Review of “Our Blood is Wine”: A Film about Georgia Qvevri Wine

March 27, 2018 By Mike Veseth in wine, wine education, wine history 10 Comments

Our Blood is Wine, directed by Emily Railsback, released by Music Box Films, 2018. Available as video-on-demand via iTunes, Amazon, Google Play, etc.

Our Blood is Wine is a fascinating look at traditional wine-making in Georgia (the republic, not the U.S. state) and how it survived the traumatic Soviet era to be widely celebrated today as a natural wine icon. This documentary has been made with the same restraint and respect for tradition that the Georgians use in making their qvevri wines. The wines let nature tell its story to a greater extent than most wines do. And the film lets Georgia tell its story in a very natural way, avoiding unnecessary intervention. Highly recommended.

I admit that I was a bit concerned when I learned about Our Blood is Wine. Georgia is unique and I worried that the film would treat it with the generic techniques that are so often found in wine films — sunny vineyard scenes, the changing of the seasons, pick-up trucks with faithful dogs. You know what I mean. These scenes are charming and beautiful, but they are clichés. They could be anywhere, so they end up being nowhere. Wine films are filled with them.

Georgia is different, special, so the film needed to be different, too. Sitting at a key geopolitical crossroads, Georgia has experienced invasion, occupation, and foreign rule repeatedly and yet somehow the people, their culture, Christian religion, unique language and alphabet, have all survived. Georgians are survivors and the same is true of their wines.

Our Blood is Wine shows the hard work and sacrifice of artisan winemakers in Georgia instead of sunny vineyard scenes. We travel along with Chicago-based sommelier Jeremy Quinn, our inquisitive guide, but he is not the star of this show. He usefully yields the screen to the Georgians who have created these wines, preserved the indigenous grape varieties, and crafted the fantastic qvevri themselves.

One thing that keeps the film moving is the fact that we mainly see people at work and often (as in a scene where several sweating shirtless men carefully move a large, awkward, heavy qvevri into place) the actions speak as loud as any words ever could. The hard work contrasts with the beautiful Georgian music that forms the film’s soundtrack.

The Soviet era, which the film shows through archival footage, was particularly hard on Georgian wine. Georgia-born Joseph Stalin made sure that he had a constant supply of good wine from his home region, but the rest of the country’s wine industry was not so lucky. Private vineyards were seized and industrial wine production replaced private cellars to satisfy undiscriminating palates elsewhere in the Soviet empire.

Traditional wine-making practices survived through home production and even today most Georgian families make wine for their own consumption, some of it very good. Georgian wine consumption is high by U.S. standards. The rule of thumb for a party is two bottles of wine for each female guest and three bottles for each male. The domestic industry is necessarily focused on export since it is hard to compete with homemade wine for local sales.

There are, as I wrote in 2016, three wine industries in Georgia today. Some large producers focus on sweeter wines (which can be very good) to sell to traditional Russian and former-Soviet markets. Another industry has grown up around exports of clean international-style wines made with indigenous Georgian grapes. And, finally, a relatively small craft industry exists to satisfy the growing global demand for the natural wines made in qvevri — traditional hand-made clay pots that are buried in the earth. These wines and the people who make them and love them are the focus of Our Blood is Wine.

Sue and I were delighted when, at the end of the film, the art of Georgian wine was driven home through the work of an artist who actually paints with wine and the juice of the grapes instead of oil or watercolor. Saperavi art? Could it be, we wondered? Yes! The artist was our friend Elene Rakviashvili, who helped us to learn about Georgian wine and culture when we visited in 2016.

Our Blood is Wine is worth seeking out for what it teaches about Georgia, history, culture, politics, and of course wine. One of the best wine documentaries of recent years.

Războaiele Vinului: Romanian Wine Wars

March 20, 2018 By Mike Veseth in Shameless Self-Promotion, Wine Wars 2 Comments

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Romania has a long wine history and a more significant contemporary wine market presence than many observers appreciate. Its fine wines seem to fly under the radar here in the United States.

Romania produces more wine than New Zealand, according to OIV statistics. So why are Kiwi wines much better known on the international scene?

Strategy is one answer. New Zealand is highly export-driven, powered by international and multinational investment, while Romanians drink much more of their own wine and export less. In fact, statistics I found suggest that Romanian spending on imports generally exceeds their wine export receipts, creating a negative wine trade balance.

Market positioning is another difference. When New Zealand was breaking into the high-margin US and UK markets 20 years ago many Romanian producers were focused on the lower-margin Russian and CIS markets. This is changing. Exports to the UK, China, and Germany among others now lead the charge. Romanian wine is on the rise.

I was pleased, therefore, to learn that a Romanian translation of my 2011 book Wine Wars has been released. It is called Războaiele Vinului, which translates as “War of Wine.” The subtitle, “The Curse of the Blue Nun, the Miracle of Two Buck Chuck and the Revenge of the Terroirists” is “Blestemul Blue Nun, Miracolul Two Buck Chuck și Razboaiele Teroriștilor” in Romanian.

The Romanian Wine Wars was adapted by Catalin Paduraru and translated by Radu Rizea. Why translate Wine Wars into Romanian? Catalin believes that it is important for Romanian wine producers to better understand the global markets in which they and their wines compete. He sees Wine Wars as an approachable and understandable analysis of global wine dynamics and was willing to go to a good deal of trouble to make it available in Romania. I’m flattered by this attention and hope that Romanian wine-makers can leverage this analysis to help them gain ground in the fiercely competitive global markets.

