A Tale of Two Wine Regions: Willamette Valley & Virginia

The best way to sell wine is also the best way to enjoy it: a personal experience with the winemaker, the wine, and the stories that connect the two and form a memorable bond. That’s why winery visits are so powerful.

Not everyone can come to the winery, however, so what’s the next best thing? By happy coincidence Sue and I have recently been involved in two efforts that succeed in different ways.

Willamette Valley: The Winemakers’ Lunch

The Willamette Valley, like many regions, sponsors periodic road shows where winemakers and their wines travel to meet media, the wine trade, and consumers in person. It is sort of an exercise in bringing the mountain to Mohammed, which in this case meant bringing Oregon producers to Seattle. There were walkaround tastings for trade and consumers, individual meetings with distributors, tastings at wine shops, and a media lunch at Matt’s in the Market that we were lucky to attend.

Sue and I were excited about the lunch both because we could taste the wines with food, which is one of our tasting preferences, but also because we could meet the winemakers in a small group setting and get to know them and their stories a little better. As good as the wines were, the people and the stories, especially about their relationships with their farms and their customers, were the best part. I have listed the wineries and wines we tasted at the end of this column.

The wines told stories both expected and new. Every winery brought a Pinot Noir, for example, which was no surprise since that is the Willamette Valley’s signature wine grape variety. Each was distinctive, all were delisious. The big surprise was the Pinot Noir wine from El Fille, which was white, not red, and packaged in a refillable bottle, part of a program to recycle and reuse bottles, not just recycle the glass. The wine was refreshing and, from a market standpoint, a smart development because white wines now outsell red wines globally.

The Willamette Valley is Pinot Noir, but not just Pinot Noir. That was one of the storylines, so each winery also brought something else that they are proud of, starting with Pinot Gris, the most-planted white grape variety, to Dry Riesling and Chardonnay, Trousseau and Gamay Noir. I think you could spend a weekend in the Willamette Valley without ever tasting Pinot Noir and have a great time because the other wines are so interesting.

People ask why this region doesn’t produce more Chardonnay since Pinot Noir and Chardonnay are best friends in France (this question actually came up at the luncheon)? Jancis Robinson and Linda Murphy give an answer in their 2013 book American Wine. The early Chardonnay vineyards were all planted with a Davis clone best suited to a much warmer climate. The wines made from these grapes lacked character and so Pinot Gris, better suited to cool climate conditions, won out. But eventually Dijon clones arrived on the scene and great wines with distinctive character appeared. You could probably spend a weekend tasting nothing but Chardonnay and not regret it!

Virginia: The Governor’s Cup Case

Oregon and Virginia have a few things in common when it comes to wine, but the differences are most important. Both wine industries took root about fifty years ago (this year the Willamette Valley celebrates the 40th anniversary of its AVA) and both were influenced by the international investment they attracted in the early days. The Drouhin family brought a lasting French accent to Oregon, for example, and Italy’s Zonin family’s 1976 investment in Barboursville Vineyards jump-started the modern wine industry in Virginia.

The Virginia wine industry organizes a Governor’s Cup competition each year, and hundreds of wines are entered by the nearly 400 wineries in the state (Oregon boasts nearly 900 wineries). For 2024, the Virginia judges tasted over 750 wines, awarding gold medals to 137 wines from 79 wineries.

A winning wine is named each year and a Governor’s Cup Case of wine created with twelve top wines, six from the Monticello AVA and six from elsewhere in the state. Monticello is like the Willamette Valley in that it is the center of the state’s industry, but a lot is happening elsewhere, too.

This year we were fortunate to be on the media list for a Governor’s Cup Case and to be invited to meet the winemakers via webinars hosted by the skillful Frank Morgan. We’ve met the people, heard the stories, and now we are slowly working our way through the wines.

Vive la Différence!

The obvious difference between the Willamette Valley and Virginia is that Virgina doesn’t really have a signature grape variety. There was one Pinot Noir wine in the case, but Pinot isn’t easy to grow in hot, humid Virginia. CrossKeys Vineyards gets away with it in part because its Shenandoah Valley (near the Blue Ridge mountains) location is friendlier to Pinot than is Monticello, but mainly because they harvest very early and make a sparkling wine.

We are working our way through the Governor’s Cup case (hard work, but someone has to do it) and learning a lot in the process. Matching grape variety to terroir is important everywhere, but perhaps especially so in a hot, humid region. The first white wine we tasted was a Petit Manseng from Paradise Springs Winery in Northern Virginia. The wine was fermented and aged in a concrete egg.

Petit Manseng is a grape variety most closely associated with Jurançon in Southwest France where it makes delicious well-balanced sweet wines. You find it in Virginia and even further south because it retains its acidity in hot weather and the loose bunches of thick-skinned berries can tolerate high humidity better than many grapes. That’s exactly what winemakers need in Virginia. The wine was delicious and very well balanced, enjoyed through the meal and even with Sue’s rhubarb upside-down cake dessert.

The characteristics that make Petit Manseng a good grape variety for Virginia also apply to Petit Verdot. So it is no surprise that most of the red wines in the Governor’s case are either varietal Petit Verdot or include it in the blend. This was true of this year’s winning wine, King Family Vineyards 2019 Meritage, a blend of 48% Merlot, 28% Petit Verdot, 20% Cabernet Franc, and 4% Malbec.

The King Family Meritage was delicious, but not exactly what I was expecting. The Petit Verdot component lifted the wine and made it juicier than most other Meritage blends we have tried. This sort of red blend might be a signature style for Virginia (just as Cabernet/Merlot/Syrah works in Washington). It might not be an accident that there are four red blends featuring Petit Verdot in the Governor’s Cup case and a 100% Petit Verdot wine, too.

We tried the “Traditional Red Blend” from Afton Mountain Vineyards, for example. Although it followed a a slightly different recipe, the Petit Verdot came through clearly. You would not mistake it for a California BDX blend. When it comes to “traditional red blends,” Virginia is creating its own traditions.

