Wine Book Reviews: Two Perspectives on Italy and Its Wines

March 14, 2023 By in book reviews, Italian wine, wine 1 Comment

How you think about Italy and its wines depends upon how you approach them. Herewith are brief reviews of two recent books that take very different viewpoints.

Italian Wine Unplugged 2.0 by Stevie Kim, Attilio Scienza, et. al. Mamma Jumbo Shrimp, December 2022.

Italian Wine Unplugged 2.0 is a key part of Vinitaly International Academy’s program to draw attention to Italian wine’s wonders through education. As Stevie Kim writes in the Foreword, the idea is to take wine enthusiasts and help them become experts and, I think, also ambassadors for Italian wine to the world.

It is a big job and so this is a big book. More than half the 450+ pages are devoted to “must-know” profiles of the wine grape varieties native or traditional to Italy. We begin with the most well-known families of grapes and move to important regional varieties and, finally to brief profiles of lesser-known grape varieties from Abrostine and Abrusco to Wildbacher and rare varieties from Abbuoto to Zanelo There is a lot of fascinating information here. Not as comprehensive as Ian D’Agata’s Native Wine Grapes of Italy, but clear, useful, and complete

A smaller section provides overviews of each region, linking denominations with associated grape varieties. A section titled “Science” features a major essay by Professor Attilio Scienza on the origins and evolution of Italian wine grapes. Prof. Scienza’s analysis is noteworthy for its interdisciplinary approach, blending DNA data, for example, with information distilled from ancient myths. It is a detailed study — you’ll need to put your smartphone away and concentrate — but very interesting.

I especially enjoyed reading Sarah Heller MW’s brief essay on “How to Taste Italian Wine.” Heller argues that Italian wines are misunderstood or underrated because they are simply different from the wines of Bordeaux and the Napa and Barossa Valleys that have shaped wine-tasting standards and expectations.

“This state of affairs is largely the result of the global hegemony of two wine value systems that poorly suit Italian wine.” One system is based upon the virtues British critics see in the best Bordeaux wines. The other derives more from characteristics of New World wines (I suppose we might associate this with Robert Parker’s influence, but I think it is more than that).

Italian wines are easy to overlook because they don’t fit either of these taste profiles. Italy is an exception and Heller proposes that “Italian Exceptionalism” be embraced and promoted by focusing on an appropriate value system. Fascinating.

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Rick Steves Italy for Food Lovers by Rich Steves and Fred Plotkin. Avalon Travel Books, January 2023.

Italy for Food Lovers is also Italy for Wine Lovers. Why? Well, it is hard to think of Italy or Italian food without the wine that naturally goes with it. Wine is food in Italy, don’t you think?

But there is also this: the core of this book, co-authored by Rick Steves and Fred Plotkin, is Plotkin’s classic 700+ page guide to Italy for the Gourmet Traveler, which takes Italian food and wine very seriously indeed.

The idea is to take Plotkin’s book, first published in 1997, which has not been revised in almost a decade, and both update and streamline it for today’s Italy-loving audience. Plotkin knows Italian food and wine like the back of his hand. Rick Steves knows Italy, too, offering his list of 100 favorite restaurants alongside Plotkin’s list of fifty. Steves is especially good at helping people take the first step, gaining confidence along the way so that they can learn and love the journey.

Wine is pretty much everywhere here. There’s a chapter on wine, of course, and major sections on local wines in each of the regional profiles. The treatment is not nearly as comprehensive as in Plotkin’s classic guide or — obviously — as  Italian Wine Unplugged 2.0. But that’s not what this volume is about. This book is all about getting started in some cases or taking the next step in others. It will help travelers to Italy embrace local wines with unfamiliar names and appreciate the whole experience.

If you already know the wines of Italy very well, you might not learn much here, but you will probably still find it interesting. If you don’t know Italian wines, well here’s a fun place to start. Either way, this is a good gift idea if you have family or friends heading off to Italy for the first time.

Chutes and Ladders: Wine and the Premiumization Game

March 7, 2023 By in wine, wine markets, wine price 6 Comments

I believe that the games we all played when we were younger taught us valuable lessons, both about life in general and life in today’s wine industry in particular. Risk, for example, taught us to be strategic in analyzing any situation. Checkers and chess taught us to think beyond the next move or the one after that, to anticipate our competition’s reaction to each possible action.

Monopoly, of course, prepared us for the wine industry’s continuing consolidation with big getting bigger at every level — retail, distribution, winery, and vineyard.

Up and Down

Chutes and Ladders (or Snakes and Ladders for some of you) is the game to play if you want to get a sense of the premiumization game that is a distinct characteristic of the wine industry today. Chutes and Ladders is a race to get from the bottom of the playing field to the top. You can climb up one step at a time, but ladders sometimes zoom you to a higher level. That’s great, but there are also chutes that send you tumbling down again.

Wine businesses have been encouraged to play the Chutes and Ladders game because the growth in the market has ratcheted upscale with surprising speed since the global financial crisis. Sales of wine at lower price points have languished or declined. The growth zone has shifted to higher and higher price points (which entail lower and lower volumes). The sweet spot in the wine market is a moving target. Talk about Risk!

Sometimes it seems like if you are not climbing the ladder you must be falling down the chute. Growth-seeking wine brands must keep climbing market ladders as the sweet spot shifts, but (to mix metaphors) it is hard for a tiger to change its stripes. Once a brand has established an identity, it is dangerous to cut prices and difficult to raise prices. Climbing the premiumization ladder can be a roll of the dice.