I hope to find an opportunity to visit Romania later this year and talk about their wine wars with my Romanian readers. Cheers to you all, and especially to Catalin for all the work he put into this project.

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Update. The Romanian edition of Wine Wars has been named the book of the year by an important Romanian publication.

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Book Review: Intriguing Variations on a Wine Globalization Theme

March 13, 2018 By Mike Veseth in Argentina, book reviews, globalization, wine, wine history, wine markets 5 Comments

Wine Globalization: A New Comparative History edited by Kym Anderson and Vicente Pinilla, Cambridge University Press, 2018. (See also The World’s Wine Markets: Globalization at Work edited by Kym Anderson, Edward Elgar, 2004.)

The fact that wine is such a global business was one of factors that motivated me to study it seriously in the first place. My 2005 book Globaloney (named a Best Business Book of that year by Library Journal) included a chapter that examined the evolution of global wine markets and that got me hooked.

Globalization’s Terroir

Globaloney was a heart a series of case studies that together argued that globalization is not an unstoppable tsunami that sweeps away all before it, but rather a complex set of forces that play out differently in different industries. Fast food globalization, for example, is different from slow food globalization. And while high fashion and used clothing are both traded in global markets and acted upon by some of the same general forces, their specific patterns and impacts are very different.

Globalization reflects its terroir, I used to tell audiences at book talks, and the volume that Kym Anderson, Vincente Pinilla, and their talented team of authors have assembled take this idea one step further. The core of the book is a collection of historical case studies of how national wine industries have developed in both the old and new wine worlds in the context of global markets.

Two things struck me as I read the studies. First, I was excited by how detailed and interesting this research is. Fascinating. Irresistible. I couldn’t wait to turn the page to read more.

The second striking feature was how much wine globalization really does reflect its terroir. Although there are some common themes (the impact of phylloxera and the Great Depression, for example), the fact is that wine has developed and evolved in distinctly different ways in different parts of the wine world. Globalization has been an important factor in many cases, but not in the same way everywhere.

Argentina’s Unique History

Let me use the excellent chapter on Argentina by Steve Stein and Ana Maria Mateu as an example. Argentina’s wine history has been shaped by a series of strong internal and external forces. Let’s start with the grapes. Spanish missionaries from the Canary Islands brought high-yielding low-quality Criolla grapes with them and this set the tone for wine-making and drinking for much of the country’s history.

French wine authority Michel Aimé Pouget was lured away from his work in Chile to improve wine quality and he brought higher quality grapevines, including especially Malbec. Alas, the authors tell us, Malbec was frequently valued less for the quality of its wines than the fact that they were dark and strong and could therefore successfully be diluted with water without completely losing their identity as wine. Low standards like this defined the domestic market for decades.

British influence, in the form of the railroads that they financed and helped to build, had a profound impact on Argentina wine. Prior to the railroads that connected Mendoza and San Juan with bustling Buenos Aires, the domestic wine industry was quite small.

Mendoza and environs made wine for local consumption. Buenos Aires residents (more and more of them immigrants from Spain and Italy) filled their glasses with imported wine. Lower land transportation costs changed everything when the train line was completed, expanding the internal market and fostering a wine boom.

Anticipating the impact of the railroads, Mendoza officials sent recruiters to Europe to bring back experienced Spanish and Italian wine-growers and wine-makers who expanded the industry. With phylloxera spreading at home and hard times all around, the difficult decision to uproot and replant families and businesses to immigrant-hungry Argentina was easy to make.

Peso Problems

The list of international and global forces and effects in Argentina is a long one and I only scratch the surface here. In recent decades, for example, the government’s strong-peso policy of the 1990s (the peso was linked to the U.S. dollar) made imports of wine-making equipment and technology artificially cheap and wineries were quickly upgraded. The collapse of this monetary system and the peso crisis that followed made the output of those wineries artificially cheap to foreign buyers, a factor in the country’s wine export boom.

Rapid domestic inflation combined with an unyielding exchange rate earlier this decade made the peso over-valued again and the wine export boom fizzled. Policies are changing now. Perhaps the export boom will return, albeit in a different form. Too soon to tell at this point.

Argentina’s wine history and its experience with international and global forces is fascinating and other chapters in the book are equally interesting. Wine’s story is a complicated one, with each nation developing and responding in a different way depending on many factors including history, culture, institutional structure, timing, and government policy.

This book is a great resource for anyone interested in understanding the wine world today and how we got here. The volume concludes with “Projecting Global Wine Markets to 2025” by Kym Anderson and his colleague Glyn Wittwer, a set of forecasts and analyses based upon their econometric model of global wine markets.

Economists Know the Price of Everything …

Wine Globalization has many strengths that recommend it to a broad readership and one obvious weakness that will discourage some who would otherwise benefit from studying it: the price. If you are not familiar with the academic book market, the price of this volume will take your breath away: $139.50 for the hardback and $124 for the Kindle on Amazon.com.

This is how books are often priced by academic publishers, who need to spread high fixed costs over small expected press runs. If you have a son or daughter in college (or are in college yourself), you already know what textbooks cost these days. Incredible.