Tannat is another wine grape that can stand up to warm contitions. It is famously at home in Madrian in Southeast France. It makes sense that it might work the right spots in Virginia, too. We were therefore excited to try the “L. Scott red blend” from Michael Shaps Wineworks. A Virginia appellation wine (because the different grapes came from specific vineyards in serveral parts of the state), this blend of 50% Tannat and smaller amounts of Merlot, Malbec, and Cabernet was terrific from start to finish. A fantastic example of what is possible in Virginia.

Take-Aways

Virginia and the Willamette Valley are about the same age in terms of their modern wine industries, but it is obvious that the Oregon region has matured more quickly. The Virginia winemakers we met on the webinar acknowledge that they are still experimenting with terroir and grape varieties (and probably in finding their markets, too).

Two things the regions have in common are quality and diversity. Tasting the Virginia Governor’s Cup wines demonstrated the quality of the best wines. The growing emphasis on grape varieties in addition to Pinot Noir shows the diversity of the Willamette Valley’s offerings. The Willamette Valley has embraced diversity by choice. They can grow many types of winegrapes and are exploring the possibilities.

Virginia is exploring new pathways both by choice and be necessity because of climactic conditions. The experiments are on-going and the best results are attention-grabbing. What fun!

Both regions have much to offer wine enthusiasts, with something new around every corner. Can’t wait to see what’s new next year.

>>><<<

Willamette Valley Vintners’ Lunch wines

Et Fille White Pinot Noir (bottled in Revino refillable bottles)
Sweet Cheeks Estate Dry Riesling & Willamette Valley Pinot Noir
Belle Pente Willamette Valley Pinot Gris & Willamette Valley Pinot Noir
Resonance Découverte Vineyard Chardonnay & Resonance Vineyard Pinot Noir
Hazelfern Trousseau Noir & Three Cedars Vineyard Pinot Noir
Division Gamay Noir “Gala” & Willamette Valley Pinot Noir
Winderlea 2019 Vintage Sparkling Brut & Winderlea Vineyard Pinot Noir

Virginia Governor’s Cup case: Monticello Region

Afton Mountain Vineyards 2019 T: Monticello AVA – 42% Merlot, 29% PetitVerdot, 29% Cabernet Sauvignon
Barboursville Vineyards 2019 Paxxito: Monticello AVA – 50% Moscato, 50% Vidal Blanc
Hark Vineyards 2019 Spark: Earlysville, Monticello AVA – 46% Cabernet Franc, 30% Merlot, 24% Petit Verdot
King Family Vineyards 2019 Meritage: Crozet, Monticello AVA – 48% Merlot, 28% Petit Verdot, 20% Cabernet Franc, 4% Malbec
Michael Shaps Winery 2020 L. Scott: Charlottesville, Monticello AVA – 50% Tannat, 33% Merlot, 17% Malbec
Mountain & Vine Vineyards: Faber, Monticello AVA – 100% Chardonnay

Virginia Governor’s Cup case: Other regions

Bluestone Vineyard 2018 Petit Verdot: Bridgewater, Shenandoah Valley AVA – 100% Petit Verdot
Breaux Vineyards 2019 The Fog Nebbiolo Reserve: Purcellville, Northern Virginia – 100% Nebbiolo
Cave Ridge Vineyards 2019 Fossil Hill Reserve: Mt Jackson, Shenandoah Valley AVA – 60% Cabernet Franc, 20% Cabernet Sauvignon, 20% Petit Verdot
CrossKeys Vineyards Blanc de Noir: Mt. Crawford, Shenandoah Valley AVA – 100% Pinot Noir
October One Vineyard 2022 Albarino: Leesburg, Northern Virginia – 100% Albarino
Paradise Springs Winery 2022 Petit Manseng: Clifton, Northern Virginia – 100% Petit Manseng

The Big and Hot Guide to Wine 2024

When you’re hot, you’re hot (and when you’re not, you’re not). That’s the way it is in the wine market today.

One of the most interesting charts at the “State of the Industry” session at this year’s Unified Wine & Grape Symposium was Danny Brager’s analysis of what I call the U.S. wine market’s “Big and Hot” situation.

The gist of the slide was that the market categories that are the biggest are not very hot (indeed, most of them are shrinkingly cold) and that the market categories that are hot and growing are relatively small. Under these circumstances, it is hard to see an “engine” category that might pull the overall market out of its current slump.

It has been a while since we published a Wine Economist “Big and Hot” column, so let’s take a closer look using the NIQ data for the 52 weeks that ended on February 24, 2024, taken from the May 2024 issue of Wine Business Monthly. NIQ captures the big chunk of the U.S. wine market that flows through distribution channels that large wineries depend upon, but doesn’t include everything, especially DTC sales that many small and medium-sized wineries depend upon.

Reference Points

The NIQ data report both volume and value numbers. Total measured sales for the 52-week period were $15.4 billion on 142 million 9-liter case equivalents. That was down 2.9% by value and down 4.2% by volume over the previous year.

The “Big” wines in various categories measured by value are as follows:

Domestic $11.1 billion vs Imported $4.3 billion
Among imports: Italy $1.4 billion, New Zealand $690 million, France $637 million.
Among domestic: California $10.0 billion, Washington $509 million, Oregon $290 million.
By grape variety: Cabernet Sauvignon $3.1 billion, Chardonnay $2.6 billion, Pinot Noir $1.5 billion, Sauvignon Blanc 1.4 billion.
Blends: Red blends $1.9 billion, Rose blends $608 million, White blends $237 million.
By price point (glass): super-premium ($11 to $14.99) $3.7 billion, Premium ($8 to $11.99) $2.5 billion, Popular ($4-$7.99) $2.4 billion.

What’s Big and Hot?

The Big and Hot winners are easy to identify because there are only two Big categories that experienced positive growth during the period under consideration and they are so closely related that they are nearly the same: New Zealand (+2.1% by value) and Sauvignon Blanc (+4.1%)! Indeed, tiny New Zealand accounts for almost half of all U.S. Sauvignon Blanc sales by value.

If you’ve noticed a lot of Costco shopping carts filled with Kim Crawford or Kirkland Signature Marlborough Sauvignon Blanc, you are not hallucinating. That’s the Big and Hot effect.