Early Mover Disadvantage

I have seen this with some European wines that entered the US market back in the day when market conditions were different, It is hard for them now to change stripes. Take the popular-priced red wines of Valpolicella, for example. These were once some of the best-selling imported wines on U.S. shelves and still do very well, but the bargain prices that drew attention back then no longer make the same impression.

Montepulciano D’Abruzzo faces some of the same challenges. Buyers may think of good value, not high quality when they see this wine, which is a problem if spending growth is focused on higher price points.  When we were doing research for our trip to Abruzzo last year, for example, most of the Montepulciano d’Abruzzo wines we found were in the “good value” category — a legacy of the region’s early successful entry into the U.S. market.

The low point came when we found a popular brand of Montepulciano d’Abruzzo in a Grocery Outlet store selling for just $5.99 per 1.5-liter bottle. Not the image you want to see, especially since the region has so much potential.

Climbing the Ladder

We found excellent wines during our trip to Abruzzo. We were especially impressed by the small wineries of Villamagna DOC, for example, and the Cantina Frentana cooperative showed that quality and quantity could go hand-in-hand.

We’ve recently been sampling the Villa Gemma line of wines from  Masciarelli, and they are terrific. The Montepulciano d’Abruzzo Riserva 2017 is an example of a wine that can help redefine the category.

The classic-level Masciarelli wine sells for $12.99 at the upscale supermarket down the street and for just under $10 at a local big-box alcohol superstore. That’s a good price point, but with premiumization moving the ladder, market growth seems to be shifting up a level. Hence a focus on super-premium Villa Gemma and wines like it to take advantage of premiumization without sacrificing the existing profitable market.

North and South

Here in the U.S., we have the tale of Washington state’s Chateau Ste Michelle, which prospered just a few years ago when the sweet spot for wine sales growth was $8 to $10. The wines are very good, but they were pigeonholed by their price point and now the market has shifted higher.

New Zealand wines present the other side of the situation. New Zealand entered global markets at what were then surprisingly high prices. New Zealand’s average export price for still wines was for some years the highest in the world (remember that world wine flows include vast quantities of inexpensive bulk wines, which are not part of the New Zealand portfolio).

Having entered the US market at a higher price point, New Zealand wine (mainly Sauvignon Blanc) has benefited from each upward shift so far. But, seeing the writing on the wall, some Kiwi producers are getting ready for the next ladder climb. For example, we have recently sampled wines from Babich, which seem to be intended to scale the next ladder.

The Babich ladder begins with the classic Babich Marlborough Sauvignon Blanc and then climbs through Black Label, Family Estates, Select Blocks, and Winemaker’s Reserve tiers. Babich is a well-known champion of sustainable wine-growing and this is part of the brand ladder. The classic that we sampled was certified Sustainable and the Select Blocks wine was made with organic grapes.

The classic wine and the Select Blocks were very different  from each other when we tried them — as they should be. The classic was a refined variation on the now-familiar Marlborough Sauvignon theme. The Select Blocks wine was even more elegant and perhaps defines a new category — which is great in terms of product differentiation. But it didn’t say “Marlborough” to us as much as we’d liked.

How High is Up?

How much longer will the premiumization game of Chutes and Ladders last? And who will the eventual winner be? The wine market is like a dynamic pyramid and the volume of wine is smaller at the top of each ladder compared with the one before.

Like the housing bubble of a few years ago, this process doesn’t seem sustainable. That means that Stein’s Law probably applies: if something can’t go on forever … it will end.

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Note: Masciarelli has released a special wine, Pecorino Castello di Semivicoli 2022,  with proceeds to raise funds to support a charity that assists the parent of autistic children. Bravo, Masciarelli family!

OTBN 2023 Report: What We Opened on Open That Bottle Night

February 28, 2023 By in wine 1 Comment

Open That Bottle Night, which is celebrated on the last Saturday of February, is the holiday where you pull out wines you have been saving for the right occasion and pull their corks (or twist the screwcaps) to liberate the contents. The purpose of wine is to make us happy, so why wait?

This year our usual OTBN crew wasn’t able to all gather together, so Sue and I organized a sort of “distributed OTBN” over three nights. Here, as is our custom, is a report of what we opened and what we discovered.

OTBN 1: Dinner with friends featuring Sue’s famous Bologna-style veal meatballs.

  • Mascarelli Villa Gemma Montepulciano d’Abruzzo Riserva 2017. Probably the best Montepulciano d’Abruzzo we’ve tried to far.
  • Grace Vineyards (China) Tasya’s Reserve Aglianico 2012. Still fresh after eleven years! Really interesting and delicious. Congratulations to Judy Chan and the Grace Vineyard team.

OTBN 2: Appetizers with a good friend featuring mushroom risotto balls.

  • Nelion Winery (Cyprus) Ofthalmo 2014. Couldn’t wait to open this. Still tight and took a while to open in the glass. Dark fruits slowly emerged. Brought back great memories.

OTBN 3: Dinner with friends on the “official” OTBN evening.

Sue decided that it was time to open some of the Sherry in our cellar to share with friends who weren’t all that familiar with this wine style. She was inspired by samples of the Amontillado and Cream Sherry.

