way. And you may be right, but give me a chance to make my case before you close the door on the Sherry cabinet.

One of the things that Sue and I wanted to do during our recent visit to Spain was learn more about Sherry. But the itinerary seemed to work against that. No time to jet south to Jerez de la Frontera in Andaluca, Sherry’s home. We would have to piece together our education in other wine regions. With a little luck and some helpful friends, we managed quite well.

Stumbling on Sherry in Madrid

Madrid is a long way from Jerez, but we found Sherry all around us, suggesting just how much it is a part of Spanish culture. Walking the aisles of the historic San Miguel market near the Plaza Mayor, for example, we stumbled upon a market stall called The Sherry Corner where dozens of different wines were offered by the glass at bargain prices. We had fun trying new Sherry wines and revisiting old favorites.

sherrycorner

The Sherry Corner offers a fun self-guided audio tour of Sherry wines. For €30 you get six glasses of different Sherries in a special carrier, coupons for six matching tapas from various market stalls, and an audio program available in six languages. It is quite a bargain when you do the math and it lets you both get to know the wines, experiment with pairings, and take advantage of the amazing tapas on offer at the market.

We found a completely different experience at the restaurant Zahara de Osborne in the Plaza Santa Ana, which was close by our hotel. The restaurant is owned by the Osborne wine group that is famous for its Sherry wines (you can see the Osborne bull staring down from hilltops all around Spain).

The idea of the restaurant was to bring the food and culture of Andaluca to Madrid. We challenged our waiter to create that experience for us and he did a great job choosing the dishes and helping us with pairings. Gosh, the Fino was delicious with a delicately fried whole fish!

Indigenous Sherry Culture

Not that Madrid does not have its own indigenous Sherry culture. There are Sherry bars in several parts of the city. Friends guided us to one called La Venencia, where the Sherry is served en rama, fresh and unfiltered, right from the barrel, which is a style I like a lot. My university colleague Harry uses La Venencia as his office when he is in Madrid (which is a lot) and he made introductions to José and Gabriel who worked the bar that day.

La Venencia has as much depth and character as the wines that are served there. If you have any pre-conceptions, you must check them at the door and accept the bar for what it is, which is true of Sherry wines, too. And then, well, it is a complete pleasure. Sherry really isn’t like anything else you will ever drink and La Venencia is just the same.

I have seldom been anywhere that was so totally itself and I will always associate that strong impression with the dry Manzanilla Sherry wines we enjoyed at La Venecia. osborne

A Little Help from our Friends

We got a little help from friends at Osborne and Gonzalez Byass wineries in our quest to learn more about Sherry. Santiago Salinas arranged for a tasting of Rare Old Sherries when we visited Osborne’s Montecilla winery in Rioja. These were wines for philosophers and poets. It is stunning to discover what great Sherries can become with time. We were inspired by Santiago’s passion for the wines and, of course, by the wines themselves.

Our visit to Finca Constancia near Toledo was organized around a rather extravagant seminar and tasting of Gonzalez Byass wines ranging from their signature Fino, Tio Pepe, on to a special Tio Pepe en rama bottling, and then carefully and thoroughly all the way through the line-up to the sweet, concentrated Pedro Xeménez.

Marina Garcia, our guide on this Sherry tour, was not afraid to draw out the complexities of the wines, which is great. As I told my audience at the General Assembly, sometimes complicated things need to be understood in complicated ways. Our favorite? We discovered the Palo Cortado Sherry style and it made us think. I love it when a wine does that.

Sherry doesn’t have to complicated … or sweet either, for that matter, although many people put the wines in that category. A chilled bottle of very dry fino or Manzanilla is pretty pure pleasure and will change many minds. But you’ve got to try it yourself to be persuaded and that’s a challenge. constancia

Sherry’s Moment?

If you look at the fundamentals, it is easy to conclude that this could be Sherry’s moment. The wines are great and well-priced. They come in a range of styles that variously make great aperitifs, pair well with food, or help unleash that inner poet. Apparently Sherry works really well as a cocktail base, too. Gotta check that out.

Tourism in Spain is on the rise and Spain’s tapas culture cuisine, which matches up so well with dry Sherry, is increasingly popular. Sherry, as much as any wine I know, is a product of time and place, and wears its authenticity proudly. Authentic, affordable, food-friendly. Aren’t these the things that wine drinkers are looking for today?

Sherry’s burden is its reputation as that sweet old wine that grandma drinks. There is so much more to Sherry for those who pull the cork. If enough curious wine drinkers pull enough corks, perhaps Sherry’s “Next Big Thing” potential can be realized!

Is Sherry going to be the next big thing? Probably not. But it doesn’t have to be. It is a timeless wine waiting to be re-discovered by a new generation of wine drinkers.

>>><<<

Thanks to everyone who helped us with our Sherry research. Special thanks to Susana, Mauricio, Marina, Santiago, George, Cesar, Greg, Harry, Jensen, Gabriel, and José. Thanks to Sue for these photos of the big Tio Pepe sign in Madrid’s Puerta del Sol, the menu at The Sherry Corner, the rare old Osborne Sherries, and the many hues of the Gonzalez Byass Sherry wines.

