Stalin, Machiavelli, and Nutritional Labels for Wine

If you want to start an argument among wine industry people, bring up the issue of nutritional labeling. Should wine labels provide consumers with the same kind of nutritional information and ingredient lists as found on most other food and drink items? Stand back!

The Soviet System

There is an old joke that everything in Stalin’s Soviet Union was either mandatory or forbidden and sometimes it seems like that’s the logic behind wine label regulations.

All wines in the U.S. market already have some required information on the label, but thi smainly  takes the form of warnings. Beware of alcohol! This product contains sulfites (without any explanation of what this is and why it might be a useful thing).  Negative labeling is required, but FDA-standard nutritional information is not.

Some wineries already provide nutritional information. Some do it because they believe consumers seek transparency in wine as in the other products they buy. Some do it to differentiate their products.

Stella Rosa wines, which are incredibly popular, are the exception to the rule. They do have nutritional labels and they are required to have it. Stella Rosa wines have alcohol levels so low that they are regulated as both wine and also food. The back label of a Stella Rosa wine bottle is a glimpse of the future whether you like it or not. Note that the Stella Rosa label shown here includes sulfites in the list of ingredients, but it also explains its antibacterial function.

A Lot to Learn about Labels

Machiavelli advises us to do willingly that which we will otherwise be compelled to do. Although I don’t accept this as a universal rule, it pretty much sums up my position on the issue of nutritional labeling of wine here in the United States.

The program committee of the Unified Wine & Grape Symposium seems to have embraced the inevitability of wine labeling regulations. There were several sessions devoted to label regulations including the two I have reproduced below. Read the descriptions to get an idea of the topic and issues that were discussed.

Prepping for Nutrient and Ingredient Labeling.  The EU is changing its laws to require labels on all wines sold there to have nutritional and ingredient information. The US is exploring this option and potentially will follow suit in several years. What does this mean for you in terms of how you make wines and how you will need to label them?

This session will explore actual EU requirements and some recommended practices to best describe and comply with these regulations. We will also discuss managing your ingredient list and nutritional levels and how to message this information to your customers. Some people have already been doing this for decades and we will discuss their reasons for why they were early adapters and why and how they have managed this through winemaking and messaging over time.

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Labeling Requirements and Regulations. Join us for a two-part comprehensive session on labeling regulations and requirements in the wine industry. The first part of this session will focus on the intricacies of the California Bottle Bill, featuring insights from industry experts and regulators. The second part of this session will explore proposed and anticipated changes in federal labeling regulations and strategies for addressing these changes. Our panel of distinguished speakers will provide valuable insights, and you will leave with a clear understanding of upcoming changes and compliance deadlines.

My Machivellian view is that it is better to accept that the labels are coming (and are already here in the European Union) and try to shape them to best suit both consumer and producer needs rather than to fight an all-or-nothing losing battle. But that doesn’t mean that there aren’t problems with labeling requirements.

Forest vs Trees

My issues with nutritional labels go beyond the wine category. I am a label reader. I want to know what’s in my food and drink and where it came from. But in the process of atomizing products into their parts, I think we have missed something important, which is a focus on the whole. Individual properties are important, especially to people with specific health issues, but the overall characteristics of foods and diets more generally are important, too. And the forest gets lost when we focus so tightly on trees.

This was not always the case. One of the factors that drove wine’s Golden Age, for example, was the French Paradox, which argued that wine was a vital part of a healthy diet and lifestyle. A healthy diet, like a good wine, is about balance.

You might not be able to exactly say that wine was good for you, but like this Wine Spectator cover, you could argue that a diet that includes moderate wine consumption is healthy for many people.

Two cheers for nutritional labels for wine. They are coming and we need to make the best of the situation. Many consumers will find that wine isn’t as unhealthy as they think. But there is much off-label work to do to get wine’s positive message back on the public radar screen.

The Road Ahead: Lessons from the Unified Symposium

What’s the state of the wine industry? Here are four observations inspired by things I learned at the Unified Wine & Grape Symposium‘s State of the Industry session and in hallway conversations. The theme, if there is one, is a spin on Robert Frost’s poem about the road not taken. The industry needs to choose a direction. Follow the well-trodden path that got us where we are or break away? Frost thought the choice was significant. What do you think?

One: The wine industry has a problem. But it isn’t just wine’s problem.

Everyone knows that the volume of wine sold has declined in recent years, which is a serious problem for many people in the wine value chain. Not every category has suffered equally and there are a few areas of growth. The picture improves a little if we look at the value of wine sold, but this mainly highlights segments where increases in average price have outpaced declining volume.

For many years the industry was built on an expectation of continued growth and it is difficult to re-gear for a declining market with high inventories from previous vintages that cloud prospects for the near future.

Some people were shocked when Jeff Bitter, President of Allied Grape Growers, called for the quick removal of 30,000 net acres of vineyards in California in order to bring supply into line with demand.  Jeff has been saying this for several years and I think his message is finally starting to sink in.

What’s behind the headwinds blowing against the wine industry? We used to blame spirits and craft beer. The story was that consumers were shifting to beer and cocktails in preference to wine. But that’s not true in general today. Both beer and spirits have falling overall demand, too.

Wine’s problem is not just a wine problem, it is a beverage alcohol problem. The situation is so bad that even once-hot tequila is cooling off. The Financial Times recently reported that some agave farmers in Mexico are balking at requests to replant for another harvest cycle. Maybe demand will be there when the plants mature. But maybe not, especially if U.S. demand tumbles (markets in other countries are not large enough to absorb a big U.S. surplus).

Two: We are not alone.

OIV data show that global consumption has fallen after a decade of stagnation. The soft wine market is just about everywhere you look, but especially noteworthy in the U.S. and China. I highlight the U.S. because it is the world’s largest consumer of wine (and still, many would argue, the best market around because American wine declines are relatively small compared to some others).

China? Well, that’s my own addition to the list. Chinese wine consumption increased dramatically before the pandemic struck and many imagined that its growth would be enough to offset declining sales elsewhere.

But then came covid, which crippled critical on-premise sales in China, and then the trade wars and tensions that have followed. The Chinese market is opening up again now (Australia has its fingers crossed that Aussie wine will be granted favorable access to China soon), but the market there has changed, and lost its dynamism. China after covid is not the growth market for wine that some counted on. It’s a small world after all and wine’s share of it has shrunk.

