Wine & Coronavirus: Assessing the Risks

virusConcern about the health impacts and economic effects of the novel coronavirus continues to grow. Although the health impacts are obviously most important, since lives are at risk, it is natural to also be concerned about how this potential pandemic might affect the global economy in general and the wine industry in particular.

I have been following the situation closely focusing for personal reasons on the U.S. (we live about 40 miles from the coronavirus infection epicenter near Seattle) and northern Italy (we lived in Bologna when I taught at the Johns Hopkins center there).

The Italian experience so far is noteworthy: some whole towns were initially locked down to contain the virus or slow its transmission, all schools and universities closed as a precautionary measure, and scenes of empty piazzas and tourist thoroughfares in Venice and Milan. Large areas of northern Italy, including Lombardy and its capital Milan, were later put under quarantine, which has now been extended to the whole country.

Closer to home, some schools and colleges, including the University of Washington campuses, have canceled physical classes in favor of on-line instruction. Several major employers, including Amazon, are encouraging workers to tele-commute if possible. Concern is likely to rise as additional testing kits arrive and the true picture of the epidemic emerges.

I’ve also been making some notes on wine and the coronavirus in order to try to think more clearly about the potential economic risks to the industry. I thought I would share them here even though they are necessarily incomplete and change daily — just like everything else about the coronavirus.

Here is a quick analysis of several areas of concern, starting with the most general and then narrowing. Use the comments section below to point out issues I have neglected or gotten wrong.

Recession Risk

Japan, Italy, and Germany were already teetering on the edge of recessions before the coronavirus outbreak, so it is not unreasonable to think that they will be sucked into economic downturn, potentially taking other countries with them through the sort of economic contagion that face masks and hand sanitizer are powerless to control.  This is a serious problem since there are also worries about slowing economic growth in China,  the United States, and the United Kingdom. Chinese exports were down 17% due to supply-side factors for the most recent period, which bodes ill for their economic situation.

Central banks have pledged to counter the economic impacts of coronavirus although they have so far stopped short of pledging coordinated action, which would be most effective. The U.S. Federal Reserve cut its key interest rate target by a half percentage point last week, but the financial market response was weak in part because this action had already been factored into investor expectations according to some observers. In any case interest rates are a blunt tool when faced with a specific problem such as coronavirus.

With interest rates already so low (and in some cases negative), the concern is that preemptive central bank strikes against coronavirus will use up all the ammunition left to deal with recession and economic contagion. The risk of a global recession, probably smaller than the global financial crisis of a decade ago and certainly different from it, is thus magnified by coronavirus.

The possibility of a recession with its impacts on income and employment both broadly and in the wine industry is thus a very serious concern. Recession risk: medium to high and probably rising.

Supply Chain Disruption

One impact of coronavirus has been to make us more aware of the inherent risks in international and global supply chains and associated just-in-time production strategies. Bottlenecks anywhere along the chain can potentially impact final production.

Some factories in China were either closed because of the coronavirus threat or slow to re-open after the Lunar New Year holiday, which has created parts shortages and headaches in many industries as well as reducing international trade flows. International shipping schedules and container availability have both been disrupted on some routes.

Wine is certainly affected by supply chain issues related to the coronavirus, although not as much as some other industries such as automobiles and electronics. Glass imports from China are one important concern and I am sure there are others.  Wine exports, which are of growing importance because of the domestic surplus, may also be disrupted.

How have supply chain issues affected your wine business? Please leave comments below. Current events seem likely to cause many firms to reconsider their supply chain strategies, shifting closer to home in some cases and relying less on “just in time” supplies in others.

Supply chain disruption risk: significant and rising as the virus spreads.

Travel and Tourism

Travel and tourism are down dramatically in many regions as people avoid airports and crowded situations in general where contagion might take place.  Soccer matches have been cancelled or postponed in Italy, for example, and a few games played to empty stadiums.  It is unclear how this summer’s Olympic Games in Japan might be affected.

Wine tourism is likely to be a victim of the general decline in domestic and international travel, although it is too soon to guess how great the impact will be on tasting room visits and sales. Direct sales to visitors have become a very important economic factor for  many U.S. wineries, so any decrease in wine-related travel would be important.

Airlines and cruise ships are also good wine markets for those who can secure their business and the sudden decline in flying and interest in cruising will necessarily affect those sales, too, as well as threaten the financial health of the air and cruise businesses themselves.

Business travel is affected along with vacation trips. Several large international wine gatherings have been canceled or postponed including ProWien in Germany, for example, and Taste Washington here in the U.S. Many people are asking themselves “is this trip really necessary?” when health risks are involved. The cancelled meetings are expensive both in terms of direct costs and potential lost business. The impacts continue to spread.

