Global Wine Trade: Headwinds, Obstacles, Distortions

Wine has become one of the world’s most globalized consumer goods. The OIV estimates that 45% of all wine crosses at least one international border on its way from producer to consumer. And that’s just the finished product. If we examine the whole product chain, to include bottles, corks, and so forth, wine’s globalization index would be even higher.

So it is significant that wine today faces headwinds, obstacles, and distortions that make global wine a risky business. Taken together, these forces impact every part of the wine trade.

Headwinds

The covid pandemic has created new headwinds and magnified some existing ones that make global wine trade more difficult and uncertain. On-premise sales are critically important to some segments of the wine industry, for example, and the recovery from lockdowns  is slow, uneven, and uncertain. Bars and restaurants have struggled to refill to capacity in many cases, even where rules permit this, because of both uneven response by wary consumers and difficulty attracting and retaining service sector workers.

Many wineries invested time and effort into establishing alternative paths to market during the pandemic and now they must wonder whether direct-to-consumer and other strategies will continue to be as critical to success and what aspects of these efforts should be expanded in the future. There are a lot of puzzle pieces to put together as we move into the new normal and the picture that they create won’t be the same as it was pre-covid.

Obstacles

Wine globalization has been powered by favorable trade policies and efficient transportation logistics over the last 50 years, so it is significant that obstacles have appeared in both areas.  US tariffs, Chinese tariffs, Brexit uncertainty — the list of trade policy factors that create barriers to particular wine flows is much longer than in the past and some counties (Australia, I’m looking at you) have been hit particularly hard.

But an even bigger obstacle for wineries not directly affected by trade policy has been the breakdown of ocean shipping logistics, which moves bulk wine, packaged wine, and intermediate goods such as bottles and corks. A world-wide shortage of shipping containers is to blame and big increases in the costs of shipping a container is one result. Port congestion, which adds extra days or even weeks and much uncertainty to shipping schedules, is an unwelcome side effect.

Distortions

Finally, foreign exchange rates have introduced or magnified distortions in the relative prices of wine on international markets. The graph above shows how the US dollar (USD) has fallen relative to the Euro in the pandemic period.  The dollar has recovered a bit of its value recently, but it is hard to know if this rise can be sustained. In general, a falling currency encourages exports and discourages imports. The impact on US wine exports has been muted, however, by the several factors noted above including especially demand-squelching pandemic lockdowns in target markets.

The dollar’s fall came as a bit of a surprise, as I noted in a column about a year ago.  Now there is another surprise. The Economist newspaper reports that the dollar is still over-valued by over 10 percent against the Euro!

The Economist released its most recent Big Mac Index report last week, which uses international fast food  hamburger price differences to estimate the relative purchasing power of various currencies. This might sound like a foolish exercise, but the Big Mac Index has a pretty good track record as a general indicator of over- or under-valued currencies.

The June 2021 Big Mac Index finds only four currencies over-valued relative to the USD, so the currency distortion would favor US wine export sales. Significantly, Sweden (+9.6%) and Norway (+11.5%) are in this group and they are both importanr potential export markets for US wine.

The list of currencies that are under-valued compared to the USD is long and includes a number of significant wine producing countries that gain an advantage from the exchange rate mis-alignment.

  • Euro area -11.1%
  • Australia -15.2%
  • New Zealand -15.7%
  • Argentina -30.2%
  • Chile -30.3%
  • China -38.3%
  • Moldova -48.8%
  • Romania -55.5%
  • South Africa -59.6%

Several of these countries are important wine exporters and so their under-valued currencies give them a cost advantage in competition for US sales. Global wine has always been a tough business. The current combination of these headwinds, obstacles, and distortions make the global wine trade particularly challenging as we head into the fall.

Pink Power: Five Rosé Market Trends to Watch

Summer is here and shop shelves are filled with pink wine. Rosé isn’t just for summer any more, but sales do rise at this time of the year and so it is appropriate to take a look at global market developments. Herewith five Rosé  market trends to watch.

Pink Prosecco is a Thing

I have tasted a number of refreshing pink sparkling wines from northeast Italy in recent years. I remember one in particular that was a blend of Glera, the Prosecco grape variety, and Raboso, an energetic red (Raboso means “angry” in the Venetian language). It was like a pink Prosecco, but couldn’t be called that because the DOC rules didn’t allow for it.  The rules have changed for this year’s releases, however, and Prosecco DOC Rosé is now authorized. The wines must contain at least 85% Glera with 10-15% Pinot Nero (Pinot Noir) to supply the pink tone.

Prosecco has been a hot wine market category in recent years and Rosé sales have surged, too, so how will Prosecco Rosé be received? It will be interesting to find out. As a side note, I am impressed with the entrepreneurial attitude of the Prosecco consortium. Many appellations stick to the old rules even when the market shifts, forcing producers to move to IGT wines. The introduction of Prosecco DOC Rosé  shows an awareness of market trends and a willingness to seize the moment to build market potential.

The French Pink Paradox

A new report called Rosé Wines World Tracking 2021 has been released that provides information about global Rosé wine trends through 2019. Sifting through the data it is hard to miss the central importance of France in this market segment. France was the #1 producer of Rosé wines in 2019 with 34 percent of global output and the #1 consumer of Rosé wines with 35 percent of global sales.

France was #1, too, in per capita Rosé wine consumption at 15.l liters per person. Uruguay was #2 in per capita terms followed by Cyprus, Belgium, and Switzerland.  The pink tide is on the rise in many regions — Australia once exported Rosé but is now a net importer according to the report.

With so much Rosé produced you would expect France to be a leading exporter. And it is. Provence is especially dependent on Rosé export sales, for example. More than 90 percent of Provence wines are pink! But — and this is the paradox — France is actually the #1 Rosé wine importer by volume and #3 (after the US and UK) by value. France imports inexpensive Rosé from Spain, for example, and exports more expensive Rosé to the rest of the world. The average ex-cellar price of French Rosé exports is 3.7 euro per bottle versus 0.7 euro per bottle for Spanish Rosé wine exports.