Three: The prisoners’ dilemma.

It is one thing to say that the wine industry needs to become smaller, more efficient, and more profitable (and it does!), but how do you do that when there are thousands of growers and wineries each protecting their own interests?  There is an element of the prisoners’ dilemma problem here. Collectively, the ideal strategy would be for many winegrowers to reduce vine acreage and take surplus grapes off the market. That would help everyone gain some control over margins.

But collective interests and individual incentives aren’t aligned. If everyone else is going to pull up their unprofitable vineyards, then it is in my interest to keep vines in the ground and gain from the higher prices while they suffer from smaller production. The private incentive encourages everyone to keep production high and the problem continues.

How do you overcome the prisoners’ dilemma created by this conflict of collective versus individual interests? Well, one solution is to play and replay the game over and over until the participants learn that cooperation is a better solution (even then, the “defect” strategy is always a problem). Or some sort of collective action mechanism can be employed, which is one of the things that the Spanish industry’s strategic plan hopes to achieve.

Four: A tale of two futures.

Susana Garcia Dolla, the director general of Spain’s broadest wine industry organization, framed the question in terms of two cycles, one a vicious cycle that reduces the wine industry through crisis and shake-out, and another, a virtuous cycle, that moves ahead toward sustainable profit by design.

Lots of forces will shape the wine industry’s future and it is impossible to expect any predictions to bear up over time. That said, it seems to me that the facts above suggest that we have reached a fork in the road and need to take the right path.

One road leads … well, it leads nowhere in terms of the future of wine. And it seems like the road we are on right now. This road blames consumers for the soft market and fails to confront over-supply in any coordinated way. The industry will lurch along until a critical point comes along, forcing action.

The other road leads to a smaller, more efficient, and profitable wine industry through timely and intentional actions.  The process is painful but follows Machiavelli’s advice to give the bad news all at once and the good news a little at a time. Which road will be taken for wine? And what’s the road not taken?

The Case for Cautious Optimism about the Future of Wine

Sue and I have just returned from the 30th edition of the Unified Wine & Grape Symposium in Sacramento. The Unified is the largest wine industry gathering in the Western Hemisphere with about 12,000 attendees over three days and 900 trade show exhibitors. If you want to take the pulse of the American wine industry, this is the place to go.

So how is the industry’s health? Well, if you go by the economic indicators such as sales trends (more about this next week), the patient is in bad shape.  There was bad news in the wine press and the expectation that more bad news was coming (it did).

Economic Pessimism

The situation reminded me of an essay called “The Economic Possibilities of Our Grandchildren” that the English economist John Maynard Keynes wrote in the depths of the Great Depression. “We are suffering just now from a bad attack of economic pessimism,” the essay began. “It is common to hear people say that the epoch of enormous economic progress … is over; that the rapid improvement in the standard of life is now going to slow down …

“I believe that this is a wildly mistaken interpretation of what is happening to us. We are suffering not from the rheumatics of old age, but from the growing pains of over-rapid changes, from the painfulness of readjustment from one economic period to another.”

I quote these lines here because I think that we are today also suffering from an attack of economic pessimism, both in the wine industry and more generally. We tend to look down and to look back, not ahead, and we avert our eyes from good news (about inflation or unemployment or, occasionally, politics) when it unexpectedly appears.

The only bright lights we allow ourselves to see (the Barbie movie, Taylor Swift) are ridiculously popular because of their novelty and scarcity. We look like the drab men and women of Keynes’s day. How sad.

I am part of this environment, of course, and because I am an economist and therefore a licensed deliverer of bad news, I am also part of the problem. I expected to meet a pessimistic wine industry at the Unified Symposium and that’s what I found. But only at first.

Cautious Optimism

Gloom and doom. But then in casual conversations Sue and I discovered a streak of cautious optimism that we didn’t expect. A friend we met at the registration counter who is involved in winery recruiting said she felt that hiring had turned a corner. Another friend who works in bottle closures was optimistic, too. He accepted the current problems but saw a path forward and was moving with confidence. This was not the first crisis he’d seen and he didn’t think it would be the last. Talking with him was a moment of quiet inspiration.

One winery owner was frustrated by all the bad news in the air because she worried about self-fulfilling prophecies. If we think the future will be dark and act accordingly then it will indeed be dark. Someone must turn on a light or at least acknowledge that the light switch is still on the wall.

Sue was working the trade show floor while I was moderating the State of the Industry session. She reported that it seemed like lots of business was getting done. There was a record number of trade show exhibitors and thousands of people in the aisles shopping for equipment and services or checking out what’s new. It was not a dismal scene, she told me. And it was still buzzing when I got there a couple of hours later after the press conference, even though a lot of people were at lunch.

Don’t Look Back!

What should we make of this uncomfortable combination of bad news and hopeful sentiments? In my remarks to the State of the Industry audience, I invoked the great American philosopher (and baseball pitcher) Satchel Paige, who warned, “Don’t look back, something might be gaining on you.”

How you see the future depends upon how you look at the past, which is your reference point. And that’s a dangerous thing because the past can be different depending upon your viewpoint.

If you look at today’s wine industry from the viewpoint of 2008 (as I discussed in last week’s Wine Economist), then you can’t help but be disappointed. The continued rapid growth that the industry expected then has failed to materialize in general. However, there are obvious market segments (thank you, New Zealand Sauvignon Blanc) that have grown beyond expectations.

But if instead, you look back 30 years, to the very first Unified Symposium, then your perspective is quite different. Seen from 1994, the wine market of 2024 is almost unimaginably prosperous. Wine has grown in every dimension: quantity, value, quality, number of producers and brands, global reach. It’s not where we thought we’d be back in 2008, but it is pretty damned amazing from the 1990s perspective.

The fact that the wine industry today is somewhere between the smaller market that they expected in 1994 and the much bigger one projected in 2008 should give us pause. There is a path forward from here; it is not without costs, challenges, and risk, but it is there for those who take it.

Don’t get me wrong. I am not denying the seriousness of the problems wine faces. Remember that I’ve been the frequent bearer of bad news for several years now. But cautious optimism is justified. The road ahead? Come back next week for more thoughts.

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Come back next week for more about what we learned at the Unified Symposium. In the meantime, follow this link for a pdf of Keynes’s essay.

A Look Back at the Future of Wine

The Unified Wine & Grape Symposium, North America’s largest wine industry conference and trade show, is happening this week in Sacramento, California. It is an exciting event where people from throughout the industry (and around the world) gather to share concerns and ideas about the challenges facing wine today.