Three-liter boxes are pretty big ($856 million) and growing by 2.4%, but no other “Big” category grew during this period, although some declined by less than the overall market (which is sort of damning with faint praise). Chardonnay sales fell by only 1.9%, for example. A rising tide doesn’t always raise all boats, but this ebb tide seems to be dragging almost everyone out to sea with it.

Hot But Not Big

As Danny Brager noted at the Unified Symposium, the market is growing in smaller, niche categories, not the large segments. Red blends, a Big, are down more than 5%, for example. White blends are up slightly (0.3%), but are a small category by comparison. Two countries have experienced good growth recently, but from a relatively small base:

South Africa 5.5% growth ($37 million)
Portugal 3.4% growth ($53 million)

Two very different categories that experienced growth with substantial sales present something of a puzzle. Luxury glass ($20-$24.99) 0.6% growth ($867 million) beat the market average despite an overage price of $22.24. Chile 2.5% growth ($373 million) did much better in terms of growth, but sits at the other end of the market with average price of $4.93. It is hard to see the thread that connects these two wine segments.

Do these trends drawn from the NIQ data apply to smaller wineries that rely more on wine club and cellar door sales? I would be interested in reader reactions to this question. I am especially interested in the shifts among wine grape varieties and price points. As always, please keep comments short and to the point.

Starbucks and the Wine Market: An Update

Last week’s Wine Economist column compared the current wine market situation with the problems being faced by Starbucks, the super-premium coffee chain. Tighter consumer budgets seem to be cutting into the sales of both wine, which is expensive on a per-serving basis, and Starbucks, which isn’t exactly a low-cost option either.

This week’s Economist newspaper features an article that compares Starbucks problem to that of President Joe Biden. You can evaluate this argument for yourself, but what interests me is the more detailed breakdown of Starbucks’ declining sales, which might be relevant for wine.

Starbucks has at least two types of customers. There are the committed regulars who most often visit in the morning. They load money on their Starbucks app, which they use to order coffee and other Starbucks products. I have read elsewhere that the “float” on the money that has been put on the app but not yet spent is a significant revenue stream for Starbucks, so these are really important customers.

Then there are the “occasional” customers, who more often show up in the afternoon and don’t necessarily use the app. Both the regulars and the occasional customers are important to total sales, just as they are to wine sales. And sales for both groups of consumers are down at Starbucks.

Regular customers are leaving more incomplete orders on the app, the article notes, changing their minds at the last minute. Is it because of unexpected long wait times? Are some of the millions of permutations of the chain’s drinks unavailable? I want what I want when I want it! Or is it because, once they see the total cost of their order, consumers, even regulars, hesitate to hit the order button? Probably some of all three explanations.

The Economist speculates that the decline in occasional customer business is due mainly to tigher economic conditions, because similar reports are coming from McDonald’s, Shake Shack, and other businesses. It will be interesting to see how Starbucks responds to these challenges and if there are any lessons for wine is the results of their efforts.

Starbucks, McDonald’s, and the Global Wine Glut

May 14, 2024 By Mike Veseth in Economic impact, wine, wine markets 3 Comments

Two of the most-read Wine Economist columns of 2023 analyzed theories of the global wine glut. The first focused on demographic theories (generational differences and life-cycle patterns) and the second took aim at economic forces (rising inflation, interest rates, housing costs, consumer and business debt). The first column got more attention. Until now.

A recent OIV report on global wine sales found that consumption measured by volume fell in almost every major consuming country between 2022 and 2023. It really is a global issue. And while there are many factors involved, including rising health concerns, the OIV stressed the economic theory of tighter budgets squeezing consumer choices. Why didn’t the OIV stress demographic trends? I can’t speak for them but it is clear that they are interested in the global problem and not every consuming country has the same demographic pattern as the U.S. Baby boom or lifestyle explanations don’t help us understand the sudden collapse of wine consumption in China, for example, but changing economic circumstances might.

Everyone knows that people are feeling economic strain these days, but can it really be affecting wine sales as much as that? Remember that sales in most countries haven’t collapsed (China being an exception). The volume of consumption has fallen by 2% to 4% in most countries. This is relatively small in percentage, but a big deal to winegrape growers and producers with unsold product.

This is where Starbucks and McDonald’s come in. Both are U.S.-based global firms and both have suffered significant declines, just like wine. I’ve been following the news about both companies recently and I think there are insights that wine producers need to consider.

Starbucks’ share price fell by 15% in a single day recently. Why? The Wall Street Journal published an article about persistently declining sales at the coffee giant. The problem, it noted, was that the company was running out of American customers who are willing to pay $5, $6, $7, or more for a beverage. Starbucks was premiumizing while their customers were belt-tightening. It turns out that many people don’t think they need Starbucks as much as Starbucks maybe needs them. Starbucks’ CEO announced a turnaround plan that seemed to miss the mark and the stock value took a dive.

What is the lesson for wine? Wine is sort of the Starbucks of its own category. Wine is more expensive per serving than other alcoholic beverages. It is a discretionary purchase. Consumers don’t need to buy wine. They don’t need to buy beverage alcohol at all. If only a few percent of them change behavior, you’ve got a Starbucks problem.

McDonald’s might also have lessons for wine. Once upon a time, fast food in general was seen as good value, but rising costs have increased the average drive-thru bill considerably and the volume of traffic has fallen. The McDonald’s CEO recently recognized the economic problem and vowed to restore the value proposition. There are rumors of a $5 hamburger meal, for example. Significantly, McDonald’s stock did not tank upon this announcement.

Perhaps wine needs to reevaluate its value proposition, too. Yes, there are inexpensive wines on the shelf, but are they good value? Consumers don’t seem to think so. Sales volumes have been falling for several years. Significantly, one of the few bright spots in the current market is the premium 3-liter box category ($4+ per bottle equivalent). Apparently many consumers see value here that they don’t find elsewhere on the wine wall.

I am not arguing that health concerns are over-stated or that generational and life-cycle explanations are wrong. But I think that the economic argument about the global wine market is important and wine producers need to take consumer budgets explicitly into account as they move forward. Consumers are feeling the squeeze. How can wine producers address this situation?

