Here Be Dragons: Wine and the Economy Enter Uncharted Waters

The International Monetary Fund is expected to announce today revised global economic forecasts –– slower growth, higher inflation, and increased uncertainty due to war in Ukraine plus (although I don’t know if it will feature in the IMF report) massive  covid lockdowns in China. Here be Dragons, indeed!

As much as we all would like to think that economic conditions and the global wine market will soon return to what we used to call “normal,” I think it is important to realize that we have actually entered what are in some ways uncharted waters. Old maps and rules of thumb do not necessarily apply and the ability to pivot quickly as conditions change is even more important than in the past.

Flashback to the 1980s

Sometimes I get to thinking that I’ve passed this point in life one time before. (That’s actually a line from a John Hartford song.) Way back in 1981 I wrote a college economics textbook because I couldn’t find a text that could help my university students understand what was happening to the economy.

The uncharted territory back them was stagflation — high inflation and high unemployment at the same time. The standard textbook analysis used Keynesian analysis to understand unemployment and the Phillips Curve to plot the trade-off between unemployment and inflation. Higher unemployment meant lower inflation. But we had both high inflation and high unemployment — how did that happen? And what could be done about it?

The problem (in very simple terms) was that inflation was caused by cost-push not demand-pull factors and had unleashed sustained self-fulfilling inflationary expectations.  The Volker solution was highly restrictive monetary policy that pushed unemployment even higher until the expectations broke. Harsh medicine for a vicious disease.

Zoom Ahead to 2022

Zoom ahead to 2002. After years of relatively stable or even falling price levels, inflation is here again at rates that haven’t been seen in the U.S. since the 1980s. The problem this time is a combination of cost-push and demand-pull factors. Higher energy, food, and transportation costs plus persistent shortages of key commodities push prices higher while the huge fiscal and monetary stimuli of the pandemic and post-financial crisis era have pulled inflation higher, too.

This is not a repeat of the 1980s, by any means, but also not like anything we’ve seen at this level in a very long time. I can’t remember seeing such a combination of broad forces aligned to boost demand and constrain supply.

The war in Ukraine adds to the inflationary pressure, especially with respect to energy and food prices, and it is hard to see these forces disappearing any time soon. Even if a truce were declared today, the energy and food price effects would continue for some time. The Chinese covid lockdowns are squeezing production of many manufactured goods at the same time.

Disruptions in global trade and finance are another factor to take into account. For a long time the “China Price Syndrome” kept a lid on prices of manufactured goods. If a company was tempted to raise price, the ready availability of cheaper alternatives from Asia and especially China acted as a constraint. The “China Price” served as a price anchor then, but much less so now because of unraveling trade relations.

Getting from QE to QT

Taken together this is a situation we haven’t really seen before, but the thing that really makes people like me nervous is monetary policy, The Federal Reserve will be responsible for squeezing inflation out of the economic system (just as it was in the 1980s), but financial conditions are different now. We have had very low interest rates for a long time now and wave after wave of quantitative easing (QE — Fed purchases of Treasury and mortgage-backed securities that pump liquidity into the markets). The markets have kind of become addicted to the constant monetary boost.

Raising interests from this very low level can be expected to disrupt financial markets if only because of the mathematical impact on present value calculations. Exchange rates will shift, too, with disproportionate impact of development market currencies.

But the real “uncharted waters” factor is the transition from QE to QT, quantitative tightening. This will initially take place as the Fed’s bond holdings mature and are not rolled over, which takes liquidity out of the market. It will start slow (which still means billions of dollars a month) and could pick up speed if necessary.

The question is how financial markets will deal with this change after having a liquidity drip line month after month for this long? There is nervous talk of another sharp liquidity crisis, but maybe bigger than the last one, which the Fed addressed quickly and well. If key credit markets freeze up and contagion takes place, the Fed will have little choice but to reverse course, opening the door to even higher inflation.

The alternative is a very hard landing as the impact of the financial crisis spreads through the economy. How hard a hard landing? It depends on what it would take to shift inflationary expectations. So you can see the concern — we may be perched on a narrow ledge with higher inflation on one side and financial crisis on the other.

What About Wine?

The wine economy operates by its own rules, but it can’t fully escape the forces shaping the economy in general. To repurpose something that is said about the pandemic economic, we aren’t all in the same boat, but we are in the same storm.

Wine has also experienced a combination of cost-push and demand-pull factors, but not uniformly for various categories. Demand-pull, for example, seems focused on more expensive wines. Cost-push is everywhere, however, which means that the crunch is felt particularly in the middle- and lower-price tiers.

Honestly, I cannot remember a time when cost pressures have been so broad and deep. To what extent will price-sensitive consumers push back on price increases? Or will the consumer inflation expectations in general soften attitudes towards rising wine prices? Given that these are uncharted waters, the map holds more questions than answers.