Spain’s Value/Volume Dilemma

I don’t see that many Spanish Rosé wines on store shelves in my area, so it comes as a bit of a surprise that Spain is the #1 exporting country by volume. The report indicates that Spain accounts for more than 40% of Rosé export volume — an incredible amount — but only 18% of global export value, just behind Italy and well ahead of the US, the #4 exporter. The volume/value difference ranking difference is explained by Spain’s very low average export price.

Sue and I tasted a number of pink wines during a visit to Spain a few years ago and many were terrific. We were shocked when we learned about the prices they were getting for these wines and encouraged them to think big at least in terms of the US market. Americans think that cheap Rosé is swimmingly pool wine, we told them, and they won’t buy it. You’ve got to ask a premium price to get sales. But that’s easier said than done. Not easy to shift a price point once it is established.

Swimming Pool Wine?

Many people turn up their noses at Rosé wine. I don’t like Rosé, they say. What does that mean? It can’t mean the flavor or the quality of the wines because Rosé  comes in so many different styles from so many different places made with so many grape varieties. You can’t hate them all. To paraphrase Dr Johnson, anyone who is tired of Rosé  is tired of life.

But I suspect that you know what the real problem is. People don’t want to be identified with Rosé because Rosé  has an image problem in some circles. And some of the wines deserve that reputation, but others certainly do not.

The image issue isn’t helped by a new product I discovered at the market today, French Pool Toy Rosé  Tote. It was on sale for $21.99 per pouch. Convenient for trips to the pool or the beach. Not a bad idea, but not necessarily the best optics in terms of elevating the image of the wines.

Respecting Rosé  

“I don’t get no respect.” That was Rodney Dangerfield’s signature line and it applies to Rosé  to a certain extent. But that’s changing and Elizabeth Gabay MW is one reason why. She has devoted a good deal of her energies in recent years to helping us understand and appreciate the evolving Rosé  world. Her 2018 book Rose: Understanding the Pink Wine Revolution  showed that Rosé  can be a serious wine and subject to serious study, review, and evaluation.

Now Gabay has released a Buyer’s Guide to the Rosé  of Southern France. If her first book was broad survey, the new volume is a deep dive into the heart of  French Rosé territory. Significantly, this is not a swimming pool book, but a serious professional guide.

Rosé, you seem to be growing up!

Flashback: the Very Model of a Modern Cooperative Winery

I’ve been busy working on a revision to my 2011 book Wine Wars and I had one of those deja vu moments. I was reading the chapter on “The China Syndrome,” which includes a report from my friend and former student Matt Ferchen, who was working in China at the time the book was published. Matt attended a wine fair in Beijing sponsored by Portuguese producers and sent me a report of what he found, which I included in Wine Wars.  Matt said that he was impressed with the Portuguese wines.

The first wines I tasted, and the ones I ended up liking the best, were from a cooperative called Adega Coop. de Borba. A couple of the wineries were family owned and there was a kind of earthiness to the wines that I really enjoyed. I was especially impressed with the Portuguese whites, which were all very crisp and I think would go very well with spicy Chinese food.

Adega de Borga? Sue and I visited that winery when we were in Alentejo in 2016. I had forgotten that Matt made a point to call it out in his report. It impressed us, too, so much so that I devoted an entire column to our 2016 experience, which I re-print here. Re-discovering Matt’s reference reminded me how surprised we were to discover this excellent example of a modern cooperative winery.

>>><<<

They say that you shouldn’t judge a book by its cover and I think this applies to wineries, too. We visited Adega de Borba as part of a brief tour of wineries active in the Alentejo vine and wine sustainability program and found ourselves led astray by our first impressions.

Adega de Borba is a cooperative winery founded in 1955 and was a pioneer at the time. All the economic incentives in those days were stacked against wine and in favor of grain production in this part of Portugal in those days. It took some effort and determination to nurture and expand wine production here.

Beyond the First Glance

At first glance the original 12,000 square meter facility was what I expected from a “mid-century modern” winery, but on closer inspection I began to realize that this was both more and different than it seemed. More because the winery is a surprisingly large operation. The 300 members together farm 2000 hectares of vineyards and the winery produces over 15 million bottles a year.

And different because while the winery dates from mid-century, the ideas are not frozen in time. Looking closely, we saw that everything was meticulously clean and well-maintained as it should be but so often is not in the case of “vintage” production facilities.

And the answers to our questions about economic incentives were the right ones, too. Do the members have to sell their grapes to the cooperative, or are they allowed to hold back some (usually the best ones)? No, they must sell to us. How are they paid? By weight, of course, but with substantial adjustments plus and minus based upon objective measures of quality. Are the premiums enough to motivate a movement to quality? Yes, they are very high for the finest grapes.

Adjusting to New Market Realities

The large scale is important because wine in Portugal is low-priced by U.S. standards and price pressure is increasingly intense. Consumers who bought €3 wine (that’s where the mass market is here) before the global financial crisis are spending €2 instead and margins for exports to some markets can be low as well. So efficient production is key as well as quality that will allow sales in the higher-price categories. imagem_rotulo_cortica_reserva_tinto13_pagina

Former Portuguese colonies Angola and Brazil have been the largest export markets for Alentenjo wines in past years, but both are going through difficult times at the moment (especially Angola with its dependence on petroleum export income), so attention is shifting to other markets such as the U.S., Canada, and Switzerland, which demand higher quality, and Russia and China, where low price is a powerful factor.

Adega de Borda has moved in both directions. The Rótulo de Cortiça wines, which are easy to spot because the label is printed on a thin sheet of real cork (cortiça in Portuguese), are a good case in point. The winery sells about a million bottles of this wine each year at the astounding (for Portugal) price of €9 and even more for the reserve bottling.

