Stalin, Machiavelli, and Nutritional Labels for Wine

February 13, 2024 By in health, wine, wine markets 4 Comments

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

The Soviet System

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

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

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

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

A Lot to Learn about Labels

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

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

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

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

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

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

Forest vs Trees

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

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

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

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

The Road Ahead: Lessons from the Unified Symposium

February 6, 2024 By in economic crisis, Unified Wine & Grape Symposium, wine, wine markets 7 Comments

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

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

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

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

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

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

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

Two: We are not alone.

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

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

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

Three: The prisoners’ dilemma.

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

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

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

Four: A tale of two futures.

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

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

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

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

The Case for Cautious Optimism about the Future of Wine

January 30, 2024 By in economic crisis, Unified Wine & Grape Symposium, wine, wine markets 4 Comments

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

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

Economic Pessimism

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

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

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

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

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

Cautious Optimism

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

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

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

Don’t Look Back!

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

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

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

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

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

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

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

A Look Back at the Future of Wine

January 23, 2024 By in Future Wine Project, Unified Wine & Grape Symposium, wine, wine markets Leave a comment

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

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

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

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

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

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

What if the Chinese were French?

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

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

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

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

The View from London

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

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

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

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

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

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

The Future of Wine?

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

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

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

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

The “Uncork Ontario” Regional Wine Cluster Strategy

January 16, 2024 By in Canada, economic crisis, Economic impact, wine, wine markets 7 Comments

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

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

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

Uncork Ontario

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

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

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

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

The Wine Industry Eco-system

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

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

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

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

Strategic Partnerships

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

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

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

Time Has Come Today?

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

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

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

Argentina Wine, Economy, and the Chimera Effect

January 9, 2024 By in Argentina, economic crisis 2 Comments

Sue and I spent a pleasant week last month tasting our way through a group of very interesting wines provided by  Wines of Argentina (see the wine menu below). We scheduled the last of the wines, the Achaval Ferrer Quimera to taste with a meal of smoked brisket and roast vegetables on December 13. We were looking forward to the wine because of our great memories of visiting the winery on our first trip to Mendoza.

We awoke on December 13 to find that the Quimera tasting had taken on a broader meeting. After the markets closed the previous night, Argentina’s new president, Javier Milei, had taken a dramatic first step in his “shock therapy” treatment of the Argentine economy, cutting the official value of the peso in half over-night and doubling, in effect, the cost of any imported goods priced in dollars.

The Chimera Effect

Chimera (or Quimera in Spanish) has more than one meeting. Chimera can be a mythical creature that combines parts of several different animals in unexpected ways  (Americans might think jackalope, I suppose). Or it can refer to a mystical illusion of some sort, which hides a different reality. Mythical? Or mystical? That’s the Chimera effect.

Achaval Ferrer’s Quimera wine was inspired by mythical beasts. It’s a blend of wines from three very different vineyard places. Terroir, we learned on that trip, is very important in Argentina wine, especially the difference between higher- and lower-elevation sites. It is probably just my imagination, but seem to believe that this effect is magnified when older vines are involved. Probably a Chimera!

First, we tasted the barrel samples of the wines from each of the three different vineyards and they were very different indeed! And then we re-created the final blend and finally the finished bottled wine. It was quite an experience to have the Quimera wine come together in our glasses.

Economic Illusion

The economic policies of the new President, the  “anarcho-capitalist” economist Javier Milei, seem to be a combination of the two ideas of chimera, mythical and mystical. The terrible state of the Argentine economy is neither, however. Inflation is out of control, poverty is high and rising, and social tensions are even higher. The fact of the outsider Milei’s election is evidence of the political divisions that overwhelm the nation. Or at least this is how it looks from my long-distance vantage point.