Appetizers: Marcona almonds, basque cheese, acorn-fed Iberico ham, and Jamon Serrano.

  • Laurent-Perrrier Champagne “La Cuvée” Brut
  • Bodegas Yuste Aurora Amontillado sherry

Pasta: Sue decided that this was also “Open That Jar Night.” We hardly ever buy pasta sauce at the supermarket because we make our own from Sue’s garden tomatoes. But we’ve been sampling imported pasta sauce products from Botticelli and were impressed with authentic homemade flavor (and the ingredients list, which looked like what you would use at home).

We’ve been saving a bottle of the Tomato, Porcini Mushrooms, and Truffle sauce to open on OTBN, served with “Trecce” Pasta di Gragnano IGP, which was pretty much made for this sauce.

  • Chateau de Beaucastel 1990. An amazing wine. Still fresh after 33 years. Layers of flavor. What a treat. And a great foil for the mushroom and truffle sauce. Memorable!

Cheese course (Mirforma “Tête-à-tête de Moine” raw cow’s milk, Switzerland; Alta Langa “La Tur” cow, goat, sheep, Italy; Cypress Grove “Midnight Moon” pasteurized goat milk aged Gouda, Netherlands; Papillon Roquefort, raw sheep milk, France):

  • Gonzalez Byass Leonor Palo Cortado 12 years

Dessert course (almond cake):

  • Bodegas Cesar Florido Cruz del Mar Cream Sherry
  • Gonzalez Byass Necras Pedro Ximenez Sherry

You might notice that we opened four different Sherry wines — what’s that about? Well, first of all, we really like Sherry and every sip brings back fond memories of a trip to Spain where we spent an entire day learning about Sherry thanks to the good people at Gonzalez Byass.

Add to this the fact that Sherry is the perfect OTBN wine. Most people don’t open that bottle of Sherry because they don’t even buy it. They think of Sherry the same way they think of Port — that sickly sweet stuff that grandma drinks at Christmas. The world of Sherry is deep and wide (and inexpensive for the quality). Our OTBN tasting only scratched the surface.

When was the last time you opened a bottle of Sherry? If it has been a while, maybe you need to do something about it soon.

This concludes our OTBN 2023 report. If one OTBN is good, three are even better. Is there ever a bad time to open that bottle?

Free the Wines! Open that Bottle (or Jar?) Night 2023

February 23, 2023 By in Uncategorized 2 Comments

Opening a bottle of wine is an occasion. Think about the rituals, traditions, and specialized equipment associated with wine and the act of drinking it. I love the traditions, but sometimes finding the right occasion to pull a cork can be a problem.

We all have a few bottles of wine that we think of as special in some way and that require a special occasion to be released. But, for various reasons, that special occasion never seems to come around and so the bottles sit, gathering dust. What a shame!

Dorothy J. Gaiter and John Brecher identified the problem way back in 2000 and created an annual holiday they call “Open That Bottle Night.”   OTBN falls on the last Saturday in February (February 25, 2023 this year). That’s when all those wines we’ve been meaning to open (but haven’t found the right occasion) are released for us to enjoy.

OTBN is our favorite wine holiday. You can read about some of our experiences through the years as reported in Wine Economist columns.  Are you going to celebrate OTBN 2023?  If so, what wines are you going to liberate from their glass prisons?

Sue is organizing our modest celebration this year and, while I can’t reveal the wines she has chosen just yet, I can tell you that her plans include several small bottles and one jar. A jar?  Yes, a jar. Not a jar of wine (although that would be interesting, too), but a jar of something else that, in the spirit of OTBN, needs to be opened, and what better occasion than this!

Best wishes to you all and Happy OTBN. We’ll report on our celebration in a few weeks. In the meantime, use the comments section below to tell us your plans.

Arizona Flashback: Desert (Not Dessert) Wine

February 21, 2023 By in emerging wine regions, wine, wine tourism Leave a comment

Sue and I are in Arizona this week, exploring a wine region near scenic Sedona that is completely new to us. Look for a full report in the coming weeks. In the meantime, we thought you might be interested in this Flashback from 2008, which reports on a previous Arizona wine expedition.

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Desert (Not Dessert) Wine

Wine Economist / March 28, 2008

I spent Friday in the Arizona wine country – south-west of Tucson near Sonoita – with my “research assistants” Michael, Nancy, and Sue. I thought that I would learn something from talking with winemakers here, and I did, but it wasn’t exactly what I expected. Here is my report.  …

A Working Hypothesis

My hypothesis going into this research was that the wines themselves would be a bit problematic, as emerging region wines often are, and that the biggest challenge would be in the vineyard not the cellar — growing wine grapes in the high desert.

Our first two winery stops quickly made me change my mind about the quality of Arizona wine. The wines at Dos Cabezas WineWorks were intense and flavorful, with a spicy complexity that surprised me. I am not a wine critic, so I will not bore you with amateur tasting notes and doubtful ratings, but we were very impressed with these wines and bought some to give as gifts to Arizona friends who did not know about Arizona wine. Todd Bostock, the winemaker, really knows how to draw flavor from Arizona (and some California) grapes. Todd is working with Dick Erath in addition to his own projects and I think this collaboration bodes well for Erath’s Arizona wines, when they are ready, and for the region’s reputation.