Charting Chile & Argentina Wine Strategy for the U.S. Market

These are challenging times for the U.S. wine market. NielsenIQ data reported in the April 2022 issues of Wine Business Monthly shows the wine market declining overall in value and volume terms. The picture isn’t perfectly clear, of course, because NielsenIQ numbers miss some sales vectors and it is hard to know what base to pay attention to given covid sales channel distortions. But there is plenty of cause for concern about U.S. wine market growth.

The situation is even worse for wine imports, because they face most of the headwinds of domestic producers but also have to deal with unfavorable international logistics issues and significant exchange rate and trade policy uncertainty.

But cloudy skies over the U.S. wine market landscape contain some welcome sun breaks — market segments where growth opportunities can be found — even for imported wines. Sue and I recently sampled wines from Chile and Argentina that illustrate this strategy.

Sauvignon Blanc to the Rescue

Where you search for growth depends on how you look at the market. In terms of grape varieties, for example, the clear target these days is Sauvignon Blanc. Sales of both domestic and imported Sauvignon Blanc have done very well in the last year.

For a long time Sauvignon Blanc has been all about New Zealand, which has sold out of this wine year after year. The rising SB tide seems to be raising all ships these days, which is good news for growers in California and elsewhere.

Chile has a long history of Sauvignon Blanc production with quality rising year after year. Sauvignon Blanc is the second most-planted grape variety and Chile is the world’s third largest SB producer. But the marketing focus has often been on that other Sauvignon, Cabernet Sauvignon. Until now. Concha y Toro sent us three wines that will compete very well in this dynamic market segment.

  • 2021 Concha y Toro Gran Reserva Sauvignon Blanc | D.O. Litueche, Colchagua Valley | $15 | 100% Sauvignon Blanc | 12.5% ABV | 1.5 g/L RS.  Sourced from our estate Ucúquer Vineyard, located in the arid hillsides of the Rapel River in Colchagua Valley, 10 miles from the Pacific Ocean.
  • 2021 Cono Sur Organico Sauvignon Blanc | Chile | $11 | 100% Sauvignon Blanc | 12.5% ABV | 3.1 g/L RS | Made with organic grapes | Vegan.  Fruit from coastal San Antonio DO’s Campo Lindo Estate and Bío Bío provide an ideal mixture of sand and red clay for this Sauvignon Blanc expression.
  • 2020 Concha y Toro Casillero del Diablo Reserva Sauvignon Blanc | Chile | $12 | 100% Sauvignon Blanc | 12.9% ABV | 2.44 g/L RS.  Fruit from Aconcagua—which stretches inland from the coast above San Antonio—Valle Central, and Región de Coquimbo compose the final blend.

As you can see from these wine profiles, the three wines present three distinctively different representations of Sauvignon Blanc from different Chilean wine regions. What they have in common — beyond grape variety — is their remarkably good value-for-money proposition.  This is especially true for the Gran Riserva. It is not often that you can find a wine like this for such a reasonable price. Distinctive and intense, you won’t mistake it for France, New Zealand, or California. Definitely worthy trying.

Raising the Bar for Malbec and More

Wines of Argentina sent us a little “mystery box” to sample and I wondered what would be in it? What message would they want to broadcast? How would they attempt to navigate the swirling U.S. wine market currents? The answers to these questions were clear as soon as we opened the package.

Message #`1: Argentina is Malbec, as everyone knows, but not just Malbec (just as Chile is not just Cabernet Sauvignon). Our mystery case included both a cool climate Wapisa Pinot Noir from Patagonia and a Trapiche Broquel selected barrel Cabernet Sauvignon, hand-picked from 30-year old vines.

Sue and I learned about the great diversity of Argentina wine on our first visit there in 2011. Our friend Andrés Rosberg arranged a tasting menu that featured wonderful wines not named Malbec until, at the very end, when a Rutini Vino Dulce Encabezado de Malbec 2007 appeared with dessert. Argentina is more than Malbec. Message received!

Message #2: Argentina makes wines that can compete successfully in the key growth segment of the U.S. wine market when we analyze it by price point — the ultra-premium $20-$25 range. A Salentein Reserve Malbec from high elevation vineyards in the Uco Valley and Luigi Bosca “De Sangre” limited edition Malbec from select vineyard parcels in the Altamira district.  I understand the average vine age is 90 years — remarkable!

During the Malbec boom of a few years ago Argentina became stereotyped as the source of simple Malbec wines at bargain prices.  Slowly — and now more quickly — Argentine producers have worked to show that they have more to offer and distinctive wines of higher quality, too, for those who are willing to reach up to a higher shelf on the wine wall.