Travel- and tourism-related risks: High.

On-Trade and Off-Trade Impacts

China is one of the most important wine markets, especially for French and Australian wineries, and its wine demand has fallen significantly in recent weeks according to early reports as consumers have hesitated to gather in restaurants and other venues out of concern for the coronavirus. How long this situation will last and how much wine demand will rebound when the health scare has passed are open questions.

Restaurant wine sales are important outside China, too, of course, and so this is an important market to watch. News reports suggest that those who are concerned about contagion sometimes turn to home delivery of meals or groceries in order to avoid crowds. This is not advantageous for wine sales in many areas, including the U.S., where wine under-performs in home delivery sales relative to other products.

Wine market risks: Significant with a good deal of uncertainty.

The Bottom Line

The bottom line so far is that the coronavirus has many effects that are detrimental to the economy in general and the economy of wine in particular. Anyone in the wine business would be wise to ask themselves a series of questions that starts with “how well prepared is my company for a recession?” and continues down the list to supply chain disruptions, swings in consumer demand, altered trade patterns, tasting room strategies and policies, and so on. It is already too late to anticipate some impacts, but not too soon to think through others.

That said, the most important questions are probably the ones I haven’t asked here. The research I did in my other life as an international economics professor probing financial crises suggests that contagion doesn’t always stay in its lane.

We saw this on Monday when coronavirus-driven falling demand for petroleum sparked a price war that drove oil prices down dramatically. Some oil investors dumped equity holdings to cover their oil losses, sparking a global sell-off there, too. Corporate junk bonds — and there is a mountain of them out there — could be next in line. If they start to fall central banks will need all the resources they can muster to keep liquidity flowing.

Book Review: What Can Wine and Coffee Learn from Each Other?

51wdqn2bcpyl._sx324_bo1204203200_Morten Scholer, Coffee and Wine: Two Worlds Compared. Matador/Troubador, 2018.

What can the coffee industry learn from wine (and vice versa)? That’s the question that Morten Scholer wanted to examine when he set out to write Coffee and Wine: Two Worlds Compared. It is the kind of question that gets attention here at The Wine Economist, where we search for lessons about the future of wine by looking at all sorts of other products ranging from craft beer to almond milk and beyond.

Coffee and wine are an interesting pairing. Both are global consumer goods, traded around the world for centuries. But, as Scholer points out, they differ in a hundred ways. Coffee, for example, is relatively young as an international commodity — 800 years compared to maybe 8000 years for wine.

North-North versus North-South

The most important markets for both coffee and wine are in the advanced industrialized world, as you might guess, but while a lot of wine is also produced there (Italy, France, Spain, Germany, the U.S.), coffee comes mainly from the developing world. Wine trade is thus mainly north-north (with important exceptions such as Argentina and South Africa), while coffee trade tends to be north-south.

So what can wine and coffee learn from each other? Scholer probably knows, but he wants his readers to find their own answers, which is both frustrating and engaging.  It is frustrating because it is natural to seek out an over-arching narrative to help organize and guide the reader through the dozens and dozens of topics covered. You won’t find that here.

Serious Fun

Some of the comparisons are just plain fun, as in the chapter on quality and quality control when the wine aroma wheel is set alongside a coffee tasters flavor wheel. Who knew that flavors and aromas could be so complicated and that coffee and wine could have so many sensory qualities in common?

Other comparisons are seriously revealing. I found the comparative analysis of the development of sustainability movements in coffee and wine very interesting.  Sustainability in coffee began as a top-down movement initially focused on assuring that growers received a fair return on their efforts, although a wider range of concerns are now addressed. Sustainability in wine, on the other hand, was a bottom-up movement based on grower concerns about environmental issues that has also broadened.

There are three main global sustainability programs for coffee, Scholer tells us, and almost half of world production meets these standards, although only about a third is marketed that way. In wine there are many different sustainability standards and programs reflecting the localized bottom-up origins of the movement. It is a complicated situation, Scholer argues, and he believes that sustainability standards for coffee are more complex than for wine in part because coffee has a long and complex value chain and meaningful sustainability must extend across the entire chain. Market structure really matters.

Everything You Ever Wanted to Know?

Scholer’s eleven chapters take pretty much every aspect of wine and coffee and then breaks them down into comparative elements. Thus the reader moves from history to botany and agronomy, processing and quality control, patterns of trade, packaging and logistics, consumption patterns, sustainability issues, organizations and competitiions, cultural values, and finally a country-by-country side-by-side snapshort. An appendix briefly expands the book’s domain, adding cocoa, tea, and beer to the comparative mix.

Each section is peppered by boxes, charts and tables and illuminated with maps. If you are just looking for interesting tidbits, they are there on every page. Hard to put the book down.