Desperate measures have been employed in the past to try to hold things together. The most obvious symptom of this, to someone familiar with international finance, is the existence of multiple exchange rates. High inflation tends to push down a country’s currency value, which protects exports but increases the cost of imports. To try to avoid the higher import costs, which further fuel domestic inflation, Argentina’s previous government artificially propped up the peso (at high cost), creating a multiple exchange rate system. There was the official rate and then the unofficial rate, which was nearly half the dollar amount,

Exchange Rate Illusions

Then the government resorted to special limited-condition exchange rates to encourage specific activities or to  please particular interest groups. An exchange rate for agricultural goods, to encourage exports, for example. Another exchange rate for foreign tourists is to keep that industry going.  A very special exchange rate, I am told, for Argentines who traveled to see their national team win the FIFA World Cup last year! And finally, of course, a special exchange rate for wine exports, the Malbec peso. What was the peso worth? The answer was all of these exchange rates and none of them. What a chimera!

Multiple exchange rates, which are a Chimera in the mythical beat sense, give the illusion of competitiveness (the other kind of Chimera), but in general, they tend to create inefficiencies and uncertainty. No one who can avoid it is likely to use the peso under these circumstances. So Milei’s “radical” devaluation as noted in the headline above is more conventional than it might seem, lifting the veil and revealing reality.

When Sue and I first visited Argentina a dozen years ago, 100 pesos would buy about 5 U.S. dollars. Now 100 pesos buys about 12 U.S. cents at the official rate, and even less on the unofficial market even after the “shock therapy” evaluation.

Elementary, My Dear Watson

So what should we think about Argentina’s prospects? I am reminded of a comment from the fictional detective Sherlock Holmes. In solving a problem, he said, test each logical theory and eliminate them one by one. When you are done whatever answer you have left, no matter how unlikely, is the solution. Logic and illogic combined — a chimera theory, don’t you think?

It seems to me that Argentina has explored all the possible solutions to its problems and opted, at this point, for the illogical remaining possibility. President Milei combines radical rhetoric and outrageous behavior (he wielded a chainsaw at rallies) with remarkably conventional economic policies (the basic outline of his radical economic plan can be found in the IMF playbook).

It is not clear what will happen now. Milei wone the election, so he was a popular candidate, but his political base as president is questionable and there is strong resistance and opposition. A general strike to protest his programs is planned for later this month.

I am not a fan of President Milei, but perhaps this is the only remaining way forward. Fingers crossed that the short-term pain and disruption lead to longer-term stability and growth.

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Here are the Argentina wines we tasted for this report. We were attracted to these wines because, while they all feature Malbec, Argentina’s signature grape variety, each takes the wine in a different direction. All the wines were excellent, and a common thread of lifted acidity was easy to appreciate, but there was no cookie-cutter effect. Very interesting!
A blend of 50% Cabernet Franc, 45% Malbec, and 5% Casavecchia, a grape variety from Southern Italy that I didn’t know was grown in Argentina.  The balance of Cab Franc and Malbec plus the influence of high-elevation vineyards made this an elegant wine and at an affordable price point.
A blend of 45% Malbec + 18% Cabernet Franc + 18% Merlot + 19% Cabernet Sauvignon from three different vineyards. Grace and power are well balanced here. The Cab Franc and Merlot thoughtfully frame the Malbec and bring out bright notes.
A wine of place. One hundred percent Malbec from the Uco Valley vineyard. Pure Malbec intensity here. A different animal from the other wines.
A blend of 85% Malbec with 10% Cabernet Sauvignon and 5% Merlot. You can sense the BDX sensibility here.

Is 2024 the Year for Next-Level Cava?

January 3, 2024 By in Uncategorized 5 Comments

Did you celebrate the New Year with sparkling wine? If so, what kind did you choose? Sparkling wine is a crowded category, so you have lots of choices. Champagne? Prosecco? Maybe a Cap Classique wine from South Africa?

Cava vs Competition?

The Spanish Cava producers hope that you think of their wines when you make your sparkling wine shopping list, but it is a tough nut to crack with so much competition here in the U.S. market. Cava benefited from the rising sparkling tide in the last several years but has suffered from a “good value” reputation that hasn’t been a particular advantage in the premiumization era.