That €9 price won’t seem like much to my Napa Valley friends, but it is a stunning achievement for this volume of wine in the context of the Portuguese market and is only possible because of the care and attention that goes into every stage of the process.

Uphill / Downhill

But this doesn’t explain how Adega de Borba is able to compete in markets where margins are razor thin and competition from other producers and other wine regions fierce. To understand that we had to walk up a gentle hillside to the biggest surprise of the day, a stunning  140,000 square meter state-of-the-art production and storage facility that was completed in 2011 at a cost of €12 million. A system of underground pipes connects the new winery with the old one down the hill so that the wines can be bottled there.

Everything is big about the new facility from its crushing capacity (1200 metric tons of grapes a day) to the fermentation and storage capabilities. But it is the technical efficiency that it creates that is most impressive since it allows both volume and margin-boosting quality to co-exist.

Thought and Action

I said at the start that you shouldn’t judge a book by its cover, but this big modern building might be an exception to that rule because the exterior of the new building gives away something of its high-tech interior. It is blistering hot in this region in the summer, so the building is clad in white ceramic tiles to reflect the sun with horizontal rows of white marble from a nearby quarry that, a bit like radiator fins,  provide a certain amount of natural heat control as well. Very cool (pun intended) and not necessarily what you would expect from a wine cooperative.

We came to Adega de Borba because it has embraced the Alentejo region’s sustainability initiative, but it is easy to see that this is part of an overall approach to wine growing and production, with attention to every detail and eyes firmly set on horizon. Cooperatives tend to struggle when they get the incentives wrong, fail to note changing market environments, and hesitate to invest for the future. Adega de Borba shows us how wine cooperatives must think and act to be relevant and successful in today’s markets. It is how all wine enterprises must think and act.

How Much Does That Wine Bottle Weigh?

How much does that wine bottle weight? The answer, too often, is simply too much.

Everyone talks about sustainability in the wine business (or at least that’s what it feels like sometimes), but how much of it is backed up by action and how much amounts to little more than greenwashing? That’s an important question and a complicated one, since sustainability has so many aspects and complicated trade-offs. What can a wine producer do to improve sustainability and signal it clearly to consumers?

One simple action is this: use lighter bottles. Glass bottles are an important part of wine’s carbon footprint and reducing weight even a little can have a significant impact when multiplied by the billions of bottles of wine that are produced and sold each year.

Tale of the Scale?

I’d invite you to weigh the next ten wine bottles that you open just to see big the gap is between the heaviest and lightest bottles. I used to include a segment about wine bottle weight in one of my Wine Wars talks. I asked for a couple of volunteers to come forward to heft bottles of different weights. They usually expressed great surprise at the difference and wondered why very heavy bottles were needed when lighter-weight alternatives are available. Good question.

I was reminded of the heavy bottle issue when a press release from Alois Lageder, the famous Alto Adige wine producer, appeared in my email inbox. Lageder’s commitment to the environment is unquestioned — they are one of Italy’s leading biodynamic estates. Their search for improved operational sustainability caused them to start thinking about wine bottles back in 2013, when they reduced bottle weight from 750 grams per bottle to 650 grams.

Some winemakers I know think that the weight of the bottle is an important marketing factor — heavy bottles signal quality. But obviously this isn’t always the case, as Katie Jackson of Jackson Family Wines told us a couple of  years ago at the Porto Climate Change Leadership Conference. Jackson moved to lighter glass and then waited for a negative reaction … that never came. So they did it again.

And Lageder is doing it again, with a special new Burgundy-style bottle that takes the weight down to just 450 grams, which allows the winery to reduce glass use by 17% or 87 tons. The bottle on the left in the image above is the old heavier bottle and the one on the right is the new sleeker product. The difference is subtle, but it is there.

“Of course, there are already lightweight bottles on the market, but there is hardly a Burgundy bottle that is so light and still meets the demands of a valuable wine. Strangely enough, many people still believe today that a valuable wine must be equipped with a heavy bottle,” says Alois Clemens Lageder. “The bottle also has a name. It is called Summa and is deliberately not patented so that many winemakers are motivated to switch to lightweight bottles,” adds Helena Lageder.

Lageder is also eliminating metal such as screwcaps and foil capsules that might make their bottles difficult to recycle. Putting a bottle in the recycle bin doesn’t guarantee that it will actually be recycled. A lot of “recycled” materials end up in the landfill. Lageder knows they can’t solve that problem, but they can take steps to help.

Tale of the Scale?

Bottle weight is a frequent topic of conversation at The Wine Economist dinner table. Sue hefts each bottle and makes the call. Unexpected heavy and lightweight bottles are swept away to be weighed and recorded at the end of the meal. Just for fun I got out the group of bottles and alternative packing that I used in the Wine Wars talks to provide context . Here is the range of weights from lightest to heaviest.

Wine can 375 ml: 16 grams (x 2 = 32 grams)

One liter tetra-pak wine container: 40 grams.

Plastic wine bottle 750 ml: 56 grams

Eco wine bottle 750mml: 426 grams

Lightweight wine bottle 750 ml: 444 grams

New Lageder wine bottle:750 ml: 450 grams

Previous Lageder wine bottle 750 ml: 650 grams

Older Lageder wine bottle 750 ml: 750 grams

Heavyweight wine bottle 750 ml: 1084

Super heavyweight wine bottle 750 ml: 1198 grams

An ultra-heavyweight bottle of a wine from China: 1218 grams.

Lageder is clearly taking a big step in the right direction with its new bottles, which are amongst the lightest glass bottles we have found. They seem very confident that going light won’t affect consumer perceptions of their wine and I think they are right.

Can you believe that some wine bottles weigh more than a kilo? The 1084 gram bottle on the list was a Chilean wine, so it is interesting to speculate the size of the carbon footprint it created. The bottle might have been made in China, for example, then shipped to Chile and then on to the U.S. Incredible when they are good alternatives. At 1218 grams,, the bottle alone of that Chinese wine weighs more than full bottles of wine in lightweight glass containers.