Follow the Money

Follow the money. That’s what Deep Throat famously advised and it is something to consider in today’s U.S. wine market. If you break down market trends you’ll find a number of categories where growth opportunities exist. These Chilean and Argentinian producers demonstrate the strategy of focusing on key categories with wines of quality and value. Good lessons for us all to consider.

Wine Book Review: Britain, Imperialism, and the Wine World They Created

Jennifer Regan-Lefebvre, Imperial Wine: How the British Empire Made Wine’s New World. University of California Press, 2022.

Imperial Wine is a serious academic study of how imperial economic, political, and social relations between Great Britain and three of its colonies — South Africa, Australia, and New Zealand — shaped their wine industries and New World wine more generally from the time of the first plantings through to today.

This is an argument that I am glad to see examined in depth. In my books Wine Wars and the forthcoming Wine Wars II I nominate Great Britain as the center of the wine universe, so powerful, I think, is its influence on wine and the wine trade.

Australia and New Zealand were British colonies that developed wine industries that were shaped to a great extent by the ebb and flow of trade with the United Kingdom. Although South Africa and its wine industry have roots in Dutch colonial trade, the decades under British rule had powerful effects.

It is a fascinating study, but I admit that I struggled at times because I really wanted this to be a book about wine first and foremost and the author is really focused on imperialism, with wine used as a lens. I think that authors earn the right to define their works, so I cannot really complain. This is a story that can be told several ways.

Most people will be surprised at the poor reputation of Australian wines in the UK market in the early post WWII period, for example, given how popular they are today. There are many ways to demonstrate this, but the author highlights a lame Monty Python joke that compares and aroma of Aussie wine to the smell of an Aborigine’s armpit, which invites a discussion of imperial racist attitudes in the post-colonial era.

“Some wine lovers might protest that colonialism is a distant historical footnote to the history of wine, and that dredging up colonial history is a buzzkill, a weary intrusion on our enjoyment of wine,” the author writes in the concluding chapter, suggesting that she’s run into people like me before. “Can’t we just enjoy a glass of wine without someone introducing controversy?  Is colonial history designed to make wine lovers feel guilty?” Imperial Wine, the author argues, makes the case that ignoring the history of wine distorts our understanding of both it and the complicated processes that have shaped it.

Fair point. Understanding the forces that conditioned what is in your wine glass, how it is made, and who it is made for deepens the wine experience, don’t you think? And that includes the forces of empire and the long shadow that they cast.

The author’s deep dives into historical documents drew me in again and again. During World War II, for example, Old World wine pretty much disappeared from store shelves, replaced for the most part by “colonial wines” from South Africa, Australia, and Algeria (not a British colony, but a colony nonetheless).  The author traces changing wartime wine patterns though a study of the detailed records of the King’s College off-license store, called the buttery, which provided wine for fellows and sold it to students. Algerian red wine and South African sherry sold well to penny-pinching students, who would turn their backs on colonial wine after the war in favor of the French wines returned to the market.

Imperial Wine teaches wine enthusiasts about the role of empire in shaping the wine world of the past, present, and probably the future, too. And it teaches students of imperialism that the influence of those forces continues even in something as seemingly simple as a glass of wine.

Interesting. Well-written. Thought-provoking. I learned a lot. Did Imperial Wine change the way I think about wine? Yes, at least a bit. Well worth your consideration.

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Curry: A Tale of Cooks & Conquerors by Lizzie Collingham is one of my favorite books about cultural globalization. Imperialism is a strong force in this account (which includes historical recipes at the end of each chapter). I was reminded of Curry when I noticed that Collingham wrote one of the cover blurbs for Imperial Wine. 

We Don’t Talk About Abruzzo … But We Should!

The thing about Bruno, a character in the Disney film Encanto, is that everyone talks about not talking about him. Or at least that’s the gist of the wildly popular song “We Don’t Talk About Bruno.

The Abruzzo Syndrome

For a long time this situation kind of applied to Abruzzo, the under-appreciated Italian region you reach by flying to Rome and driving east over the Apennine mountains to the Adriatic. My well-worn 1998 Knopf Guide to Italy, for example, devotes more than 500 colorful pages to tourist Italy, but gives poor Abruzzo precisely 2 pages of text.

The Abruzzo syndrome, as illustrated by the Knopf guide treatment, is that the Itay is full of the best of the best of tourist sights and attractions. Abruzzo’s natural beauty and modest charm is undeniable, but it struggles for the spotlight that is focused elsewhere.

Sue and I can appreciate this situation from our experience living in Bologna some years ago. For the most part foreign visitors only knew Bologna from changing trains at the station or attending conferences at the big convention center outside of town. Bologna was a place you passed through on your way to somewhere else. Abruzzo’s location makes it ever less of a destination point.