Questions about the future of wine are never far below the surface of these discussions, which perhaps might explain why, in the run-up to the Unified, a very old Wine Economist column has suddenly started to get more clicks. The column was called “The Future of Wine” and it appeared in 2008 when The Wine Economist was in its first year as an online newsletter.

I am republishing “The Future of Wine?” now not because it got everything right, but rather because it illustrates how much recent events weigh on our vision of the road ahead and how hard it is to guess the future.

Please read all the way to the end if you have time because I think Kenneth Boulding’s point cited there is worth considering now and always. Come back next week when I will get out the crystal ball once again and speculate about the future of wine in the context of what I hear and see at this year’s Unified Symposium.

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Wine Economist “The Future of Wine?” May 25, 2008

What will the world of wine look like in 50 years? A look in the crystal ball.

What if the Chinese were French?

A journalist with a Brazilian newsweekly called me on Thursday to ask for help with a story on China. The magazine is doing a sort of “worst case scenario” report on the potential impact of China’s economic growth on world markets. What would happen to oil prices, for example, if the Chinese used as much fuel per capita as Americans do? Yikes, that would be a lot of drivers using a lot of gas and it would send oil prices through the roof. What would happen if Chinese consumers generated as much waste and pollution per person as people in the West? Once again, the global effects would be dramatic.

What would happen, the journalist asked me, if Chinese tastes changed and they drank as much wine per capita as the current world champtions, the French? Well, that is a very interesting question, even if it isn’t a very realistic one. Annual Chinese consumption of wine is about a half-liter per capita and rising, according to my copy of The Global Wine Statistical Compendium (and a lot of that wine isn’t grape wine, as I wrote in The China Wine Syndrome). Wine consumption in France, on the other hand, is 55 liters per person and falling (it was more than 120 liters per capita in the early 1960s). The figure is about 8.5 liters per capita for the U.S. and 20 liters per capita for Great Britain.

It is hard to imagine how Chinese wine consumption could rise to the current French level. Heck, it is unlikely that the French will sustain their current level for long. But isn’t entirely out of the question that Chinese consumpion could rise to the world average, which is about 3.5 liters per capita per year. That’s a lot smaller increase than the Brazillian reporter was concerned with, but it would still have a huge impact on global wine markets. Much of the increase would probably be met by higher Chinese production; China is already a major wine producer — smaller than Chile but larger than Portugal in total production. But the global effects would be substantial and prices would surely rise.

We can already see some indication of the potential “China Effect” in the market for fine wine. Everyone seems to think that at least some of the rise in Bordeaux prices in recent years is due to Asian and especially Chinese purchases. This trend seems likely to accelerate now that Hong Kong has eliminated its high tax on wine transactions so that it can become the auction hub of the Asian wine market. The latest Wine Advocate reports prices of 2005 Bordeaux that reach stratospheric levels — $500, $1500, $2500 per bottle! This is what happens when a global market focuses on an object of speculation — huge rents (excess returns) are created. As China (and India, too) become more completely integrated into global markets for products like fine wine, these rents will likely rise higher still.

The View from London

The Brazilians are not the only ones interested in the future of wine. Berry Bros. & Rudd (BBR), the London fine wine house, recently celebrated its 310th anniversary with the release of the Future of Wine Report written by four of their top wine buyers (Alun Griffiths MW, Jasper Morris MW, Simon Field MW and David Berry Green). It makes pretty interesting reading if you are interested in what wine markets might look like in 2058.

I say wine markets (plural) because BBR correctly recognizes that there is not one wine market but many interrelated ones. The fine wine market, BBR predicts, will see the rise of China and India as important factors in terms of both demand and supply. “I absolutely think China will be a fine wine player rivalling the best wines from France,” writes Jasper Morris. Britain will become an important producer of fine wines, too, perhaps especially Champagne-like sparkers.

Wine prices will soar even higher, according to the report. “If values increase by 15% per annumn, as they have been doing recently, a case of 2005 Ch. Lafite-Rothschild, currently available for £9,200. could be worth just shy of £10 mllion by 2050,” according to Simon Staples.

The forecast changes are more dramatic in the volume wine market. China will be the world’s largest wine producer. Global warming will shift wine production from France to Eastern Europe and from Napa Valley to Canada. Australia, the report speculates, could see a collapse of its volume wine industry if recent droughts persist. Goodbye Yellow Tail. Hello boutique producers in cooler, wetter areas like Tasmania.

Brands will become even more important in the volume business, BBR suggest. “In 50 years, consumers will ask for wine by the brand name or flavour and won’t know, or care, where it has come from. Grapes will be genetically modified to change a wine’s taste,” according to Jasper Morris, “and producers will add artificial flavourings to create a style wanted by consumers.” Wait — OMG I think I drank those wines back in the 1970s when I was in grad school!

Bottles and corks? They’re history. Corks will disappear because they are inefficient — the contamination rate is too high. Bottles are heavy and environmentally problematic. Tetra pak containers (like the ones used in today’s French Rabbit wines) and other sustainable packaging systems will prevail for volume wine.

The Future of Wine?

So what should we think of these visions of the future of wine? Economists like to say that prediction is difficult, especially about the future, so long range forecasts need to be taken for the educated guesses that they are.

Some forecasts, will be wrong because they are more or less simple straight line extrapolations (How much wine would the Chinese drink if they were French? How much will fine wine costs if its price compounds at the current rate?). It seems to me that simple projections are usually wrong because they are sensitive to initial conditions. Who is to say if long term trends will match those of the recent past?

Some predictions, like the £10 million case of wine, are extreme, but others are probably too conservative. The wine world has a way of surprising us — who in 1958 would have predicted the importance of Chile and Argentina today or the decline of consumption and production in France? People matter, too. People and their ideas are powerful forces that do not always respect historical trends, as refelction on the recent death of Robert Mondavi remind us.

Kenneth Boulding, the great 20th Century social scientist, once wrote a history of the future. He looked back to see what people in the past had said about the world just ahead. What he learned, he told me, was that when the future eventually rolled around, it never matched the predictions, it was always unexpected. The best way to prepare for the future, he concluded, was to prepare to be surprised. I expect this rather general advice applies as well to wine.