Is Heavy Glass Sustainable?

It seems to me that the weight of the glass bottle is a sustainability issue. I wonder, do any of the many sustainability certification protocols specify a maximum weight for wine bottles? I really don’t know — I’d appreciate it if you’d use the comments section below to provide information about this issue.

Sometimes too much is too much and I think we have reached that point with heavy glass wine bottles.

Out of the Shadows: Vino Nobile di Montepulciano

One of the last in-person wine events we attended before the coronavirus pandemic put most such activities on hold was a symposium on the wines of Italy, which I wrote about on The Wine Economist. One particularly memorable session was sponsored by the Vino Nobile de Montepulciano consorzio, which was hoping to draw attention to the region and its wines.

Chianti’s Deep Shadow

It is easy for a wine region — even a very important one like Vino Nobile — to get lost amongst famous names from across Italy and around the world. As I wrote back in 2019 …

Italy is a complex mosaic of wine regions, styles, and brands. … The big regions crowd out the smaller ones on store shelves. This is the challenge facing Vino Nobile di Montepulciano DOCG, for example.  Vino Nobile is a small and distinctive appellation located about 65 km south-east of Siena. The four wines we tasted at the seminar were terrific and made me think about this region as a sort of Tuscan Stags Leap District — one of my favorite U.S. wine appellations.

But excellent wines are not necessarily enough when you need to compete with famous Chianti Classico. You need to get glasses in consumer hands and give the wine and region a distinct identity. Tourism (and not simply wine tourism) is one way to do this. Come for the history, food, and culture and learn about the wonderful wines. This seems to be part of Vino Nobile’s strategy to get out from under the shadow of its more famous neighbor and to tell a distinctive story about the region and the wines.

Hand-selling wines like Vino Nobile has been nearly impossible in the traditional sense during the pandemic, but Avignonesi, a historic Vino Nobile producer, took matters in their own hands and, with our permission, sent us samples of their wines and invited us to look more closely at what they are doing.  The result was quite revealing.

Old But Not Stale

Avignonesi and Vino Nobile di Montepulciano are old names, but there doesn’t seem to be anything stale about them. Indeed, dynamic is the world that comes to mind.

Biodynamic, in fact. Virginie Saverys, a successful Belgian attorney and passionate  wine lover, acquired Avignonesi in 2009 and set about expanding the vineyards and converting them to biodynamics. Avignonesi is now the largest biodynamic producer in Italy. The public face of the winey in terms of its hospitality programs was upgraded as well. I hope we can visit one day to sample the wines and experiences in person. Even at this distance, however, it is hard not to be impressed with what’s been done in just a little over a decade.

The Avignonesi wines themselves do nothing to diminish the positive impression. When a package with six small sample bottles arrived we looked for an opportunity to taste through the wines with friends who share our Vino Nobile focus. When we finally found the right date we sampled the wines from a Vashon Island deck overlooking Puget Sound with a pair of bald eagles soaring above. Not Italy, but still not the worst tasting room, do you think?

We tasted the traditional wines first, which meant a flight of Rosso di Montepulciano DOC, Vino Nobile de Montepulciano DOCG, and a special bottling, Vino Nobile di Montepulciano DOCG Poggetto di Sopra Alliance Vinum.

The Rosso was a bright wine, fruity with nice acidity. An excellent opening act. The Vino Nobile DOCG was stunning — a terrific wine with a long complex finish. The Poggetto di Sopra was even more distinctive — truly memorable. It is the result of a project involving Avignonesi and five other Nobile producers. Each made a particular wine meant to highlight the specific qualities of the terroir. The label (see above) shows the particular vineyard blocks that produced this wine.

Taken together the three traditional wines show what is possible in Vino Nobile and make a strong case for the region even in the context of its more famous neighbors. Bravo!

IGT Surprises

But there was more. Our second flight was devoted to three of Avignonesi’s IGT wines. IGT and similar wines are increasingly important in Italy and elsewhere in Europe as winemakers seek to make distinctive wines that display both their art and their craft, but don’t follow the strict appellation script.

The first IGT wine was called Da-Di — a 100% Sangiovese vinified in terracotta vessels that were made in Tuscany from clay like the soils where the grapes were grown.  No oak. No stainless steel. This was a wild wine, full of fruit and acidity, alive in the mouth. Unique. Wow. I sure didn’t see this coming.

Next came Desiderio Merlot Toscana. Merlot vines love the clay and have been grown in parts of Italy so long that locals think of it as almost a native grape.  This was an intense experience from start to finish and I think it was Sue’s favorite wine of the tasting. Unexpected.

Our final IGT wine was the Grifi Toscana, a “super Tuscan” blend of just about equal amounts of Sangiovese and Cabernet Sauvignon. It lived up to the “super” moniker, intense, dynamic, with the long finish that characterized all the wines.

Four Take-Aways

So what are the take-aways from our experience with the Avignonesi wines? First, the quality of the IGT wines makes me even more enthusiastic about the creative potential for wines like this in Italy. Second, the stunning DOCG wines reminded me of how good traditional wines from this region can be in the right hands. Sometimes I think consumers take these wines for granted or, as noted above, mistakenly passing them by in favor of more famous appellations.

The final take-away is this. Tasting these samples was a treat. But we can’t wait until we can resume our travels and taste the wines and meet the producers in person. Soon, we hope!

Wine Book Review: Invisible Pignolo Revealed

Ben Little, Pignolo: Cultivating the Invisible. 2021. Available exclusively from The Morning Claret Shop.

Pignolo: Cultivating the Invisible is quite a fantastic multi-media exploration of one of Italy’s (and the world’s) nearly forgotten grape varieties. My first impression of the book was fascination — so playful, so colorful. I just had to thumb through it to discover what was on the next page. Then there was puzzlement, because I would read short passages and it wasn’t really clear what was going on.