Back to the Big Picture

But if you are looking for the answer to that big question about what wine and coffee have to say to each other, more effort is required. Scholer’s method is a bit like pointilist painting, where the image only becomes clear when you stand back a ways. What’s the big picture? Honestly, I am still working on it. Maybe one big macro answer doesn’t exist and that the insights are best appreciated at the micro level.

But I think it’s worth the effort to think about coffee and wine seriously. I tried to do that in a pair of Wine Economist columns back in 2009. My focus then was on the question of why the price difference between the cheapest and most expensive wines was so much greater than for the cheapest and costliest coffees. Wine does better than coffee in spanning the space from everyday commodity to luxury product. But, I wrote then, coffee will try to catch up and I think that’s happening today.

Scholer’s Coffee and Wine is an intriguing book. You can try to solve its riddle or just enjoy learning all about these two global industries. Either way, there’s food (and drink) for thought.

Sometimes the Best Wine is a (Non-Alcoholic) Beer

win“Sometimes the best wine is a beer” is the title of a chapter in my book Money, Taste, and Wine: It’s Complicated. The chapter begins with a situtation that most wine drinkers have experienced. Stranded at a charity reception with only tasteless donated wine to drink, I long for the craft beer that others seem to be enjoying so much.

At really low price points (and sometimes at higher price levels, too), I am afraid that the best wine probably is a beer, at least if you care what you’re drinking.

Recently I’ve had an opportunity to explore another situation where wine fares poorly compared to beer: when you need to avoid alcohol for one reason or another.

Non-alcoholic wines are available but they are not really much of a thing here in the U.S. — at least not yet — although they are getting more attention in Europe. Sue and I learned about Matarromera Group’s innovative “Win” alcohol-free wines during our visit to Spain, for example. Matarrommera sees potential in the non-alcohlic wine market and has made significant investment in production and marketing.

Non-alcoholic wine is a narrow category here in the U.S. I am not sure I would even think to ask for non-alcoholic wine at a bar or restaurant. On-trade people — what is your experience? Do customers request non-alcoholic wine?

Non-Alcoholic Choices Everywhere

But beer is another matter. Every bar and restaurant I surveyed during my dry week offered a non-alcoholic beer option — most at the 0.5 % abv level that qualifies as non-alcoholic (that’s about the same abv as orange juice, for example). And some had 0.0 % options, too. A Whole Foods store we visited had seven different choices, including two 0.0% options.

What did they taste like? Well, the first non-alcoholic beer I tried was an old school O’Douls and it was just like I remembered it. No offense, but I’d rather drink warm tap water.

But at dinner at a French restaurant one night and then an Italian place the next night I was introduced to a couple of German import brands and they were terrific, with the aroma, body and flavor of real beer.  I guess the Germans take beer seriously and that attention extends to non-alcholic products.

beer

I really didn’t miss the alcohol and I appreciated the fact that, because they were priced like bottles of beer, these products were considerably less expensive than many of the by-the-glass wine offerings.

Hey Gallo!

I’d still rather have the wine, but I didn’t suffer with the non-alcoholic beers. It is clear that that the non-alcohol  beverage market is growing and that some producers are making significant investments in both product development and marketing.

Is there space for a decent non-alcoholic wine in a single-serve container? Yes, I think so. But someone’s going to have to make the investment to establish the market. Hey, Gallo — why don’t you give this a try? You are already expanding your Barefoot brand to include hard selzer in cans.  Why not take the next step with a non-alcoholic wine in a single serve can? Barefoot 0.0!

As the week was ending I found an affordable six-pack of Clausthaler Dry Hopped non-alcholic beer imported from Germany. Complex with a rich nose, amber-colored, made with Cascade hops, it seems ideal for a craft beer consumer who wants or needs to avoid alcohol.

And the perfect choice for those times when the best wine is an alcohol-free beer.

Liquid Assets Podcast: Can U.S. Wine Win Back Its Mojo?

268x0w“Can U.S. Wine Win Back Its Mojo?” That’s the title of the lastest Rabobank Liquid Assets podcast, which I recorded along with  Rabobank’s Global Strategist Stephen Rannekleiv and Analyst Bourcard Nesin in Sacramento during the annual Unified Wine & Grape Symposium meetings earlier this month.

The mojo question was at the front of our minds because earlier that day the speakers at the State of the Industry session had painted a complicated picture of American wine’s prospects. There are still opportunties in the U.S. market (the rumors of wine’s death are exaggerated, I said in my presentaiton, paraphrasing Mark Twain), but there are undeniable problems, too.