The “Uncork Ontario” Regional Wine Cluster Strategy

Although the U.S. economy performed surprisingly well in 2023, the wine business news columns were filled with gloom and doom as wine demand lagged behind the growth needed to sustain the industry. The problems affected the wine sector at all levels, but were most obvious in the vineyards. I’ve heard reports from all aroound the world of vineyards simply abandoned for lack of a market for the grapes or grubbed up and repurposed to a more profitable use.

2023 was a bad year for wine, but that’s not the whole story. Stagnant and falling demand has been here for more than ten years. And wine isn’t alone. I track the beer and luxury goods industries because I think they can tell us something about trends affecting wine. Beer is down, too. And all but the very top of the luxury goods market is suddenly stalled after a prosperous pandemic period.

There is one corner of the wine world where optimism can be found, however. Not the giddy optimism that comes when you don’t really appreciate how challenging conditions are, but the realistic optimism that comes when you have studied the problems and devised a plan to turn things around. Where is this magical place? Welcome to Ontario, Canada, and the dynamic Niagara wine region.

Uncork Ontario

The Canadian wine industry is concentrated in Ontario and British Columbia and has not been immune to the economic problems (declining demand) and natural crises (widespread wildfire damage in British Columbia) that face winegrowers all over the world. Significantly, they have decided that they need to try to take control of the situation to the extent possible. The result is a strategic plan called Uncork Ontario that is designed not just to stabilize the wine sector but to harness it into an engine of economic growth.

The first step in this process seems to have been the recognition that the various players could not achieve much on their own. They needed to work together to get traction. So an alliance of sorts was formed that combines Ontario Craft Wineries, an association of about 100 small- and medium-size wineries, and Wine Growers of Ontario, a broad group that includes some of the largest wineries, including the producers of that distinctive Canada product, IDB wine (for International-Domestic Blend).

This kind of alliance is not common because, while all the firms are in the same business and so share many broad interests, they often focus more on narrow strategies such as taking market share from each other instead of growing the overall market pie. Add to this the usual tension between larger firms that focus on commercial products versus smaller firms that want to see resources used to support their part of the market, and you can see why cooperation can be very hard to achieve.

The third partner is the Tourism Partnership of Niagara because wine tourism is an important economic force in a region located so close to major population centers in both Canada and the U.S. Tourism and wine are best friends, but cooperation is often limited because each group would prefer to focus on its narrow interests. An important informal fourth partner was soon enlisted, as I will explain below.

The Wine Industry Eco-system

Knowledge is power, so Team Ontario contracted with consultant Deloitte to produce a report titled “The Niagara Cluster: Ontario’s Untapped Economic Engine.”  The Niagara Cluster? Let me explain.

The Deloitte report uses an analytical framework made famous by Harvard economist Michael Porter, author of many books including Competitive Advantage: Creating and Sustaining Superior Performance. Prof. Porter’s key insight, which he developed by studying highly successful industries worldwide, was that successful firms don’t exist in a vacuum.

The greatest success is achieved when key firms are surrounded by effective supporting industries; have access to skilled talent, advanced research, and high-quality resources; face intense competition; and  must satisfy demanding customers. When conditions are right, the whole cluster grows as competition drives it ahead. Take away important factors, however, and things fall apart.

I like to think about Porter’s clusters as eco-systems (which is a term the Deloitte report also uses) and I am a fan of this kind of strategic analysis. (The Wine Economist reported on the Porter-style cluster analysis of the Walla Walla wine cluster in 2014.)

Strategic Partnerships

The Deloitte report makes interesting reading for anyone in the wine business for several reasons. First, it uses Porter’s analytical framework to break down the key elements of successful wine industry clusters. Second, it identifies “best practices” for each element, so there are specific targets to shoot for. Third, it frames the growth goals of the wine sector not in narrow terms (sell more wine!) but in terms of the broader economic impact on the communities involved. All of this is relevant to any wine region.

Two additional factors struck me as particularly important. First, the study doesn’t set an unrealistic goal such as “become the next Napa Valley” as sometimes happens. No, the report proposes that the Niagara region aims to be as important in its wine market (Ontario) as the Okanagan Valley wineries centered in Kelowna are to their region (British Columbia). The economic impact of such a development is large, both for wine and more generally.

But, the report found, one more partner was needed: the government. Ontario tax and regulation regimes discouraged the wine industry’s growth. That needed to change and, what’s more, the “best practices” model calls for the government to take an active role in promoting industry growth.

Time Has Come Today?

Incredibly, the provincial government seems to have heard this message and, although the situation is complicated and it is still early days, it looks like changes are coming, initially to the retail sales and taxation regimes. The introduction of retail competition is a major change and will really shake things up. The powerful Liquor Control Board of Ontario (LCBO) will retain its monopoly on spirits sales,  but open up competition for beer and wine. It won’t happen overnight, but the biggest market reforms since the end of Prohibition are on their way.

I need to learn more about what’s going on, so I will be heading to Niagara later this year to speak at the Ontario Craft Winery Conference. I am sure there is much more to the story and I may have made mistakes fitting the pieces together. But one thing is clear: even with all the gloom and doom in the wine sector, it is possible to make the case for growth.

But it doesn’t just happen. Everyone’s got to work together. And that’s hard. Ontario’s journey is just beginning, but they are off to a good start.

Non-Alcoholic Wine and the “Second Glass” Test

Sue and I hadn’t given much thought to non-alcoholic wine (NA wine) for a while but then we read Florence Fabricant’s NY Times article on “8 Non-Acoholic Wines for the Thanksgiving Table” and we knew we had to take another look at this growing category.

The “Second Glass” Test

There are more and more wines in the “No and Low” alcohol category and when we have occasionally tried one or two we have been disappointed. Although we’ve had a sense that the quality is rising along with demand, nothing really passed the “second glass” test.  I might be OK with a glass of one of the NA wines we’d sampled if I needed to avoid alcohol for some reason (designated driver role, for example, or a prescription drug issue), but I probably wouldn’t ask for a second glass.

I’d probably choose an NA beer over an NA wine. NA beers have made big strides. Both imports and domestic products like the ones from Athletic Brewing are high on my list. They taste good, remind me of the kind of beer they are made to represent, and cost about the same as the real thing. I’d be happy to accept a second glass. That’s what we are looking for in NA wine, too.