Abruzzo Wine Syndrome

The Abruzzo syndrome plagued the region’s wines, too. Take the usually-generous Burton Anderson’s Wine Atlas of Italy, for example. Anderson gives 3 pages out of 300 to Abruzzo in my 1990 edition of this classic volume, disappointed by what he saw as a lack of interest in quality.

… the growing of grapes in abundance as just another fruit crop still offers more attractive prospects than does the making of premium wine. The shame of it is that the Abruzzi’s sunny hills could make outstanding wines, not only from the native Montepulciano but from many other noble vines.

A few producers stubbornly swam against the tide — Anderson cites Edoardo Valentini in particular — but it was a difficult task given the region’s lack-luster reputation. Abruzzo’s reputation was nothing much to talk about even though the potential was clear.

Abruzzo Fast Forward

Fast forward to 2022. Sue and I hadn’t talked much about Abruzzo over the years, but an unexpected invitation to visit later this year was enough to make us circle back to see how Abruzzo has changed and it is clear that the region is getting some of the respect it was previously denied.

Travel and Leisure magazine, for example, named Abruzzo to its list of the 50 best places to travel in 2022.  Abruzzo has changed, as the article suggests, but perhaps travelers have changed, too, and now appreciate local charm and character more than before. Here’s an excerpt from the article.

Stretching from the heart of the Apennines to the Adriatic Sea on the peninsula’s southeastern side, Abruzzo, Italy has long been one of the country’s most overlooked destinations despite its unspoiled villages, picturesque Trabocchi Coast, and stunning natural escapes. Over the past few years, however, it has gone from a sleepy underdog to an ambitious harbinger of slow travel, sustainable gastronomy, and conscious hospitality.

Reality vs Reputation

Reality has moved faster than reputation on the wine front, too. Abruzzo is still noteworthy for the quantity of wine it produces. Abruzzo ranked #5 among Italian wine regions in 2020 for volume of production. Veneto and Apulia topped the table followed by Emili-Romagna and Sicily. Abruzzo was followed by Piedmonte and Tuscany. But quantity is no longer the only game in town.

My battered copy of Slow Wine Guide 2014, for example, highlighted the growing number of premium producers who were able to meet the guide’s high standards.

It is a mistake to speak about the Abruzzo as an emerging winegrowing region. Consistent quality has now become more general, no longer the prerogative of a handful of historic cellars plowing the furrow of tradition, but also a characteristic of the work of both small wineries and large cooperatives.  … All in all, the Abruzzo wine world is in good health, working the land more sustainably than in the past and affording consumer enjoyment with very reasonably priced labels.

Clearly Abruzzo has turned a corner, a fact underlined by the evaluation I found in my copy of the Gambero Rosso 2019 guide to Italian wines. “Abruzzo’s wine industry is in many ways a kind of microcosm of the nation as a whole,” the analysis begins, “… leaving behind an age in which it was dominated by large quantities of generic bulk wine used outside of the region.”

Slowly Then Suddenly

The wines today (and the people who make them) are a better reflection of the remarkable diversity found within the region. “And they won’t cost you an arm and a leg either,” the report suggests, “(it’s not a coincidence that once again a number of Tre Bicchieri come at a price that would allow for daily consumption).”

Slowly — and then suddenly — Abruzzo is a topic of conversation. Just last week, for example, the region was highlighted in two news stories. The Drinks Business reported that Italy’s National Wine Committee and Agricultural Ministry agreed to consolidate the central Italian region’s wines under a single IGT (Indicazione Geografica Tipica), Terre d’Abruzzo. IGT wines are an important category where innovation is encouraged and the new designation will raise Abruzzo’s visibility. The hope is that Terre d’Abruzzo  IGT will do for Abruzzo was “Terre Siciliane” did for Sicilian wine identity when the designation was introduced a few years ago.

Meanwhile, New York Times wine critic Eric Asimov featured two indigenous Abruzzo wine grape varieties in his column on “Ten Grapes Worth Knowing Better.”  Pecorino and Trebbiano d”Abruzzese — and recommended Abruzzo producers — made the list of wines worth discovering.

So apparently we are talking about Abruzzo now for the quality, value, and character of its wines. And it is good to keep the conversation going because it will take some time for Abruzzo’s reputation to catch up to reality. And it will not be easy to get attention in the crowded market for Italian wines, where famous names abound.

Wine Book Review: Grassroots Perspectives on Portuguese Wine

Simon J. Woolf and Ryanb Opaz, Foot Trodden, Portugal and the Wines that Time Forgot. Interlink Books, 2021.

Portugal is having a much-deserved moment at present. For a long time Portugal wasn’t really on the radar for most people. The situation was so bad that some folks couldn’t find Portugal on a map — I saw a headline that proclaimed Portugal as a Mediterranean destination! It was enough to make Henry the Navigator cry!

