Get Ready for the Wine Industry Financial Symposium

Sue and I have just returned from a week in Northern Italy as guests of the Valpolicella Consorzio (look for a series of industry reports on Valpolicella and Prosecco in the coming weeks) and now we are getting ready to head to Napa, California for the Wine Industry Financial Symposium that will be held there on September 22 and 23.

The theme of the symposium is “Let the Good Times Roll,” which will strike some as a bit off-key since the California headlines this year have been dominated by bad news — first drought and then the recent Napa earthquake. The program (see below) doesn’t sidestep the challenges, but seeks to put them into the context of a rising tide in the U.S. market. It should be an interesting couple of days!

Monday’s program features workshops that focus on specific issues of interest to wine industry professionals including the Hispanic wine market in the U.S., the rise of craft beer, the emerging talent gap in the wine industry, tax issues and vineyard finance.  Lots of interesting topics and great speakers — something for everyone.

The Tuesday morning program accentuates the positive, beginning with David Freed’s industry overview and ending just before lunch with Carolyn Wente and the celebration of 130 years of Wente Vineyards. In between Dr. Robert Smiley will present the results of his annual survey of wine industry CEOs and John Ciatti will report on U.S. and global harvest trends.

I will talk about “Lessons from the Global Wine Wars,” with an overview of important global market trends, focusing on two that I think are particularly relevant for the U.S. industry today: the “premiumization” of the wine market and the surge in “disintermediation” in the wine industry.

Tuesday afternoon features sessions on social media marketing, “next generation” consumers and wine distribution. Looking forward to hearing the speakers and seeing everyone in Napa next week. Here’s the complete program. Cheers!

>>><<<

Wine Industry Financial Symposium

Monday Workshops – September 22, 2014

Session I: 1:30 p.m. – 3:00 p.m. – Choose One

1. NEW DIRECT TO CONSUMER TRENDS
Examine new ways to relate to consumers through the direct to consumer channel. Speaker-moderator Craig Root will present several new tips designed to enhance your operation. Featured speaker Norman Stolzoff, President of Ethnographic Insight, will offer a detailed look at ethnographic research. This important field uses anthropological insights to solve real-world problems. Ethnography helps better serve customers, leading to profitable results.
Craig Root, Visitor Management Resources
Norman Stolzoff, PhD, President, Ethnographic Insight Inc.

2. TRANSACTIONS: WHO ARE THE BUYERS AND WHO ARE THE SELLERS?
John Mackie,
Partner, Carle, Mackie, Power & Ross, LLP, Moderator
Tony Correia, Owner, The Correia Company
Matt Franklin, Principal, Zepponi & Company
Josh Grace, Managing Director, International Wine Associates

3. THE HISPANIC WINE CONSUMER
What does it mean to the wine industry and what do we do to make wine the beverage of choice?
Steve Rannekleiv, Executive Director, Research, Rabobank International
Natalia Velikova, PhD., Texas Tech University

4. THE EMERGING TALENT GAP POSES RISKS FOR THE WINE INDUSTRY
Ray Johnson, Director of Wine Business Institute, Sonoma State University
Carol O’Hara, Partner, Burr, Pilger & Mayer, Moderator
Tom O’Brien, Director of Human Resources, Trinchero Family Estates
Larry Smith, Senior Vice President, Human Resources, Jackson Family Wines
Dawn Wofford, Managing Partner, Benchmark Consulting

Session II: 3:30 p.m. – 5:00 p.m. – Choose One

5. EQUITY AND DEBT MARKETS: CURRENT TRENDS AND FUTURE OUTLOOK
David Freed, Chairman, The Silverado Group
William Beyer, Principal, Prudential Agricultural Investments
Hal Forcey
, American AgAppraisal
Perry F. Deluca, Senior Vice President, Wine Industry Team Leader, Wells Fargo Bank

6. WHO IS THE COMPETITION? WILL CRAFT BEER AND CRAFT SPIRITS HURT WINE SALES, OR SHOULD YOU JUST JOIN THEM?
Bill Leigon, President, Jamieson Ranch Vineyards
Mark Crisler, CS, Founder & Chief Everything Officer, Trellis Wine Group
Jesus Ceja, Ceja Winery / Carneros Brewing Company

7. USE PERMITS: CURRENT ISSUES AND FUTURE TRENDS
Phillip Kalsched, Partner, Carle, Mackie, Power, Ross, LLP, Moderator
Dean Parsons, Project Review Manager, Sonoma County Permit & Resource Management Department
Jeff Redding, Principal, Land Use Environmental Planning Service
Beth Painter, Principal, Balance Planning

8. COMMON TAX ISSUES FOR VINEYARDS AND WINERIES
Federal Income Tax Updates, State Income Tax Updates, Sales Tax Updates and Estate Tax/Valuations
David Pardes, Tax Director, PricewaterhouseCoopers
George Famalett, Tax Partner, PricewaterhouseCoopers
Joan Armenta Roberts, Managing Director, PricewaterhouseCoopers
Eric W. Nath, ASA, Principal, Eric Nath & Associates
Thomas Garigliano, Tax Partner, Burr, Pilger & Mayer


Tuesday General Session – September 23, 2014
7:45 – 8:15 a.m.
COFFEE & REGISTRATION

8:15 – 8:20 a.m.
WELCOME & INTRODUCTIONS
Lisa Adams Walter, Director of Programs, Wine Industry Symposium Group

8:20 – 8:30 a.m.
WINE INDUSTRY OVERVIEW
David Freed, Chairman, The Silverado Group

8:30 – 9:15 a.m.
WHAT WINE INDUSTRY LEADERS THINK IS IMPORTANT FOR THE FUTURE
Robert Smiley, PhD, Dean and Professor Emeritus, Director of Wine
Graduate School of Management, University of California, Davis

9:15 – 10:00 a.m.
LESSONS FROM THE GLOBAL WINE WARS
Mike Veseth, Editor, The Wine Economist Blog

10:00 – 10:30 a.m.
GET – ACQUAINTED BREAK

10:30 – 11:15 a.m.
THE CALIFORNIA AND GLOBAL HARVEST UPDATE
John Ciatti, Broker, Ciatti Company LLC

11:15 a.m. – 12:00 noon
WENTE VINEYARDS CELEBRATES 130 YEARS
Carolyn Wente, CEO, Wente Vineyards

12:00 – 1:15 p.m.
NETWORKING LUNCHEON

1:15 – 2:15 p.m.
HOW SKILLFUL USAGE OF DIGITAL MARKETING AND SOCIAL MEDIA
NEED TO BE INTEGRATED IN THE BIGGER PICTURE OF BRAND BUILDING AND POSITIONING
John Gillespie, President, Wine Market Council and CEO, Wine Opinions
Karena Breslin, VP Digital Marketing, Constellation Brands
Alisa Joseph, Vice President, Business Development, The Nielsen Company
Mark Gordon, Digital Marketing Manager, Jackson Family Wines
Mike Osborn, Founder and VP Merchandising, Wine.com

2:15 – 3:00 p.m.
NEXT GENERATION WINE
Liz Thach, PhD, MW, Professor of Management and Wine Business, Sonoma State University
Judd Finkelstein, Judd’s Hill Winery
Lisa Broman Augustine, Broman Cellars
Nicole Bacigalupi Dericco, Bacigalupi Vineyards

3:00 – 4:00 p.m.
WINE AND DISTRIBUTION
Jonathan Pey, Principal, TEXTBOOK Napa Valley
Jon Moramarco, Principal, BW 166 LLC
Dan Grunbeck, EVP Corporate Business Development & Strategy, Youngs Market

4:00 – 5:00 p.m.
FINANCIAL SPONSOR FINALE
WINETASTING & RECEPTION – Hosted by WIFS Sponsors

 

Sababay Wines of Bali: New Latitudes, New Flavors, New Frontiers

BottlesThe Wine Economist’s chief Hanoi correspondent Ali Hoover recently visited Bali, Indonesia and volunteered to investigate the local wine sector, focusing on Sababay wine. Here is her report.