Journey to NA-ville

Fabricant’s column in hand, we made our way to the local big box beverage superstore and asked for directions to the NA wine section. We were led to the opposite side of the store to a section where all of the NA products (beer, wine, spirits) were on display. There were more NA wines on the shelf than I had imagined, many of them fruit-flavored. Since NA products are regulated as food, not booze, they all had full nutritional information and ingredient lists, so calories, carb counts, and additives were easily identified.

We found one of Fabricant’s recommendations on a lower shelf, the Giesen NA Pinot Grigio from New Zealand, and bought that along with the Giesen NA Sauvignon Blanc. Both wines were mixtures of de-alcoholized wine and a bit of grape juice and some other ingredients. I suspect the juice adds some body that is lost in the de-alcoholization process. We know and respect this producer (and even visited the winery a few years ago), so we were interested in how they would stand up to our tests.

The Giesen wines were better than the NA wines I remembered from past experiments (easy to see why they’ve become so popular), but for me, they didn’t pass the “second glass” test. They tasted fine and cost about the same as the regular Giesen wines, but they didn’t really remind me of Pinot Grigio or Sauvignon Blanc.  But, a step in the right direction.

JØYUS Discovery

Then, by happy coincidence, we received a sample bottle of JØYUS NA sparkling wine. Sue had speculated that sparkling NA wine might be the right direction based, in part, on our experiments with canned wine; she was right. The bubbly wine tasted very good, reminded us of sparkling wine (and not sparkling cider), and at less than $30 per bottle it was priced between Prosecco and Champagne and so in the range you might expect for sparkling wine.

The main ingredients are de-alcoholized wine, water, white grape juice concentrate, natural flavors, and carbon dioxide (to make the bubbles). By the numbers: 30 calories and 6 grams of carbohydrates per 8-ounce serving. (Eight ounces? Yes. Remember that this is a non-alcoholic beverage so larger serving sizes apply.)

Seattle-based  JØYUS makes other varieties of NA wines, both still and sparkling, including a Cabernet Sauvignon. The wine we tasted won best-in-category at the Sunset magazine competition.  Because it is non-alcoholic and regulated as food not booze,  JØYUS is available through Amazon.com!

So 2023 ends on a bright note for NA wine. There are NA wines out there that pass the “second glass” test after all, we just have to find them and hope that the list will grow. New Year’s “cheers” to wine (and NA wine) lovers everywhere.

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Many of my friends insisted that they would never drink an NA wine. But they are only partly correct. A lot of them have been drinking partially non-alcoholic wine for years.

Alcohol levels have been rising along with vineyard temperatures and it is one of the wine industry’s open secrets (along with the use of Mega-Purple to deepen wine colors) that they have been forced to take action to bring high abv down.

A common practice is to take some of the wine, de-alcoholize it, and blend it back in to get to the desired alcohol level. This is better than the dark art of adding “Jesus units” (water) to the fermenting wine to accomplish the same. I guess water is the ultimate NA beverage, isn’t it?

Fiasco Flashbacks? Rediscovering Chianti Classico

It is called a fiasco.

Fiasco? Yes, I know what you are thinking, but you’re wrong. I’m not talking about what happening in Congress with the debt ceiling. And I am not talking about the bonehead moves your favorite sports team’s coach always seems to make.

A fiasco is a type of bottle. It is bulb-shaped and wrapped in straw that both protects the glass from breakage and keeps the rounded-bottom vessel from tipping over. Back in the day, if you spotted a fiasco you knew instantly what was inside: a tasty medium-bodied Italian wine that probably wouldn’t break the bank when you hit the check-out counter.

Fiasco meant Chianti, which along with Lambrusco and Valpolicella, was the easily recognizable popular face of Italian red wine here in the U.S. The Chianti fiasco was popular with me and my young friends years ago because you got the wine itself and a decorative candle holder (the straw-wrapped bottle) all for the same price. What could be better? The traditional Chianti fiasco still exists, although I don’t see them very often (you can buy empty bottles on eBay if you are into retro decorating).

Sue and I discovered a 1.5-liter fiasco of “red Chianti wine” at Trader Joe’s as this column was being prepared for publication. The fiasco endures!

Chianti Identity Crisis?

I suppose that the move away from the distinctive fiasco was a bit of an identity crisis for Chianti, but it might not have been the only or most important one as Bill Nesto MW and Frances Di Savino explained in their 2016 book  Chianti Classico: The Search for Tuscany’s Noblest Wine.

Nesto and Di Savino argue that Chianti’s historical roots are in a relatively well-defined area that we now associate with Chianti Classico. As Chianti wine became more popular around the world, the Chianti zone expanded and the wine inevitably lost of some its distinctive character. Not all of it represented the original idea of Chianti very well. That’s a more serious identity crisis, especially at a time when there is more and more competition from within Tuscany, within Italy, and around the world.

Product Differentiation

The task for Chianti Classico producers, as it is for quality producers everywhere, is what economists call product differentiation. They need to make consumers aware of the difference between Chianti and Chianti Classico and then, because this is the age of premiumization, to further differentiate the best wines they produce.

The first task – Chianti versus Chianti Classico — is easy from a visual standpoint. Chianti Classico stands out on the shelf with its distinctive black rooster logo. But the wine needs to be distinctive in the glass, too, which has not been as clear in the past when both Chianti and Chianti Classico could be found with quality that varied from excellent down to just fair.

Climbing the Cecchi Chianti Classico Pyramid

The Cecchi family of wine producers invited us to sample their wines and taste the difference and it was an eye-opening experience. The Cecchi winery dates to 1893. Andrea Cecchi, who guided our tasting, is the fourth generation of the family in the business. The family’s home vineyard is Villa Cerna, which they acquired in 1962. The Villa Rosa vineyard was acquired in 2015. Both are complex mosaics of elevation, soil type, and aspect.

We started with their Chianti Classico Storia di Famiglia, which makes up about 60 percent of Chianti Classico production. It is made from 90 percent Sangiovese and 10 percent other grape varieties. Sue took one sip and said “Wow!” This wasn’t like any other Chianti that she tasted recently, she said. Bright, intense, and persistent in the glass. She was immediately taken by the wine’s style and substance. Product differentiation goal #1? Check!

We moved on to Cecchi’s Chianti Classico Riserva wine, Riserva di Famiglia, which is 90 percent Sangiovese and 10 percent Cabernet Sauvignon. Riserva wines are about 35 percent of production. Sue appreciated this wine but didn’t find it as exciting as the first, perhaps because the Riserva might be an attempt to balance the traditional wine identity with the power that the international market sometimes prefers. An excellent wine. And I think Sue’s reaction might have been different if she had tasted it first.