But all the news about price is not so discouraging. Kym Anderson and his colleagues at the Wine Economics Research Center at the University of Adelaide provide an enormous array of useful and interesting global wine market data (some of which informs the Wine Globalization volume) for the attractive price of … free. Free! Here are some of the data sets you might want to explore. (You can find even more data here.)

Anderson, K., S. Nelgen and V. Pinilla, Database of Global Wine Markets: A Statistical Compendium, 1860 to 2016 (November 2017)

Anderson, K., S. Nelgen and V. Pinilla (with the assistance of A.J. Holmes), Annual Database of Global Wine Markets, 1835 to 2016 (November 2017)

Holmes, A.J. and K. Anderson (2017). Annual Database of National Beverage Consumption Volumes and Expenditures, 1950 to 2015 (July 2017)

Wine Globalization is a valuable contribution to our understanding of world wine markets. Highly recommended. And that’s not globaloney!

Book Review: James Conaway on the Napa Valley Wine Wars

March 6, 2018 By Mike Veseth in book reviews, wine, wine history 9 Comments

napa James Conaway, Napa at Last Light: America’s Eden in an Age of Calamity (Simon & Schuster, March 2018).

Hegel wrote that the Owl of Minerva only takes flight at dusk, suggesting that wisdom (the owl) finally awakes when the day is nearly done and the opportunity to benefit from insight has almost passed. It is a sad thought — I hope that Hegel is wrong — but it captures pretty well the gist of this new book by James Conaway, who has been writing about the Napa Valley for many years.

Conaway’s new book presents a series of vignettes and profiles that collective capture the ongoing wine war in the Napa Valley. Conaway is not a neutral observer in this battle, so this is a tale of white hats and black hats.

The White Hats include Andy Beckstoffer, Volker Eislele, and Randy Dunn, leaders in movements to preserve Napa’s farming and environmental heritage. The Black Hats include Mike Davis, Jean Charles Boisset, and especially Kathryn and Craig Hall, who have told their side of the wine wars story in their book A Perfect Score.

Reading Conaway’s book about what’s wrong with the Napa Valley made me sad because it reminds me about something that is wrong with society today. The Napa Valley of Conaway’s book is full of people with their backs to the wall, angry, suspicious, and unwilling to bend or compromise. Reminds me of any number of issues in society today (guns and immigration, for example).

There doesn’t seem be much room for meaningful dialogue. Sometimes it seems like there isn’t even a common language, much less common values or goals. Gridlock prevails: movement is slowed or stifled, but threats remain.

Only at the very end of the book — dusk, I suppose, or last light — does Conaway give a sense that there might be some coming together, working together. Hope it is not too late. But recent news is not encouraging.

Pressures continue to grow. Last week, for example, the Napa Country Board of Supervisors voted to put an initiative on the June ballot that would shut off development in certain areas. Pro and con forces seem to be prepared for a serious fight over the future. Meanwhile an interview with James Conaway suggests that he’s given up hope. Too little, too late.

I learned a lot about the Napa Valley, wine wars, and the White Hat and Black Hat combatants from this book, but I admit to being disappointed. Conaway takes a strong stand with his White Hat friends and his anger and outrage come through clearly. But I wonder what the conflict looks like from the perspective those who are in the middle, trying to balance interests and reconcile development and environment before the last light is gone? That’s a book that I would like to read.

Not that there aren’t glimpses here of what a working consensus might look like. I was especially intrigued by the sixteenth chapter, which gives an account of how John Williams of Frogs Leap Winery led a successful movement to restore a stretch of the Napa River. Water, Conaway suggests, is at the root of all conflict in Napa. Rivers both divide and unite. The Williams story shows that it is at least sometimes possible to find common ground.

Building that common ground where shared values are developed and real progress can be made is important both for Napa and for society in general. Having started with Hegel’s owl, I conclude with William Butler Yeats’ falcon, from “The Second Coming.”

Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world …

Beyond Wine Boom & Bust: Taking a Closer Look at the SVB Report

February 27, 2018 By Mike Veseth in Economic impact, wine, wine markets 4 Comments

Silicon Valley Bank recently released their 2018 State of the Industry report on the U.S. wine market and if you haven’t read it you should. It is well researched, written, and argued. Most important, it will challenge your ideas about the U.S. wine industry and make you think.

Most of the media reaction to the report has focused on two “boom and bust” elements: the predictions that (1) the 20-year wine market expansion is coming to an end and (2) that the relentless rise in grape prices and vineyard valuations in Napa Valley will pause or plateau.

Both of these predictions are significant although, as the report notes, calling a “turn” in the market is inherently problematic and will be difficult to assess until a few years down the road. In the short term, for example, the report notes that the U.S. wine market should continue to grow in 2018, although at a slower pace. Value will grow faster than volume due to the “two track” U.S. market with growth in premium wine sales offsetting declining lower-shelf demand.

This Changes Everything?

Boom and bust make headlines, but there are two important points that the SVB report makes that I think should get more attention. The first is the fact that we are witnessing fundamental changes in the retail market environment. Not just retail wine market, retail everything (or just about). Who buys, when, where, and how, who consumes, when, where, why, and how. Even the way people pay is changing. Amazon is one driving force in this environmental transformation, but only part of it.