Cava has a bit of an identity crisis because it doesn’t exactly fit the usual ways we classify wines.  Cava isn’t a region (like Champagne or Prosecco) or a grape variety either.

Like Champagne, Cava has its secondary fermentation in the bottle (the “Classical Method”),  but you must never call it Spanish Champagne. Cava comes from Spain and is made in several regions, not one, so it is not in itself a geographic designation. Cava is made from native Spanish grape varieties, but it can also be made from Chardonnay and Pinot Noir, the grapes of Champagne, or some combination of them all. So it isn’t one of those “signature varietal” wines, either.

In the past, to some degree at least, the identity crisis encouraged Cava producers to compete based on price. Consumers who weren’t sure exactly what Cava was would buy it because it was both good and very good value, with sweet and sour results. The sweet? Rising sales to the tune of almost a quarter billion bottles. The sour? Low prices mean tight margins, especially for winegrowers. The grower squeeze has increased for Cava, as it has elsewhere, as rising costs meet retail price ceilings. Something’s got to give and the hope is that final prices can be pushed up.

Cava Steps Up

How do you raise prices and margins without losing the customers who come for good value? One solution, which producers in many regions are working to implement just now, is to build a quality ladder and encourage buyers to climb to the next level. In Prosecco-land, for example, the ladder starts with Prosecco DOC wines, moves up to  Prosecco Superiore Conegliano Valdobiaddene DOCG, then to the Rive-specific sites, and finally the top-shelf Cartizze wines.

Spanish wine drinkers are familiar with quality levels: Rioja, Rioja Reserva, Rioja Gran Reserva. And so Cava producers have created quality designations of their own. The categories based upon the length of bottle aging: Cava de Guarda (9+ months), Cava de Guarda Superior Reserva (18+ months), Cava de Guarda Superior Gran Reserva (30+ months), and finally Cava de Guarda Superior de Paraje Calificao (36+ months), which is made from grapes from a specific zone or sub-zone. The specific geographic designations seem to be a work in progress as they are not consistently highlighted on the labels we’ve seen, but they are another product differentiation tool to work with.

Style and Substance

Paul Hollywood, the genial judge on that popular UK baking show, is famous for telling nervous contestants that they must show both substance and style and this lesson applies to Cava and other wine regions today. Consumers don’t want to pay more for the same old wine. They might pay more for something better or different. But winemakers and sellers must first get buyers’ attention (the style part) so that they understand what they are getting, and then they must taste the difference (the substance) in the glass. The future of Cava will be shaped, at least in the short run, but how well style and substance come together.

Sue and I have been working our way through samples of next-level Cava. Here is the list with suggested retail prices and some thoughts about the wines we tasted.

Dominio de la Vega Cava Reserva Especial Brut Rose 2020 – $22
Dominio de la Vega Cava Reserva Especial Brut 2018 – $25
Roger Goulart Organic Reserva 2018 – $23
Roger Goulart Gran Reserva Josep Valls 2018 – $25
Vins El Cep Gelida Brut Gran Reserva 2018 – $24
Mestres Visol Brut Nature Gran Reserva 2016 – $41

Next Level Cava Substance

The wines we tasted are very good indeed, especially given their relatively affordable prices. As noted before, some of the wines are made with traditional Spanish grapes, some from Pinot Noir or Chardonnay, which are permitted for Cava, and some from combinations of French and Spanish grapes. All are made using the traditional method, which Cava producers see as a point of differentiation to rival Prosecco.

What did the wines have in common? First, they surprised the people who tasted them with us. More elegant and refined than expected. The Brut, Extra Brut, and Brut Nature wines are surprising by being even drier than the names suggest. More than enough substance to satisfy Mr. Hollywood, I think.

The Mestres Visol Brut Nature Gran Reserva was an extreme Cava experience worth noting. The base wines were held in a combination of stainless steel tanks and chestnut barrels. The second fermentation and bottle aging (under cork stoppers, not the usual metal crown caps) lasted six years! The 2016 wine was disgorged in 2022. Talk about going to extremes to make a point!