>>><<<

A decade ago, one of my personal favorite wine celebrities, Jancis Robinson, wrote about a new breed of wine emerging on the market – New Latitude Wines. Joining existing wine region categories of Old World and New World, New Latitude’s name suggests it all: these alternate regions seek to break out from the +/- 30 to 50 degree latitude belt considered the bookends of quality viticulture, due in part to climate change, but also enabled through increasing human understanding of how and when vines grow and advancements in refrigeration and irrigation techniques. Jancis ended her article with hesitation, though, admitting “I still find it hard to believe that New Latitude Wines will ever be seriously good, but then that’s what was said about New World Wines not that long ago.”

Since then, wine has begun to pour into the international market from a myriad of unexpected places. I certainly didn’t think Kenya, Azerbaijan, or Thailand were producing wine, and apparently I’m not alone; the Wine Explorers estimates 80% of wine producing countries are poorly known to the general public.

alimap

Among the surprisingly extensive list of non-traditional wine producing countries is equatorial Indonesia, and Bali in particular. After my visit to Bali last month, I’m happy to report it deserves the overuse of the word “paradise” in reference. Despite a confluence of tourists and a disproportionate amount of surfer types, Bali has preserved much of its cultural essence. The crowd favorite ‘homestay’ accommodation looks more like a new-purposed temple, replete with impressive stonework, koi ponds covered in lotus flowers, and breakfast served on sunny patios in the morning. Crystal blue water, lush green vegetation, infamous coffee shops, yoga retreats, and small boutiques have created a getaway nothing short of idyllic. The abundance of fresh fish and produce, coupled with the laid-back attitude and stunning views lends itself all to easily to a crisp glass of wine, but producing local wine posed its own difficult set of challenges.

The Sababay Project

At a mere -8 degrees latitude, low-quality grapes considered unfit for consumption flood the Balinese market, destined for the omnipresent sidewalk religious offering (pictured below). But it turns out climate wasn’t the biggest barrier to quality wine – education in farming sustainability and viticulture standards was. Seeking to use these advances in modern technology to contribute to their native homeland, Evy Gozali and her mother founded Sababay Winery and the Asteroid Vineyards Partnership. In exchange for agricultural & technical support, Northern Balinese grape farmers commit their yields exclusively to Sababay—the 175 farmers currently producing have experienced yield increases of up to 50% in the first year alone with the new viticulture practices, and some have even reported a ten-fold annual profit increase since engaging in the partnership.

bali

What struck me most was Sababay’s strong Indonesian identity, a true achievement in an industry with a constant tug of war between terroir and global appeal. Beyond their tangible contributions to local agriculture, Sababay produces wine to match the cultural preferences and local flavors. Marketing wine to the largest Muslim country by population in the world is no small feat, but the demand is growing, and Sababay provides an alternative to these new consumers who’re looking for a twist-top wine that tastes good with dinner. The resulting wines, designed to be poured young, are sweet, with low alcohol content, and are a perfect pair for the complex, spicy flavors of Indonesian dishes.

Think Global, Act Local

Sababay does not currently export its wines – they’re 100% focused on local consumers. In keeping with advancements in technology and understanding, they have machinery imported from all over the world and a French winemaker to make the magic happen, but in all other facets of their operation they maximize Indonesian involvement in their leadership, staff, production, branding, and promotion. Sababay’s focus is a wine for the people, as opposed to an award winning wine – though they’ve incidentally done that as well! Their sparkling Moscato d’Bali (my personal favorite) recently won the silver award at the WSA Wine Challenge 2014 in Singapore.

As wine expands its boundaries, both in terms of production and consumption, I believe local identity and alternative branding will play a critical role in New Latitude’s potential success. There are untapped demographics with unique preferences and flavors, and New Latitude presents an opportunity to break out not only from geographic constraints, but traditional flavor profiles as well. In our increasingly global world, it seems the time is right to engage these regions and step outside our delimiting 30/50. Rather than expecting New Latitude to produce “seriously good” wines by our preexisting standards, I think we ought to encourage them to create “seriously relevant and unique” wines that appeal to emerging demographics and engage local consumers. So keep your eye out for these intriguing New Latitude wines on your next vacation, it’s bound to shake up your wine experience and add an extra dimension to your cultural experience.

>>><<<

Update: All of the Sababay wines entered in the Chine Wine & Spirits Awards competition have received medals.  The Sababay Pink Blossom received a double gold! Congratulations to Sababay on this international recognition. To see the details click on the awards link and search for Sababay.

>>><<<

IMG_9817

Thanks to Ali for her report. Here is a photo of Ali (red blouse) and the Sababay team.

I’m also impressed by the Sababay wines and also by the values they embody. Here is the winery’s mission statement (taken from the website):

Our mission is to elaborate local products of international standard that are accessible to all to enjoy and to give back to the land and to the local community.

  • Developing a diversified and performing agriculture in Indonesia with reduced impact on the land.

  • Recycling solid and liquid wastes at every steps of the production.

  • Social responsibility in the local community by creating jobs.

  • Constant training of the work force.

  • Harmonious relationship with trading partners and consumers.

 

European Wine Economists Meeting Update

The European Association of Wine Economists is meeting this June and they’ve asked me to post details about the sessions, which sound very interesting and worthwhile.

You can find current information about the meetings by clicking on this link. Here is the program for the conference, which I copied from the website. Take a look at what’s on offer this year.

Wednesday June 4, 2014

14:00 Registration
14:30 – 15:00 OPENING
15:00 – 16:30
Keynote 1: Antoine BAILLY – Univ. de Génève, CH
“Wine and Divine: from Bacchanals to Prohibitionism”
Keynote 2: Jon H. HANF – Universität Geisenheim, DE
“Pay what you want – A New Pricing Strategy for Wine Tastings? “ ( joint paper with Oliver GIERING )
16:30 – 17:00 Coffee break with signing of the book “Wine Economics” by the editors
17:00 – 18:30
Keynote 3: Johan SWINNEN – LICOS, KU Leuven, BE
“The Rise and Fall of the World’s Largest Wine Exporter and its Institutional Legacy” 
(joint paper with Giulia MELONI)
Keynote 4: Ricardo SELLERS-RUBIO, Univ. Alicante, SP
“The Economic Efficiency of Wineries of Protected Designations of Origin” (joint paper with Francisco MAS-RUIZ)
18:30 – 19:00 Signing of the book “Wine Economics” by the editors, welcome drink
20:00
Thursday June 5, 2014
8:15 Inscription and coffee
SESSION 1

8:30 – 10:30 WINE as INVESTMENT and INVESTMENT in WINE
chaired by

Foreign Direct Investment in the Wine and Spirits Sector 
J. François OUTREVILLE 
HEC Montréal, CA
A Barrel of Oil or a Bottle of Wine: How do Global Growth Dynamics Affect Commodity Prices? 
Serhan CEVIK , Tahsin SAADI-SEDIK
International Monetary Fund, US
History and Rational Market Values of French Vineyards,
Optimal Financing of the Vineyard in the Major Countries of the Euro Zone. (EN)

Historique des valeurs de marché et raisonnée du vignoble français. Financement optimal du vignoble dans les principaux pays viticoles de la zone euro. (FR)
Alain DALLOT 
Consulting actuary graduate in viticulture-oenology, FR
Long-run Relationships between Prices of Fine Wines and Stock Market Indices 
Jan BENTZEN , Valdemar SMITH
Aarhus Univ., DK
Wine and Gold as Alternative Investments: Which one is the Best? 
Beysül AYTAC , Thi Hong Van HOANG, Cyrille MANDOU
Groupe Sup de Co Montpellier Business School, FR
Wine Funds – An Alternative Turning Sour? 
Philippe MASSET , Jean-Philippe WEISSKOPF
Ecole hôtelière de Lausanne, CH
Wine – Investment: A Profitable Alternative Investment or a Simple Long Term Pleasure? 
Marie-Claude PICHERY , Catherine PIVOT
LEDI Univ. de Bourgogne & Centre Magellan, Univ. Jean Moulin – Lyon 3, FR