GD Vajra: Once Upon a Time in Barolo

April 30, 2024 By Mike Veseth in Italian wine, wine, wine markets 2 Comments

Once upon a time … That’s how many of our most beloved stories begin, so that’s how we begin this report on the wines of G.D. Vajra. These wines might be best understood in the context of the stories about them. And the stories have surely helped us understand and appreciate what we found in our wine glasses.

So … once upon a time Sue and I were invited to take part in a Zoom interview with Giuseppe Vaira, the second-generation family winemaker of G.D. Vajra. It was a great pleasure to spend an hour (even a web hour) with him. If you ask him a question, he will tell you a story (once upon a time …) using metaphors to communicate both facts and feelings. I think you can get a sense of what I am talking about from this video.

Every Glass Tells a Story

Mr. Vaira is such an engaging person that it would be difficult not to like his wines, but the memory of his stories certainly added to the experience. Here are three brief examples to show you what I mean.

Barolo is famous for Barolo, of course. That’s what they make and export around the world. But what do Barolo winemakers like to drink, Mr. Vaira asked. Dolcetto! Not, he made certain to add, because they are cheap (it would be difficult to get as much for a Dolcetto as for a Barolo), but because it can make such an appealing wine.

Dolcetto was once widely planted (and enjoyed), but it lost out to Nebbiolo when the region was replanted after Phyloxxera. G.D. Vajra began making a very special Dolcetto Costa&Fossati in 1979 and it shows what Dolcetto can be. Complex, elegant, great with food. Who would not want to drink a wine like this? Mr. Vaira’s story made us pull the cork and now we can’t think of Dolcetto the same way.

The Sun? Or the Moon?

The second story is about Freisa, an ancient Piemonte grape variety that you rarely see anymore. Freisa was once very common in the region, we learned and used it to make the base wine for Vermouth. But then came Prohibition in the United States and the bottom dropped out of the Vermouth export market. Most Freisa vines were pulled out so only a little is left. Many different styles of wine are made from Freisa today, so it would be easy for consumers to get confused. What is Freisa? Well, it depends.

G.D. Vajra’s Freisa “Kyè” plays on this theme. Look at the label. Is it the sun? Or the moon? Hard to pin down. As you might imagine, our minds were racing as we tasted this wine. I imagined that I could sense the Vermouth connection, but that might be the power of suggestion. A unique experience, more moon than sun for me, but maybe it was the residual effect of that solar eclipse a few weeks ago?

At one point Mr. Vaira suggested that we taste the 2020 Barolo wines over a couple of days to appreciate how they evolve. We took it as an opening to sample two different wines, half on one might and half on the next so that we could both compare the terroirs and experience the evolution. You’d do the same thing, wouldn’t you?

Turn It Up to Eleven?

Inevitably each wine came with an image or story to provoke our imaginations. The Coste di Rose comes from a small steep vineyard at the top of a hill. Reaching to the top, the notes tell me, that you are confronted with a tall sandstone dune, a dramatic sight that makes this vineyard’s unique soil profile clear. A wine with emotion, according to the tasting note, with tones of cherry and rose petals, mint, and sweet spices.

I selected the Ravera Barolo to complement the Bricco delle Viole partly because of the difference in terroir but, I admit, mainly because of a note I found where Giuseppe Vaira says, “I am intrigued by Ravera’s indomitable personality. It is crisp like the sound of a Telecaster, straight and electric.” How can you not taste a wine that evokes the iconic Fender guitar that has featured on so many rock hits?

The experiment was quite an experience. The two wines were indeed quite different from each other, showing the influence of terroir, and the second night tasting added more depth and richness. It reminded me of my friend Brian’s advice to always double-decant Barolo wines. These wines have years of development ahead of them, so it will be interesting to revisit them and see how their stories and personalities have evolved.

An Unexpected Favorite

Of all the G.D. Vajra wines we have tasted so far, Sue and I think the humble Dolcetto is our favorite, which is a surprise. But this isn’t just any Dolcetto because great effort was made to select the best heritage clone vines and to plant them in just the right place (a vineyard plot that would have made great Barolo) to tell the story of this historic wine in the most expressive way.

It doesn’t make economic sense to make a Dolcetto like this, but sometimes there are more important things to consider. It is all about the story at G.D. Vajra. I think that’s why their wines are so appealing.

>>><<<

An article that begins with “once upon a time” and ends with electric guitars needs a theme soung. Here it is. Enjoy. (It’s a Stratocaster not a Telecaster, but you get the idea!)

Roots to Resilience and Success for Ontario’s Wine Industry

April 16, 2024 By Mike Veseth in wine, wine markets 1 Comment

There has been a lot of troubling wine business news recently and I am watching closely to see if, when, and how the industry can pull together to address the many problems. As I wrote a few weeks ago, Lewis Perdue’s 1999 book “The Wrath of Grapes” criticized wine industry groups for putting individual interests above broader industry needs. Can we do better this time around?

So far this year I have been able to take the industry’s pulse through my participation at the Unified Wine & Grape Symposium in Sacramento and virtual and in-person speaking events in Idaho, Burgundy, Moldova, and the Eastern Winery Expo and License to Steal workshop in Syracuse. These experiences have left me cautiously optimistic, although narrow interests are a strong force.

I remember a lunch conversation with the owner of a small eastern winery looking for more direct sales opportunities. Off-site tasting rooms were a good option, but the extra sales involve substantial extra cost. What about sharing space with another winery from your region, I suggested? Maybe, was the reply, but not with a real competitor. Understood, but that limits cooperation. And that’s a problem if you are trying to grow the wine market pie rather than just grab a bigger slice.

My next stop is Niagara-on-the-Lake, Ontario, for the 6th Ontario Craft Wine Conference. The one-day program plus trade show packs in a lot of opportunities to learn, teach, talk, listen, and build new and honor old relationships. There are four tracks for specialized workshops: finance/operations, human resources, sales/marketing/digital, and technical/winemaking.

There are also three general “keynote” sessions where I hope everyone will gather. The day starts out with Spanish winemaker extraordinaire Almudena Alberca MW discussing “The Future of Premium Wine Production.” I take the stage right after lunch with a talk about “Secrets of the World’s Most Respected Wine Regions.” Elaine Chukan Brown addresses ” Building New & Diverse Opportunities in Wine” to close out the day’s formal program.