This fact was driven home to me a few weeks ago when I read that the Swiss luxury group Richemont (controlled by South Africa’s Rupert family), announced plans to buy out Yoox Net-a-Porter, an Italy-based luxury “etailer.” Richemont’s brands include Cartier, Van Cleef & Arpels, Piaget, Vacheron Constantin, Jaeger-LeCoultre, IWC Schaffhausen, Panerai and Montblanc. High end stuff.

You might think that consumers would be willing to buy books and t-shirts online but that they would hesitate to throw down $5000 or more for jewelry or a watch without holding it in their hands. But you would be wrong, or so the Richemont folks believe. The idea kind of takes my breath away.

It’s a new world for wine as for other things, the SVB report suggests. And the patterns and practices that were successful in years gone by, including but not limited to bricks-and-mortar versus online sales, are not guaranteed to work in the future. Time to question and rethink.

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Talking ‘Bout the Generations

A second interesting but possibly under-appreciated point that the SVB report raises concerns generational analysis of the wine market. Most of what you read about wine today frames the changing market demographics in terms of baby boomers versus millennials. But, as this figure from Statista.com suggests, there is a “missing middle” to this analysis. The figure shows 2016 median household income by age of householder.

Lost in the focus on rising younger, poorer millennials versus declining older, richer boomers is the Gen-X generation who are in their 40s now (more or less) and reaching their peak earning (and consuming) years. They are, SVB argues, an important but sometimes underappreciated market for wine. And, as a recent Wine Access study reveals, although Gen-X is a smaller cohort than boomers or millennials, they are willing and able to spend proportionately more on wine.

I think these are very useful insights, although I’m always a bit cautious regarding generational analysis. My years as a university professor taught me that the differences between generations are sometimes less important than diversity within them. Sometimes it is appropriate to generalize about a generation, but not always.

Take boomers, for example. The conventional wisdom is that baby boomers have driven the wine market growth — and this is true — but remember that most boomers don’t drink wine regularly and many don’t drink it (or any alcohol) at all.

The boomer wine boom is driven by a relatively small segment of this generational group. In a way, the boomer wine phenomenon is about a subgroup that is at least somewhat atypical of its cohort — and that difference is key.

The SVB report goes well beyond boom and bust to include these significant insights and many others, too. Highly recommended for anyone who wants to understand the American wine industry today and where it is headed.

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Congratulations to Rob McMillan and his team for a thought-provoking report.

David Ricardo to Donald Trump: Global Wine Trade and Its Discontents

February 20, 2018 By Mike Veseth in Economic impact, trade policy, wine, wine markets 5 Comments

5788597-m When David Ricardo wanted to make the logic of his famous Theory of Comparative Advantage crystal clear he knew what example to choose: wine. It was obvious that Britain should import wine from Portugal in exchange for cloth rather than trying for vinous self-sufficiency. Any fool could see that!

Make Great Britain Great?

But wine wasn’t really the point of his example. He was more concerned about the Corn Laws, a set of trade barriers designed to choke off agricultural imports and promote higher prices for domestic grain (lining the pockets of rural landowners in the process). If Britain should trade cloth for wine, then why not trade cloth for wheat and other grains as well?

The wine story was good enough to convince Ricardo’s economist colleagues, but not so much those in parliament. The Corn Laws lasted from 1815 until 1846. Economic logic triumphed over vested interests in the long run, but the human cost of the trade barriers to urban workers and their families in terms of higher food costs and lower living standards was very high.

Britain really didn’t fulfill the promise of its Industrial Revolution until the Corn Laws were repealed. It is fair to speculate that Parliament could have acted to Make Great Britain Great much sooner if they had been guided by the economic logic of wine trade.

Wine is perhaps a good guide to British political economy today, too. Brexit, which was promoted as a way to Make Great Britain Great Again, seems to have instead made British families poorer even though the change in trade policies has not yet been enacted or even agreed. Rising import prices and stagnant wages have squeezed consumer budgets for wine as for many other items (sound familiar?). Tesco, the upscale supermarket giant, is reportedly planning a discount chain of its own to compete with increasingly popular “hard discount” Aldi and Lidl stores.

Make American Wine Even Greater?

The wine trade has lessons for the United States, too. Or at least that was my takeaway from two speakers at the “State of the Industry” session at the recent Washington Winegrowers Convention and Trade Show.

Glenn Proctor of The Ciatti Company presented a very interesting survey of global wine market conditions. There are only two big wine markets that are growing in terms of total consumption, Proctor said: China and the United States. The Chinese market is particularly attractive because of the large rising middle class and potential for further growth. French wines are top of the import table in China, followed by Australia and Chile — two countries that have benefited from free trade agreements with China.

Indeed, China is now the #1 export market for Australian wine, accounting for 33 per cent of exports, ahead of the US (18%), UK (14%), Canada (7%), and Hong Kong (5%). The Chinese market has powered Australia’s resurgence as a global wine power and the free trade agreement is an important part of the story.

The United States? Well, the U.S. has no free trade agreement with China and President Trump pulled the U.S. out of the Trans-Pacific Partnership negotiations — which could have opened up Asian markets — on his first day in office. Partly as a result, I suppose, the U.S. ranks #6 on the China import list. Australia wine sales volumes are more than ten times the U.S. amount.