10:30 – 11:00Break “Mâchon” (typical morning snack in Lyon)

SESSION 2a

11:00 – 13:00

PROSPECTIVES & STRATEGIES
chaired by

Prospect (Perspective) of a Strategic Option of Developing and Boosting the Algerian Vineyard 
Nasser SARAOUI 
Institut technique de l’arboriculture fruitière et de la vigne, DZ
Trade Liberalization in the Presence of Domestic Regulations:
Likely Impacts of the TTIP on Wine Markets
 

Bradley RICKARD , Olivier GERGAUD, Wenjing HU
Cornell Univ., US & KEDGE- Bordeaux Business School, FR
Towards Sustainability in the Wine Industry through Engineering and Management Tools 
Stella Maris UDAQUIOLA , Rosa RODRIGUEZ, Susana ACOSTA, María CASTRO, María Verónica BENAVENTE, Marcelo ECHEGARAY, Ricardo SIERRA
Instituto de Ingeniería Química – Universidad nacional de San Juan, AR
Wine as a Cultural Good: Stakes of a Recognition 
Véronique CHOSSAT , Cyril NOBLOT
Univ. de Reims, FR
How to Improve Wine Quality? The Challenge facing South African Cooperatives 
Joachim EWERT , Jon H. HANF , Erik SCHWEICKERT
Univ. Stellenbosch, ZA & Univ. Geisenheim, DE
Price or Quality Competition? Old World, New World and Rising Stars in Wine Export 
Diego LUBIAN, Angelo ZAGO 
Università degli Studi di Verona, IT
Winners and Losers in the Global Wine Industry 
Geoffrey LEWIS , Tatiana ZALAN, Matthew SCHEBELLA
Melbourne Business School, Torrens Univ. & Univ. South Australia, AU
SESSION 2b

11:00 – 13:00

 

GASTRONOMY, TESTING and HEALTH 
chaired by

Restaurants and BYOB: What Do Consumers Expect and Who Are They? 
Nelson A. BARBER , D. Christopher TAYLOR
Univ. New Hampshire & Univ. Houston, US
The Profiles of Worldwide Gastronomy 
Quentin BONNARD , Christian BARRÈRE, Véronique CHOSSAT
Univ. de Reims, FR
Analysis of Consumers’ Sensory Preferences of Nanche (byrsonima crassifolia) Liquor in the South of the State of Mexico. 
Erandi TENA, Javier J. RAMÍREZ, Jessica AVITIA , Tirzo CASTAÑEDA
Universidad Autónoma del Estado de México, MX
Evaluation of the Influence of the Interaction tannin-anthocyanin over the tannin-protein Binding and its Effect on the Perception of Astringency in Red Wines 
Marcela MEDEL , Alvaro PEÑA, Elias OBREQUE, Lopez REMIGIO-LOPEZ
Facultad de Ciencias Agronomicas & Faculta de Medicina, Univ. Chile, CL
Gastronomic Supply and Touristic Clientele 
Christian BARRÈRE , Quentin BONNARD, Elsa GATELIER
Univ. de Reims, FR
Is a Sequential, Profiling Approach useful for Predicting Match Perceptions in Food and Wine? 
Robert HARRINGTON, Lobat SIAHMAKOUN, Nelson A. BARBER 
Univ. Arkansas & Univ. New Hampshire, US

13:00 – 14:00Frugal Lunch

SESSION 3a

14:00 – 16:00

WINE PRODUCTION and MARKETS in the WINE VALUE CHAIN
chaired by

Comparison of Selected Determinants of Chosen European Wine Markets 
Helena CHLÁDKOVÁ, Sylvie FORMÁNKOVÁ , Pavel TOMŠÍK
Mendel Univ. in Brno, CZ
Tournament Mechanism in the Wine-Grape Contracts:
Evidence from a French Wine Cooperative 

M’hand FARES, Luis OROZCO 
INRA Toulouse, UMR AGIR: Univ. de Toulouse, LEREPS, FR
Unperceived Costs: A Dilemma for French Wine-Growers 
Joëlle BROUARD, Benoît LECAT 
School of Wine and Spirits Business & ESC Dijon/Burgundy School of Business, FR
Adaptation to Climate Change in the French Vineyards:
An Innovation System Approach (EN)
Etudier l’adaptation aux changements climatiques des vignobles français:
une analyse par les Systèmes d’Innovation 
(FR)
James BOYER, Jean-Marc TOUZARD 
INRA, UMR Innovation Montpellier, FR
Characterization of Chilean Bottled Wine Market 
Miguel A. FIERRO , Rodrigo ROMO
Universidad del Bío-Bío, CL
Producer Single Commodity Transfer: A Comparison of Policy Intervention Between Wine and Other European Agriculture Products 
Davide GAETA , Paola CORSINOVI
Department of Business Administration, Univ. Verona, IT

 

SESSION 3b

14:15 – 16:00

WINE EDUCATION and WINE PREFERENCES
Chaired by

Are Today’s Consumers Ready to Buy the Wines of Tomorrow? (EN)
Les consommateurs d’aujourd’hui sont-ils prêts à accepter les vins de demain ? (FR) 

Alejandro FUENTES, Eric GIRAUD-HERAUD , Stéphanie PERES,
Alexand re PONS, Sophie TEMPERE, Philippe DARRIET
INRA et GREThA, Bordeaux Sciences Agro & ISVV, Univ. de Bordeaux, FR
The Impact of General Public Wine Education Courses on Consumer Perception 
Richard SAGALA , Paolo LOPES
École In Vino Veritas, Montreal, CA & Kedge Business School, Bordeaux, FR
Contributions of Experimentation in the Study of Reception in Communication Science: The Case of Wine Labels (EN)
Apports de l’expérimentation dans l’étude de la réception en SIC :
le cas des étiquettes de vin (FR)

Mihaela BONESCU , Diana BRATU, Emilie GINON, Angela SUTAN
ESC Dijon Bourgogne, FR
Controlling for Price Endogeneity: A Case Study on Chinese Wine Preferences 
David PALMA , Juan de Dios ORTÚZAR, Gerard CASAUBON, Huiqin MA
Pontificia Univ. Católica de Chile, CL & China Agricultural Univ., CN
Young Urban Adults’ Preference for Wine Information Sources:
An Exploratory Study for Republic of Macedonia
 

Hristo HRISTOV , Aleš KUHAR
Biotechnical Faculty Ljubljana, SI
“In Vino Veritas”—But what, In Truth, Is in the Bottle?
Experience Goods, Fine Wine Ratings, and Wine Knowledge 

Denton MARKS 
Univ. Wisconsin-Whitewater, US
The Need for Information of the Wine Consumer after the Purchase of the Wine (EN) 
Le besoin d’information post achat du consommateur de vin (FR)

Frédéric COURET 
Bordeaux Sciences Agro Univ. de Bordeaux, FR

16:00 – 16:30Coffee break16:30 – 17:30General Assembly VDQS20:00

Friday 6 June, 2014
SESSION 4a

8:30 – 10:30 WINE TOURISM, WINE CONSUMPTION and the HISTORY of WINE
Chaired by

The Douro Region: Wine and Tourism 
João REBELO , Alexandre GUEDES, José CALDAS
Univ. Trás-os-Montes and Alto Douro & Turismo do Porto e Norte de Portugal, PT
Traditional Wine Taverns and their Hard Landing in the 21st Century:
The Case of the Viennese Heurigen 