Portugal Discovered

Now Portugal is high on the list of popular destinations for travelers of all stripes. Many of our friends have visited Portugal as tourists, for example, one has bought property there and is moving permanently, and another is seeking Portuguese citizenship.

What is the attraction? The people, their culture, food, wine, climate — the list goes on and on. The question isn’t so much why people love Portugal as what took them so long to discover it!

You can say pretty much the same thing about Portuguese wine.  For a long time the wines of Portugal have been sort of filed away a couple of niches. Port and Madeira? Check! Vinho Verde? Check! Lancers and Mateus? Check! Check!

But the world of Portuguese wines beyond the niche categories was essentially uncharted territory. What would it take for get wine drinkers to try Portuguese wines from unfamiliar regions made with unfamiliar grape varieties? It seemed like an impossible challenge.

Portuguese Charm Prevails

But the challenge is being met these days and Portuguese wine sales have been strong in the United States market, due in part to the popularity of Portugal as a travel destination, but also the rising profile of the country and its people more generally. Portugal has become a little bit like Italy in the sense that warm feelings about the place encourage consumers to give the wines a foot in the door, which is all they really need.

Walking into Costco recently, for example, I was met by a giant haystack wine display right by the entrance featuring colorful bottles of wine labeled simply “Portugal Red Blend” from the Lisboa region. It is an honest red wine, not too complicated, and a very good value. Shoppers happily filled their giant shopping carts. Would that have happened five years ago?

Grassroots Portugal

Foot Trodden, the recent book by Simon J. Woolf and Ryan Opaz, comes at an opportune moment when many wine enthusiasts are thirsty to learn more about Portugal. The book is appealing in part because it approaches Portuguese wine from a different angle than many wine books.

The standard format of “Wines of XXX” books is to survey the landscape from the perspective of the grape varieties, the wines they produce, the regions where they are made, and the wineries that make them. It is essentially a top-down approach, which is appropriate for a survey volume. Richard Mayson’s The Wines of Portugal, for example, applies this template to Portugal very successfully.

Foot Trodden breaks the mold a bit by focusing on the people and their stories, letting the other elements appear as part of the human tale. This is a bottom=-up perspective, which I find especially appropriate in this case because, as I noted above, so many of the sources of Portugal’s current success are essentially grassroots characteristics.

The book is well written, the stories, which mainly focus on family wineries, are well chosen and told, and the result a feeling of the place and the challenges that wine makers faced in the past and confront today, too. Excellent book. It deserves the success and recognition it has received.

All in the Family

Because stories are the driving force here, breadth is sometimes sacrificed for depth. So, for example, we are introduced to far fewer wine makers than in the survey books and these tend to be smaller multi-generation family affairs. The big wine producing houses are mentioned, but the focus is elsewhere.

I especially enjoyed the chapter on the Alentejo, which was organized around the tradition of making wines in large clay pots called Talha.  The rise, fall, and now rise again of this tradition is very interesting and deftly connects several family wine stories. These wines certainly honor the book’s sub-title.

I was also pleased to see so much Portuguese history woven into the book’s tapestry.  It seems to me that it is impossible to understand Portuguese wine today, for example, without taking into account the long shadow case by Prime Minister Salazar’s policies and the reaction to the Carnation Revolution.

The book features many colorful photographs, which support the grassroot perspective by highlighting the families, their land, and work. There are a few missed opportunities. The one map included in the book is pretty, but doesn’t answer many questions. More is more when it comes to maps, especially in this case because they can help connect the top-down and bottom-up perspectives.

Which is the better approach — survey or grassroots? Each is useful and interesting. Why choose? More is more when it comes to perspectives on Portugal and its wine!

Wine on the Nile: Wine Goes to the Movies (and TV)

One of my pet peeves is wine’s lack of impact in popular culture. Celebrity chefs get lots of traction — even fictional cartoon rodent chefs (have you seen the Disney film Ratatouille?). Celebrity winemakers? Not so much.

Wine shouldn’t try to simply imitate food, of course, Watching Michel Rolland micro-oxygenate a tank of Merlot will never be as much fun as watching Julia Child throw together a pot of Boeuf Bourguignon.  If we want to reach potential newbie wine drinkers, I think wine needs to go where they are and to connect in as many ways as possible.

Wine is so often an afterthought. I bemoaned the fact that wine had no particular pride of place in Stanley Tucci’s hit television series Searching for Italy, for example. A wasted opportunity for sure!

Bordeaux on the Nile?

So I am pleased to see the efforts that Bordeaux producer Chateau Malartic-Lagravière, which is working very hard to position its fine wine where it can be seen and appreciated by a diverse audience.  The white wine, for example, appears in the second season of the Netflix series Emily in Paris.  And the red wine is featured in the recently released big-budget 20th Century Studio version of Agatha Christie’s Death on the Nile.