We reached the top of the pyramid with Valore di Famiglia, the Cecchi Chianti Classico Gran Selection wine. Gran Selection accounts for just 5 percent of production. The grapes are 100 percent old-vine Sangiovese from the Villa Rosa vineyard. The wine ages in both oak and concrete. The goal is elegance, limiting intervention so that the identity of the vineyards is not obscured. Goal achieved! A wine of many layers and nuances. Memorable.

Is Chianti Classico a Terroir Wine?

The premise of Chianti Classico is that terroir makes a difference. If it doesn’t, then wines from the larger Chianti appellation (and indeed wines from all over Tuscany) that are made in the same way with the same basic grape varieties should be just as good.

To test the terroir hypothesis we were invited to compare two of the Cecchi Chianti Classico wines that are sourced from two very different vineyard sites.  Primocelle (first hill) Villa Cerna is a particular part of the Villa Cerna vineyard while the Ribaldoni Villa Rosa is from a vineyard of that name with the youngest vines on the estate. The differences showed themselves clearly both on the nose and in the mouth. I enjoyed the violet and iris notes of the Primocolle. Sue was attracted to the elegance and sleek style of the Ribaldoni.

Rediscovering Chianti Classico

Sue says that she enjoyed all the Chianti Classico wines we have tasted recently (and looks forward to a couple of others we have in reserve). Excellent wines are all very different from one another. But she couldn’t forget that first glass of the Cecchi Storia di Famiglia. The purity and clarity stood out. And the surprise punctuated the experience.

I think that we are not the only ones to be rediscovering Chianti Classico. I see that there are seven Chianti Classico wines (including Sue’s favorite from Cecchi) on this year’s Wine Spectator Top 100 list. That’s a strong showing for what is a relatively small region. Congratulations to Cecchi and the other producers for this timely recognition.

Bottle Shocks: Unexpected Wine Bottle Trends

The movement to address climate change challenges is one of those glass half-full or half-empty situations. Bold initiatives are often followed by foot-dragging or back-sliding. Two steps forward then one step back.

Take the electric vehicle (EV) industry, for example. Bold initiatives such as targets to stop sales of gasoline-fueled cars are weakened and deadlines postponed (the situation in the UK). Meanwhile, the wind seems to have gone out of the sails of EV sales in the U.S., leaving auto producers wondering if their bold plans to transform their fleets are premature. Maybe most people who want an EV already have one? Maybe plug-in hybrid vehicles make more sense right now given resource limits, battery technology, and charging infrastructure?

Green Wine Agenda

The wine industry is working to reduce its carbon footprint, too, with attention to the weight of glass bottles particularly noteworthy and easy to understand. Sparkling wine bottles need to be fairly heavy to withstand internal pressure (indeed, the origins of Champagne are linked to innovations in glass bottle technology). But still, wines don’t really need heavy bottles in most situations. So thoughtfully reducing bottle weight has been on the green wine agenda for some time.

Progress is being made both to adopt lighter-weight bottles and to develop systems to recycle and reuse bottles. I have been following an innovative project that aims to re-invent the wine bottle to make it both lighter and more effectively recycled. Verre Vert Bottle, which I understand is at the advanced testing stage, ticks all the boxes with the potential to save energy, lower costs, and reduce carbon emissions.  I am looking forward to seeing how this project develops.

The Heavyweight Champ

But not all the news is good. Sue and I habitually consider wine bottle weight in our work, although we haven’t started keeping detailed records yet. We note when we find an unusually light bottle, for example, and when one seems heavier than we expect given the type of wine.

Recently we’ve run into several heavy bottles weighing about 700-900 grams when Sue puts them on her electronic scale. Not as heavy as our current heavyweight champion, a bottle of wine that our friends Pierre and Cynthia brought back from China that weighs in at 1218 grams (that’s 2.69 pounds!), but pretty heavy nonetheless.

Bottle Shape Differentiation

But that’s not the end of the story. My friend Jonathan Rodwell has brought another wine bottle trend to my attention, Rodwell is a vineyard and winemaking consultant who divides his time between Italy and the UK. He scans supermarket and wine shop shelves wherever he goes to try to keep up with the changing retail scene. Recently he has noted an increase in the use of custom bottles and bottle decorations on the wine wall. I guess a distinctive label is no longer enough to differentiate a wine on crowded retail shelves. The bottle itself needs to be different enough to catch the eye.

Rodwell looked around the noticed that the bottled water shelves had already taken the bottle shape step to the next level. If you look at the water wall you’ll see that major brands have distinctive color and shape bottles. In many cases, you can pretty well guess what water someone is drinking from across the room without seeing the label.

Is this where wine is headed? Product differentiation through specialized bottle shape is not new. Some of the most popular imported wines in U.S. wine history have distinctive bottles. Those rafia-covered Chianti bottles of the past were easy to spot, for example, but I am thinking of brands like Blue Nun (the bottle is bright blue), Black Tower, and Lancers Rose (ceramic bottles), and, of course, Mateus Rose with a bottle shaped like a WWI water flask.

The Bottle’s the Thing …

Mass-market wines like Mateus Rose are not the whole story. Sue and I are no longer surprised when we meet regional wine officials who are convinced that all that’s holding their local industry back is the decision to change the bottle color or shape.

There is no particular reason why the trend toward custom bottles should conflict with the lighter-bottle movement. A blue bottle doesn’t need to weigh more than a brown one. But some of the custom bottles we have seen, with embossed logos or textured surfaces, are heavier than average. And I doubt that they are cheaper than standard glass.

I am not advocating regulation to force everyone in wine to adopt strict glass bottle standards. My point is that wine industry choices are complicated. Even the seemingly simple decision to use lighter glass faces many obstacles. It is important to keep pushing forward — don’t you agree? — if only because the forces pushing back are strong.

In the meantime, I think wine bottles are on a path toward sustainability, even if it doesn’t always take the most direct route.

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Thanks to Jonathan Rodwell for the photo of the water display highlighting the unique bottle designs of each producer.

Crisis & Change for Washington Wine

Is the Washington State wine industry in a crisis? How you answer this question depends on where in the industry you sit and how you define a crisis. Certainly the news this year, as reported at The Wine Economist and elsewhere, is not good news. About 10,000 acres of the 60,000+ acres under vine appear to be surplus to requirements. Serious adjustments on both the supply and demand sides of the market are necessary. Change is in the wind.