Cornelia CASEAU , Albert STÖCKL and Joëlle BROUARD
Groupe ESC Dijon Bourgogne, FR & Fachhochschule Burgenland, AT
Consumers’ Intentions to Purchase Greek Bottled Wine
Athina DILMPERI , Martin HINGLEY
Lincoln Business School, UK
‘Dry Enough to Wash your Hands in’: The English Taste for Champagne, 1860-1914 
Graham HARDING 
Univ. Cambridge, UK
Liastos Oinos Siatistis: Where the Enthusiastic Present Meets the Glorious Past
Georgios MERKOUROPOULOS , E BATIANIS
Center for Research & Technology – HELLAS, Regional Admin. of Western Macedonia, GR
Seatbelt Use Following Stricter Drunk Driving Regulations 
Scott ADAMS, Chad COTTI , Nathan TEFFT
Univ. Wisconsin-Milwaukee, Connecitcut, & Washington, US
Interest of Italian Consumers for a Sustainable Wine 
Chiara CORBO, Martina MACCONI , Giovanni SOGARI
Univ. Cattolica del Sacro Cuore, IT

 

SESSION 4b

8:30 – 10:30

WINE MARKETING, Selected Aspects
Chaired by

Retail Channel Selection on Wine by Households in Argentina 
Gustavo ROSSINI , Rodrigo GARCÍA ARANCIBIA, Edith DEPETRIS
Universidad Nacional del Litoral, AR
Vinsseaux Traditionel: The Branding of Canadian Sparkling Wine 
Doris MICULAN BRADLEY , Donna LEE ROSEN
George Brown College, CA
The Consumer Trail: Applying best-worst Scaling to Classical Wine Attributes 
Fernando NUNES , Teresa MADUREIRA, José Vidal OLIVEIRA
Instituto Politécnico de Viana do Castelo & Instituto Politécnico de Lisboa, PT
Presentations of Packaging Quality Wines:
Semiotic Analysis of Bottles of the Top 100 Wines from “Wine Spectator”,2008 – 2012 (EN).

Les présentations packaging des vins de qualité: Analyse sémiotique des bouteilles du top 100 du “Wine Spectator” de 2008 à 2012 (FR)

François BOBRIE 
Maison des Sciences de l’Homme et de la Société-Poitiers; Laboratoire CEREGE, FR
Difference of Representation and Choice of Burgundy Red Wines from the Upstream vs Downstream Actors of the Wine Sector 
Monia SAIDI , Georges GIRAUD
UMR CESAER INRA – AgroSup Dijon, FR
Wine Distribution Channel Systems in Mature and Newly Growing Markets:
Germany versus China
 

Tatiana BOUZDINE-CHAMEEVA, Wenxiao ZHANG , Jon H. HANF
KEDGE Business School, FR & Geisenheim Univ., DE
Attitudes Towards M-Wine Purchasing. A Cross-Country Study 
Jean-Eric PELET, Benoît LECAT , Jashim KHAN, Linda W. LEE, Debbie VIGAR-ELLIS, Marianne MC GARRY WOLF, Sharyn RUNDLE-THIELE, Niki KAVOURA, Vicky KATSONI
Univ. Nantes, ESC Dijon, FR; Auckland, NZ; KTH Royal Institute of Technology, SE; Univ. KwaZulu-Natal, ZA; California Polytechnic State Univ., US; Griffith Univ., AU; Technological Educational Institute of Athens, GR

10:30 – 11:00Break “Mâchon” (typical morning snack in Lyon)

SESSION 5a

11:00 – 13:00

BUILDING PERFORMANCE and EFFICIENCY
Chaired by

The Market Structure-Performance Relationship Applied to the Canadian Wine Industry 
J. François OUTREVILLE 
HEC Montréal, CA
Wineries’ Performance, Response to a Crisis Period 
Juan Sebastian CASTILLO-VALERO , Katrin SIMON-ELORZ, Ma Carmen GARCIA-CORTIJO
Universidad de Castilla la Mancha & Universidad Pública de Navarra, ES
Quality Improvements and International Positioning of Chilean and Argentine Wines 
Fulvia FARINELLI 
UNCTAD, CH
Winegrower or Winemaker? Influence on Business Efficiency in Burgundy 
Georges GIRAUD 
AgroSup Dijon, FR
Institutional Drives of the Success of the New Wine World. Factors Influencing Technical Efficiency of Wine Production and its Relation with Wine Exports Growth 
József TÓTH , Péter GÁL
Univ. Budapest, HU
Creating Jobs from New Investment in the Wine Sector 
Martin PROKEŠ , Pavel TOMŠÍK
Mendel Univ. Brno, CZ
Terroir and Sustainability: The Role of Terroir in Sustainable Wine Standards 
Shana SABBADO FLORES 
Instituto Federal do Rio Grande do Sul, BR

 

SESSION 5b

11:00 – 13:00

WINE CONSUMPTION, Selected Aspects
Chaired by

The Importance of Wine Region and Consumer’s Involvement Level in the Decision Making Process 
Teresa MADUREIRA , Fernando NUNES
Instituto Politécnico de Viana do Castelo, ES
We Should Drink no Wine before its Time 
Leo SIMON , Jeffrey LAFRANCE, Rachael GOODHUE
Univ. California at Berkeley, US; Monash Univ., Victoria, AU & Univ.C. Davis, US
An Analysis of Alcohol Demands in Japan 
Makiko OMURA 
Meiji Gakuin Univ. Tokyo, JP
The Effect of Wine Culture on the Relationship between Price, Consumption and Alcohol-Related Problems 
Damiana RIGAMONTI , Frédéric LAURIN
Aarhus Univ., DK & Univ. Quebec, CA
Segmenting Greek Wine Consumers Using the Best-Worst Scaling Approach: New Results and Comparison across 11 Countries 
Dimitrios ASTERIOU , Costas SIRIOPOULOS
Hellenic Open Univ. & ; Univ. Patras, GR
Wine and Women: A Focus on Feminine Consumption of Wine 
Stefania CHIRONI , Marzia INGRASSIA
Univ. Palermo, Department of Agricultural and Forestry Science, IT
A Comparative Study of Demand for Local and Foreign Wines in Bulgaria 
Petyo BOSHNAKOV , Georgi MARINOV
Univ. Economics Varna, BG

13:00Awards of VDQS13:30 – 14:30Cocktail with snacks14:30

 Saturday June 7, 2014 – Tourism around Lyons

Extreme Wine Experience: The Stray Mongrel of Hentley Farm

Winery dogs are a ubiquitous presence. You see them everywhere. There are even photo-filled coffee-table books and colorful calendars devoted to them. Decanter, the self-declared “world’s best wine magazine” used to profile a winery dog on each issue’s final page. Always dogs — almost never cats (I once met a winery cat called “Muscat”). Go figure

Exception to the Rule

It comes as a bit of a surprise therefore that The Stray Mongrel of Hentley Farm is a wine, not a four-legged cellar companion. A blend of Grenache, Shiraz and Zinfandel (!), it received the 2013 Rob Schubert Trophy for the most outstanding red wine at the annual Barossa Wine Show Awards. The Stray Dog has a gnarly name, but it is really quite an elegant beast — it would have to be to win such a prize — and it represents the elegant spirit of  Hentley Farm very well.

We had the good fortune to visit Hentley Farm the day after the big prize was announced and Keith Hentschke, the proprietor, was glowing with pride. Recognition is always welcome — who can complain about good scores or reviews? — but this was something special and the warmth that filled the room was only partly the result of the fireplace’s glowing embers.

We came to Hentley Farms because we wanted to see what Hentschke and his team had created in terms of an extreme wine experience. Hentley Farm was started in 1997 and has evolved to align with very definite ideas of what it should be from the vineyard to the cellar to the marketplace.

This 360-degree vision of the supply chain and wine experience is something that Hentschke acquired over the years, starting at age 15 when he began to manage the family vineyard on through agriculture training, an MBA and work at Orlando, Nepenthe and other wine businesses. All this helped prepare him to launch Hentley Farm and to produce wines as distinctive — and unexpected — as The Stray Mongrel.