A reception follows and, if past is prologue, this is where a lot of the most important discussions will take place. It promises to be a full, intense day. Looking forward to it.

Can the wine industry pull together to address today’s problems? The Ontario conference title is “Roots to Resilience and Success for Ontario’s Wine Industry.” Resilience is certainly the name of the game today. Success in the future will be best achieved if the the industry can find ways to pull together.

Kind of Malbec: Mendoza Wine + Business Collaboration

April 9, 2024 By Mike Veseth in Argentina, wine, wine brands, wine markets 3 Comments

“Kind of Blue” is one of my favorite jazz albums and, although we usually think of it as a Miles Davis work, it is really a collaboration of talented artists at the height of their powers. Recorded in 1959, it features John Coltrane, Cannonball Adderly, and Bill Evans among others (who can forget Paul Chambers’ bass on the title track?). A timeless classic.

Wine is like jazz in many ways, including the power of ensemble work. Although we often give credit for a wine to the head winemaker, there is usually a team involved. The collaboration can take many forms. Recently, for example, Sue and I have sampled the wines of Ventisquero made by Chilean Felipe Tosso and Australian John Duval (of Penfolds Grange fame). Their “Obliqua” Carmenere, the result of a 20-year collaboration, was probably the best version of this wine we have tasted. The two winemakers harmonize well indeed!

Here in Washington State, the Long Shadows winery is organized like an album of duets. Allen Shoup, who founded the project, invited renowned winemakers from around the world (including John Duval, as it happens) to work with his team to make their version of Washington wines. The idea was to showcase what Washington can produce (and it has done that successfully) and give the international winemakers a new melody to riff on.

Miles Ahead: Marcelo Pelleriti

We were recently introduced to the wines of Pelleriti Priore, which are the result of a different sort of collaboration that makes complete sense. Marcelo Pelleriti is kind of the Miles Davis of the team. He is a rockstar (to mix musical genres) winemaker who has worked in both his native Mendoza and in France. An associate of Michel Rolland, Pelleriti has made famous wines in both hemispheres. His focus today, however, is Argentina, which is a great place to grow wine, but a difficult place to grow a wine business because of its many economic problems.

If Pelleriti is Miles Davis, then Miguel Priore is more like Bill Evans on the piano, driving the project forward and creating the foundation for Pelleriti to riff. Priore, also a Mendoza native, knows the region’s terroir, too, but especially contributes his understanding of the business side of wine to the partnership. Pelleriti makes great wine, Priore makes the great wine business possible. Together with other members of the Pelleriti Priore team, they are a tight ensemble.

The Business Side: Miguel Priore

The business side is very serious and I can see how it empowers Pelleriti. They insist on owning their vineyards, which is a very considerable investment. They have also invested to ensure effective distribution of their winery’s 50,000 case annual production both in the United States and in Europe. Looking to the long run, they have prioritized wine quality and providing their clients quality service over other factors.

I had to ask Miguel Priore about the problems of doing business in Argentina, with its high inflation and uncertain future given new President Milei’s bold policies and strong opposition. Priore acknowledged the challenges, but business in Argentina is accustomed to headwinds and his intent is to provide Pelleriti with a firm economic foundation for winegrowing and to insulate buyers from the economic changes, too. This is the right approach, but not easy to do. Makes me appreciate how important both parts of this duet are to the final product.

Kind of Malbec

In vino veritas, they say, and this was one of those times when the wines sang in harmony with their reputation. Sue and I tried two Malbecs from the Flagship line, a Marcelo Pelleriti Signature Malbec made from old vines and the 1853 Selected Parcel Malbec made from very old (more than 100 years!) vines. The year 1853 is significant for Argentina; it was when the first Malbec vines arrived from France.

Sue and I are now working our way through the next level of Marcelo Pelleriti and 1853 wines Last night we opened an Altamira Malbec they call Terroir Expressions “Hostage.” Why “hostage?” Because once they tasted the fruit from this “old little vineyard,” they felt themselvews held hostage to its charms. It is a real pleasure to experience the complex harmony. Powerful. Elegant. Unique.

Kinda reminds me of “Kind of Blue.” Another timeless classic?

>>><<<

P.S. Although he is best known for rock and roll, I don’t think Marcelo Pelleriti will object to the jazz references in this article. When Sue and I interviewed the two protagonists via Zoom I noticed that Pelleriti was wearing a vintage Ramones t-shirt under his jacket.

Wine Books Revisited: Lewis Perdue’s “The Wrath of Grapes”

March 26, 2024 By Mike Veseth in book reviews, economic crisis, wine, wine markets 5 Comments

A look back at The Wrath of Grapes by Lewis Perdue (Spike Books / Avon, 1999).

Over long, hard decades, American winemakers have won the respect of connoisseurs everywhere. Many of the world’s most cherished, and expensive, wines come from the United States. But today, the unique and eccentric wine industry faces a grim set of challenges that could transform it forever: oversupply in the face of flat consumption, devastating vineyard diseases, an antiquated distribution system, fierce competition from abroad, attacks from anti-alcohol forces, and an inability to capitalize on wine’s proven health benefits.

Sound familiar? This list of problems plaguing the wine industry reads like it could be taken from today’s wine industry news headlines. But it comes instead from the back cover of a 1999 book by Lewis Perdue. What can a 25-year-old analysis of the wine industry’s woes tell us that will help us today? I couldn’t resist looking back. Here is what I found.

Is It Time Yet?

The Wrath of Grapes was one of the first books I read when I started studying the wine business. Going back to it now I am impressed with how relevant it remains today and how much it has obviously shaped my thinking about the wine industry.

The first part of Perdue’s book is a sharp critique of the American wine industry. Why don’t consumers buy more wine? Because the way that wine is marketed confuses and intimidates them. Perdue cites the famous Paul Masson ad campaign starring Orson Welles as an example. The tagline “We will sell no wine before its time” was meant to assure consumers that Paul Masson was mature and ready to drink. But, consumers might have wondered, does this mean there is a wrong time to drink this wine? Maybe I’d better stick to beer!