Why Death on the Nile? A press release suggests that the Bonnie family that owns the Chateau connects with the film’s chief protagonist, fellow Belgian countryman Hercule Poirot. Perhaps. But I have to think the luxury setting in which the film’s action unfolds is an appealing frame for a luxury Bordeaux wine.

Consumers need a nudge to put wine on their minds and I congratulate Chateau Malartic-Lagravière for taking the initiative.  Product placement, however, is just one element of a potential initiative to connect wine culture with the interests and lifestyles of today’s consumers.

Wine First, Please!

Sue and I have been impressed for the early efforts of a group producing a public television series called Wine First, for example. The idea, I think, is that when most people go to a restaurant they pick their meals first and then choose a wine. But when YOU dine out, I’ll bet, at least some of you study the wine list first, choose the wine you want, and they pick food to go with it. Wine First.

The series format takes a wine first approach. The hosts visit a wine region (the Mosel, for example), stopping at three wineries to choose wines that captures the essence of each place — plus a regional food ingredient. A local restaurant chef is then challenged to prepare dishes that will highlight the wines — the wines are the star. The local wine producers evaluate the imaginative pairings that result and render a wine first verdict. Sue and I really enjoyed the programs and hope the multinational series comes back for a second season.

So far so good. But there is a lot more work to be done to get wine more clearly on the radar of the next consumer generation. In the meantime, remember that it is not telling the world how wine tastes (or is made) that will be the key to future growth. What’s important is how it makes you feel.

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I thought you might enjoy viewing the trailer for Death on the Nile.

Wine Book Review: Rethinking Wine Market Perspectives

Giacomo Negro and Michael T Hannan with Susan Olzak, Wine Markets: Genres & Identities. Columbia University Press, 2022.

What would you think if you stumbled upon a tasting note for a familiar wine that was written by someone from a very different culture, using different terms and concepts, and set in a different frame of reference? Think of an extreme version of the Chinese wine tasting notes described in a 2013 Wall Street Journal article.

At first you might just be puzzled and scratch your head (being careful not to spill any wine), but then — if the tasting note is a good one — you’d find yourself thinking, questioning what you thought you knew about the wine, and maybe considering it in a whole new way. That was my experience in reading Wine Markets: Genres & Identities.

I come from Planet Economics, so for me a book about wine markets is a book that is rooted in supply and demand. Producers, consumers, price and quantity — these are the fundamental building blocks.

The authors of Wine Markets come from Planet Sociology, so they think about the people and their relationships as much as — or maybe more than — the wine itself. Hence the book’s subtitle: Genres & Identities. A tasting note from Planet Sociology contemplates the same reality but analyzes it in very different ways.

Chapters at the beginning and end of the book lay out the theoretical elements and the terms that go with them. Different readers will react to this material in different ways. The core of the book is a set of three case studies that all readers will agree are interesting both for their stories and for the conflicts they reveal.

The first case study is Barolo, where modernist producers confront those who follow traditional practices, creating two genres within the one appellation. One element of tension is the use of small oak barriques versus large neutral botti grandi, although it a distortion to oversimplify in this way because some noteworthy producers — including iconic modernist Angelo Gaja — use both to good effect.

Brunello is the second case study, where tension arises between those who follow tradition in using 100% Sangiovese grapes and those who favor “super Tuscan” blends that include international varieties. Finally, the authors visit Alsace, where producer identities are at least in part defined along a biodynamic – organic – sustainable – conventional viticulture spectrum. The research proceeds mainly through interviews with the producers, although there is also statistical analysis of some issues.

The stories are told in terms of wine genres, producer identities, solidarity (or lack thereof), the audiences (consumers, critics), and the markets where they all come together. A different way of thinking about wine markets indeed.

For me the Barolo case study, which was the most detailed, was also the most interesting. The Alsace case confused me — which is not necessarily a bad thing — because the authors argue in part that biodynamic producers there are driven by the desire to achieve market differentiation. My experience is very limited, of course, but I have never met a biodynamic grower who struck me as doing it for the money.

Much of the research for the book was completed several years ago and I wish that more of it had been updated. I also wish there was room for case studies from the New World, where appellations are more geographic indicators than prescriptive wine genres. I wonder how the social dynamic analysis would be different from Barolo and Brunello?

Finally, I appreciate this book because it has given me some new ways to think about the natural wine movement, a genre of wine where identity is both strong and hotly contested at times. I am not ready to move from Planet Economics to Planet Sociology in terms of wine market analysis, but I think we can all benefit from ideas that challenge and stimulate as this book does.