If recent import trends continue for a couple of years, U.S. sales to China may be surpassed by relatively tiny Georgia. Georgian wine sales to China have surged (up 45%) in part because of the Georgia-China free trade structure that went into effect at the beginning of the year. The U.S. wine industry is clearly handicapped in foreign markets where other producers have preferential access.

John Aguirre, President of the California Association of Winegrape Growers, also highlighted the importance of trade agreements for the wine industry. President Trump has raised doubts about U.S. – Korea free trade (the Korean market has lots of potential for U.S. wine) and launched negotiations to revise NAFTA. Since Canada is the largest export market for U.S. wines, it is essential that NAFTA maintain open cross-border access.

The wine industry would suffer if the NAFTA negotiation somehow collapse, although the negative impacts would obviously be less than agriculture generally and the automotive industry, both of which have become dependent on efficient trans-border industrial integration in order to compete with efficient producers in other parts of the world.

I am hopeful that the NAFTA negotiations will be successful at updating the treaty since there is so much at stake. But my confidence is shaken somewhat by President Trump’s actions to block new appointments to the World Trade Organization’s appeals body — the entity charged with enforcing the rules of the trade game. This will make it more difficult for the U.S. wine industry to pursue its complaint against the British Columbia wine regulators concerning their discriminatory supermarket wine sales policy, which favors B.C. wines relative to imports in clear violation, in my view, of the WTO’s non-discrimination principle.

What’s the bottom line? If President Trump: wants to Make American Wine Even Greater, he might take a lesson from David Ricardo and re-think administration actions and policies regarding global trade agreements.

Wine Business 101: Exploring America’s Largest Wine Industry Trade Show

February 13, 2018 By Mike Veseth in wine, wine markets, wine research 1 Comment

unified Contributing editor Sue Veseth is fascinated by wine industry trade shows. She recently attended the Unified Wine & Grape Symposium trade show in Sacramento, California. Here is her report.

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Making wine is not very stuff-intensive, right? Some grapes, a vessel for fermentation, maybe a couple of barrels, some bottles or jugs, closures — voilà!

But modern winemaking, even for small wineries and those making natural wines, can be very stuff-intensive. A good place to start looking at or shopping for all of the stuff for winemaking is the trade show at the Unified Wine & Grape Symposium in Sacramento, California. This is the largest trade show in North America for the wine and grape industry, attracting more than 600 vendors from around the world and more than 14,000 visitors. A lot of people in the industry use the trade show to connect with friends, colleagues, suppliers, and peers in the industry, in addition to shopping.

Some trade shows are focused on particular aspects of the industry. The SIMEI show we attended in Milan, Italy, in 2015, was all about machinery and technology. Smaller regional trade shows may combine winemaking and other agriculture industries. The January 2018 VinCO trade show in Grand Junction, Colorado, was about winemaking and fruit-based agriculture.

Soup-to-Nuts

In contrast, the Unified is a soup-to-nuts trade show: tractors, plants, fertilizers, trellises, bottling lines, hoses and fittings, flooring, waste and wastewater management, vessels and containers of all types and sizes, construction services, irrigation systems, cleaning equipment, chemicals, testing services, software to manage just about everything, bottles, closures, labels, packaging, marketing materials, financial services, transportation, industry publications — and the list goes on. Some vendors have been in the show for years; a few new vendors show up every year. Some vendors may wait several years before scoring a spot.

It seemed to me that the people staffing the booths this year were spending more time talking to customers and passers-by than staring at their cell phones — hooray! Conversely, fewer exhibitors this year insisted on scanning my visitor badge, probably easily realizing that I was looking not buying.

One vendor in particular especially impressed me. This vendor had a dozen staff members, including high-level executives, in a standard-sized, attractive-but-not-flashy booth. But few were actually in the booth. They were always working the floor, with both intense and casual conversations with customers and potential customers. You could tell that this vendor was focused on business.

The raptors are always one of the most popular exhibits. The falcons are used for pest control. It is easy to anthropomorphize and conclude that the birds’ beady stares may be sizing us up — perhaps as lunch?

I also enjoyed looking at the pruning equipment and vineyard supplies that could be useful to the home gardener.

Vegan Fertilizer?

So, is there anything new? Yes, to me anyway. Especially intriguing were two French vendors with vegan products and processes for winemaking. One was showing vegan fertilizer. I had hoped to bring home a sample to try, but the smell was very strong, very fertilizer-y, even packed in multiple layers of plastic zip bags. Alas, it did not make it into the suitcase. Another company offers a range of products for vegan winemaking.

I was not aware of vegan winemaking, but it turns out that many wines I know and enjoy are vegan, at least based on the Barnivore list (http://www.barnivore.com/), although they are not necessarily promoted as vegan. Another “who knew?” moment.

Costs and Benefits

The question always arises: Is it worth it? There were moments when the trade show was jammed (after the State of the Industry presentations, during lunch, and during the regional wine tasting, for example) and other times when the aisles were open and easy to navigate (such as the afternoon of the second and final day of the show). The busy times seemed as busy as in past years but the slow times seemed slower to me this year.