First Class from the Ground Up

The initial strategy at Hentley Farm was to focus on exports, but then the global financial crisis turned things around a bit and now the Australian market itself is the priority and the cellar door experience the key. The idea, as I understand it, was to create first class wine and a first class wine experience from the ground up with as much attention to the business side of things as to enology and viticulture. Hentschke warmed to the opportunity to talk about markets, marketing and so on, so we learned a great deal about his carefully calculated approach.

There are many interesting aspects to the Hentley Farm approach. The wine club, called simply the Loyalty Program on the webstie, impressed me by offering a choice of progressive levels of expenditure and engagement. It reminded me very much of museum memberships and symphony and opera donor clubs, with very clear expectations about financial commitments and benefit levels.

Restaurant Australia Realized

Sue and I came to Hentley Farm having spent a week at Savour Australia and it seems to me that Hentschke’s winery is the very model of the branding approach — called “Restaurant Australia” — that was launched at that meeting. The idea behind Restaurant Australia, as I have written before, is to appeal to upscale tourists through their interest in food and wine. Come for elevated cuisine, enjoy the great wine then go home and tell your friends about an idea of Australia that is little in common like the “shrimp on the barbie” Yellow Tail tales of the past.

Hentschke and team seem to have realized the power of this relationship well before the current campaign launch, so Hentley Farm’s visitor center pairs a warm cellar door facility with The Restaurant, which features multi-course tasting menus paired with the estate wines. (The Restaurant was named South Australia’s restaurant of the year for 2013.) It brings in the patrons, who seem delighted to find a destination restaurant in this surprisingly quiet valley. The wine hook, because there should be one, was clear and successful. Hentley Farm wines with the meal, of course, and then also a credit to be applied against Hentley Farm wine purchased that day at the cellar door.

One of the challenges of designing a wine tourism experience is to get the target audience to “stick” — to stay around long enough too be engaged and for a strong impression to be formed. The restaurant, with its elaborate (and not inexpensive) tasting menus asks  visitors to make a significant time commitment. Perfect if you want to communicate the sense of the place.

Chance and Circumstance

We ran into some new friends we had met in Adelaide at the Barossa Valley farmer’s market in nearby Angaston and asked about Hentley Farm. The Restaurant? Fantastic! Did you use the credit to buy the wine next door? Of course! Would you go back? Can’t wait! It was really an enthusiastic response from a sophisticated wine industry couple and provided a bit of unscientific evidence that the Hentley Farm strategy does its job.

The wine, the food, the experience. Hentley Farm brings it all together and provides a model for others in the wine business who seek to design an experience to capture the imagination of sophisticated wine enthusiasts.

I think there is a real winery dog at Hentley Farm and maybe he is a mongrel — I don’t really know. But if a mongrel is the product of chance and circumstance, Hentley Farm itself is just the opposite — a well-conceived and designed wine destination.

>>><<<

Thanks to Keith Hentschke for finding time to meet with us.

Anatomy of Australia’s New Wine Strategy

Click on the image to view one of the Restaurant Australia videos.

>>><<<

In my last column I talked about Australian wine’s plans to re-brand itself on the global market through an integrated food-wine-tourism campaign called “Restaurant Australia.”  Delegates to Savour Australia were treated to four specially produced videos  (click on the image above to see one of them) that introduced the concept and, not coincidentally, also introduced the chefs and purveyors who would be providing some of our (delicious) meals over the next few days.

Beyond Sensory Overload

The audience seemed to pause, slightly stunned, after each video. At first I thought that it was just sensory overload. And it was. The stunning images presented on the big screen with rich surround sound was an intense experience, to be sure. The fact that we experienced it all again later, meeting the chefs, tasting the produce– that was intense too.

But now that I am back home and reflecting on the experience, I think that perhaps we also paused for a different reason. The whole purpose of our gathering was wine. We had journeyed long miles to Adelaide to see and hear Australia tell its wine story. But where’s the wine?

Yes, wine and a winemaker appeared in each video, but they seemed a bit of an add-on rather than the featured element of the message. What would happen if you left out the wine ? Nothing much else would change. Is that the way we want people to think about Australian wine — an afterthought in the grand “Restaurant Australia” concept?

Now There’s Your Problem

Obviously not — and it would be a mistake to judge the marketing campaign by a few introductory videos. But, as I thought about it, I began to recognize that it was related to a bigger problem.

One of the chapters in Extreme Wine is about wine and modern media — I call it Extreme Wine Goes to the Movies — and it concludes in part that wine’s inherent sensuousness seems to be difficult to translate to video. Yes, wine famously unlocks all the physical senses and a few of the mental ones, too. But it is an experience good. Like fly fishing and some other things you might be able to think of, its more fun to do than to watch someone else do.

That’s why there are surprisingly few films where wine plays a really central role. There are a few excellent ones (Sideways fans please put down your pitchforks!) but you’d really expect there to be far more than I found in my research. Food, on the other hand, seems to be something that video can capture very well. Does watching someone drink wine in a movie make you thirsty? Maybe. Does watching a celebrity chef eat a delicious dish make you hungry? You bet it does!

Hungry?

No doubt about it. Wine’s magic is difficult to capture on the silver screen (or that little screen on your tablet or smartphone). That’s why we have Master Chef but not Master Enologist.  There are rock stars in wine, but they don’t generally transcend the wine category the way the foodie celebrities increasingly do.

Wine Porn versus Food Porn

My foodie friends are always taking X-rated “food porn” photos of the the plates they are served at fancy restaurants. But my wino buddies generally don’t bother to snap “wine porn” images of their glasses (although I admit to some G-rated bottle/label shots myself).

Assume that I’m correct about this for a moment (or, better yet, grab a copy of Extreme Wine and read a more detailed account, which uses Sideways to show why really powerful wine films are so rare). Given video’s undeniable importance in communications today, what is wine to do? Well, one answer is to do what Australia wine seems to be doing, which is use what works (the foodie side of the campaign) to drive the message.  They call it “Restaurant Australia,” but I have a better name.

Strongest Brand in the World?

I call it The Italian Way. What region has the strongest generic wine brand? Well, here in the United States I would say that it is Italy (although France can make a claim because of Champagne’s powerful brand). Americans love everything about Italy — the food, the people, the art, the scenery, the food again, and now with the new Fiat 500, even the cars.

Americans love Italian (or sometimes Italian-style) coffee. And they love Italian wine. Just the fact that it’s from Italy gives it an automatic advantage at supermarkets, restaurants and wine shops.

It seems to me that “Restaurant Australia” aims to get Americans to love warm, friendly Australia in the same way that they have always loved warm, friendly Italy. A good idea? Yes. But not easy to do. If it was easy to achieve Italy’s reputation, everyone would do it. But it is worth trying. Australia has authenticity in its favor — it really is warm and friendly and the food and wine you can find there really are great– and that’s worth a lot.

Is it the only way to re-brand Australian wine? No — tune in next week for my report on another approach to this problem.

Tasting Notes for Three Colorful New Wine Books

A number of new wine books arrived earlier this year. Sensing that I wouldn’t be able to find time to give reviews my full attention while in the final revision stages of Extreme Wine, I offered three of them to my university students for Spring Break reading. The only catch: they would have to write brief “tasting notes” for publication on The Wine Economist.

Celebrating Celebrity Wine.

Kayla asked to review Celebrity Vineyards: From Napa to Tuscany in Search of Great Wine by Nick Wise. This is an attractive volume, beautifully illustrated and printed on high quality stock. The book’s sixteen chapters provide detailed case studies of wineries associated with the A (for Mario Andretti and Dan Aykroyd) almost to Z  (Formula One driver Jarno Trulli and football coach Dick Vermeil) of international wine celebrity. (I wish soccer star Zinedine Zidane would start a winery just to make the celebrity wine alphabet complete!)  A nice mix of current stars along with  figures from the past such as Fess Parker and even Thomas Jefferson.

Here is Kayla’s tasting note for the volume.