The result? A stunning wine. Still fresh, but much more complex than expected, with a long finish. Is this a philosopher’s Cava? It gives a sense of the direction that next level Cava is headed and, even if most of the Cava wines won’t go to this extreme, it is a bright star to follow.

Sue thought the Mestres was the most interesting wine we tasted, but it didn’t really remind her of Cava, which is something to consider. The “People’s Choice” wine was a Rosé of Pinot Noir from Dominio de la Vega. Delicious and delightful. And, alas, impossible to find here in the U.S. market. We tracked down the importer and he said he’d stopped carrying the wines. Disappointing. But that’s what happens sometimes when limited-production wines meet the many headwinds and hurdles of the complicated U.S. market structure.

Cava is changing, but that’s not news. One hundred years ago the wines were sweet and released pretty much as soon as possible. Dry with significant bottle age? Pretty radical in that context, but perhaps on the money today.

Avoiding the MEGO Effect

These next-level Cava wines are more expensive than the Cava wines we usually see in the market, which should send buyers a signal, but how is the differentiation communicated apart from price? If you look at the photo above,  you’ll see seals and designations that tell the informed buyer the story of the wine. A good beginning.

I couldn’t find the designation seal on one of the wines, which puzzled me until I glanced at the top of the bottle. There I spied the round seal sitting elegantly atop the fat cork.  I like the look, but a more obvious display has advantages, too.

Some of our sample wine bottles were cluttered with seals and designations of various types, which risks a MEGO (my eyes glaze over) effect. A clear, simple indicator (think Chianti Classico’s black rooster) would be welcome. I hope these wines can make a bigger dent in the on-trade market for Cava because the story of these next-level Cava wines lends itself to hand-selling.

Redneck Educators Unite!

Sue and I are familiar with this problem from our work last year with the Prosecco Superiore DOCG producers in Northern Italy. Their wines are an authentic step up from many of the best-selling Prosecco DOC products. Their terroir is very special and has been designated a Unesco World Heritage site. These are wines of place (or places, because the DOCG zone is far from homogenous), and you can taste the difference.

Getting consumers to understand the difference and to look for DOCG instead of DOC is a difficult proposition and it is not different for Cava.  But the challenge is worth undertaking. I am reminded of a fellow we met years ago at a Walla Walla farmers market. He was selling organic meat he raised on his farm and he introduced himself as “a redneck educator” because he wasn’t selling organic goat meat, he said, he was educating people about what made his meat different and why they should be willing to pay more for it.

D.O. Cava, Prosecco Superiore, and everyone who aspires to the next level for their products is in the same boat. We are all redneck educators now.

Adventures on the China-Spain Wine Trail

December 27, 2023 By in book reviews, China wine, Spain, wine 2 Comments

The Spanish edition of Cynthia Howson and Pierre Ly’s 2020 book Adventures on the China Wine Trail has just been published by Tolosa Wine Books.

Aventuras en la Ruta del Vino de China

Aventuras en la Ruta del Vino de China is a first-person account of the natural, social, political, and economic forces that shaped the Chinese wine industry and the people who made it all happen. I have always thought of it as the perfect complement to Suzanne Mustacichi’s 2015 best-seller Thirsty Dragon.

Why a Spanish edition of Adventures on the China Wine Trail?  I think part of it was personal, which aligns very well with the way that Howson and Ly tell the Chinese wine story. They met Spanish publisher Lluis Tolosa when they were all in China for the Gourmand International Awards ceremonies. He saw an opening for a book that would help Spanish readers understand the Chinese market and the forces driving wine there. Tolosa tells the story in his prologue to the Spanish edition.

Spanish Wine Goes to China

Spain is the third largest producer of wine in the world and is often the largest exporter by volume. Bulk wine sales to other European countries make up much of the trade. Spain ranks #4 on the China wine import table behind France, Chile, and Italy. (Australia ranked higher in this list before China imposed prohibitive tariffs on Aussie wine.)