Our second stop was Callaghan Vineyards. Kent Callaghan’s wines were strikingly good. We noted the depth and distinctive character of these wines, particularly the Tempranillo- and Petit Verdot-based blends but also a Mourverdre, Syrah and Petite Sirah blend. These wines were different from Bostock’s and gave us a hint of the potential range of Arizona wine styles. Kent let us taste some library wines and the question, can Arizona wines age well, was answered in the affirmative. We bought wine and had it shipped home, which is I suppose the highest praise a wine consumer can provide.

We visited one other winery, a new one that I won’t name, that made the sort of wines that I originally expected to find – what I would describe as immature wines showing wood in the wrong places. They served to put Bostock’s and Callaghan’s achievements in context. It is possible to make very good wine in Arizona, but it’s probably not easy.

The Globe in Your Glass

Wines have started to appear from many regions not on the list of “usual suspects:” India, Thailand, Peru and Brazil, for example. Brazilian wines actually make a cameo appearance in the film Mondovino, but not in a way that makes them seem in any way part of the classic tradition of wine.

It is possible to grow wine grapes at unexpected latitudes, but special conditions are necessary. In Arizona it is the desert at an elevation of about 4500 feet, where summertime highs are only in the 90s and the temperature at night can drop by 35 degrees. Elevation compensates for latitude. This advantageous diurnal variation along with lots of sunshine and rocky red soil are a good recipe for wine if you can add the right amount of water – not too little or too much.

Climate is not the problem I thought it would be and I think some of the wines we tasted displayed that mystical terroir that is the holy grail of wine critics. But climate change is a problem and that’s the unexpected story here. (I’ve written about climate change and wine in Chateau Al Gore.)

Kent Callaghan told me that the climate seemed to him to have changed significantly in the last 18 years. He reported recent crop yields of just a ton an acre for some varieties due to unfavorable weather. Some of the plantings of the classic varietals that showed promise earlier now seem misplaced so he has started slowly to change over to grape varieties that are able to produce consistent quality in the evolving environment.

This helps explain the use of California grapes for a few wines I tasted (to compensate for low Arizona yields) and the effective use of unexpected varietals (Tempranillo from Spain and Petit Verdot, a Bordeaux blending grape). Having learnt to make good wine in Arizona, winemakers like Callaghan have had to learn the process all over again with new varietals. In this regard I think they are perhaps ahead of the curve – winemakers all over the world will have to adjust to climate change in the decades ahead.

I understand that the Erath Arizona vineyard is being planted with many different varietals. It sounded to me like an experimental vineyard when I heard the list of plantings, but I think there is more than guesswork involved. I expect that Erath, Bostock and Callaghan and other talented winegrowers will figure out what Arizona’s terroir is meant to produce. It will be interesting to track Arizona’s progress and see how its wines fare in a world where the environmental givens are shifting and the market conditions becoming increasingly diverse and competitive.

Wine and Wine Tourism

The wineries I visited are all relatively small with limited distribution, so don’t expect to find these products at your local shop. Production is limited to a couple of thousand cases, even with the use of California grapes to fill in the gap left by low local yield, and sales are mostly cellar door. The winemakers I spoke with are beginning to develop wine clubs and internet sales facilities, but most of the product is sold face-to-face. Restaurant placements, if done well, can help build reputation, but there is not much money in it for a small winery. And output isn’t usually big enough to fill a distributor’s pipeline. All of this may change in the future, of course, but for the present it is a craft industry. The future of Arizona wine, at least in the short run, is local not global.

And that is not necessarily a bad thing because exploiting the local is an important strategy and it seems to me that Arizona has a good potential for wine tourism. The world will probably come to Arizona wine before the wine is produced in sufficient volume to venture out into global markets.

The country around Elgin and Sonoita is strikingly beautiful and closer to Tucson than Napa Valley is to San Francisco. It is already a desirable day-trip destination from Tucson because of its bicycling and horseback riding opportunities. All you need is wine (and food) to complete the deal. The wine is already there, as we learned, and the food, too, but the word hasn’t leaked out. That, I think, is about to change.

Note: Thanks to Michael, Nancy and Sue for their help with this report and to Joyce at Dos Cabezas and Tom Bostock and Kent Callaghan for taking time to talk with us.

Got Wine vs Not Wine? Wine and the Generation Gap

February 14, 2023 By in economic crisis, Unified Wine & Grape Symposium, wine, wine markets 7 Comments

We are suffering just now from a bad attack of economic pessimism. It is common to hear people say that the epoch of enormous economic progress … is over; that … a decline is prosperity is more likely than an improvement.

The economist John Maynard Keynes wrote these words in a 1930  essay called “The Economic Possibilities of our Grandchildren” and I have been thinking about them quite a lot recently in the context of the wine industry. Keynes was writing in the depths of the Great Depression. Is wine in (or headed towards) a Great Depression of its own?

On the Other Hand …

Certainly the mood at last month’s Unified Wine and Grape Symposium was mixed. Obviously I didn’t talk to all the 10,000 people who attended the 3-day event, but I think I got a general sense of what wine industry people are thinking and feeling from those I encountered.

On one hand (a classic economist opening phrase), there was an upbeat mood because the meetings and trade show themselves felt back-to-normal after several years of covid-driven disruption. The house was packed for our State of the Industry session, for example, and there was a record number of exhibitors at the trade show (and a waiting list for next year). Glass at least half full, for sure.