Participating in the show is not inexpensive, for both the vendors and those attending. A lot of people were looking, but how many were buying? Does the activity level reflect expectations about expansions, contractions, or no change at individual wineries and the industry in general? Is it an opportunity to see and be seen?

The answers probably depend on who you are, what you are selling, and what you are buying. But if you want to understand the scope of the wine industry, the Unified Wine & Grape Symposium trade show is a good place to start.

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New York Times wine critic Eric Asimov attend the Unified trade show for the first time in 2017. You might be interested in his reflections on the experience. Spoiler alert — he was also fascinated by falcon pest control.

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Many thanks to everyone who works to make the Unified Symposium and its trade show a success. Special thanks to John Aguirre and Jenny Devine and to photographer Ken Freeze for providing the image above.

Wine Tourism Challenge: Giving City Visitors a Taste of the Wine Country

January 30, 2018 By Mike Veseth in Washington wine, wine, wine tourism 5 Comments

The most famous explanation of international trade is David Ricardo’s Theory of Comparative Advantage. England can make both cloth and wine and so can Portugal, but they will both gain if England specializes in cloth and trades it for Portuguese wines on the basis of each country’s relative efficiency of production.

Divine Will?

There are other trade theories if you aren’t satisfied with Comparative Advantage. One of my favorites is what you might call the Divine Will theory of trade, which holds that God distributed people and the stuff they want and need much differently so that they would be forced to trade or else do without. And trade, the theory holds, brings people together peacefully as Divine Will intends.

I hesitate to invoke Divine Will, but it certainly is true that the wine trade throughout history has been driven in part by the fact that population centers where wine is consumed and vineyard regions where wine is produced do not always coincide.

Getting the wine to consumers is a technical (and, because of taxes and other regulations, legal) problem that has been solved for better or worse over the centuries. The vast wine wall at your local upscale supermarket may not prove Divine Will but it certainly is an impressive achievement.

The growing industry of wine tourism, however, turns the problem on its head. Now the issue is how to get people to the sometimes far distant vineyards so that they can enjoy the experience. Back when wine tourism was just about cellar door sales this was a relatively modest problem, but today wine tourism is an important industry with economic multiplier effects that extend beyond the tasting room.

How do you give consumers a taste of the wine country experience if they are unable to get to wine country itself?

Real and Virtual Reality at Brancott Estate

I discovered one possible solution in an interesting article on the VeeR VR Blog. Marlborough’s Brancott Estate, which is part of the Pernod Ricard wine empire, partnered with Found Studio to create an experience of the “Red Shed,” named for the estate’s famous big red building that is the program’s home base (see video above).

Virtual visitors don VR headsets and can explore the vineyards and the shed and — in a rather remarkable innovation that I have not yet tried — actually sense something of the wines through scents that the headset releases at key moments. This prepares participants for the “real” reality experience of tasting the wines that follows the VR exploration.

This is obviously a pretty complicated way to bring wine country to the city or anywhere else and at this stage it probably risks becoming as much or more about the technology as the wine itself. But it also has the potential to surprise and delight in magical ways. Is this the wine tourism of the 4-D future? Probably one aspect of it and a glimpse of what the future might hold. Stay tuned — this could be pretty interesting.

Woodinville Wine Cluster

We found a second very interesting approach in Woodinville, Washington, which is located a short drive from Seattle and is a major wine tourism destination. There are precious few vineyards here (a few demonstration vines in front of Chateau Ste Michelle and a small Pinot Noir and Chardonnay vineyard at Hollywood Hills Vineyards). But there are more than 100 wineries and tasting rooms, forming a rather impressive wine industry cluster and wine tourism opportunity.

The wineries, following the production model set by Chateau Ste Michelle in the 1970s, truck grapes or grape juice over the Cascade Mountains from the Eastern Washington vineyards and make and package the wine close the market rather than close to the farms. Fast, efficient, refrigerated transport helps assure high quality raw materials and excellent final product. Some of the wineries are showcases like Chateau Ste Michelle while others are working spaces in the warehouse district. Taken together they made a successful industrial cluster.

Tasting rooms began to spring up alongside the wineries when, a few years ago, Washington law was changed to allow wineries to have off-site sales rooms in addition to their traditional cellar door facilities. Wineries based in the Yakima Valley, Red Mountain, the Walla Walla Valley, and elsewhere rushed to open tasting rooms in Woodinville, creating the wine tourism destination you see now.

Sue and I were accompanied by our friend Hermes Navarro del Valle, who is an expert on the global tourism industry with a special interest in wine tourism. It was interesting to see Woodinville through his eyes. We began our visit at Chateau Ste Michelle, which has recently opened a new visitor center that I will talk about next week.

Then we moved on to two of the several small wine tourism clusters, each of which features cafes or restaurants as well as a selection of tasting rooms. We stopped for lunch, for example, at The Bistro at the Hollywood Schoolhouse, a casual, friendly place with good food and a nice wine list. Then we walked a few steps to visit one of the half-dozen or so nearby tasting rooms. I wanted Hermes to taste the wines of Amavi and Pepperbridge from Walla Walla. especially and Amavi Syrah and the Pepperbridge Trine, which is one of the “Around the World in Eighty Wines” selections.