This book exhibits an easy-going style of writing that gets down to the core of why these select individuals are involved with wine. His sense of story is sure to appeal to wine enthusiasts as well as those interested in the wines simply due to the fame of their financiers. Wise organized this book in a way that would make it perfectly suitable for those who want to read one section at a time or just place it on the coffee table for guests to peruse. All in all, I found the stories both appealing and well written. Wise brings these iconic figures down to earth with their relate-able passion for one of the world’s most amazing and diverse beverages.

The French Connection

Kelsey wanted to read  Into Wine by Olivier Magny and I couldn’t wait to see her “tasting note.” I gave Magny’s earlier book Stuff Parisians Like a very favorable review on The Wine Economist. As I read the first book I kept waiting for him to talk about wines that Parisians like. After all, Paris is the capital of France and France is the capital of wine, so how could Parisians not like wine? But I was wrong.

“It is very easy to spot tourists in a Parisian cafe,” Magny wrote, “They are the ones drinking wine.”  Having a glass of wine gives the tourists pleasure. Not drinking wine is what Parisians like to do.

Magny, with obvious frustration since he runs a wine school there, enumerated all the reasons wine has fallen from grace in Paris. Once it was the default choice, he says, but now young people especially understand that they have many choices, most of which are easier to comprehend and have better marketing behind them. Water, beer and spirits — these are the go-to beverages of Paris now.

Parisians may like not like wine, but Magny hasn’t let this discourage him. Into Wine starts with Magny’s introduction to the world of wine as an occupation and then veers off into a number of interesting issues. Here is Kelsey’s note:

In his book “Into Wine”, Olivier Magny introduces the reader to the concept of terroir and highlights its importance throughout the wine-making process— from the vineyard to its consumption. At times, however, it seems like the book was less “into wine” and more into promoting organic lifestyles. It is clear from the outset that Magny is a terroirist, but his account of wine is definitely an eye-opener to the perils and shortcomings of the modern agriculture and wine industries.

The book made me rethink where my wine and food are coming from, what goes into their production, and the negative consequences of modern wine-making and agricultural processes. If you want to know more about what terroir is all about and why it is important, this is a good read. His footnotes (though excessive and sometimes distracting) are entertaining and even once poked fun at the modern-day “hipster”.

Overall, Magny is witty and his book definitely has something to offer those unfamiliar with the concept of terroir and its role in today’s wine industry.

The Color of Wine

Erin picked The Wine Lover’s Coloring Book by Louise Wilson.  Her tasting note reads.

The Wine Lover’s Coloring Book by Louise Wilson makes learning about the world’s wine regions appealing and fun for wine enthusiasts and budding professionals alike! Wilson’s book is full to the brim with colorful diagrams and vital information, and the hands-on learning approach is particularly well suited to visual learners. This interactive book is the perfect blend of accessibility and educational content.

I liked the idea of this book quite a lot, but after paging through it twice I decided that I wanted more — more in the art or more in the text.  Could the diagrams do more to illustrate the terroir (as opposed to basic geographic lines of wine regions)? Could more be done with the wines themselves? And is it possible to do more while still keeping to the appealing coloring book format? I dunno — maybe not.

But the author is plainly very creative (and a fine artist, too), so perhaps she will think of a visual way to take her readers to the next level in a future volume. In the meantime, as Erin’s note makes clear, this is a welcome addition to the wine education bookshelf.

>>><<<

Thanks to Erin, Kelsey and Kayla for their tasting notes. Thanks to the authors and publishers for providing the books.

Book Review: Italy in a Bottle (but maybe not what you think)

Grappa: Italy Bottled by Ove Boudin. (Originally published as Grappa: Italien på Flaska) Stockholm Text, 2012. Kindle download available here).

Any book that is subtitled “Italy Bottled” should be about Italian wine — right? The only question is which Italian wine? Italy has so many wines, so many wine regions and so many grape varieties that the question is maybe not so much which wine as it is which Italy?

So it comes as a bit of a shock to discover that this is a book about grappa, not wine, and since this is the Wine Economist blog, not the Grappa Economist or the Spirits Economist, I wondered if I would like it. Seduced as usual by all things Italian, I optimistically opened the e-book and began.

What a beautiful book — that was my first impression. The photos made me wish for a coffee-table sized physical book so that I could just drink them in. But I imagine that a physical book would be enormously expensive (Amazon lists the used 2008 edition of this book in hardback at prices that start at $320 and peak out over $500. Yikes! The e-Book is only $3.99.)  E-book it is, then, but this is definitely best viewed on a computer or tablet with a larger color screen.

Cool photos are nice, but it’s Italy after all, so you expect physical beauty. What about the book itself (and why would a wine enthusiast care)? 

Two Books in One

There are really two books here. The first can be thought of as a Practical Companion to Grappa because it really does tell you nearly everything you might want to know about this fiery liquid and in an interesting and informative way.

Grappa is closely related to wine because it is distilled from vinaccia, the grape solids that remain from the wine making process. The vinaccia residue from red wine is already alcoholic, since the skins and the juice were in contact during fermentation and can go straight to the distillery pot (fresher is better, the author advises). White wine vinaccia is alcohol free because the skins were whisked away before fermentation — these aromatic solids need to be fermented before distilling can begin.

The Wine Road to Grappa

So wine and grappa are related both in terms of raw materials (the grape varieties) and process, but there’s a lot more to the connection than this. Author Boudin assumes that you probably know very little about grappa, but that perhaps you know a bit more about wine and he exploits this fact. He defines the process of making grappa by  reference to wine-making, he talks about grappa terroir and he even outlines a grappa-tasting protocol that generally parallels wine tasting but is fundamentally different from it in some respects.

Grappa is tasted differently from wine because grappa is a different and much stronger drink with a different purpose. Wine tasting is performed on certain occasions or moments – for example when a new bottle is opened or when a glass of wine is served – and afterwards the wine is enjoyed. A grappa on the other hand should be tasted every time! At every intake of the bouquet, at each mouthful, at every swallow and at every taste sensation and association. Grappa is a complex sensory experience that simulates an inner-dialogue as well as a discussion around the table.

Good advice, I think if you want grappa tasting, not grappa drinking and grappa drunking. But good advice for wine drinkers, too. We shouldn’t take these precious liquids for granted. We should always taste (and enjoy)!

Unexpected Pleasures

The fact that Boudin’s insights about grappa often apply to wine is one of the unexpected pleasures of reading this part of the book. To pick an appropriate economic example, Boudin writes about the difference between artisan grappa and the bulk industrial product (a difference that exists in the wine world).

You might expect that he would praise the boutique product and condemn the manufactured commodity. But you would be wrong.

Some aficionados and purists (who only accept boutique grappa) are of the opinion that industrial distillers are a threat to the future of true grappa. However, both distillery schools have their different roles that in the big-picture presuppose each other’s existence.

The role of the industrial distilleries is to provide the world with grappa. Volume production and efficiency are key words here. Industrial-scale grappa is made from not only fresh grape skins, but also grape skins that have been stored for a period of time. Due to the production techniques, industrial grappa has a more neutral flavour. But industrial distilleries can still deliver a good, consistent-quality grappa. …

Customers have the right to know what they are buying. When, where, of what, by whom and by which method is the grappa made? Today, there are not enough labeling requirements to ensure that detailed information is consistently provided. The manufacturers themselves determine to a large extent what should appear on the bottle.

A declaration of goods of this kind would be beneficial for the smaller artisan distillers as they could lay claim to certain quality concepts as discontinuo (batchwise production). The industrial distilleries could offer this as they have the resources, the advantage and a global market. And a stronger focus on the quality of grappa would increases the interest in grappa and consequently the market.

This scenario would benefit all grappa producers.

Giro d’Italia / Grappa Edition

The second part of the book reports on a personal tour through Italy’s grappa heartland and it reads like what it is — a grappa enthusiast’s travelogue, complete with all the practical facts (I visited this town, stayed at this agritourismo, dined at this small restaurant, etc.) that you might expect. It is well written and useful if you want to follow in Boudin’s tracks, either for grappa or wine or simply for  pleasure.