One the other hand (you knew that was coming), it was impossible to ignore some of the discouraging news in the air (I reported on some of this in last week’s Wine economist column). Some people blamed this on the recently released Silicon Valley Bank report, but I think that is unfair. Like our State of the Industry session, the SVB report has an obligation to be objective — to report the straight facts without a lot of spin. And I think their report does that well. Facts are facts. The question is what you do with them and whether, like Keynes, you can see beyond the current crisis to the possibilities of the future?

The Generation Gap: Got vs Not

Keynes was thinking in generational terms when he wrote his famous essay and a lot of the analysis of wine’s current malaise is generational, too. The baby boom generation powered the golden age of American wine, the story goes, but the generations that followed haven’t embraced wine with the same warm hug. What can we do to make Gen Z consumers love wine as much as their grandparents do? How can we close the wine generation gap?

This is a good question (and I am glad so many people are asking it), but it by-passes part of the problem. Yes, boomers as a group drink a lot of wine, but in fact wine consumption is concentrated among just a small fraction of boomers. The baby boom generation is large — it contains multitudes. It is both Gen Got Wine and Gen Not Wine. Generalizing about generations like the boomers is a risky business.

This is true, I believe, for other generations, too. What makes the wine drinking boomers different from the boomers who don’t drink wine or don’t use alcohol at all? And what, if anything, does the boomer wine cohort have in common with wine-drinking members of other generations? Maybe generational differences aren’t the whole story (or even the most important part of the story)? Is the gap as much within generations as between them?

How Full is your Glass?

Should we be optimists or pessimists as we consider the future of wine? Well, our situation is nowhere near as dire as what Keynes faced back in Depression days. The wine market requires only relatively small adjustments by comparison to restore a balance and a bit more to kick-start growth. Not easy by any means, and it might not happen, but not at all hopeless.

Keynes was an optimist and he used this essay to look far into the future, peering past the short term problems necessarily on his readers’ minds. The prospects for our grandchildren are bright, he said, so long as we are able to avoid certain obstacles — over-population, violence and war, and the politicalization of science. Our current economic situation, since we are the future of Kaynes’s past, is indeed prosperous compared wtih 1930 if not quite so bright as he hoped.

A Half-Full Future?

Let me follow Keynes’s example in talking about the future of wine. Wine has endured for thousands of years and survived many dark periods, so it is not unreasonable to imagine a bright future for wine as both culture and industry. But there are obstacles to be avoided.

In my recent book Wine Wars II I propose that wine must deal with a triple crisis: environmental crisis, economic crisis, and identity crisis. The identity crisis is most relevant to today’s topic. Wine is an alcoholic beverage — the fermentation process doesn’t just add alcohol, it transforms the grape juice in miraculous ways. If, as I think is possible, wine becomes defined by its alcoholic content — grape juice alcohol the way that hard seltzer is fizzy water alcohol — then something very important is lost and wine’s future grows dark.

Another obstacle — and this allows me to circle back to the generational issue — is occasion. Opening a bottle of wine is an occasion (there is both an element of ceremony in the cork-pull and the more-than-single-serving quantity to deal with) and must align with occasions in consumer life.

Mind the Gap?

Dinner is an occasion sufficient to pull a cork at our house, but that’s not true for everyone. I wonder how much of the wine that is sold is consumed with meals versus other types of occasions and how this might differ for different demographics?  The wine industry would be wise to try to adapt to the occassions that younger consumers (and older consumers, too) actually experience rather than the ones we imagine they should enjoy.

An article in yesterday’s Wall Street Journal suggests that at least one big beer company is rethinking its marketing plans in light of the threat of recession. Home consumption is rising at the expense of on-premise, for example, so marketing will work to put beer at the center of home and family occasions. Smart thinking!

A recent Financial Times column by Gillian Tett provides food for thought regarding Generation Z attitudes. The article doesn’t talk about wine, but maybe there are implications for wine. Tett cites studies that show that Gen Z workers demand more control over work environments than employers are used to. If they can’t customize the job, they prefer to quit, one expert suggests. Dangerous to generalize, of course, but it makes me think about how the wine experience compares with, say, cocktails in this context?

The generation gap is complex. Lots of food (and drink) for thought!

Margins? What Margins? The Big Squeeze in Winegrowing 2023

February 7, 2023 By in economic crisis, South Africa, Unified Wine & Grape Symposium, wine markets 7 Comments

I was talking with a group of California winegrowers just before the Unified Wine & Grape Symposium‘s State of the Industry session a couple of weeks ago and the stories they told me made me understand that The Big Squeeze, which I wrote about around this time last year, is still going strong.

Margins? What Margins?

The Big Squeeze? Many winegrowers have for some time been caught in a squeeze between rising costs and stagnant or sometimes even falling wine grape prices. Your margins are getting squeezed, I asked? Margins? What margins? they replied. Margins got squeezed away some time ago.

The Big Squeeze is significant and not limited to the United States. When I travel the world speaking to wine industry groups I will ask quietly about how the growers are doing? Often the reply is a shrug, downward look, and slow shaking of the head. Not so good, they tell me.

South Africa is a good case in point. Every year Vinpro, the important South African winegrowers organization, reports its survey of vineyard profitability. Rico Basson, Vinpro’s executive director, released the results for 2022 at the annual Nedbank Vinpro Information Day last month and the chart above summaries the conclusions.