First fascination, then puzzlement, then — finally — enlightenment. Ok, that might be too strong, but I went back and read it from the start and it all made sense.

First comes the history of Pignolo in the context of the history of its native region, Friuli Venezia Giulia in Italy’s upper right-hand corner. A really interesting explanation of how Pignolo, wine, and the region evolved. Then the history shifts a bit to author Ben Little’s personal experience with Pignolo, which started only a few years ago (2016) but developed quickly and soon involved many others. There is much of a technical nature to learn through Little’s first person reports.

And then there are the lessons that Pignolo teaches us, inspirations, meditations, not sure what to call them. But by the time you get there you are ready to slow down, let the flow carry you, and absorb them, which might not have been the case at the start. Colorful graphics act as signposts along the way.

Little’s notion that Pignolo is an invisible grape variety works. It was always there all along, you just didn’t see it. That’s how it happened for him. At first he thought that there were just a few people in Friuli growing the grapes and making wine. But once word got out that there was interest, more and more plantings and producers began to appear until there were enough to fill a room (which Little did, with a little help from Pignolo’s friends).

Pignolo might be invisible to you, too. That’s how it was for us. Did we ever taste Pignolo during our trips to Friuli? I had to think and use the ample resources of Little’s big book. We might have tasted Pignolo when we visited the Cormons cooperative, but there were so many wines there it is hard to know. Possibly when we stayed at Il Roncal. Bastianich makes an IGT blend called Calabrone, which is includes a splash of Pignolo as a key ingredient. When we didn’t have time to taste it at the winery Wayne Young wrapped up a bottle for us to take home and I’m very glad he did. Amazing.

We staying in one of the rooms at Borgo San Daniele and I remember distinctly the tasting where Mauro Mauri poured his Arbis Ròs Pignolo from magnum. What an amazing wine. I tried to get him to sell me some bottles, but it was all gone. Only that magnum was left. And the memory, too.

Our final taste of Pignolo was at Paolo Rodaro and that’s when we met Ben Little. Little was nice enough to help with some difficult translations, but you could tell even then, not too long after his Pignolo journey had begun, that his focus was on the particular wine and Rodaro’s version was especially intense and interesting. There was another connection that I only learned about by reading this book — like me, Little is a recovering student of economics and can’t resist adding his insights to the blend.

Having read Little’s book, I want to go back to Friuli and visit the small region of Rosazzo, which seems to be Pignolo’s spiritual home. Pignolo was pretty much invisible to me a few days ago, now that I see that it has been there all along, I want to ask it a few questions.

In the meantime, I couldn’t resist trying to track down a bottle of Pignolo here in the U.S. and refresh my memory. I was able to find the 2005 La Viarte Pignolo Riserva at Kermit Lynch‘s online store. We pulled  the cork and paired the wine with Caesar salad and a prime-grade dry-aged steak — clearly this was a special meal. The wine lived up to the occasion. The first glass was a bit wild, but it settled down and developed along several axes over the next two hours. Sue said that the wine really pulled itself together when the food arrived just as it was meant to do, I think.

Some wine experiences are delicious but not especially interesting — you know what you are getting. Others are interesting, but not necessary delicious — you are happy to stop after the first glass. The Pignolo was both, so it is easy to understand Little’s fascinating with it.

Pignolo: Cultivating the Invisible is a highly personal memoir of and tribute to a very distinctive grape and the people who have nurtured it as it nurtured them. More than a book, it is an experience. Highly Recommended.

Too Much, Too Much, Too Little: Solving the Canned Wine Puzzle

Sogrape, a leading Portuguese wine producer, recently sent us samples of their new entry into the canned wine market: Gazela. Gazela is characterized as a “refreshing white wine” and it certainly lives up to that billing. A really nice wine for those casual summer outdoor occasions and a strong entry into the booming  canned wine market segment.

There is a lot to like about Gazela, but I am especially interested in the way that it addresses three problems in the popular canned wine category: too much (alcohol), too much (cost), and too little (wine quality).

Too Much

Forget about what you read on the label, American consumers are trained to see a beverage can as a single serve container. I know, I know that this is wrong — 5 ounces is more appropriate for a serving of wine than 12 ounces. But if you are drinking directly from the can, as people often do, the can is a serving. And that’s way too much alcohol.

Gazela addresses this in two ways. First it’s a smaller 250 ml can. That’s still more than one serving according to the “Nutrition Facts” panel on the can (which also lists calories — 87 per serving). But the smaller can plus low 9% abv means that consumers who empty the can aren’t getting nearly as much alcohol as they might. That’s progress.

Less is more when it comes to wine in cans from the alcohol standpoint and Gazela leans in the right direction.

Too Much

Price is another hurdle to canned wine success. Consumers are used to paying maybe $10 or so for a six-pack of canned beer or hard seltzer, so you can imagine how they react to wine priced at $5.99 or $6.99 per individual can. Seems like a really big price difference unless you do the “per serving” math in your head. Even so canned wine isn’t bargain wine from the consumer cost standpoint.

Gazela is priced at $2.99 per can, which I think will make a difference. I have seen one or two other 250 ml cans at this price point.  It will be interesting to see if a lower price point can help unlock the untapped growth potential of canned wine.

Too Little

A third problem with canned wine is that sometimes the wine itself is disappointing — there’s no there there, if you know what I mean. Sue has complained that the taste and aroma often fade very quickly and there’s not much left to enjoy by the end of the glass. This is certainly not true of all the canned wine we have tried and I am not sure if the problem is mediocre wine to begin with or too much time in the warehouse.

The Gazela was different, Sue said. Better. The first sip and the last told the same story. And that’s what wine needs to do to be successful. Otherwise, hard seltzer is going to win in the long run.