Hermes was excited by the possibilities he saw. If a tourist could get from Seattle to Woodinville, there were lots of eating and tasting options — easy to spend a day here learning about the wines. But he quickly focused on the problem of local transportation — getting around between and among the different winery and tasting room clusters was going to be problem. There needed to be some sort of shuttle that would circulate around the wine routes, he said. A good public-private investment for the local government, Hermes thought.

We glimpsed how that might develop when we moved on to a nearby cluster for our next visit. This space is anchored by a popular wine-themed restaurant called Purple and featured eight or nine tasting rooms with more just across the road.. We started at Fidelitas, which is one of our favorite. The tasting room manager turned out to be Will Hoppes, son of winemaker Charlie Hoppes, so we felt very much at home. Fidelitas is located on Red Mountain and we enjoyed sampling wines from the estate vineyard as well as Quintessence and Champoux vineyards.

As we settled into tasting we started chatting with another visitor, Mark Pembrooke, who is CEO of W3 Tours and may be the solution to the local transportation bottleneck that Hermes diagnosed. W3 Tours provides a variety of winery shuttle services in the Walla Walla Valley and Mark was in Woodinville working on a project to expand his shuttle services here.

If the shuttle service is successful it will take cars off the roads, easing the congestion that we have seen on peak weekends, and help tourists get the most out of their time. Mark said that he was grateful for the support of several wineries who benefit from his service in Walla Walla and have supported the expansion to Woodinville. Hermes was impressed with the entrepreneurship and suggested the next step: discount coupon books to encourage visitors to spend more time and money in the tasting rooms. 252494_172be_feb17_3740

We had time for two more tasting room visits and I selected Brian Carter Cellars and DeLille Cellars, which were conveniently located on the other side of the compact parking lot from Fidelitas and next door to each other. They represent very different ideas of Washington wine, which is what I wanted Hermes to see and taste.

Cabernet Sauvignon and Bordeaux blends like the poplar D2 and elegant Four Flags Cab are what DeLille is known for while Brian Carter likes to source a diverse range of grape varieties s to make blends that often pay tribute other regions.

Hermes was particularly taken with a Brian Carter wine called Corrida (Spanish for bullfight), a blend of Tempranillo, Graciano, and Garnacha from the Columbia Valley. The wine was balanced and had great character. A fine way to end our tour.

Wine Tourism Cluster Advantages

We were able to experience something of the variety that Washington wine offers both in terms of terroir and varietal character in just a short span of time and space. And there were about 100 other opportunities available for our next visit.

All four of the tasting rooms we visited were warm and friendly and staffed by people who knew their stuff and could answer questions confidently. We appreciate their time and generous hospitality. The individual wineries and tasting rooms are working hard to build their markets and establish a successful wine tourism industry here.

Problems remain, of course. Traffic congestion on peak weekends can remind a visitor of Napa Valley, for example, and there is room for more hospitality infrastructure, too. And it might be possible that Woodinville has exceeded critical mass and there are now too many tasting rooms competing for the same customers for all of them to be successful. I will be interested to see if a new cluster appears in Seattle’s historic Pioneer Square neighborhood where Browne Family Vineyards is opening a tasting room nearby to The Estates Wine Room.

But you could see Hermes thinking that this might be a useful model for other parts of the world — Mendoza comes to mind — where the wineries and vineyards are far from town and distance limits the growth of the wine tourism industry.

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As I noted above, our visit to Woodinville began with a tour of Chateau Ste Michelle’s new visitor center. Come back next week for details.

Video credit: Brancott Estate – ‘The Red Shed’ VR Experience from Found Studio on Vimeo.

Around the World in Eighty Wines Wins Gourmand International Wine Book Prize

January 23, 2018 By Mike Veseth in book reviews, Shameless Self-Promotion, wine, wine awards, Wine Competitions, wine tourism 9 Comments

9781442257368 My new book Around the World in Eighty Wines has received the Gourmand International 2018 award for best U.S. book in the wine and spirits tourism category and will now compete for “Best in the World” with winners from other countries. The global gold, silver, and bronze medals will be announced this May at award ceremonies in Yantai, China.

The Gourmand International awards are important and I have been fortunate to be recognized in the past for best U.S. and bronze medal “world’s best” wine history book (Wine Wars, 2012), world’s best wine blog (WineEconomist.com, 2015) and world’s best wine writing (for Money, Taste, and Wine: It’s Complicated, 2016).

Here is the list of international champions in the wine and spirits tourism category:

logo_awards Austria – Kulinarische Tourismus und Weintourismus (Springer)
Canada – Les Paradis de la Biere Blanche (Druide)
China – Compass to the ocean of wine (Zhejiang S/T) 9787534179549
France – Des Vignes et des Hommes (Feret)
Georgia – Georgia, Miquel Hudin (Vinologue)
Germany – Seewein, Wein Kultur am Bodensee (Jan Thorbeke)
Portugal – Vinhos & Petiscos (Caminho das Palavras)
Scotland – I love champagne, David Zyw (Freight Books)
Singapore – Cracking Croatian Wine, Charine Tan, Dr Matthew Horkey
Switzerland – Randos bieres en Suisse Romande, Monika Saxer (Helvetiq)
USA – Around the world in 80 wines, Mike Veseth (Rowman & Littlefield)

I am especially pleased to see that Cracking Croatian Wine by Charine Tan and Dr. Matthew Horkey is also on the list. Sue and I met Charine and Matt at the 2016 UNWTO global wine tourism conference in Tbilisi, Georgia and we like and admire them a lot. Their books are valuable additions to the resources available to wine tourists in particular and wine enthusiasts generally.