Unsustainable Operations

Only about 9% of the South African winegrowers were earning a sustainable level of income per hectare — a high enough return to support long-term investment. Fifty percent were caught in a low profit zone, with positive net income, but less than they might earn elsewhere. (If you remember your Econ 101 definitions, this would be positive accounting profit but zero or negative economic profit — it’s an opportunity cost thing.)

The actual level of income per vineyard hectare (the green line in the chart above) is far below the sustainable income level (black line). Fully 41% of the South African winegrowers in the survey were either at break-even (3%) or bleeding red ink (38%). The average return on investment in 2022 was minus 2.4% and the gap between costs and revenues was widening. That, my friends, is a really big squeeze.

Volume or Value?

Which is the better strategy to escape the squeeze: volume or value? Do you push to raise vineyard yields or  try to raise price though lower yields  but higher value?

I don’t know the answer for South Africa today, but when I spoke at the Vinpro event a few  years ago the answer was clear. The higher the yields, the better the chance for success. Sacrificing quantity for quality didn’t consistently pay, I was told, because South African wine found it hard to break through the premium price-point ceiling on international markets. Most producers couldn’t manage to raise price enough to compensate for the higher unit costs. Ouch!

I told this South Africa story to my winegrower friends and they shook their heads. Pretty much the same here, they said. Given the limits on what buyers would pay for their grapes, the best way to profits was to increase yields to, say, 12 tons per acre or more depending on grape variety.

Limited Yields, Limited Opportunity

But there were two problems,, I was told. First, some buyers won’t go along — they were concerned about loss of quality at the higher yield, although modern viticulture practices make it possible to raise yields without loss of quality possible in certain circumstances. So in these situations raising yields is a non-starter.

And it isn’t always possible to get yields up to an economically sustainable level because many older vineyards just aren’t set up for that and have built-in limits that were OK when they were planted years ago, but make life difficult today.

So what are you supposed to do, one grower asked me, if you have an older vineyard that needs to be renewed at high cost? This is where the unsustainable profitability issue really hits. Do make a big bet that the Big Squeeze will loosen up in the future? My winegrower friend was less than optimistic.

Unsustainable?

Not all vineyards bleed red ink, of course. The situation is different in different winegrowing regions with different market conditions and vineyards of different ages and farming set-ups. But the problem remains. As I reported last year, wine prices have fallen in real terms recently and one result has been to make the already-serious vineyard squeeze even worse.

When you talk about sustainable vineyards, people naturally think about environmental sustainability. But economic stability is an issue, too.

Game Over for the Wine Game?

January 31, 2023 By in Unified Wine & Grape Symposium, wine, wine markets 4 Comments

What’s ahead for the wine industry in 2023 and beyond? Speaking at the “State of the Industry” session at last week’s Unified Wine & Grape Symposium in Sacramento, I suggested that the challenges our bvindustry faces today are not unique to wine, so perhaps we can find clues by looking outside the wine box.

The particular case I examined in the short time available was the board game industry. Board games? Yes, you know, games like Risk, Life, and Clue. Once upon a time board games were so popular that they were part of the fabric of life. Then the board game industry was battered by forces that I think are analogous to some of the headwinds we in the wine industry have experienced.

Ready Player One

The story of the fall and rise of board games is interesting if we think about it in terms of similar patterns in the wine industry. Board games (and wine) suffered four big blows in recent years. First came in the form of demographic and socio-economic change. Generations shifted — the players got both older (aging Boomers) and younger (Gen X, Gen Z), too. The faces around the table were different and the opportunities to gather together were different. That vintage Life board game box shown above isn’t what life looks like today.

Then video games hit the scene. Video games were the “craft beer” of board game industry — a competitive product that was new and innovative. Innovation was the name of the game: there was always another video game to try. Board games (and wine) were not so innovative and suffered as players looked for the next big thing.

Next came smart phones, which were sort of the hard seltzer of the board game industry. You could play games on smart phones, of course, but the fact is that “gamification” became a general strategy, as app developers sought to keep users glued to their screens (and then to track their every move). Apps that had nothing to do with video games used “gamification” techniques. If you find yourself constantly checking smartphone apps, you may be playing a game without knowing it.

A lot of the time, if I’m honest, my smartphone is sort of like the TV series Seinfeld, “a show about nothing” that I watch again and again. That’s hard seltzer to me and products like hard seltzer had sort of the same impact on wine that the smart phone had on board games.

Finally the covid pandemic struck, which hit both board games and the wine industry hard. Gathering together for board game play or to share wine in social settings were both suddenly problematic. For wine, restaurant and tasting room sales channels dried up.

Game Over for Games?

The situation for board games looked particularly bad because, if you’ve followed the story so far, you can see that a whole generation has grown up in a different game environment than before. It was hard to believe that board games could ever stage a come back. Game over for them. But they did it! Board games are back! How?

A recent Washington Post article by Jacvlyn Peiser suggests that the board game renaissance is a combination of old and new. The old virtues of board games — the social and educational elements (which I talked about in more depth in my talk) — have not really changed, but are perhaps now a bit more precious to us because we had to live without them during the pandemic. And there is also a new side in that innovative game designers are finding new ways to connect with users and their interests and needs.

But it’s the classic appeal that is the foundation of the innovative surge. The Washington Post article concludes with a comment that board games endure because they get friends and family together to share experiences and make memories. What could be better?

Everything’s Better with Wine?