How did the Gazela taste? Well, the Gazela brand is all about Vinho Verde when it comes to their bottled wines. The can, as noted above, identifies the contents as “refreshing white wine” which makes sense since, as I understand it, wine in cans isn’t allowed for the appellation designation.

It is refreshing and white, as the can claims, which is how Vinho Verde should be. We tasted it alongside Broadbent Vinho Verde, which is our go-to wine of this type. The Gazela was fizzier and tasted like Vinho Verde to me, but the Broadbent had sharper acidity. Sue liked the Broadbent better,  but we’d be happy to have the Gazela when the occasion is right.

Taylor Made Solution

Although we haven’t been able to taste yet (it’s rolling out nationwide just in time for summer), it looks like another Portuguese winery, Taylor Fladgate, has also figured out a canned wine success strategy. Taylor’s recently announced its new Chip Dry and Tonic premium RTD cocktail. It is a combination of 1/3 Taylors Chip Dry White Port, 2/3 tonic, with a bit of lemon and mint.

If you have ever visited Porto and the Port lodges just across the river, you’ve probably had a White Port and tonic. It is totally refreshing on a warm day. Seriously, you need to try this. Taylor’s Chip Dry Port is seriously good on its own, too, chilled or on the rocks.

Taylors cans hit the right notes. Small 250 ml can? Check. Low 5.5% abv? Check. Competitive price? Check — SRP $17.99 for a 4-pack should work in the premium RTD cocktail space. I hope Kobrand, Talylor’s U.S. importer, brings in enough to keep the store shelves stocked this summer.

I notice that the label is Chip Dry and Tonic — the word Port doesn’t show up, except the trademarked brand “Portonic”. I think this is probably due to the same sort of Portuguese regulations that affected the Gazela can. In this case, I think the omission might benefit sales. People think of Port as heavy and sweet, but Chip Dry sounds just the opposite. Many know that Port is fortified and alcoholic, whereas this beverage is in the same abv range as hard seltzers. Not many people know what White Port even exists. Chip Dry and Tonic stands well on its own.

And the can is beautiful, don’t you think? Who wouldn’t want to find out what’s inside?

Congratulations to Sogrape and Taylors for these refreshing new entries in the canned wine market.

 

Wine Book Review: Rescuing Roussillon’s Identity

Rosemary George MW, The Wines of Roussillon (The Infinite Ideas Classic Wine Library, 2021)

It’s not easy to write a book about a complicated wine region like Roussillon — a place with such varied terroir and interesting history. It is especially hard when the approach is personal and intimate. But it must be nearly impossible to do this when the necessary fieldwork is interrupted by a global pandemic.

And yet Rosemary George MW has managed to do all of this and to do it really well in her newest book, which I highly recommend.

The heart of The Wines of Roussillon is a comprehensive analysis of “Who’s Who,” which takes us through Roussillon’s wine regions, visiting many of the most important producers. The winery profiles are very personal and I often had a sense that I was visiting the winemakers with George, which is a welcome feeling after months of relative isolation. Her deep knowledge of the regions and wines provides context and perspective on how things are changing and what has remained the same.

Roussillon’s Identity Dilemma

One of the continuing themes — the elephant in the room that is outlined very well in a chapter on wine business in Roussillon — is identity. What is Roussillon in the broader world of wine? For older wine enthusiasts, Roussillon is an appendage — the trailing part of Languedoc-Roussillon, the term sometimes used to identify the huge vineyard area of the French south. This geographical simplification is unfair to Roussillon, however, which has a distinct character, more Catalan than French (whatever that means, since France itself is so diverse).

Sue and I only dipped our toes into Roussillon wine, food, language, and culture during a media tour a few years ago, but it was impossible to miss (and to appreciate) the differences. Roussillon’s unique character is clear and deserves to stand on its own.

And what about the wines? Well, when we were planning our trip to the area I told some friends and one of them dismissed the enterprise, saying that he hoped that we liked cheap, sweet wines, because that’s what we’d find in Roussillon. The unfavorable reference was to the Vins Doux Naturel wines that the region is known for. The wines are like Port in that their sweetness comes from sugar that remains after neutral spirits are used to prematurely stop fermentation.  Sweet wines like these were highly prized before sugar was cheap and plentiful and sweetness a glut on the market.

The wines don’t have much in common with Port apart from the method of halting fermentation, which makes sense since the grapes are different and the terroir different, too. If you haven’t tasted a Vin Doux before (or you haven’t done so recently) you might make a point of doing so now. You’ll have to search for them a little, but they are there. See what you’ve been missing.

The Sweet and the Dry

One thing Port and Vins Doux share is the ability to age and we were fortunate to taste many quite old wines during our visit. They were stunningly delicious. A wine from 1949 was especially memorable. Amazing. But not all Roussillon’s sweet wine have been amazing and my friend’s comment about “cheap, sweet wines” come from the fact that there was once a robust market for such wines to serve as aperitives that the Vins Doux once filled alongside inexpensive Sherry and Port. It was a good market, I suppose, and a pleasant drink before dinner, but it isn’t the identity that Roussillon needed or deserved. But there you are.

And now, of course, sweet wine generally is hard to sell and so sweet wine with a questionable reputation is especially problematic.  Producers in the Douro have responded to the slump of the market for sweet fortified wines by shifting to non-fortified table wines and they’ve achieved some success, albeit with considerable effort.

Rousillon producers have responded in a similar way with vin sec, which has a larger potential market than the sweet wines. But the French domestic market is not very welcoming to Roussillon dry wines, so emphasis is on developing exports. China, George tells us, became the #1 export market for both the dry and the sweet wines in 2017.  But, as good as they can be, these dry wines have not yet established a clear identity.

The Old and the New

So the elephant in the room is the problem of selling both the sweet and the dry and it seems that this issue comes up whenever George gets into a conversation with a Roussillon wine grower. The problem has had a visible impact on the region — both vineyard area and total product have declined dramatically over the last 30 years. Old identities are hard to dislodge and new ones tricky to establish in a wine world full of where much is changing at once.