I’ll admit that I didn’t read all of this part of the book. I only wanted to know one thing: Did he go to the hills outside of Asti and visit Azienda Rovero? Sue and I stayed with the Rovero family during our 2011 trip to Piemonte. We loved their wines and the local cuisine they served at the restaurant.  The grappa was great, too, but I ignored Boudin’s advice and didn’t taste it in all its fullness.

But I will the next time because of course he did go there and devotes ten pages to his experience. It sounds like it was one of the highlights of his journey.

Grappa: Italy Bottled is a beautiful book that will interest a wide audience that includes wine lovers. Highly recommended!

>>><<<

The photo above shows the chapel at the Rovero winery and distillery. Boudin had dinner there and so did we. Here are notes from our meal for your reading pleasure!

One highlight of our stay was a meal at the family restaurant, which is generally open only on weekends. Enrico’s mother prepared a menu of regional dishes that Enrico paired with Rovero family wines. It was the perfect way to learn about the wines — tasting them with the local Monferrato cuisine while talking with the winemaker about wine, wine markets and his plans for the future.  So you want to know what we ate, of course. OK, here’s the menu.

  • Two types of typical Piemontese salami crudo
  • Small puffed pastries stuffed with local cheese
  • Fried zucchini flowers
  • Soft herbed cheese
  • Salad of shredded chicken and radicchio in balsamic dressing
  • Zucchini and basil flan in an intensely rich Parmesan cream
  • Torta di fagiolini (green beans)
  • Tagliolini (thin, flat pasta) with peas and zucchini
  • Veal and roasted potatoes in a Barbera sauce
  • Panna cotta, bonet (chocolate panna cotta), and hazelnut cake

And the wines that complemented the meal:

  • Rovero Baptista (Riesling Italico)
  • Rovero Villa Drago (Sauvignon Blanc)
  • Rovero “La Casalina” (Grignolino D’Asti)
  • Rovero Spanase’ (Barbera D’Asti)
  • Rovero Nebbiaia (Nebbiolo Monferrato)
  • Rovero “Gustin” (Barbera D’Asti Superiore)
  • Rovero Rouve (Barbera D’Asti Superiore aged in French oak)
  • Rovero Brachetto (frizzante red dessert wine)
  • Rovero Calasaya (fortified Barbera D’Asti)
  • Rovero Ampolo Reserva 1998 (grappa made from Barbera)
  • Rovero Brandy (aged in barrel for 10 years)

Argentinean Wine: Striking a Balance

Old and New at Mendel Wines

Balance is the key to great wine (and profitable wine business, too). I was reminded of this truth many times during our visit to Mendoza, where wine makers are trying to chart a course between and among several extremes:

  • Competitive export sales versus the challenging domestic market;
  • Reliable value wine sales versus potentially more profitable premium products;
  • Popular and successful Malbec versus TNGT — The (speculative and uncertain) Next Big Thing.

The key to long term success involves finding the right balance in this complex economic environment.

Thinking Global: Anabelle Sielecki

I want to use this post to consider three types of balance that I think are particularly interesting in Mendoza – the balance between crisis and opportunity,  local and international winemaking influences and the simple tension between the old and the new.  We learned about all three dimensions during our brief visit to Mendel Wines in Lujan de Cuyo.

Crisis and Opportunity

Mendel is both very old and quite new.  The vineyards are old, planted in 1928. Somehow these Malbec vines survived the ups and downs of the Argentinean economy. The winery is almost as old and has a certain decaying charm. It stands in stark contrast to Salentein, O. Fournier, the Catena Zapata pyramid and the many other starkly modernist structures that have sprung up in this part of the world.

The winery project is quite new. Mendel is a partnership between Anabelle Sielecki and Roberto de la Mota and is the result of a balance between crisis and opportunity. When economic crisis struck Argentina ten years ago, opportunities were created for those with vision and entrepreneurial spirit. Anabelle and Roberto seized the moment and purchased these old vines and well-worn structures for their new super premium winery project.

That their impulse was timely and wise may not have been obvious at the time (crises are like that), but it is perfectly clear now. Wine Advocate named Mendel one of nine “Best of the Best” Argentinean wineries in a recent issue.[1]

Old and New

The winemaking that goes on in Mendel is also a combination of old and new. The technology is modern, of course, with stainless steel and French oak very visible. The setting, however, constantly reminds you of the past and the vineyard’s and winery’s history. Walking through the winery, for example, I was struck by the big concrete (or were they adobe?) fermenting tanks – a blast from the past for sure.

No, we don’t use them to ferment the wines anymore, Cecilia Albino told us, but we put them to good use. Peek inside. Sure enough, the tanks were filled with oak barrels full of wine aging quietly in the cool environment.

[Interestingly, I saw concrete tanks again during our visit to Achaval Ferrer.  Roberto Cipresso, the winemaker there, built the tanks because he uses them at his winery in Montalcino.]

Mendel also illustrates the balance between local and global that characterizes wine in Argentina, where much of the capital and many of the winemakers come from abroad.  Roberto de la Mota, partner and chief winemaker at Mendel, personifies this balance. Roberto is the son of  Raúl de la Mota, who is sometimes said to be Argentina’s “winemaker of the century” so important was his work in developing quality wine in this country.

Roberto naturally grew up in the wine business both here and in France, where he sought advanced training on the advice of Emile Peynaud. He was the winemaker at Terrazas, Chandon’s still wine project in Mendoza, and then at Cheval des Andes, a winery with connections to Château Cheval Blanc. I think it is fair to say that Roberto’s resume represents a balance between local and global, between deep understanding of Mendoza terroir and knowledge that perhaps only international influences can provide.

Acting Local: Roberto de la Mota

Local and Global

I asked Roberto if it was important that Mendel is an Argentinean project and not owned by a foreign multinational. Yes of course, he said, but he hesitated a bit and I think I see why. Many of the influences and markets are international, but people, vines and inspiration are  purely local. Not one or another, but intertwined, balanced.

And this thirst for a complex balance defines the future. Talking with Anabelle over coffee in Buenos Aires, she was ambitious to break into new markets – Hong Kong, China, and so forth. Anabelle is an architect — another field where global and local intersect.  She is married to Héctor Timmerman, Argentina’s Foreign Minister and former Ambassador to the United States, so her international interest comes naturally.

Meeting with Roberto at the winery in Mendoza, he was interested in learning even more about his vines and terroir so as to better develop their potential. And to bring more of the classic Bordeaux grape varieties (like Petit Verdot) into the mix.

Mendel has charted its balanced course quickly, purposefully and well.  It is a perfect illustration of both the tensions that define wine in Argentina and the potential for success if a clear but balanced path is boldly taken.


[1] The other “Best of the Best” wineries in Wine Advocate issue 192 are Achaval Ferrer, Alta Vista, Catena Zapata, Viña Cobos, Colomé Reserva, Luca, Tikal and Yacochuya.

Cracking the Coffee-Wine Paradox

My last post, Starbucks and and Coffee-Wine Paradox, raised questions about the relative price of wine. We think of coffee as being expensive, especially coffee drinks at Starbucks and other gourmet espresso bars. But compared to wine they seem like a bargain.

You can get an excellent coffee drink for less than the cheapest glass of on-premises wine. And the price difference between generic coffee and the best (a factor of 16 according to a Decanter article) looks great compared to wine, where the cheapest bottle costs a couple of bucks and there’s almost no upside limit.

Coffee and wine are both simple quotidian pleasures (or should be). Why are their relative prices so different? Several readers and colleagues offered answers to this question.

Cost Plus Wine

Suggestions (click on the article link above and scroll down to the comments section) focused on cost differences . Coffee is cheaper to ship and store, for example, and as Rob Boyd pointed out coffee isn’t typically aged for years like red wine, which increases cost.