Well, of course, board games are better with wine (for those of legal drinking age). Wine and social gatherings are perfect parings. There are even board games for wine enthusiasts. Did you know that there is now a special Napa Valley Monopoly edition?

How realistic is the Napa Monopoly game, which is based on Napa Valley properties in the same way that the original game was modeled on Atlantic City, New Jersey?  I checked on Amazon and the classic Monopoly was selling for $11 while the Napa version was around $44. A four-times Napa premium seems pretty realistic to me, don’t you think?

Today’s gamers haven’t given up their screens, but they have rediscovered the pleasures of in-person interactions and board game sales have benefited. That’s a good thing.

Since I used board games as a way to think about wine, this was an optimistic result. Perhaps the virtues and pleasures of wine, which have sustained it as culture and industry for thousands of years, have not suddenly lost their value, either. Perhaps, as the clouds lift, wine’s classic appeal with become even more apparent.

The Game Endures

It seems to me that the wine industry, following the board game analogy,  needs to continue to innovate, to reach out to consumers with different interests and lower specific levels of commitment than before. But in doing that, it is important not to forget the values and virtues that have made wine an enduring part of life.

It is reported that Bernard Arnault, the head of LVMH and the current holder of the “World’s Richest Man”  title, once met with Steve Jobs, the visionary creator of the Apple electronics phenomenon. Do you think people will still be buying your iPhones in 30 years, Arnault asked Jobs. Don’t know, Jobs said honestly.

Do you think people will will still drink your Dom Perignon Champagne in 30 years, Jobs asked in reply? Yes, Arnault said confidently. The wine will endure. There will be Dom Perignon for generations. Jobs agreed. So do I.

We Are All Terroirists Now: A Tale of Three Distinctive Terroirs

January 24, 2023 By in Uncategorized 1 Comment

There is a chapter in my new book Wine Wars II: The Global Battle for the Soul of Wine that’s titled “We are all terroirists now” and makes the case that the sense of place that I call terroirism is a powerful force in the world today.

All terroirists?   Really? Terroirists (not to be confused with terrorists)? Well, I admit it might be a bit of a stretch, but how often to do find Richard Nixon, Karl Polanyi, John Maynard Keynes, and Joseph Schumpeter all referenced in a wine book? You might disagree with where I take the argument and what I have to say about wine and terroir, but I guarantee you will find the ride interesting.,

This much I think we can all agree upon. Sometimes the power of terroir is undeniable. The sense of a particular place is so strong that special wines just have to be made to serve as both tribute and showcase. Herewith three nominees for terroirist tribute.

To the Heights

Artesa Elevation Block Estate Vineyard Cabernet Sauvignon 2019, Mount Veeder, Napa Valley

The Raventós Codorníu family, famous for their excellent Cava wines, came to California to make sparkling wines and Codorníu Napa, situated in the Los Careneros district, opened to much acclaim in 1991. But there was more than bubbles on their mind and a sister winery was born in 1998 to make still wines, too. Artesa is Catalan for “handcrafted” and that focus hands-on was the guiding principle.

When it came time to think about renewing the original vineyard plantings, focused attention was drawn to one particular vineyard high on the hill — so high that it had a complex terroir all its own. It was, in fact, so elevated that it was technically in the Mount Veeder AVA. Maybe the original Pinot and Chardonnay could be replaced with Cabernet to make a really special terroirist wine?

And so the project began, with careful attention to matching specific blocks to just the right Cabernet clones. Sue and I were lucky to be able to taste the result on a video link with winemaker Ana Diogo-Draper and we were just amazed by the layers of flavor and the super-long finish. Complex, balanced, lively — what a great wine — nothing at all like the generic “Napa Valley red wine” that I have often criticized.

Artesa’s elevated Cabernet makes the terroirist case in every way. And there is more to come. When they renewed the Elevation Vineyard they also planted Tempranillo! Can’t wait to taste that, too!

The Original

Bonterra The McNab, McNab Ranch Vineyard Cabernet Sauvignon 2020, Mendicino Country

If you look closely at the label of this wine you will see a group of sheep. The McNab Ranch, an east-to-west box canyon up in Mendocino Country, was a sheep ranch before the folks at Bonterra looked closely at its vineyard potential. It became one of the original American biodynamic vineyards and helped propel both biodynamics and Bonterra ahead.

I hesitated a bit in pulling the cork on this wine because it is a 2020 — kinda young as with all three wines discussed here — and because it is one of the last wines to be made from the original McNab vines. It’s time to renew the vineyard, my Bonterra contacts report, and it will be interesting to see what the next generation of vines produces.

The guiding principles will be the same, I’m sure, but as in the Artesa case, this is an opportunity to exploit the complexities that nature presents. I hope we have a chance, in a few years, to taste this lively, complex, fascinating wine again alongside the next generation of Bonterra McNab Ranch wines.

In the meantime, however, this McNab is the OG — an original in several respects and a fascinating vision of terroirist wine.

Show Horse

Trothe Cabernet Sauvignon 2019, Horse Heaven Hills

The Andrews family have been farming the land in the Horse Heaven Hills area of Washington state for four generations. First came drylands wheat then eventually other crops and then, back in the 1970s, the first grape vines. That’s a long time ago in Washington wine terms, and it perhaps suggests the sort of generational thinking that has guided the Andrews family operations.