Spanish producers were early entrants into China and have been key in the growth of that market.  Torres China, for example, was founded in 1997 and today imports into China and distributes more than 400 wines from 13 countries including, of course, the wine of Familia Torres but also a list of iconic brands from Spain and around the world.

The giant Spanish wine producer Felix Solis was another early entrant to the Chinese market.  It established the Shanghai Félix Solís Winery Corporation in 1998 and, if I can trust my memory, boldly built a facility to accommodate bulk wine imports that was an important factor in the expansion of Spanish wine in China.

Although the Chinese wine market has receded from the peaks of the pre-covid boom years, it remains an important opportunity for Spanish producers in a wine world where opportunities are not thick on the ground.

A Celebration of China and Spain

We wanted to celebrate the China-Spain wine trail with Cynthia and Pierre, but how? Their January 2024 book tour will include stops in many regions of Spain, including Rioja. Sue and I proposed a dinner pairing some Rioja wines we’ve been saving for a good occasion with a Chinese dinner. The pairing makes sense since the Rioja industry was jump-started by French winemakers looking for red wines to replace the Bordeaux wines that were lost to phylloxera. And, of course, China and Bordeaux have a longstanding friendship. Connect the dots and Rioja to China it is!

Pierre and Cynthia prepared some of their favorite dishes from their trips to China and opened a delightful Grace Vineyards traditional method Angelina Brut Reserve 100% Chardonnay sparkling wine from the 2009 vintage. Grace Vineyards is one of China’s top producers and its wines never disappoint.

Sue and I provided the Spanish connection with two Rioja wines: a Marques de Murrieta Finca Ygay Rioja Reserva and Ramon Bilbaos Mirto. We chose the wines to represent two sides of Rioja today. The Finca Ygay is a traditional blend of four grape varieties, with Tempranillo in the lead with 80 percent. The Mirto, on the other hand, is 100 percent Tempranillo.

When Sue and I visited Rioja a few years ago we found that some winemakers were excited to make 100% varietal Rioja wines while others favored a traditional approach. I don’t think we found a consensus in Rioja any more than you might find one in, say, Chianti today about the merits of 100% Sangiovese.

Both Rioja wines paired well with our Chinese meal. Sue likes the rounder Marques de Murrieta best with an eggplant dish and the more structured Ramon Bilbao Mirto with pork belly. The bright acidity of both wines made them easy to pair with the rich Chinese cuisine. It is easy to understand why Spanish wines like these would be popular in China. And Spanish consumers might want to experiment with Chinese-inspired tapas, for example, to match up with their fine wines. China and Spain. Mix and match!

Adventures on the Spain-China wine trail.

Pierre will be in Spain in January to promote the new book and to inform Spanish audiences about the development of the Chinese wine industry. There will be events at bookstores and universities, but the one that I wish I could attend will be at the Marques de Atrio winery.

Why is this particular event so interesting? Because the Spanish winery is owned by ChangYu Pioneer Wine Company, one of China’s most important producers. ChangYu saw the potential for Spanish wine in China and so acquired this historic winery.  The Spain-China wine trail is real and Aventuras en la Ruta del Vino de China is a perfect way to begin to understand it.

Non-Alcoholic Wine and the “Second Glass” Test

December 19, 2023 By in wine, wine markets 1 Comment

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

The “Second Glass” Test

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

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

Journey to NA-ville

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

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

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

JØYUS Discovery

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

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

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

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

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

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

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

Wine & Chocolate? The Chocolate Moonshine Challenge

December 12, 2023 By in wine 1 Comment

This is a report of our recent experiment pairing various Chocolate Moonshine truffles and fudge (which are not alcoholic despite the name) with different wines. Chocolate Moonshine takes its name from its early days when they made the fudge in the basement of their Pittsburgh-area home. The steaming copper pots so reminded neighbors of copper stills that they called it moonshine fudge. The name stuck along with the nickname of “America’s Favorite Fudge.”