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Gillian Tett, an anthropologist by training who reports on the world of global finance, is chair of the editorial board of the Financial Times and an advocate of the sort of cross-silo thinking discussed in this book review. You might be interested in her recent book Anthro-vision: a new way to see business and life.

Wine and the British Sunshine Tax

If you stroll around London for a while you are likely to come across a scene like the one shown here. An old building with its windows bricked up. Sometimes it’s one or two windows.  Sometimes they are all covered over. No sunlight gets in.

Ain’t No Sunshine …

The reason the owners decided to keep the sun out was the window tax, an attempt by 19th-century government in England and then later in Scotland to tax the rich in a manner less invasive than an income tax.

What could be better than a window tax?  Big houses with many windows were indicators of wealth and simply counting the windows (with exemptions for the humble cottages of the poor) an arbitrary straight-forward way to assess tax liability.

This was an era when revenue-craving governments were willing to go to almost any length to raise funds through specific excise taxes — think about the advice to “declare the pennies on your eyes” in the Beatles tune “Taxman” (see below for music video). Rather than one big tax source, dozens of smaller excise taxes were imposed.

The Taxman Cometh

But the tax authorities didn’t count on quite how much the English hated to be taxed and, obviously, many of them were willing to wall-up their windows and contentedly sit in the dark in order to escape the despised taxman’s assessment.

This bit of fiscal history is prompted by what might be considered by some to be a new tax on sun light, but this one collected via wine instead of windows. Galileo famously said that wine is sunlight held together by water, so what better way to tax sunshine than through wine. Or at least that’s what some people are saying, according to a recent article in the Financial Times.

Britain is slowly adjusting to its post-Brexit status and part of that means transitioning away from EU rules on the taxation of alcoholic beverages. Under EU regulations, which are still in effect, still wines and fortified wines are taxed in three bands according to alcohol by volume (abv), with sparkling wines in a further higher-rate band.

Let the Sunshine In?

Britain’s chancellor has proposed a new 27-band system with the rate rising every half percent of abv.  The complexity of the plan suggests high compliance costs, don’t you think, and would seem to invite a certain amount of gaming of the system. The abv of that wine in your glass may or may not be the same as the number of the label — a certain amount of rounding up or down often takes place — and this will matter more if fine-grained tax consequences are at stake.

I’ve heard that the chancellor’s office says that it is really just one band with 27 steps., not 27 bands. Good to know.  I’m sure that makes compliance much simpler!

Some members of the British wine trade go further, asserting that this amounts to a “sunshine tax.” The argument is that producers in sunnier regions like Australia can’t help producing riper grapes that yield higher abv levels while wineries in cooler climates, like the Mosel, naturally produce wines with lower abv.

This is true to a certain extent, although wine producers certainly have their secret ways of increasing abv when they want to and reducing it when that makes sense. No one in California brags about de-alcoholization, for example, but people tell me it happens all the time. Part of a batch of wine goes through a process to extract alcohol, they say, and is then blended back into the tank to bring the percent of abv down.

One winemaker friend talks about using “Jesus units” to accomplish the same end more directly. This process involves water and a hose. The result turns water into lower alcohol wine. A miracle!

Australian producers are particularly upset. Australia and the UK have signed a free trade agreement which will modestly reduce tariffs on Aussie wines exported to Britain. The “Sunshine tax,” which would apply to most wines from Oz, more than offsets any advantage from the new agreement.

Let me know if you see any wineries bricking up their windows. They might do that if they don’t want the world to see how they are lowering the alcohol levels in their wine!

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Lift a Glass to Toast Open That Bottle Night 2022

Wine lovers have a lot to celebrate. The calendar is dotted with days devoted to particular wines. International Malbec Day. International Grenache Day. The list goes on and on. They are all great in that they help us both celebrate wine and remember its incredible diversity.

But the greatest wine holiday of them all IMHO is Open That Bottle Night, which is celebrated on the last Saturday of February each year (that’s February 26 in 2022). The idea, according to John Brecher and Dorothy Gaiter, who invented the occasion when they were wine columnists for the Wall Street Journal, is to ferret out some of the wines that you have squirreled away to open on some indeterminant special occasion and open them up to enjoy now. Ferret? Squirrel? What are you waiting for?

Or, as Orson Welles might have said in one of the old Paul Masson television commercials, we will drink no wine until its time. It’s time now!

Sue and I take turns picking a bottle for our OTBN celebration — the choice often driven by the memories the bottle holds as much as the wine itself. This year we are remembering our trip to the cradle of wine, Georgia, where I spoke at the first United Nations World Tourism Organization wine tourism conference back in 2016.