Crisis and change has been a recurring theme to my economic research starting with my 1990 Oxford University Press book Mountains of Debt. Vested interests, structural rigidities, and simple momentum often lock nations, industries, and people into particular paths while the conditions around them evolve. Sometimes the only thing that can break the pattern is a crisis.

So let’s put the Washington situation in context and think about the future. Herewith several brief points to stimulate thinking.

Crisis is a durable feature of global wine.

The history of wine is a history of crises, mostly local or regional but some (think phylloxera) both global and transformational. University of Adelaide wine economist Kym Anderson’s history of the Australian wine industry, for example, is told in terms of five cycles of boom and bust. If he were to revise his history today, Prof. Anderson would have to add a sixth crisis to the list: the collapse of much of the Aussie industry due to the loss of its biggest export market, China.

Prohibition created crisis in the United States and many other countries a century ago and it took decades for the wine industry to really recover. As I wrote in a chapter of my book Wine Wars II, wine consumption actually increased during the Prohibition period in the United States as consumers exploited a loophole in the law that allowed for home production of up to 200 gallons of wine a year for household use. The quality of much of the wine was very low and alcoholic strength was valued above all.

The legal wine market that emerged when Prohibition was lifted leaned toward sweet, high-proof wines; it took years (until the 1960s in many places) for production of conventional table wines to become the norm. This was as true in Washington as elsewhere, where wines like the NAWICO Port shown here were the popular choice.

Washington’s current wine crisis is part of a global problem.

Washington’s wine crisis hasn’t happened in isolation. It is best scen in the context of a global wine glut, which has been the focus of several recent Wine Economist columns. As global wine consumption first stalled and then declined after several decades of steady growth the market shifts mean there is too much wine produced and too many vineyards growing grapes. It happened slowly and then suddenly and it happened almost everywhere. In Washington and California. In Bordeaux and Rioja. A friend reports driving by abandoned vineyards in Tuscany.

Like Tolstoy’s unhappy families, the story of each afflicted wine region is different, but they all happen in the context of global over-supply. Exporting  your way out of a wine surplus is harder when so many others are trying to do the same.

Washington’s Wine Crises: California Wine Bill

Washington is no stranger to wine crisis, as I have written on The Wine Economist, and it is interesting to review two cases in particular: the California Wine Bill of 1969 and the Langguth wine bust of the 1980s. Both situations were damaging at the time, but proved useful in the longer-term evoluations of the industry.

Wine sales became legal with the end of Prohibition but the market in Washington was not completely open. Washington producers gained a measure of protection from out-of-state (that is, California) producers because they could work directly with distributors whereas “foreign” wine had to go through the state liquor agency.

The California Wine Bill of 1969 (I have heard it called the “Gallo Bill”) leveled the playing field and took away the home-state advantage. Washington producers could not compete with the inexpensive wines that flooded in from California and so they were forced to turn up-market for sales. A quality wine indsutry emerged since that was the only kind that made sense.

As The Wine Economist reported, the Washington industry’s long-term decline as a protected industry reversed course and the modern wine sector emerged. The transition was far from painless and some producers disappeared. But Chateau Ste Michelle, Washington’s leading wine producer, can trace its roots back to the NAWICO and Pommerelle wines that the California Wine Bill crisis helped erase from store shelves.

Langguth Boom and Bust

The successful German wine giant F.W. Langguth boasts a brand portfolio that includes the famous Blue Nun brand. Langguth was attracted to Washington state by the success of Chateau Ste Michelle’s Riesling wines (which are still today, I think, one of the most popular on-premise by-the-glass wine selections).  Seeking to ride Riesling’s rising tide, they became the first important international investors in the Washington wine industry when they entered the market in the early 1980s.

Vineyards and a winery were required and soon appeared. The owners of Sagemoor Farms agreed to develop the 221-acre Weinbau vineyard on the previously vine-free Wahluke Slope. A state-of-the-art $5 million winery was constructed near Mattawa, far away form Chateau Ste Michelle’s big facility near Seattle.

Five million dollars doesn’t seem like a lot of money for a winery today, but back then it was big bucks (Ste Michelle’s big complex in Woodinville, built just a few years earlier, cost about $7 million). To build such a big winery out in the middle of nowhere on speculation of future market growth must have seemed crazy.

And, in fact, the project collapsed in just a few years and the Langguth family pullled out of Washington state. The history of the project makes good reading. Opinions vary about what caused the collapse. Maybe the project was ahead of its time (dry Riesling, for example, when sweeter wines were the market sweet spot). Maybe the project was poorly managed, with too much distance between those pulling the strings and those actually doing the work.

In any case, the Langguth label disappeared. The Weinbau Vineyard became a key element of a growing Wahluke Slope vineyard scene. The shiny new production facility was sold to Snoqualmie Vineyards, which was then an important producer and is now a value label in the Ste Michelle portfolio. Mattawa might still be pretty much out in the middle of nowhere, but now there are several shiny facilities producing lots of wine.

Creative Destruction

This brief account of wine industry crises in Washington and around the world has only scratched the surface of the topic. What are the lessons we can learn from this history? The first, which is where this column started, is that crises are a durable feature of the wine industry and once a given crisis is over the best thing to do is to beging preparing for the next one! Some of the crises from a century or more ago (think phylloxera and Prohibition) cast a long shadow that still affects us today in some respects.

But there is another lesson here, which was suggested to me when I talked with Seattle Times writer Erik Lacitis, whose report on Washington wine appeared in the Seattle Times’s Pacific NW Magazine over the weekend. Lacitis didn’t write about wineries closing their doors, although some have done so. Instead, he focused on winery start-ups and the many new folks who enter this business every year.

In fact, as Lacitis makes clear, the industry is remarkably resilient and each painful crisis lays the foundation, in one way or another, for future growth. The California Wine Bill, for example, destroyed part of the Washington industry but set a course for premium wine that was exactly in line with the way the market developed.

The Langguth collapse was painful, too, but left us with those production facilities near Mattawa and the vines that became the Wahluke Slope AVA, one of the state’s most important wine regions.

Is this an overly-optimistic way to think about Washington’s wine problems today? Perhaps. But I note without comments that the Langguth winery near Mattawa is now a custom crush facility, the sort of place where the next generation of Washington wineries get their start.