I wrote about the identity problem after our visit three years ago and noted a certain refreshing optimism.

The Roussillon producers we spoke with saw old reputation as less of an issue mainly because their region is not so well-known as Languedoc. Roussillon is often lumped in with Languedoc or left out altogether. They see today’s market as an opportunity to build a strong reputation from scratch.

We enjoyed all the wines, both sweet and dry, and sensed important shifts, from older cooperative members to younger independent producers

When we arrived at Domaine de Besombes we met winemakers from the region and shared a delicious Catalan barbecue lunch. And we tasted their delicious stereotype-breaking dry red and white wines, too. Sue was particular fond of the wines made by Laurent Pratx of Serre Romani. The grandson of the man who founded the local cooperative, Pratx returned to Roussillon after working in the Rhone Valley committed to taking his wines in new, independent directions.

So a lot of factors are at work, but the problem remains to establish Roussillon’s identity in today’s environment. Tourism, George suggests, might be part of the answer (once pandemic restrictions have passed). Visitors who learn about Roussillon’s distinct identity can become ambassador’s for the wines. So there is much work to do and you can tell that George appreciates the challenge and believe that the wines are worth the effort and will succeed once they are better known and understood.

Elizabeth George’s The Wines of Roussillon is a rewarding survey of the Roussillon wine landscape and the people who are driving it ahead. Highly recommended.

>>><<<

I thought you might be interesting in this menu from a gala dinner with the winemakers during our visit to Roussillon. It was quite fantastic and showed the versatility of the Vins Doux wines.

Magical Mystery Box: Emerging China Wine Market Strategy

The Chinese economy is booming, recovering from the pandemic sooner and stronger than any other country, although the pace of recovery seems to have slowed. The wine economy in China is still struggling, however, with high inventory levels remaining due to last year’s lockdowns. Selling off the surplus stock without eroding price points and reputations is serious concern. Recently reports highlight creative solutions to the problem.

Doubling Down on China

Concha y Toro, the famous Chilean wine brand, is doubling down on its success in China according to The Drinks Business. CyT is strengthening its already strong presence in China by investing in its Shanghai operations, now part of its network of global offices, and taking advantage of Australia’s current crisis. China has imposed punitive tariffs on Australian wine, creating space for upmarket wines from Chile, which continues to have good relations with the Chinese government.

Concha y Toro is launching two upmarket brands in China, which may well appeal to buyers of super-premium Penfolds products, for example, who are put off the the new 200+% tariffs. What do you think of the label designs?  The Cellar Edition wines feature a shell (concha in Spanish) framing a bull (toro). Direct and memorable, don’t you think? It should become the global logo for the brand in my opinion.

The Master Edition label is a playful nod to Boticelli’s “Venus on the half-shell,” as we used to call the famous “Birth of Venus” painting in art history class, paired  with a Greek mythology minotaur (half bull, half man). Half-shell, half-bull, not half bad!

Meanwhile, Accolade, the big Aussie producer currently owned by private equity investor The Carlyle Group, is pivoting in response to Chinese tariffs on Australian wine. It will focus on non-Australian wines, including some from Chile, to keep its Chinese pipeline as full as possible.

Exploiting Opportunities

A recent China wine market report by Rabobank analyst Stacie Wan titled “Staying Alive in the Chinese Market” reveals three unusual strategies that distributors and retailers are using to cope with current problems. Distribution systems work best when pipelines are full of product, but with wine sales down, inefficiencies are exposed. So some distributors are adding non-wine products such as sauce aroma baijiu to their portfolios, to build critical mass and keep their networks busy.

Community group buying is a rising trend in China. Groups of consumers band together to purchase larger quantities of various products and gain better terms. Communal buying in bulk is apparently especially popular in lower-tier cities. Several important wine producers, both domestic (ChangYu) and import (Yellow Tail) are taking advantage of these opportunities, especially with their lower-priced brands.

Some wine companies are exploring opportunities to develop special low price products specifically for community group sales — much as some clothing producers make special products for off-price and outlet retailers. Interesting!

Magical Mystery Box

A final strategy cited in the Rabobank report involves “mystery box” sales. Consumers are offered mixed cases of unidentified wines at bargain prices. Buyers get wine, good prices, and a (hopefully) pleasant surprise. The mystery box idea struck a note for me because we purchased a mystery box from a well-known producer a few months ago and were delighted. There was a mix of wines we knew, private label wines we hadn’t seen before, and several limited-production wine club or tasting room only wines. Some of the wines were really terrific and none were losers. We were happy overall and recently purchased again when the limited-time opportunity re-appeared.

The Rabobank report notes that mystery boxes appeal to adventurous consumers, but the main point is how useful they can be for retailers and distributors. They are a good way to clear out excess inventory without dumping wines in traditional market channels. Consumers know that they are getting a lower price for the case they buy, but since price isn’t broken down by bottles, the integrity of any particular price point is not seriously undermined.

One limitation of the mystery box strategy is that it can backfire if you offer the boxes constantly. As Rabobank notes

Furthermore, this is not the most effective strategy for building long-term consumer brand loyalty. As a result, most players currently prefer to promote their mystery box wines as limited editions, rather than as quarterly or annual subscriptions. After all, a constant surprise ceases to be a surprise.

Will mystery box become an important part of the wine market? Too soon to tell, but rising internet sales make this sort of niche strategy feasible. It is one indication of the innovation taking place in China as players deal with adverse market conditions.

We Are All Terroirists Now

The third section of my book Wine Wars, which is celebrating its 10th birthday this  year, is called “the Revenge of the Terroirists.” As I explained in last week’s Wine Economist column, Wine Wars argues that globalization pushes the wine market forward, which is great, but one market reaction to this “creative destruction” is rationalization, which can be both good and bad.