At one point the conference paused to visit the Alaverdi Monastery, which has been producing traditional wines since 1011. We surveyed the monastery and toured the marani (cellar) with its clay  qvevri vessels, which are buried in the ground in the traditional way. I was surprised and delighted when I was called aside to receive a gift from the archbishop — the bottle of the monastery’s golden Rkatsiteli that we will uncork on OTBN 2022.

I remember tasting this golden wine and being moved. Here is Tim Atkin’s tasting note for an earlier vintage. I guess he was moved, too.

This is the wine that first won me over to the charms of the qvevri – the most astoundingly complex nose of tea leaves, baked apples, jasmine, herbs and plum compote (and bear in mind my description does not remotely do it justice). Very much an amber/orange style, with chewy but perfectly ripe tannins – and yet the fruit shines through effortlessly. Outstanding.

Inspired by the choice of wine, Sue has announced that she will pair it with homemade Khachapuri, which is sometimes described as a Georgian cheese bread. If you’ve ever had Khachapuri, however, you know that description doesn’t really do it justice.

Sue plans to riff on the King Arthur Flour recipe for Khachapuri, which substitutes ingredients readily available here in the United States for some of the Georgian originals.

The food and wine will be great in themselves, I’m sure, but more important will be the memories of people and places that they will inspire.

Those are our OTBN plans for this year. What bottle will you open on February 26? What memories will be uncorked. Please share your thoughts using the Comments function below.

Cheers to Dottie and John, who gave us Open That Bottle Night and to everyone who celebrates it in 2022!

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Here’s a photo Sue took of the wine — remember it is a white wine! I know it looks dark in the decanter, but it really had amber notes in the glass. And it held our attention for a couple of hours as we tracked its development, An experience to remember

Build Wine Back Better: “Got Wine?” meets “License to Steal”

“WineRamp” is an important new initiative to try to overcome obstacles to the continued growth in the U.S. wine market. The idea, in simple terms, is that younger consumers aren’t finding the on-ramp to wine that the baby-boom generation discovered back in the day. What’s the problem? Well, it is complicated, of course, and there are many factors at work here.

Got Your Moo-Stache?

But one issue is simple. There are literally thousands of wine brands on U.S. shelves and each one promotes its own products. But no one is telling the story of Brand Wine. WineRamp hopes to fill in that gap.

It is still early days and impossible to know what WineRamp might look like if it gains the necessary industry support. Some people think of it as a “Got Milk?” program for wine. “Got Milk?”, you may recall, was a very popular generic promotion campaign for dairy milk, with television, print, and more components. You might remember the photos of celebrity endorsers with their white “moo-staches.”

“Got Milk?” was successful in raising awareness, but as I wrote on The Wine Economist a few years ago, it could not prevent the slowly evolving collapse of milk consumption in the United States as consumers opted for other products, especially plant-based non-dairy milks. Got Milk? Yes, but increasingly it is made from almonds or oats.

Grass Roots Initiatives

Generic marketing campaigns are inherently top-down projects, but that’s not the only possible strategy. Mobilizing forces at the grass roots level is another option. Neither approach is easy or guaranteed to work. What would a grass roots wine project look like?

“License to Steal” (aka LTS) is the name of the national wine marketing conference, which will be held this year on March 22-24, 2022 in association with the Eastern Winery Exposition in Syracuse, New York. License to Steal? Well, the idea is that everyone brings their best ideas about how to reach consumers and promote wine in a sort of open-source environment where sharing and stealing go hand-in-hand.

I started thinking about License to Steal when Donniella Winchell, the driving force behind the 15-year old initiative, asked me to recommend someone to record a brief “Crypto 101” video for the program. I’ll do it, I said. It will give me a good excuse to do some research and get up-to-speed on blockchain, crypto-currencies, NFTs, and so forth.

Gulliver in Lilliput?

The LTS program includes presentations and discussions that are relevant to all wineries, but especially the ones that I think of as “grass roots” American wine. Some U.S. wineries are huge (Gallo produces an estimated 100 million cases a year) and sell in broad national and even global markets. Gallo towers over the U.S. wine industry like Gulliver in Lilliput.

But most of the 11.300 US and 872 Canadian wineries are smaller — much smaller — producing 10,000 or 5000 or even fewer than 1000 cases of wine each year. These wineries succeed or fail depending upon how well they connect with local communities, forging wine-based relationships one happy consumer at a time.

Each of these Lilliputian wineries is small by itself, but there are so many of them that they can make a difference. That’s how grass roots connections work and it would be a mistake to underestimate their current and potential aggregate impact on wine in American society.

While we are thinking about top-down wine promotion, I think it is important keep the grass roots in mind, too.  LTS is a powerful tool and the dozens of regional and local wine associations and their members. Can they be persuaded to sing a song of wine (with local variations, of course) to win the ear of hesitant consumers? E pluribus unum is a worthy goal.