It might be possible to overcome the misguided marketing strategies of individual wineries through an effective generic marketing campaign, Perdue suggests. But the wine industry is too dysfunctional to do anything important. Leadership and followership both fail at critical points. Vested interests focus on share of the wine market pie, so little is done to grow it.

I am not enough of an insider to evaluate Perdue’s critique of industry politics either then or now, but he pulls no punches in casting blame. Only one industry group, Women for WineSense, is praised for their effectiveness.

An even bigger problem than marketing is the lack of a cohesive strategy to address concerns about wine and health and the neo-prohibitionists who push for policies to reduce and restrict wine consumption. If nothing is done on this front, Perdue asserts, falling consumption is assured. Well, nothing much was done and here we are.

Love, Not Money

Part II is titled “Investing in Wine” and it takes the topic broadly, offering advice and analysis for those thinking of investing in a vineyard or winery, investing in fine wines for resale, and investing in the wine business through common stocks. Is investing in wine a matter of love or money? I suspect that most people would say “both,” but Perdue warns that you’d better be doing it for love because there are other ways to earn similar returns with less risk.

I think this was the first time I had seen an economic breakdown of a bottle of wine. Where does the money go to produce the wine (hint: grapes are not the biggest cost)? And how is the final price distributed between producer, distributor, and final seller? The specific numbers are different today, of course, but the fundamental analysis remains shockingly relevant.

Perdue’s hard-nosed analysis of wine-related common stock opportunities circa 1999 makes interesting reading. Coming from a Silicon Valley venture capital background, he is very objective about business models and risks and, interestingly, pays some attention to the perks such as wine discounts or special events that some of the wine companies offer their shareholders. He sees the perks as part of the “love” you need to get out of your wine investment to compensate for the risky return.

But perks aren’t everything. If you read Perdue’s analysis of the Robert Mondavi company, for example, you can appreciate the troubles that were building in its business model and why it got into such trouble a few years later. You’d need a lot of discounts on Opus One to compensate for the underlying economic woes.

There are three useful appendices. The first explains financial ratios, which anyone needs to understand to make sound investment choices, but not everyone thinks about when contemplating wine. Vineyard finance is the second topic, explored through a simple example of the sort of financial analysis that an intelligent investor should consider. The book concludes with a brief statement about wine and health.

Back to the Future?

Although some parts of The Wrath Grapes have naturally aged better than others, the book’s overall argument remains timely and relevant. Most of the big problems that Perdue wanted us to take seriously 25 years ago remain at the top of the agenda. No wonder the book is still in print.

If you haven’t read The Wrath of Grapes in a while, it’s time to look back at what Lewis Perdue was saying 25 years ago so that you can look ahead with more insight.

The Tax Man, Carl Lewis, and the Paradox of South African Wine

March 19, 2024 By Mike Veseth in economic crisis, Economic impact, South Africa, wine, wine markets 4 Comments

It was an unlikely pairing. Thirty years ago the legendary Olympic champion Carl Lewis became the face of Pirelli, the Italian tire maker. “Power is nothing without control,” the advertisements proclaimed.

This photo of sprinter Lewis in high heels made the point very well (as did a spectacular television commercial). Power without a strong foundation isn’t very useful. It is important to assess situations from the ground up (where the “rubber meets the road”) rather than simply top-down.

The Tax Man Cometh

What prompts my interest in vintage tire advertisements? I am inspired by recent reports from South Africa. The wine industry there, as I will explain below, is robust and resilient, and yet fragile. However, the South African government doesn’t seem to appreciate the situation’s complexity and has recently announced an excise increase of 7.17% on still wine, 7.17% on sparkling wine, and 6.67% on brandy. This is a harsh blow to an economically important but fragile industry just as it moves to recover more fully from the dismal pandemic days.

It is worth noting that South Africa is not the only wine region facing detrimental tax or other policies. One survey of winegrowers in Ontario, for example, lists discriminatory tax treatment as one of the top two or three headwinds and I know other regions with similar concerns.

It seems to me that the officials behind this tax fail to appreciate the wine industry’s double nature. It is robust, resilient, and an important economic driver of the national and many local economies, which is something to be protected. But, at the same time, it is fragile because the foundation of the wine industry is farming, and especially in South Africa, that is a difficult business.

Read the Report!

I recommend that government officials study a recent report issued by South Africa Wine titled “Macro-Economic Impact of the Wine Industry on the South African Economy.” The report traces the economic impact of the wine and brandy industry on the South African economy, making the case that it is an effective driver of economic growth.

The wine and brandy industry’s extensive value chain, which is deeply rooted in agriculture, has, over the past 365 years, played a significant role in South Africa’s cultural and economic history. Its distinct role within the South African alcohol industry landscape includes an extensive rural footprint, tourism, foreign revenue via exports of wine to more than 120 countries, and the associated brand reputation for the country.

You would not think it necessary to make such a case, but the industry suffered a variety of headwinds in recent years, including devastating drought and covid-related policies that banned the domestic sale of alcoholic beverages for long periods and also limited port access that is necessary for export shipments. What a nightmare!

Unsustainable Foundations

So it is important to dig down into the report to assess the condition on the ground, which in this case means the wine growers. The news is not good. Winegrape growers in South Africa, as in many places including the United States, have been hit with rising costs and limited opportunities for price increases. Margins have been squeezed like a fragile grape.

This chart from the report shows how quickly a fragile situation has worsened. In 2018 only 20 percent of grape farmers reported profits high enough to justify continued investment. Fifty-two percent of growers reported unsustainably low profits. Twenty-nine percent experienced losses. This is a picture of an industry on the edge.

Fast forward to the 2022 vintage and you can see that conditions deteriorated significantly. Only 12 percent of growers experienced sustainable profits while nearly a third reported losses and almost half unsustainably low net revenues. It is no wonder that hectares under vine have been in steady decline.

The Curse of Stein’s Law

In the past, the report explains, winegrowers have responded to higher costs by pushing up vineyard yields rather than through price increases. This strategy is difficult to sustain, however, and Stein’s Law holds that if something cannot go on forever, it will eventually stop. The steadily falling quantity of producing vineyard land indicates Stein’s Law at work.