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Want to dig deeper into Washington wine industry history? I recommend two classic books:

The Wine Project: Washington State’s Winemaking History by Ronald Irvine with Walter L. Clore (1997) and

Washington Wines & Wineries: The Essential Guide 2/e by Paul Gregutt (2010).

Unified Symposium XXX: Back to the Future for the Super Bowl of Wine Industry Meetings

As harvest 2023 draws to a close, many of us are gearing up for the 2024 edition of the Unified Wine & Grape Symposium in Sacramento on January 23-25, 2024. The Unified is sort of the Super Bowl of North American wine industry events, so I’ve decided to follow Super Bowl practice and call this Unified XXX.

A lot has changed in the economy and the wine business since the first Unified Symposium was convened. The 1990s were a very different time. This was the era of “The End of History” as the collapse of Communism was said to close the era of ideological conflict and open a world of rising liberal democracy.

Surfing the Global Wave

The economy was expanding and markets were becoming more open and more global. Although Ross Perot claimed to hear a “giant sucking sound” of jobs being pulled to Mexico by the new NAFTA agreement, economic growth was remarkably robust. I recall that interest in university economics studies declined because there didn’t seem to be any big economic problems to solve.

As the 1990s moved ahead, the budget deficit in the United States shrank and then eventually actually achieved a surplus! The budget deficit for the last fiscal year was more than $1.5 trillion. What a difference!

The wine world was changing very rapidly in the 1990s, too. Wine surfed the globalization wave much to the benefit of Southern Hemisphere producers. This was the time when Australia, New Zealand, Argentina, and Chile wines became more widely available in the U.S. market, for example.

Wine’s Golden Age?

The U.S. wine market was growing and a Wine Business Monthly article published at the end of the decade provides useful context. “Demographic and Macroeconomic Factors Fueling Increased Wine Consumption” by research analyst Kristine Koerber identified four forces driving American wine: demographic trends, moderate wine consumption’s image as heart-healthy (think “60 Minutes” and the French Paradox story), rising wealth among consumers, and a successful generic marketing campaign (think Got Milk? but for wine).

Koerber concluded her report by saying, “We expect favorable trends to persist. The aging of the baby boomer will be the key demographic trend providing robust growth for the wine industry in the coming years. This demographic group has more disposable income and is reaching its peak spending years at 46.5 years of age, which should further facilitate the consumption of premium wines. High-quality wines with strong brand recognition such as Beringer and Mondavi are positioned to benefit from the growing premium wine market.”

Changing Times

An insightful forecast! But the situation today is pretty much the mirror image of that report. Demographic trends are widely seen to work against wine and alcoholic beverages generally today. Some consumers are wealthier but don’t necessarily feel that way because of pressure from inflation, rising interest rates, higher housing costs, and other factors such as student loan obligations.

Wine was the healthful choice in the 1990s but that tide has turned, too, with anti-alcohol initiatives gaining steam.  The wine industry’s response has been muted, creating what I call in my recent book Wine Wars II the wine identity crisis. Wine has a positive case, but consumers seem to have trouble hearing it.

Which brings me back to Unified XXX. The Unified Wine & Grape Symposium has become the place where the American wine industry comes together to think about, talk about, and form strategies regarding the challenges and opportunities of the day. (A lot of relationships are strengthened and business takes place on and off the trade show floor, too).

Unified I in Perspective

Now flash back to Unified I. That first event drew about 500 participants to the symposium sessions and to visit the 20 exhibitor tables (too small to call a trade show back then). Five hundred wine industry players is a lot and that attendance would be impressive for most meetings today. But Unified XXIX (the 2023 edition) was a lot bigger. About 12,000 people attended over three days, harvesting insights from the 96 speakers and doing business with the 879 exhibitors at the trade show. Unified XXX is on course to be bigger yet.

I have been involved with the Unified since 2012, mainly as moderator and/or speaker at the Wednesday morning State of the Industry session, the largest gathering of a three-day event. So I was interested to see what the equivalent program looked like at Unified I.

Jon Fredrikson was the lead-off speaker, giving a half-hour survey of market conditions. Knowing Jon, I’ll bet it was jam-packed with data and insights and that the audience hung on every word. Jon went on to be a featured speaker at almost every Unified meeting for the next 25 years until his retirement.

Jon’s lead-off presentation was followed by a teleconference that brought the voices of wine retailers into the room. This was not an easy thing to do in the landline era of the 1990s. Everyone wanted to know as much as they could about who was buying wine, who was selling it, and how the market looked for the future.

Globalization was obviously on everyone’s mind, too, as the next three sessions made clear, with a session on international trade effects, global perspectives, and how efforts to drain Europe’s wine lake might affect the American industry.

The Unified XXX State of the Industry lineup shows how the program has evolved to even more directly address the concerns of its wine industry audience.  Jeff Bitter and Danny Brager take deep dives into the trends and issues on the grower and consumer sides of the wine market respectively and Steve Fredricks analyzes the markets that connect them and the global market environment in which everything takes place. Susana Garcia Dolla, Director General of the Interprofesional del Vino de España, will provide an important international perspective, helping us understand how Spain’s wine sector has weathered the wine world’s storms and what lessons can be learned from their experience.

But Wait, There’s More!

There was a lot more going on at that first Unified meeting, of course. I am particularly struck by sessions titled “Monsters in the Closet: Major Issues Impacting Growers & Vintners” and “Government Landmines & Opportunities.” Monsters and landmines? Sounds like wine was a dangerous place! John Gillespie and Mike Boyd spoke on “Who’s Not Drinking Wine and Why?” — a question we are still asking today.

Unified XXX will feature a vast array of sessions (here is the complete schedule) that examine important issues in virtually every aspect of wine growing, production, distribution, regulation, and sales. Several sessions are offered in Spanish. It is quite a multi-discipline University of Wine.

A special treat this year is the Tuesday Keynote Luncheon. Karen Ross, Secretary of the California Department of Food and Agriculture, will be the featured speaker. Secretary Ross was President of the California Association of Wine Growers before taking her current job and in that role was instrumental in expanding the Unified into the impressive event it is today.

I am looking forward to hearing what Secretary Ross has to say about how the wine industry has adapted (and must continue to adapt) to the monsters and landmines that lurk around the corner. And to see everyone and learn as much as I can at Unified XXX.