What’s to keep wine from going off the rails and becoming just another branded consumer good? Well, it could easily happen and has happened in some cases, but I’m an optimist and, in Wine Wars, I argued that people who understand wine and appreciate what makes it different from commodity products would be a force strong enough to keep wine safe.

It’s a Wine World After All

I wasn’t the only person to see the wine market as this sort of conflict. Jonathan Nossiter’s  2004 film Mondovino took a decidedly less optimistic view of this battlefield. The forces of globalization and commodification (symbolized by the Mondavi family brand in this poster for the film), are determined and powerful. Can the first terroirist we meet in the film, Giovanni Battista Columbu, guardian of Malvasia di Bosa in Sardinia (shown here below the Mondavis) possibly stand in the way of the global market juggernaut?

If that’s the war — big vs little, money vs traditional values — then it would seem like the wine wars have already been lost. But that’s not necessarily how things have to work out.

Large wine businesses are not all the same. For one thing, only a surprisingly small proportion of wine business are public corporations with professional managements than have to answer to investors with constantly rising quarterly profits and share prices. As I have pointed out before, a great many wine businesses, even the largest of them (think Gallo!) are family firms that think in generational terms. This long term thinking doesn’t guarantee a terroirist attitude, but it at least sometimes points in that direction.

B Corps, Slow Wine

Indeed, a number of important wine businesses are benefit corporations (B-Corps for short). Oregon’s A to Z Wineworks was the first in this growing group and  Portugal’s Symington Family Estates one of the most internationally recognized. Fetzer, the California winery long known for its environmental focus, was the world’s  largest B Corp wine company … until last Friday! That’s when its parent company, Viña Concha y Toro, announced that all of its global operations had received B Corp certification. Amazing!

B Corps make no specific commitment to terroir, of course, which is natural since they can be found in all sorts of industries (the little coffee shop on the corner hereabouts is part of a B Corp operation). But the values that B Corps commit themselves to supporting are different from those of the stereotypical corporate behemoth.

I’m also encouraged by my study of the Slow Food movement. Founded in Italy but now spanning the globe, Slow Food is a grassroots counterpoint to industrial food and agriculture. It doesn’t confront global corporations directly by, for example, bombing McDonalds restaurants the way French anti-globalization protestors used to do. Slow Food instead works to identify products and practices of tradition and terroir and then seeks to promote and preserve them using the very tools of media and markets that we usually associate with industry. Slow Food uses the weapons of global capitalism against itself, an elegant irony, don’t you think?

Slow Wine is a thing, too,  and the guide to Slow Wine USA 2021 has just been released. You should check it out.

We Are All Terroirists Now

To paraphrase a comment attributed to both Milton Friedman and Richard Nixon (see note below), we are all terroirists now. Well, almost all or at least a lot more of us. The reason: climate change. Climate change is real and it is a crisis, even if we don’t treat it like a crisis (compare the reaction to the Covid global pandemic to climate change and you can see that climate isn’t given the same priority). Last year’s wildfires and this spring’s killer European frosts are reminders of the climate’s destructive volatility.

The wine business needs to take account of changing environmental conditions and, while this isn’t the same vision of terroirism that you see in Mondovino, it is a step in that direction.  More steps are needed, both to address the environmental risks and to secure the future of wine.

I’m trying to figure out where the natural wine movement fits into the revenge of the terroirists. Natural wine producers often fit the terroirist stereotype that Jonathan Nossiter established in Mondovino. In fact, Nossiter has written a book about them called Cultural Insurrection: A Manifesto for Arts, Agriculture, and Natural Wine.. Natural wine advocates in Nossiter’s telling of the story tend to define wine more narrowly than I do (something that I pointed out in reaction to Nossiter’s book), but they still contribute to the “revenge” I hope to see.

Not Exactly a Manifesto

Nossiter’s vision of wine sees a world of industrial wine versus natural wine and industrial wine needs to disappear because, well, it isn’t really wine at all. It’s just a toxic chemical concoction. A lot of people see wine in terms of a dichotomy — wine of the market versus wine of place, commercial wine versus fine wine, you get the idea. Generally they make this distinction in order to favor one type of wine — almost always the terroirist side of the equation.

My realist perspective is that there many types of wine, including high volume commercial  wines. They are all wine and each category fills a consumer niche. What is important to me is that the big doesn’t crowd out the small, that terroir wines and the terroir that produces them endures. And that consumers  understand the choices they make and their implications.

It’s a complicated situation, a fact easily illustrated by the case of Canadian billionaire Anthony von Mandl. Terroirist or not? You be the judge!

On one hand, von Mandl is the head of the company that makes Mike’s Hard Lemonade and White Claw hard seltzer. These terroir-free alco-pop beverages are insanely popular and my market research friends tell me that they are partly responsible for declining sales of inexpensive (and, it must be said, also relatively terroir-free) commodity wine.

On the other hand, however, von Mandl is the Robert Mondavi of the Okanagan Valley in Canada. He’s the founder of iconic Mission Hill Winery and, according to a recently VinePair report, is a driving force in British Columbia’s organic wine movement. Six wineries in von Mandl’s Mark Anthony Group are leading the charge, converting about 1300 acres to organic viticulture:  Mission Hill Family EstateCedarCreek Estate WineryRoad 13 VineyardsLiquidity WinesMartin’s Lane and Checkmate Artisanal Winery.

Do you appreciate irony here? White Claw money funding a terroirist revenge in the beautiful Okanagan Valley.

Whether  you think of terroirism as a broad phenomenon or a narrow reaction movement, I hope you can see its importance in the wine wars of today and the battles of tomorrow. Are we all really terroirists now? No, not really. But the I think the wine world has come a long way from the David versus Goliath world of Mondovino.

>>><<<

“We are all Keynesians now” is the comment commonly attributed to Friedman and Nixon and if they were still alive they would probably repeat the saying again. I cannot think of any time in the past 40 years when fiscal policy has been more important.