The best guess is that 200,000 tons of wine grapes were left on the vines in California in 2019 for lack of buyers. Perhaps 30,000 acres of wine grapes need to be taken out of production to balance demand and supply. So it is no surprise that our discussion centered on ways to boost demand and therefore lesson the supply-side pain.

The podcast is fast-paced and raises interesting points about the potential for wine exports (my contribution to the discussion), the need for increased attention to e-commerce sales (Bourcard’s point) and Stephen’s analysis of the challenges of building brands for a changing market environment.

Interested? Follow this link to “Can U.S. Wine Win Back Its Mojo?”

Wine Book Review: Adventures on the China Wine Trail

chinaCynthia Howson & Pierre Ly, Adventures on the China Wine Trail: How Farmers, Local Governments, Teachers, and Entrepreneurs Are Rocking the Wine World. (Rowman & Littlefield, 2020).

I remember my first taste of Chinese wine very well. My university student Brian brought a bottle of 1999 Changyu Cabernet Sauvignon back from his study abroad semester in Beijing. It didn’t really taste much like Cabernet, but it was the smell that really got me. “Ashtray, coffee grounds, urinal crust” was the tasting note I found on the internet. Exactly. Quite an experience.

The second taste was not much better. Matt, another student, found a case of Dragon’s Hollow Riesling in a Grocery Outlet store in McMinneville, Oregon. He gave me a couple of bottles that I tried (but failed) to serve at a student tasting. The smell (something rotten?) got in the way of tasting and the wine went down the drain.

I learned two things from these tastings. First, maybe my students were out to kill me! And second, Chinese wine had a long way to go.

And a long way it has come, too, in only a few years. That’s one of the messages of Cynthia Howson’s and Pierre Ly’s fast-paced new book, Adventures on the China Wine Trail. Howson and Ly, partners in life as well as wine research, might have been initially attracted to Chinese wine by its peculiar taste and unexpected existence. But as they have immersed (I nearly said marinated) themselves in the wine, the people, the geography, and the culture they have discovered so much more, which they enthusiastically share with their readers.

Adventures on the China Wine Trail works on many levels. It is in part the record of the authors’ personal journeys and it is interesting to travel with them as they lug their seemingly-bottomless wine suitcase from place to place. The authors have an amazing mastery of the detail of the people and places, food and wine. It’s almost like being there.

In fact, the book works as a travel guide as well wine journey account, providing information of where to go, what to do, where to stay, and so on. But beware: Howson and Ly aren’t your typical tourists, so while they do take us on a walk along part of the Great Wall, this is only because they took part in a wine conference quite close by. They still haven’t seen the famous Terracotta soldiers despite spending time in that region.  They couldn’t pull themselves away from the wineries. Maybe next time, they sigh.

More practical advice appears in the closing chapters. Where should you go to buy or drink excellent Chinese wine if you visit China? They have recommendations for you. And when will you be able to enjoy Chinese wines (good ones, not the drain-cleaner stuff) at home? Sooner than you think, they say.

Some of the wines are already here, including the $300 Ao Yun that Pierre bought at a Total Wine in Washington State. But that is just the iceberg’s tip and if you are reading this in London or Paris you may know that Chinese wines are no longer the shocking discovery that they were just a few years ago.

And how are the wines? They vary in quality, just like wines from any place else. But many of them (more each year) are excellent and even distinctive. I know this both because Howson and Ly tell us about the wines and also because Sue and I have been fortunate to share some of their Chinese finds — including that luxury Ao Yun.

There’s a final layer to the story that I can’t forget. Howson and Ly are both professors and serious scholars. Although the book doesn’t read like an academic treatise, it has a serious purpose. The authors began their study of the Chinese wine industry wondering where it might lead? Could wine possibly be the basis of sustainable rural economic development? Or was it an alcoholic dead end in terms of a greater purpose?

Chinese wine’s journey has been anything but simple or smooth and continues today. It will be a long time, I suspect, before we know for sure how the story will end. But as for economic development, Howson and Ly have overcome their doubts. Wine in China is the real deal, whatever specific shape it takes in the future. All the hard work of the farmers, government officials, teachers and entrepreneurs we meet in the book has succceeded in building a viable industry.

So here’s my tasting note:  Adventures on the China Wine Trail is a fast-paced journey through the world of Chinese wines that will appeal to readers who love wine, China,  travel, or who just looking a good adventure yarn. Highly recommended.

Money, Taste & Wine: Best of the Best Wine Writing 1995-2020

gourmand-best-25years-1995-2020Gourmand International has been spotlighting the best food and wine books and writing for 25 years and for this year’s big fair in Paris they are recognizing what they consider the “best of the best” of the last quarter-century.