The Andrews were growers not winemakers, so their grapes were blended together with other grapes and turned into the wines that powered the Washington industry grow over the last several decades. At some point, the current Andrews generation probably began to wonder how wine made from the best of their grapes would compare with top wines from Washington? California? the world? It’s a natural question to ask. Only one way to find out.

And so was born the Trothe project. Ray McKee, the former head red wine maker for Chateau Ste Michelle, was brought on board to craft the wines. He had been buying the Andrews’ fruit for years and appreciated the distinctive terroir and its potential. The current release is getting a lot of deserved attention and I understand there are more wines in the tiny pipeline. It will be interesting to see what comes next as the particular terroir of the Andrews estate is explored to make Trothe wines.

Wine Book Review: History on a Plate (and in a Glass?)

January 17, 2023 By in book reviews, Italian wine, wine, wine history 1 Comment

Andreas Viestad, Dinner in Rome: A History of the World in One Meal. Reaktion Books, 2022.

All roads lead to Rome, they say, so the idea of a history of the world centered in Rome is not ridiculous. And, for food writer and activist Andreas Viestad, all pathways in Rome lead to his favorite restaurant, La Carbonara, so it is the only logical place to begin.

When in Rome …

Viestad (a favorite in the Wine Economist household for his television series New Scandinavian Cooking), takes us through a meal at La Carbonara, reflecting upon the experience as the courses follow their traditional sequence.

Viestad’s stories are not as intentionally global as the “history of the world in one meal” subtitle might lead you to expect (note that this is “a” history, not “the” history). Instead he talks mainly about Rome and Romans, and then Italy and Italians, leaving it mainly to the reader to connect dots to the world-wide implications and insights.  It’s fun! You learn a lot reading this book. And you get hungry, too.

The chapters are organized around the familiar elements of the Italy meal. Bread, antipasto, oil, and salt. Pasta, pepper, meat, fire, and lemon. And wine, of course, because this is dinner and this is Italy, so of course there is wine.

The best thing I can imagine would be to share a table at La Carbonara with Viestad and work through the  phases of the meal with him, listening to the stories he tells. (There would be room for a guest — in the book he dines alone!) And then, stuffed with pleasure, we would take the stroll around Rome he describes in the final chapter, ending with a soothing/shocking scoop of intense lemon sorbetto (lemons being the last topic discussed).

Since this first-person experience is unlikely to take place, I guess the second best thing is to take up the opportunity to read this creative and interesting book.

The Problem with Wine

But there’s a problem. Taken as a food book or a history book or a cultural guide for anyone who loves Italy or Rome, it is hard to deny Dinner in Rome‘s charm. But from a wine perspective it is hard not to be disappointed.

This may be because, as I read other parts of the book, I was mentally writing the chapter I hoped Viestad would write about wine. That chapter, I thought, might mirror in some ways the chapter on pasta, which invokes the Italian idea of “the civilization of the table” that Viestad suggests might easily be confused with the idea of civilization itself.

Is there a civilization of the glass that we might raise up along with the civilization of the table? Some think so, I believe, and there is even an Italian journal devoted to the idea. It is called Civilta del Bere (the civilization of drinking). So, you see, I was thinking about a chapter that might stress the ways that wine brings people together and both shapes and reflects relationships, both at the table and in other ways.

While the chapter that Viestad writes addresses many aspects of wine, his main point is that wine is alcohol and the point of alcohol is inebriation much of the time. The idea that wine is just the local alcohol makes me sad, since I think wine has much more to offer than that, but it is a problem since there are many who have this view.  My latest book Wine Wars II finishes with a section on “Wine’s Triple Crisis,” which examines the wine = alcohol syndrome and concludes that it is a threat to the future of wine as we know it. If wine is just alcohol, who needs it? There are cheaper ways to get numb!

Civilization of the Glass

Would it be possible to write a history of the world that framed wine and the civilization of the glass in a different way? Yes, I know it is possible because it has already been done. Economist editor Tom Standage’s 2005 book A History of the World in 6 Glasses uses beer, wine, spirits, coffee, tea, and Coca-Cola to trace an outline of global history.

It is interesting that Standage and Viestad focus on the same places and periods when it comes to wine: ancient Greece and Rome. But Standage tells very different stories. The Greek symposium, which in Viestad is all about getting drunk, is for Standage all about philosophy and, if the alcoholic temptation of drink is there (and it is), it is a passion to be resisted and controlled — a process that we might call civilization.

As Greek trade took wine throughout the Mediterranean, Greek culture and civilization tagged along. The civilization of wine and civilization — hard to tell where one ends and the other begins.

Wine in Rome, in Standage’s telling, has many layers. Taste, class, power, and empire all appear. If wine were just its alcoholic component it would not have been so important. I guess I stand with Standage in my thinking about the civilization of the glass and I feel a little bit sorry for Viestad that he doesn’t find more interesting stories in his half-full glass.

Highly Recommended

I wonder — would it be possible to write a book that tried to tell a history of the world in one wineglass the way that Viestad has done with one meal? Yes, I think it might work, although you’d need to break things down a bit so that the grapes, glass, bottle, cork, and the forces that spread them around the world and then brought them all back together wineglass could tell their stories.

But deconstructing your glass of wine wouldn’t be enough, as Viestad demonstrates with his Roman dinner. You also have to consider the whole and its significance. The civilizations of the table … and the glass.

Dinner in Rome by Andreas Viestad is highly recommended. A fine addition to your food and wine bookshelf.