Wine is typically bottled at the source, so to speak, which also contributes to the cost difference. Weight gets added relatively early in the wine supply chain whereas coffee gains weight at the point where it is combined with water, brewed and served — a real advantage. “If coffee was brewed in Colombia and then shipped to Starbucks around the world,” Steve DeLong wrote, “the price would be astronomical.” (See note below.)

Steve also had the insight that, while Starbucks-style coffee products are pretty labor intensive to make, this cost also comes at the final stage of production, whereas wine’s high labor costs come much earlier and are magnified by multiple mark-ups in the distribution system. An additional  dollar of labor in the cellar translates to maybe $2 higher retail price for wine here in the US with our three-tier distribution system. An extra dollar of barista wage cost at the end of the coffee product chain has less of an impact on price.

Cost and Price

The comments I’ve received go a long way toward unraveling the paradox. As I expected, however, most people try to solve the puzzle on the cost side — focusing on why wine costs are relatively higher than coffee costs. These are good answers, but it is important to consider the demand side, too. Everyone knows that some prices are determined by production cost, but others are dictated by what people are willing to pay.

Cost rules in highly competitive markets, where products are undifferentiated and good information is readily available. Willingness to pay is more important in imperfectly competitive markets with highly differentiated products and asymmetric information.  The markets for generic coffee and wine fall into the first category, fine wines and specialty coffees into the other.

What Will You Pay?

Why do highly-rated wines cost so much to buy? Production cost is a factor, particularly for generic coffee and wine, but it alone doesn’t explain the big price gap between the bottom shelf and the top. Fine wine and gourmet coffee cost so much because people are willing to pay these prices — and they lack the confidence to pay less in some cases because they associate lower price with lower quality (or maybe lower status).

So I think Steve Kirchner is on to something when he points to differences in marketing between coffee and wine. Gourmet coffee, Steve argues, is a relatively new phenomenon and it is certainly true that the range of choices is still limited compared to wine.

Closing the Coffee-Wine Gap

How many different coffees does your grocery store sell? Probably a few dozen at two or three price points. How many wines? Probably one or two thousand at many more price points!

Fine wine is more complicated than fine coffee and there is more uncertainty surrounding it. This makes the market more “imperfect” in the jargon of economics, and price and cost are more likely to deviate.

Will coffee producers ever catch up to their wine-making cousins? Not soon, I suspect, but I think they will close the gap!

>>><<<

Note: Steve’s comment about brewing coffee and then shipping it reminds me of a story I picked up back when I did tax policy economics.

When coffee was first introduced in Great Britain, it was subject to high excise taxes intended for luxury goods. Coffee shops reacted by adding non-coffee ingredients to the brew to stretch their precious grounds. Adulterated coffee. Ugh.

The tax authorities, seeing a revenue shortfall,  responded by ordering all coffee to be brewed in designated central canteens, then transported full-strength to the shops and reheated there. Twice cooked coffee. Ugh again! More expensive, of course, and adulteration was still possible, but at least the tax was paid.

Thus did high taxation ruin Britain’s taste for coffee, which has only recently recovered thanks in part to market entry by quality sellers like Starbucks.

Starbucks and the Coffee-Wine Paradox

The Water-Diamond paradox is a classic problem in economics. Water is essential to life, but it is relatively cheap in most situations. Diamonds, on the other hand, are non-essential luxuries in most uses, yet they cost the earth compared to water. How is this possible? How can market price deviate so clearly from practical value? A tough problem. John Law, John  Locke, Copernicus and Adam Smith all tried to provide sensible answers.

In Vino Paradox

Starbucks (the Seattle-based company that sells coffee with a side of lifestyle) presents us with a similar puzzle today. I call it the coffee-wine paradox in honor of the original problem.

Starbucks has started selling wine. Not at branded Starbucks stores, but at three experimental “15th Avenue Coffee and Tea” shops in Seattle.  As near as I can tell they have not yet begun to market a Starbucks wine (the image here, courtesy of Google Image Search, is apparently bogus), but who knows what will happen in the future?

I know a number of coffee bars here in the Pacific Northwest that double as wine bars and authentic espresso bars in Italy nearly always serve alcoholic beverages including wine. Starbucks knows how to sell branded goods. Connect the dots. Maybe there is Starbucks Pinot Grigio in your future?

So what is the paradox? Well, the joke is that Starbucks coffee products are very expensive. You know what I mean — the mythical four dollar caffè latte? But when you compare Starbucks coffee to wine, it looks like coffee is unbelievable cheap. Thinking in terms of absolute price both wine and coffee cost a lot but, as in the water-diamond problem, their relative prices seem totally out of line. Why is wine so expensive compared to coffee and why is coffee so darn cheap?

Pulling the Supply Chain

Coffee cheap? Well, consider what a diagram of the global supply chain for a Starbucks latte would look like. The high tech espresso machine is usually Italian-made. The milk is probably a local product and the labor likewise, but the coffee and flavorings such as chocolate and vanilla come from all over the world and pass through many processes and middleman hands on their way to you.

Wine, by contrast, is the simplest of products. It practically makes itself. Even with the notorious three-tier distribution system here in the US, it is a whole lot easier to get wine into your glass than coffee into your 20-ounce cardboard takeaway cup.

And think about the wine bar versus espresso bar experience. Servers at the wine bar retrieve the bottle and pour some in your glass.  Pretty simple. At the espresso bar, by contrast, your coffee made to order with sometimes extravagant special requests (a tall half-caff soy vanilla latte with caramel?). No doubt about it, in terms of both global sourcing and labor-intensive local production,  Starbucks coffee seems like it would be a lot more expensive to produce and serve than my mythical Starbucks wine.

So here’s the paradox. $4 for a cup of coffee (or espresso-favored coffee drink) seems impossibly expensive. Ridiculous. A joke. But $4 is impossibly cheap for a glass of decent wine these days when you are dining out. What do you think Starbucks would charge for a glass of wine? If they conform to the industry rule of thumb (and I don’t know if the 15th Avenue shops do) the price for each glass would equal the wholesale cost for the bottle. So you’d expect to pay $6 and up for fine wine (wine poured from a bottle in this context) or less if it is drawn from a bag-in-box hidden somewhere in the back room.

Generic industrial wine sells for more than a premium custom-brewed coffee product. No question about it. Wine costs too much and coffee is too cheap. Why? That’s the first part of the coffee-wine paradox.

A Factor of Sixteen

A second aspect of the coffee-wine paradox is revealed in the November 2009 issue of Decanter magazine in a short but very interesting article on coffee. It seems that coffee, like wine, comes in all sorts of variations from cheap bulk product to the equivalent of vineyard-designated grand cru coffee cuvées (if that isn’t stacking the adjectives a bit too high).

Coffee connoisseurs will pay enormous sums to get the finest, rarest coffees. Decanter quotes the price of the winning coffee from a recent international competition at £13 per 250 grams of roasted beans or roughly 40 U.S. dollars per pound. On a per-cup basis, according to the article, the top coffee sells for about sixteen times the most humble Cup of Joe. That’s a pretty high premium to have the best instead of the simply pretty good.

Consider the corresponding wine ratio. If we take Two Buck Chuck as our Nescafé equivalent, the most expensive wine on the market would cost $32 in California (where Two Buck Chuck really costs $1.99) and $48 dollars per bottle nearly everywhere else in America. But this is ridiculous. The most expensive wines cost much more than this. If you read the wine magazines you frequently encounter prices of hundreds and even thousands of dollars for the finest, rarest wines. The coffee factor is sixteen from bottom to top. The wine factor, by comparison, is fifty, sixty, a hundred, even more.

What is the solution to the coffee-wine paradox? Why does wine seem to cost so much more than coffee despite the factors that would seem to raise coffee’s cost? And why do the best wines cost so much more, in relative terms, than the best coffees? What’s your answer? Watch this space for mine!

:)