9781442234635I am happy to announce that my book Money, Taste, and Wine: It’s Complicated! has been shortlisted for the 25th anniversary best wine writing award (it previously won the 2016 best wine writing prize). Here is a quick summary of the book in case you haven’t read it yet.

As wine economist and best-selling author Mike Veseth peels away layer after layer of the money-taste-wine story he discovers the wine buyer’s biggest mistake (which is to confuse money and taste) and learns how to avoid it, sips and swirls dump bucket wines, Treasure Island wines and toasts anything but Champagne. He bulks up with big bag, big box wines and realizes that sometimes the best wine is really a beer.

Along the way he questions wine’s identity crisis, looks down his nose at wine snobs and cheese bores, follows the money, surveys the restaurant war battleground and imagines wines that even money cannot buy before concluding that money, taste and wine might have a complicated relationship but sometimes they have the power to change the world. Money, Taste & Wine will surprise, inform, inspire and delight anyone with an interest in wine – or complicated relationships!

I admit that it warms my heart to be on a short list with authors like Steven Spurrier (see below).  And the nominees in the other categories (full pdf list here) read like Who’s Who of wine wriiting.

Gourmand

Very exciting. Big thanks to Gourmand International and everyone who helped make Money, Taste, and Wine such a success.

Wine Book Reviews: Vino, Économie, Le Guerre & Leonardo’s Vines

torcoli

Four wine books with intertnational twists for your reading consideration.

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Alessandro Torcoli, In Vino Veritas: Praticamente tutto quello che serve sapere (davvero) sul vino. Longanesi.

Billy Joel tells us that wine is a simple thing. A bottle of white? A bottle of red? Perhaps a bottle of Rosè instead? Alessandro Torcoli wants us to know that wine is actually complicated, but not so complex that we can’t enjoy it. And that’s a good thing.

Torcoli is editor of Civiltà del Bere, a leading Italian journal of wine and culture, and an aspiring Master of Wine (there are no Italians on the current list of MWs — incredible!).

I am not fluent in Italian (or French, either — see below), but wine is a universal language and that plus some extra effort allowed me to read and enjoy Torcoli’s new book, In Vino Veritas. My efforts were well rewarded.

In Vino Veritas, as the subtitle promises, provides the reader with “pretty much everything you need to know (really) about wine,” which is to say that it is a survey of the most important topics in wine. I might be wrong, but I imagine that the book came out of Torcoli’s MW studies and represents his thoughtful reflections on the world of wine. Two things especially impressed me about this book.
First, the writing style is so fluid that it is a pleasure to read even, as I noted above, when struggling a bit with translation. Some of this is no doubt because it is written in Italian, which is a beautiful language. But it is possible to write poorly in Italian, too, so most of the credit must go to Torcoli, who is a poet as well as wine expert.

Although Torcoli’s book has global reach, analyzing both old and new world wines, it is written for an Italian audience and so uses Italy and its wines as the reference point. I didn’t realize how important the shift in perspective (from France in many cases) would be and how much it would help me understand and appreciate both Italian wines and those from other places.

This is an enticing book with much to offer both novice and professional. Highly recommended.

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cardebat

Jean-Marie Cardebat, Économie du vin. La Decouverte.

Jean-Marie Cardebat is a wine economist who teaches at the University of Bordeaux. Although my French is only a little better than my Italian, I found this book accessible because it draws on both the language of wine and the lexicon of economics.

Prof. Cardebat’s book is an introduction to the economic analysis of the wine industry and successfully straddles a certain kind of line, telling economists about wine and wine people about economics without leaving either group behind.

Because of this the book’s organization is very different from that of a standard wine guide. Forget about the typical arrangement based on grape varieties and wine regions. We start instead with the determinants of the supply of wine and move to demand, the market structure, and price, drawing on relevant data and published research along the way.

The tone becomes much more analytical in the final chapter, perhaps because this is where Cardebat’s own research is most relevant. Well written and clear with many fine passages (although understandably not as poetic as Torcoli’s essays). A worthy addition to your bookshelf. You might also consider James Thornton’s American Wine Economics, for an American perspective on the topic.

lambrusco

>>><<<Attilio Scienza & Serena Imazio, Sangiovese, Lambrusco, and Other Vine Stories. Positive Press.

The third book on this list is provided in English translation of the original Italian, which is helpful since its topic can be dauntingly technical.

I have had the pleasure to be on programs with Prof. Scienza in both the New York and Italy and to appreciate that he is quite a legendary figure in viticulture research. It is easy to see why.

This book analyzes the origins of and the relations between many of the most important indigenous Italian grape varieties using DNA analysis. An important topic, to be sure, but it can be quite technical and somewhat tedious for the novice like me.

So it is significant that Scienza and Imazio interweave the stories of the vines with human stories, drawing upon history and archaeology to help understand how the vines and the wines developed and how they gave us the wines and grapes of today.