So what should the government do when an economically important industry, with substantial domestic and international backward and forward linkages, is in such a fragile condition? Raising taxes on its products doesn’t seem like the obvious answer. Some may argue that the tax increases are intended to reduce alcohol abuse, which they might do, except for the existence of robust illegal alcohol markets, which would likely expand as the regulated market declines.

The South African wine industry has many problems, just like other wine regions today, but it has one thing going for it: professional organizations like Sound Africa Wine that provide unusually strong data and analysis that could and should help guide public policy. Now it needs government officials to wake up and understand that the wine industry is a powerful but fragile engine for growth and change and not just a conveniennt source of tax revenue.

What’s Your Wine’s Story? From 19 Crimes to 1000 Stories

March 12, 2024 By Mike Veseth in The Next Big Thing, wine, wine brands, wine markets 4 Comments

“What Young Wine Drinkers Want” is the title of a recent Financial Times article by Hannah Crosbie, one of several recent reports probing the priorities and buying habits of younger consumers. Taken together, they give anyone concerned about the future of the wine industry a lot to think about. Compared to the baby boomers who drove the wine industry for many years, younger consumers differ greatly in terms of their economic situation, communications preferences, relationship to alcohol, and much else.

The Changing Nature of “Story Wines”

One common theme is that younger consumers want more than something to eat or drink. They want products that tell a story that they can pass on to their friends and make part of their own story, too, in one way or another. Wine is good, but wine and a story about the wine are much better.

To be fair, the story element of wine purchases is not new, it is mainly that the importance has increased and the type of story has changed. First-person stories of visiting wineries and meeting winemakers are powerful, for example. I have some boomer friends who like to tell some version of a numbers story. Sometimes it is about how much the wine cost and sometimes it is about how little they paid (hello, Two Buck Chuck). Often it is about critics’ ratings. These stories intersect with various identities ranging from aspirational to reverse snobbery.

I am sure that these stories resonate with many younger consumers, but recent articles suggest that today’s consumers are looking for narratives that better connect to their identities. So story-telling, which has always been important in wine, is even more critical today.

Don’t Need No Stinkin’ Badges

One of the most-read articles in Wine Economist history is a 2018 column about 19 Crimes wine, “Outlaw Wine? 19 Crimes Succeeds by Breaking All the Wine Marketing Rules.” The article argues that there is no particular reason 19 Crime, which started as a brand featuring rather unfashionable Australian Shiraz, would have become a hit, especially with younger consumers. The key, I wrote, is the “outlaw” backstory, which resonated with many young male consumers.

19 Crimes is still a storied wine, but the story has shifted a bit since that column first appeared. Now it is also a celebrity story wine, with labels that feature Snoop Dogg and Martha Stewart. “Every bottle tells a story,” the wine’s website proclaims along with the outlaw motto, “It’s good to be bad.” And every bottle does tell a story via augmented reality technology. Just download the app and scan the label. Talk about a story wine.

One Thousand Stories

Sue and I recently took part in an online tasting of wines from a winery that has so completely embraced story-telling that it is even in its name: 1000 Stories wine. 1000 Stories is a line of California appellation wines produced by Fetzer/Bonterra, which is part of the multinational Concha y Toro wine group.

The name draws directly from the interest in story-telling. We all have stories, according to the website, and we want to add stories and share stories. Every bottle tells a story, too. The mood is upbeat compared with the darker 19 Crimes vibe, but wine as part of your identity theme is still there.

This umbrella story is supplemented by several (but not necessarily a thousand) supporting stories. 1000 Stories claims the title of the first bourbon barrel-finished wine (there are now several of these on the shelves). Used bourbon barrels are toasted and used to finish the wines. Since these barrels come from different distilleries and have different characteristics, each batch of wine is a bit different (that is, it tells a different story of its origins). In a world of homogeneous commodities, this will be a story that will resonate with many.

The use of bourbon barrels is not traditional, but I don’t see a problem. I remember visiting Justino’s winery on Madeira, where used barrels are so important to the process. They were using a few used whiskey barrels in an exchange with a distillery that was using used Madeira barrels to add some complexity to its whiskey. I thought that was pretty interesting, so I can’t criticize bourbon barrels for Zinfandel if the results are worthwhile.

The Bison Story

Concha y Toro and all its subsidiaries are certified B Corporation businesses, so there is a subtle social and environmental responsibility story told by the “B Corp” logo on the back label.

The back label doesn’t mention the story behind the bison on the front label, which is kind of puzzling. What does a bison have to do with the 1000 Stories? The answer is a good story. 1000 Stories is working with a group called Yellowstone Forever to support bison conservation in Yellowstone National Park. Why not advertise these efforts more clearly on the wine bottle? I speculate that perhaps it is left to the informed wine drinker to share the story with friends. Word-of-mouth is the most effective way to get a story passed around.

Sue and I have been tasting through the 1000 Stories lineup. The Zinfandel is balanced and rounded by its 5 grams per liter of residual sugar, but not avoids being the sugar bomb that many wines that target younger drinkers have become. It was great with BBQ brisket. The Red Blend is an interesting mix of grape varieties including Teroldego, Zinfandel, Cabernet Sauvignon, Petite Sirah, and Pinot Noir. It played nicely with a ham dinner.

I admit that I sort of wish that 1000 Stories really just focused on one story — it would make the wine’s story easier to tell. But I admit that people aren’t one-dimensional, so why should wines and their stories be monolithic.

I am not sure which of the many stories of 1000 Stories resonates with me, but then I doubt that I am the target audience. Pragmatically, what’s important for the wine industry is that wine brands pitch stories that connect with consumers, especially newbies who are looking for reasons to connect.

License to Steal 2024: Forging Best Practices in Wine Marketing

March 5, 2024 By Mike Veseth in wine, wine education, wine markets 1 Comment

I will be in Syracuse, New York, next week to speak at License to Steal, a national wine marketing conference that is being held in conjunction with the Eastern Winery Exposition.

License to Steal? Well, it is all about wine industry people gathering to talk about their marketing experiences, encouraging each other to “steal” strategies that have worked as a way to grow the total market pie. This would be called “sharing best practices” in consultant-speak. It is a great idea whatever you call it and very important today when the wine industry faces many headwinds.