We didn’t set out to explore the world of chocolate and wine pairings, but it has been a delicious journey. Here is the backstory.

We were approached last summer by Rogue Creamery with a proposal to try various wine and cheese (mainly blue cheese) pairings and the exercise proved a spectacular success as reported on The Wine Economist when we mixed and matched the cheeses with some outstanding wines from the El Dorado AVA. The wines made the cheese taste better and more distinctive. The cheeses really brought out some interesting things in the wine. And there were a couple of those magical moments that wine and food pairings so often promise but seldom deliver.

The folks at Chocolate Moonshine proposed a variation on the tasting theme with several of their chocolate treats and some general pairing guidelines. Armed with chocolate, wines, and instructions, Sue and I assembled a group of “usual suspect” research assistants on the Sunday after Thanksgiving and got to work on the Chocolate Moonshine challenge.

Here is a list of the Chocolate Moonshine treats, the general wine recommendations provided by Chocolate Moonshine, and the specific wines we picked for the experiment

  • Farmer’s Market Truffle Collection + Prosecco / Zonin Extra Dy Prosecco DOC
  • Belgian Chocolate Fudge + Pinot Noir /  Kirkland Signature Russian River Valley Pinot Noir 2022
  • Dark Espresso Fudge + Cabernet Sauvignon / Substance CS Columbia Valley Cabernet Sauvignon 2021
  • Belgian Chocolate Walnut Fudge + Tawny Port / Kirkland Signature 10-year-old Tawny Port
  • French Vanilla Fudge + Moscato d’Asti / Terrenostre Spatuss Mosato d’Asti DOCG 2022

Tasting and Results

The tasting was very successful and, combined with the Rogue Creamery experiment a few months ago, has created an enthusiasm for adventures of this sort. What did we learn? The wines and the chocolates were all great on their own, but what about the pairings? I think our gang of usual suspects came away with a lot of specific conclusions and one general observation.

The over-arching theme, as Sue put it, is balance. Wine pairing works when the components together achieve a balance (or in some bases a certain tension) that neither had in the same way on its own. That makes sense, doesn’t it? This is about the balance idea in terms of other successful food pairings such as peanut butter and jelly or Oreo cookies and milk.

Richard, for example, smiled with his first taste of the hazelnut chocolate truffle and Zonin Prosecco. The sparkling wine’s effervescence balanced the rich creaminess of the truffle and brought out its flavor. The chocolate and Prosecco pairing was high on just about everyone’s list, as was the classic combination of Belgian chocolate walnut fudge and Tawny Port. Port likes both chocolate and nuts and they like Port back.

Chloe had a complicated reaction to the chocolate fudge and Pinot Noir pairing. She really liked the fudge and she really liked the Pinot, so having them together made her smile. But did they make magic together? Not so clear. Maybe the balance wasn’t right.

That was the story of the Cabernet Sauvignon and espresso fudge pairing. I think everyone thought that this was a great idea, but the balance wasn’t quite right with this particular combination. Either the Cab needed to be more intense to stand up to the espresso fudge or the fudge needed to be dialed down a notch to better balance the Cabernet (which, it must be said, was nicely balanced on its own, as were all the wines). The idea works, everyone, agreed, but more work is needed to fine-tune the details.

Pairing Power Takeaways

Perhaps the best example of pairing power was the vanilla fudge and Moscato d’Asti. Several people found each of them a bit sweet on their own, but pretty interesting when enjoyed together. Everyone agreed that the Chocolate Moonshine truffles and fudge were delicious and especially creamy, which made them a great partner for the wines we tasted.

We need to explore the topic of wine pairings in more depth. It occurs to me that a tasting like this would be a good way to introduce young people to wine by linking it to something familiar and delicious.

But I think the fact that we tasted in a small group setting made a difference. Water keeps us apart, I like to say, but wine brings us together. And sharing what we think and feel about wine and chocolate was a great way for us to connect with friends and to begin our holiday season.

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Thanks to Chocolate Moonshine for inviting us to take up this challenge!