One of my favorite chapters explores the family tree of Moscato and Malvasia. Along the way we are introduced to Zibibbo, which the authors compare to a sailor who has a son in every port because this somewhat obscure grape was instrumental in the evolution of so many other wine grape varieties.

We also learn about Leonardo Da Vinci’s personal vineyard in Milan, which still exists and has been somewhat miraculously reconstructed. How do they know what grapes were grown then and are therefore planted again now? Elementary, dear reader. DNA analysis — plus some human detective work that would make Sherlock Holmes proud. We can say with confidence that Leonardo favored sweet wine. Sweet wine? Perhaps that is part of the secret of the Mona Lisa’s mystical smile.

Hard to resist a book with so many fascinating insights.

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hitler

Christophe Lucand, Hitler’s Vineyards:How the French Winemakers Collaborated with the Nazis. Pen & Sword History, 2019.

Originally published in French as Le vin et le guerre (Wine and War), the English translation’s title really grabs your attention. Hitler’s Vineyards? Hard not to pull it down from the shelf to learn more.

This isn’t the first book I’ve seen about wine and World War II. One of my favorite wine books of all time is Wine and War: The French, the Nazis, and the Battle for France’s Greatest Treasure by Donald and Petie Kladstrup. It tells the story of how French producers walked a delicate line, trying to preserve their wines and vines during the Nazi occupation. The Kladstrups are wonderful story-tellers, so this is a book that is hard to put down.

Lucand’s detailed historical analysis of wine during the Nazi Occupation of France is fascinating, too. Nazi forces purchased truly enormous quantities of French wine from all regions and of all qualities at prices well above the market and shipped it all back to Germany. The money to buy the wine came from the exorbinate fees that Germany charged the French government for the costs of occupation. So French money bought French wine for German drinkers.

Although I am sure the wine producers had mixed emotions about these transaction, the fact is that the high-priced sales were welcome since large stocks had built up in the pre-war years. And, Lucand tells us, the occupiers worked to improve vineyard operations in order to keep the wine flows going.

When the clouds of war finally cleared, Lucand explains, the French wine industry was transformed from an inward-looking business to an export-oriented giant. Fascinating. Detailed, well-written, and controversial, Lucand’s history of France and its wine during the Nazi Occupation is an unexpected treat.

Wine Book Review: Back to the Future? Strong, Sweet & Dry

9781789141528Becky Sue Epstein, Strong, Sweet & Dry: A guide to Vermouth, Port, Sherry, Madeira and Marsala. Reaktion Books, November 2019.

What do Vermouth, Port, Sherry, Madeira, and Marsala wines have in common? They are all fortified wines (the “strong” part of the book title). You probably have bottles of several if not all of them stashed away somewhere in the back of the wine closet, although you might not have thought about them in a while.

And they are all delicious. Time you brought them out of the closet and onto the table where they belong! Becky Sue Epstein’s entertaining and informative new book is just the nudge you need to do it.

There are two themes that run through the chapters on the different wines. The first is a classic rise, fall, rise again arc. Each wine was once the object of intense interest and widespread celebration. Then, for reasons that are sometimes the same (phylloxera vine devastation) and sometimes unique to the particular situation, interest declined and production faded away.

Now, however, these wines are enjoying a bit of a renaissance.  Back to the future! Why now? Well, this leads to the second theme. As they declined, each of the wines was reduced to a stereotype (think stuffy Port and cigars or your grandmother’s sticky sweet sherry). Now, however, there is more interest in exploring the diversity of these wines and returning to their roots.

Controversially,  there is also a trend toward using these fortified wines as the base for cocktails. Wine cocktails? OMG. How could you do that to a nice wine? Yes, I know there are purists who turn their noses up at this idea, motivated perhaps by the fear that it is a slippery slope that leads all the way down to Vintage Port and Coca Cola. Shudder!

But Epstein embraces the idea, pointing out that fortified wine cocktails are part of the history of these wines. People made cocktails a hundred years ago using whatever products were available. And fortified wines were often more readily available than Gin or Vodka, for example.  No reason why such a drink can’t be tasty. And it is probably lower in alcohol than many spirits concoctions.

sandemanSogrape, the Portuguese producer of the Sandeman wines, has embraced the old/new trend. My 2016 column on Port wine developments noted that the Sandeman Tawny Ports were packaged into new bottles designed to look at home behind the bar. What do you think? The shape is more like a whisky bottle and very different from the traditional black Port bottle with its stenciled label.

Sue and I have a strong interest in fortified wines and have been fortunate to be able to sample many of them — including some unusual ones like Commandaria from Cyprus — at the source. But for some reason we’ve never explored Vermouth. Until now.