License to Steal is nearly 20 years old. It started when seven state association directors (Illinois, Indiana, Michigan, Missouri, New York, Ohio, and Pennsylvania) got together. It is a national conference today, providing an important grassroots forum for wine marketing information.

Donniella Winchell, Executive Director of the Ohio Wine Producers Association and Conference Chair, describes License to Steal as “a place where wineries, growers, and ancillary entities willingly share, collaborate, and contribute to the future strength of the grape and wine communities across the nation. Sessions are lively, interactive, and led by some of the most exciting marketing minds in the business.”

I am looking forward to seeing everyone in Syracuse, learning as much as I can, and contributing a few ideas of my own, Here is the program agenda. Lots to talk about, think about, and plenty to steal, too.

Wednesday, March 13
8:15 – 9:15
Mike Veseth, The Wine Economist
Secrets of the World’s Most Respected Wine Regions
Wine economist Mike Veseth probes the world’s most respected wine regions to uncover the
secrets of their success and reveals how these secrets can be applied to wine regions around the
world.

9:25 – 9:55
Karen Thornton, AVA Program Manager
Avoiding AVA Petition Pitfalls
This presentation will help applicants move through their application with a minimum of
mistakes and resulting subsequent delays in the approval process.

9:55 – 10:10
Jim Trezize, President, WineAmerica
How WineAmerica represents your interests in Washington
Learn how this dynamic organization serves as a sounding board, represents your interests and
helps to protect the industry’s future as we deal with the coming pressures from the neo
prohibitionists, shipping issues, including the coming Farm Bill as is crafted in Congress.

10:10 – 10:25
Michael Kaiser, Vice President, Wine America
Legislative and Regulatory updates from Washington
An update from Washington on issues of concern to the American Wine industry including
Ingredient and Nutrition Labeling, Interstate shipping issues, and music licensing.

10:25 – 10:40 Coffee break

10:45 – 11:25
Ankita Okate, Chief Growth Officer, Beverage Trade Network | USATT
Using AI to take your winery into the techno future PRE-RECORDED
This topic encompasses the current impact of AI on the business, future AI trends, and
opportunities, preparing for the AI revolution, personalized recommendations, predicting market
demand and consumer preferences, quality control, compliance with regulations, enhancing the
sensory experience, sustainability, inventory management, and the future of the industry.

11:25- noon
Steal Session – Identifying New “on-ramps” For Our Industry
As boomers age and the Z generation’s affinity for RTDs and bourbon is ever-growing, we need
to find new ways to build new ‘on ramps’ to maintain the vitality of our industry

Lunch and visit the trade show

2:30 – 3:15
Maureen Ballatori, 29 Design Studio
Algorithms Reward Accounts That Share Videos
As social media moves more and more toward entertainment, algorithms reward accounts that
share videos. Video content tends to receive more impressions and a wider reach. In this session,
we’ll go beyond the basics to look at what truly moves the needle on social media.

3:15 – 3:30
Roger Brooks – Destination International – video PRE-RECORDED
Words that work
As marketing programs are designed, using the ‘correct’ words will provide the foundation for
success.

3:40 – 4:20
Clint Bradley, the Bradley group
New Customer Experiences & Inter-Generational Connections
What’s Old is New will focus on opportunities for the wine industry to capitalize on current
societal and demographic trends. Hint: it’s about creating new customer experiences and
building intergenerational connections by introducing young people to wine in ways that touch all
the 5 senses.

4:20 – 4:40
Steal Session
Refreshing Events: Festivals, Trails, Dinners, Wine & Food Pairings
As wine festivals and events are experiencing diminishing attendance numbers, we will explore
new ideas and approaches to rebuild and re-imagine these marketing tools.

Thursday, March 14
8:20 – 9:20
Chris Puppione, Regional Account Manager for Coravin
Part 1 of a 2-part workshop
What I Talk About When I Talk About Tasting Rooms
Welcome to the modern world of hospitality, where customer loyalty is not good enough; we
must dedicate ourselves to transforming those we serve into passionate advocates. In an era when
the bar for hospitality in tasting rooms is set painfully low and satisfaction will not suffice, we
must redefine the game. We will discuss the power of listening, creating unforgettable moments that elevate experiences, and how to make it effortless for your customers to love your brand

9:30 – 10:30 –
Chris Puppione
Part 2 of a workshop
By mastering the art of influence, rapport-building, and storytelling, learn how to fulfill your
guests’ core needs while fostering a sense of belonging, status, and self-fulfillment. We will
discuss impactful ideas that help keep things fresh in developing exclusive experiences and will
make everyone want to be a part of your tribe. In this session, we will explore our current
hospitality economy and discuss how you can be the answer to building lasting cultures where
teams and customers stay for years, making it stunningly simple to get it right.

10:30 – 10:40 Coffee break

10:45 – 11:45 Bennett Caplan, FIVS and FIVAS Adbridge
What Does “No Safe Level” Or “NSL” View Of Alcohol Mean For The Wine Sector
There are those who are effectively reconceptualizing alcohol in terms of a view that any level of
alcohol consumption is associated with preventable diseases, such as cancer and heart disease.
What does this “no safe level” or “NSL” view of alcohol mean for the wine sector?

Lunch and visit the trade show

2:30 – 2:45
Steal Session: The WHO’s Wine as “Carcinogen” & the Neo-Prohibition Movement
Sharing ideas about the pressures from the re-emerging Neos: tactics, and potential action plans
to counter their efforts

2:45 – 3:30
Kathy Kelley, Penn State University, professor of Horticultural Marketing and Business
Management
Using Emotion to Engage and Build a Connection with Your Customers
Learn how to use emotion to enhance your customer relationship and improve your brand
commitment. Attendees will discover ways that positive feelings about a brand can significantly
impact consumer loyalty.

3:40 – 4:40
Roger Brooks
“Sell the Experience, not the Amenities” – video PRE-RECORDED
Research indicates that stories sharing engaging, interactive experiences will sell an attraction to
every generation while pretty, but mundane pictures of wine and tasting rooms will not sell them
effectively.