The Three Faces of the American Wine Dilemma

February 25, 2025 By Mike Veseth in economic crisis, Unified Wine & Grape Symposium, wine, wine markets 8 Comments

We live in a time when problems we face are complicated but many of the answers proposed to address them are very simple. I am suspicious of simple answers to complicated questions, both in general (this was the theme of my 2005 book Globaloney) and when it comes to the American wine industry.

Draining America’s Wine Lake

Wine Economist readers already know about the American wine industry’s general over-supply problem. Despite several short harvests in a row in California, wine inventories remain very high and prices are falling. As Jeff Bitter pointed out at the Unified Wine & Grape Symposium last month, many thousands of acres of wine grape vines have been removed and more grubbing up is necessary before supply has been downsized to balance with demand. Similar adjustments are taking place throughout the world of wine.

I was interested to learn from Jeff that California’s Central Valley is perhaps closer to equilibrium than, say, the Central Coast. This is in part because growers in the valley can more effectively switch to alternative crops, which cushions the blow of vine removal. Indeed, many large growers already farm multiple types of crops, so the switch is a change of ratio and proportion, not a move into a new line of business.

Some growers would like to “furlough” their vineyards, to pause production until the market has stabilized. But, at least in some areas, this is made difficult because of water use regulations. Water rights can be withdrawn if the land is not actively farmed for several years. So in some areas, where alternative crops are not feasible and water rights are tightly controlled, vineyard removals or furloughs are hard to manage. No wonder there are reports of some vineyards simply abandoned! (I have also heard of one vineyard that was offered at a zero-dollar lease to anyone who would keep production going and, therefore, keep water rights safe.)

Unemployment: Cyclical, Structural, Frictional

The wine market situation is complicated in other ways, too. Both Glenn Proctor and Danny Brager talked about the problem at the Unified in terms of structural versus cyclical adjustments and this got me to thinking about the way economists explain unemployment as the interaction of three forces. I will explain briefly since I think these concepts apply to wine, too.

Cyclical unemployment is caused by cycles in the economy. Workers lose their jobs as firms scale back during a recession, for example, and gain them back (or get other jobs) when economic growth returns. Macroeconomic stimulus (tax cuts, interest rate reductions) are tools of choice to address cyclical unemployment.

Structural unemployment is joblessness due to changes in the essential structure of the economy. Changing patterns of trade, environmental shifts, and technological change are some of the causes of structural unemployment. Some newspaper employees, for example, suffer structural unemployment as demand shifts from physical to digital platforms for information, entertainment, and advertising. One of the concerns about artificial intelligence technology is that it might contribute to structural unemployment.

It is significant that policies designed to address cyclical unemployment such as interest rate cuts will do little to correct (and could even accelerate) structural unemployment problems.

Finally there is frictional unemployment, which is joblessness caused by inefficiencies in the labor market, as happens when there are jobs available in one city and jobless workers in another city, but information inefficiencies, high transaction costs, and other barriers prevent them from productive connection. The current housing market, with higher mortgage interest rates and historically high prices, is one source of frictional unemployment, for example. Job market policies tailored to either address cyclical or structural unemployment problems may have little impact on frictional unemployment. There aren’t many easy answers to complicated questions.

The American Wine Dilemma

These concepts apply to the wine industry in America and other countries today. The wine market has long been subject to medium-term (7- to 10-year) cycles, for example, although “wild card” events such as the COVID pandemic have distorted the pattern. Some wine industry folks have never seen the bottom of the wine cycle before. The fact that the previous “boom” part of the cycle was characterized by a ratchet-up of wine prices (premiumization) makes the down cycle more difficult to predict.

There are also structural changes at work. Demographic transition (baby boomer rise and fall) is part of the situation, but so is the structural shift in attitudes and behavior towards beverage alcohol generally. There also seems to be a structural shift in consumer preferences away from red wines toward white wines. It is hard to predict how and when these structural forces might run their course and when or whether they might reverse.

Finally, there are frictional concerns that take many forms around the world, but here in the United States are perhaps most apparent in wine distribution and retailing. Wine distribution pipelines have narrowed in recent years. I have written that every industry organizes itself around its most important inefficiency (or “bottleneck,” if you know what I mean). Distribution is wine’s bottleneck, not growing grapes or making wine. The fact that this bottleneck has narrowed is significant and could well reshape the industry broadly.

The Age of Uncertainty

If you are looking for a simple answer to the dilemma of American wine, you are not going to find it here. The point, as stated above, is that complicated questions seldom have simple answers. Complexity leads to uncertainty because each of the cyclical, structural, and frictional forces is difficult to predict and their dynamic interaction is sometimes best modeled by chaos theory

So, as I wrote here a few weeks ago, we have entered the Age of Uncertainty. In economics, uncertainty equals risk and risk discourages investment, innovation, and growth. Not what the wine industry needs at this moment. But understanding uncertainty and risk is better than charging ahead in ignorance.