Epstein’s chapter on Vermouth convinced us we had to learn more. So now we are working our way through the local selection and look forward to adding this wine to our travel agenda list.

Becky Sue Epstein’s Strong, Sweet & Dry inspired us and I think it will inspire you to try something new that’s also something old. Highly recommended.

It’s Going to be Huge: 2020 Unified Wine & Grape Symposium

 

The Unified Wine & Grape Symposium is just a few weeks away (February 4-6 in Sacramento) and I am already excited. The Unified is North America’s largest wine industry event with about 14,000 in attendance for the trade show and seminars.

Bursting at the Seams

The 2020 Unified promises to be bigger and maybe even betterthan ever before. The event has been moved out to the Cal Expo fairgrounds for 2020 while the Sacramento Convention Center is expanded and remodeled — the Unified  simply outgrew the old facilities. The one-year move means even more room than in the past for trade show exhibitors, including outdoor space for big machines and equipment. It’s going to be huge — literally!

And the program organizers have gone to some trouble to expand seminar offerings, too, with 110 speakers divided among about 30 sessions. Something for every need and interest with programs for growers and winemakers, marketing and business management. As has been the case for several years, some of the technical sessions are offered in both English and Spanish.

Labor cost and availability is an important issue in the wine business, so I am interested in one session that examines mechanization in the vineyard and includes a wine tasting. I’m guessing that the audience will be offered the opportunity to see if they can taste the difference between wines made with machine-harvested versus hand-picked grapes. Should be interesting.

State of the Industry

I’ll be moderating and speaking at the “State of the Industry   general session on Wednesday morning. Danny Brager (Nielsen), Steve Fredricks (Turrentine Brokerage), Jean-Marie Cardebot (University of Bordeaux), and Jeff Bitter (Allied Grape Growers) will be joining me on the big stage. A great team with deep understanding of the wine market.

Jeff O’Neill of O’Neill Vintners and Distillers is giving the Tuesday luncheon keynote speech this year and I am looking forward to hearing what he has to say. These are uncertain times for wine in the United States and it is easy to be pessimistic about the future. O’Neill’s company has been remarkably successful in navigating the treacherous seas, taking advantage of favorable winds. Everyone will be looking for lessons and insights they can take back to their businesses.

This is important because one cloud hanging over the meetings is a structural surplus of grapes and wine in some categories. U.S. wine demand is plateauing, which is better than some countries where demand has been falling for years. Overall wine expenditures are still rising even if overall volumes have declined.

The surplus creates a problem that may take years to correct through a combination of rising sales in old markets, development of new markets, and adjusting production capacity. Heidi Scheid is leading a session that will address the issues directly titled Strategies for Managing Through Over-Supply. Should be a standing room crowd.

Trade Wars Shrink the Pie

Trade wars are another concern. President Trump has said that trade wars are good and they are easy to win, but the wine industry has found little to celebrate about being in the center of the battlefield. Having invested years of effort and lots of dollars opening up Chinese markets, for example, many wineries have watched hoped-for opportunities disappear with retaliatory Chinese tariffs on U.S. wines.

It looks like French wine producers have dodged a bullet, avoiding sky-high U.S. tariffs that were threatened as retaliation for France’s digital tax scheme. You might have expected U.S. wine producers to celebrate tariffs on wine imports because some buyers are likely to shift from imports to domestic wines. But this substitution effect is not the only impact the tariffs have.

Prohibitive tariffs on imported wine are more likely to shrink the wine market pie at every stage of the product chain. It is hard to see how retailers or distributors can justify investment in the wine category when overall sales fall and uncertainty about future conditions is high. The uncertainty effect looms especially large, despite the recent wine tariff trade truce. If wine was caught in the trade war cross-fire before, there’s no reason it couldn’t happen again. And truces are by their nature temporary and fragile.

When tariffs work to protect an industry they tend to do so only temporarily and at high cost (struggling Harley-Davidson is a good example of this). But they more often backfire. The recent tariffs meant to protect manufacturing jobs in the U.S., for example, seem to have only accelerated the decline of the manufacturing sector generally because of the complex international interweaving of manufacturing chains and other factors.

Food (and Drink) for Thought

There a lot to think about as the wine industry moves into 2020, so I encourage readers to check out the Unified’s seminar programs and start working on a strategy for the trade show.

I’ve been to a lot of wine meetings both here and abroad, but there’s nothing like the Unified. Hope to see you there.

Wine, Adapting to Climate Change, & the Peter Parker Principle

beforeThe Red Mountain AVA is Washington’s smallest, warmest, and maybe its most distinctive wine-growing region. The warm part has been advantage for most of Red Mountain’s history. But not any more, according to Gaye McNutt and Benjamin Smith, owners of Cadence Winery and the Cara Mia Vineyard.