I don’t know who will be named the “best in the world,”, but I appreciate this recognition. Good luck to Charine, Matt, and all the other national champions in all the categories.

Trickle Up Wine Economics and the Big Wine Market Squeeze of 2018

January 16, 2018 By Mike Veseth in wine, wine markets 2 Comments

trickle You’ve probably heard of “trickle down” economics. It’s the theory that if you give money to the rich it ends up benefiting those who are not so rich as the wealthy spend or invest their money and create incomes and jobs for others.

Trickle Up and Down

Trickle down economics is controversial. Not because it is crazy to think that the rich spend or invest their funds; the question is how much actually gets down to the bottom of the economic pyramid? Mega-rich Scrooge McDuck, my favorite childhood cartoon character, didn’t spend much of his money at all, so very little of it trickled down to others.

Although it might initially seem counter to the laws of fiscal physics, it is also possible for money to trickle up. In my studies of Italian economic history, for example, I discovered that the wealthy families of Renaissance Florence sometimes successfully enacted a trickle up policy.

There were some situations where the working class found themselves tapped out and disgruntled. The economy stagnated and social tensions heated up — a dangerous combination. So the rich found ways to get cash into the pockets of the poor, which they spent immediately and, by the end of the month, the coins were back in the hands of the rich where they started, the markets were churning away steadily, and peaceful social relations had been restored. Priming the pump, we used to call it. Enlightened self-interest at work!

How Does Wine Trickle?

Under certain conditions it is possible to experience a trickle down effect in wine markets. When grape harvests are unusually bountiful and grapes therefore cheap, it is possible for a winery to have more quality wine than they need for a particular brand or line of wines. They could of course simply cut the bottle price and sell the extra wine that way, which is what you learned in Econ 101, but price and reputation are closely associated in the minds of many wine consumers, and it is difficult to raise price back up in the future if you cut it now because expectations have change. This is sometimes called an example of economic hysteresis.

So the wine trickles down, either in the form of a second label or through bulk market sales. Trickle down bottom line: the surplus of good wine can trickle down to lesser wine market tiers when the conditions are just right. In recent years a whole industry has developed to take advantage of structural surpluses and trickle down situations. The rise of “asset lite” wine businesses (which own a brand, but no land or production facilities) is predicated in part on the ready availability of wine supplies.

This Time is Different

This time is different. As a recent Rabobank report makes clear, Wine’s Big Three global producers (France, Italy, and Spain) all had significantly short harvests this year and many other major producers had similar experiences either in 2017 (some parts of California) or 2018 (drought will dramatically limit production in South Africa). The tight global market will be felt mainly through squeezed margins, but other impacts may be felt.

A global wine shortage renders trickle down opportunities scarce, for example, but creates the right condition for trickle up wine economics. Here’s how it works. The shortage is going to raise wine prices in some categories and put the squeeze on those who are used to selling them. They’ll need to give priority to wine markets where margins are higher and can better absorb the rising costs. In Spain, for example, this may mean favoring exports over the domestic market.

At some point basic bulk wines will cost too much to go into the boxes and budget bottles where they found homes in the past. To the extent that quality permits (and this is an uncertain factor), they will migrate up to wines selling at a higher price point. And the wines that would have gone there will migrate up a bit, too, as grape demand shifts up and the effort to preserve and protect margins moves along.

Or at least that’s what the Law of 100 suggests. This is a rule of thumb that holds that you take the cost per ton of wine grapes and divide by 100. The result is the bottle price necessary to make wine production economically sustainable. If shortage pushes the effective tonnage price up far enough, the grapes need to be used for a higher tier of wine.

If the more costly wine cannot trickle up in one way or another, then tighter margins will likely trickle down. Many links in the value chain get squeezed in this process, but wine producers with the greatest ability to substitute and avoid higher costs and shortages face fewer potential difficulties. Brands built around specific grape varieties (versus flexible blends) and narrow appellation designations with limited alternative sourcing options are more vulnerable.

Price and Quantity

How will the Big Squeeze and the trickle up game affect wine price and quality? Well, costs will certainly squeeze margins and higher prices may result, but as I’ve just noted, there are some ways to mitigate that. One of them is to sacrifice quality, so that will be an important thing to watch as grapes migrate to higher price points.

This could be a serious issue for wines at the bottom of the shelf. Some of my wine friends have told me privately in the past that they believe the stagnant market for some of these wines is due in part to a decline in quality — which they often blame on cheap bulk imports used to preserve margins.

The economic impacts of the Big Squeeze could extend to the vineyard real estate market as well. Look for some of asset lite business to try to purchase or lease more vineyards to assure future grape supplies. This is not a new trend — it has been going on for a while in the Napa Valley, for example — but it is likely to accelerate.

It is obviously too soon to tell exactly how the big squeeze will play out — especially on the global markets — but these are some of the forces and patterns that I will be watching for.

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The Wine Economist will pause next week so that I can concentrate on my role as moderator and speaker at the “State of the Industry” session at the Unified Wine & Grape Symposium in Sacramento. Hope to see many of you there.