Too Darn Hot

Climate change has had a variety of effects that condition Smith’s ability to make the elegant wines he prefers. Earlier harvest, potentially higher alcohol levels, sunburned fruit, tough tannins — none of these impacts is desirable. Working with vineyard manager Dick Boushey, McNutt and Smith considered many alternatives and found each potential solution problematic in one way or another.

Then they hit upon an insight — to transform the vineyard in the image above to the emerging vineyard you see below.

after

The result is the first vineyard in Washington State specifically designed to mitigate the effects of climate change by doubling the row density of the vineyard. First planted in 2004 at three feet between vines and eight feet between rows the vineyard is now spaced at four feet between rows.

This tighter spacing provides up to two hours additional morning and afternoon shading of adjacent rows thereby cooling the fruit, reducing the effects of high heat, and ultimately producing more elegant, lower alcohol wines even in hotter vintages.

All around the world winegrowers are facing up to the challenges that climate change presents and, because wine people are creative by nature, they are finding ways to adapt through innovative viticultural techniques. Cadence is a model of how this can be done.

The Cadence solution is not inexpensive, of course, but it promises to allow them to continue to make excellent wines and even has benefits as an opportunity to add additional clonal selections to the mix.

Peter Parker Principle

A 2000 case winery like Cadence is to be commended for setting an example of innovation to mitigate the effects of climate change. Larger wineries can do the same, but the Peter Parker Principle (familiar to all Spider-Man enthusiasts) holds them to a higher standard. With great power comes great responsibility.

Many large wineries have risen to the Peter Parker challenge. Familia Torres and Jackson Family Wines, for example, have taken the lead in forming a global wine alliance to fight climate change, the International Alliance for Climate Action.  Adrian Bridge of Port producer Taylor Fladgate was instrumental in creating the Porto Protocol and the global conference on climate change and wine that Sue I and attended last year.

Many wineries embrace their social and environmental responsibilities by becoming benefit corporations (B Corps for short). Certified B Corps commit to a social and environmental responsibility agenda and agree to transparent assessment of their activities. Are you familiar with B Corps? A number of large businesses have taken this step including Patagonia Works, which has a B Impact Score of 151.2 on a scale of 0-200 (the minimum score for B Corps certification is 80 — an “ordinary” business might score about 50 points).  The craft beer producer New Belgium Brewing is also a B Corp (B Impact score 136.5).

It is easy to be a B Corp skeptic because it seems so unlikely that a business really would elevate people and planet to the same level as profit in its priority list. And I am sure that some are more committed than others. But a number of my former university students have become practitioners of and advocates for the B Corp program and they have persuaded me to take it seriously (Steve, Russ, Portland, Douglas, and Colleen — I’m talking about you).

Many wineries are entering the B Corp economy. Oregon’s A to Z Wineworks became the first certified winery B Corp in 2014 and is now joined by a growing international community including Symington Family Estates in Portugal and Fetzer Vineyards in Calfiornia. Fetzer, with about 2.5 million case production, is the largest B Corp winery in the world.

The Symington Family’s sustainability program, Mission 2025, is especially ambitious and includes a recently announced €1 million Impact Fund. The primary use of the funds will be for community well-being and health, environmental protection and conservation and cultural heritage and education in the Duoro and Alto Alentejo regions where the company has vineyards.

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Mapping the Road at Fetzer

Fetzer has doubled-down on the Peter Parker Principle. Fetzer and its Bonterra brand have long been known as environmental stewards and activists. Chilean leader Concha y Toro’s 2011 acquisition has given Fetzer greater scale and even deeper commitment to corporate social responsibility.

Fetzer’s 2017-2018 “Peter Parker” report, Mapping the Road, makes good reading because the range of activities and commitments is very impressive. As the report says,

Fetzer Vineyards understands that transforming the future requires not just small, incremental steps toward sustainability, but rather an ambitious framework—like regenerative development—applied to every part of its business. With the knowledge that the road will not always be easy, Fetzer Vineyards is poised to continue taking bold steps toward its vision of a regenerative, net positive company, and to be part of the movement to redefine what responsible business is all about.

One thing that I admire is that Fetzer is willing to “own” its supply chain. Many environmentally ambitious firms limit their universe of concern to their own operations, which is both practical and understandable. But wine’s supply chain is long and complex and progress in the vineyard and cellar alone is commendable, but not enough. Major players like Fetzer need to take responsibility for the whole chain. It’s the Peter Parker thing to do.

And, increasingly, they are. Congratulations to Cadence, Symington, Fetzer, and others  for their leadership.