Existential Threat? Anatomy of Italy’s Wine Crisis

It is cold comfort for U.S. winegrowers, producers, distributors, and retailers, but they are not alone in suffering a cascade of wine market woes. Recent reports from Italy, for example, paint an increasingly clear picture of a major wine-producing country in crisis.

UIV Analysis Focuses on Exports

The Unione Italiana Vini, which has more than 800 members and accounts for 85% of Italian wine exports, has been “the voice of Italian wine” since 1895. Recently that voice has sounded an alarm. A June 2025 press release focused on falling export demand for Italian wine. Italy’s domestic market for wine is large, of course, but production is very much larger, so many regions depend critically on export sales. Exports account for 63% of total sales in Piedmont, for example, 59.5% in Tuscany, and 58.7% in Abruzzo.

The U.S. is Italy’s biggest export market, so you can imagine that President Trump’s “Liberation Day” tariff announcements were not welcome news in Italy. As the UIV chart above shows, there was a surge of shipments to the U.S. in the first two months of 2025 as exports were accelerated in an attempt to build inventories before the tariffs went into force (Italy was not the only wine country to use this strategy). Then exports to the U.S. fell sharply in terms of both volume and value.

With substantial stocks in U.S. warehouses and unfavorable tariff and exchange rate conditions, the prospect of improved exports to the U.S. market for the rest of the year is not bright. And all this was driven by uncertainty about U.S. policy as the final tariff rate was not yet determined.

Trouble Beyond the U.S. Market

A second recent press release presented even more disturbing news.

The imbalance between potential output and market demand was highlighted in a report presented today by UIV’s Observatory, led by Carlo Flamini. Data from the first five months of 2025 show volume declines across Italy’s top four export markets: Italy (-1.8%), U.S. (-4.7%), UK (-3%), and Germany (-9.6%). These countries collectively account for 73% of Italian wine revenues. Overall retail sales are down 3.4%, with still and sparkling wines falling 5.3%. Only spumante bucked the trend, growing 4.9%. Despite the downturn, Italy remains the only major wine-producing country expanding its vineyard area – a growth that risks worsening oversupply.

Italy has been fortunate to experience several short harvests in recent years, which have masked the large structural wine surplus that is now impossible to ignore. What is to be done?

Internal and External Adjustment

One strategy is to focus on export markets by negotiating lower tariffs and reduced trade barriers generally. But, as the press release suggests, it would be all but impossible to replace lost U.S. sales by shifting focus to other markets. Some attractive non-EU export markets (think Brazil) have tariff barriers (27%) even higher than the 10% or 20% rates often discussed for the U.S. Border adjustments won’t solve Italy’s problems. Internal reforms are needed.

Here is the UIV’s agenda.

UIV is urging immediate structural changes to balance supply and demand. Key proposals include:

Lowering grape yields per hectare, including ending exemptions for generic wines.

Aligning DOC (controlled designation of origin) production limits with actual 5-year averages.

Reducing or eliminating the 20% overproduction allowance for DOC wines.

Revising reclassification mechanisms and accelerating production management tools.

Freezing new planting authorizations for one year.

UIV is also calling for a major reorganization of Italy’s appellation system. Although 529 DOC/IGT labels are officially recognized, just 20 account for 80% of national production.

There are two things to note on this reform agenda. The first is that it sensibly addresses the market surplus from both supply and demand perspectives. Fewer grapes and less wine should be produced on the supply side. And changes should be made to make the wine easier to understand and more consumer-friendly on the demand side.

Too Many Cheeses?

I especially support the movement to reduce the kaleidoscopic blur of regional designations. Charles de Gaulle famously said that it is impossible to govern a nation with 246 different kinds of cheese. Strong local identity isn’t always easily aligned with national purpose.

Italy is learning that having 529 regional wine identities can be a problem, too. (A lesson that might apply here in the U.S. as well.)

The second thing I would like you to note is that the reform agenda focuses on regulation, which is the way that Old World wine sectors tend to view things. Sometimes I think that the most important difference between Old World and New World is whether responsibility for change is located in the public or the private sector. (In this way of thinking many New World wine countries belong in the Old World.)

In any case, I agree that Italy’s current problems are due in part to the regulatory structure, which has sometimes aimed to protect producers from market forces rather than channeling those forces productively. So the UIV’s proposals for reform are appropriate. The question is, will they be implemented and then will they succeed?

Existential Threat?

The situation worsened last week when U.S. President Donald Trump threatened 30% tariffs on EU products including wine, an increase from the 20%, then 10%, then maybe 17% rates suggested earlier this year. The fact thast the dollar has fallen in value substantially against the euro this year magnifies the dilemma by increasing the cost of European wines to U.S. buyers regardless of the tariff rate.

The term “existential threat” is thrown around too casualy these days but it may perhaps apply to the Italian wine industry today. Here is the UIV response to the 30% tariff threat.

Rome, July 12, 2025 – “It took just one letter to write the darkest page in the history of relations between two long-standing Western allies. A 30% tariff on wine, if confirmed, would amount to a near-embargo on 80% of Italian wine exports. At this point, the fate of our industry – and hundreds of thousands of jobs – hangs on what could be considered extra time, which will prove crucial. It’s unrealistic to think such volumes can be redirected elsewhere in the short term. At the same time, an extraordinary intervention from the EU will be absolutely necessary.” This was the stark warning issued by Lamberto Frescobaldi, President of Unione Italiana Vini (UIV), following the Trump administration’s announcement – delivered in a formal letter – of additional 30% tariffs on European Union wine imports, set to take effect on August 1.

Italian Prime Minister Georgia Meloni is sometimes said to be a “Trump whisperer,” able to talk sense to the U.S. President. I am sure Italy’s wine sector is hoping she will succeed in her efforts so that they can move ahead with their necessary reforms.

Searching for Italy’s Wines: A Stanley Tucci Flashback

July 8, 2025 By Mike Veseth in Italian wine, popular culture, wine 4 Comments

The first season of Stanley Tucci’s new travel and food series, “Tucci in Italy,” is running this summer on the National Geographic network. Click on the image above to view the series trailer.

Sue and I can’t get enough of Italy, so we’ve been tuning in regularly for this just as we did a few years ago for his CNN series “Searching for Italy.” We enjoy the shows (it is fun to count the number of times Tucci says “wow” in each episode) and the many memories they inspire, but we have a gripe.

Where’s the wine?

Italy is nothing if not a country of wine. Wine is everywhere, but different in each particular place. The land, the food, the wine, the people, it all goes together. You can even tell the history of Italy through its wines, as one celebrated author has done.

But wine rarely makes an appearance in Tucci’s reports. In Alto Adige, for example, he mentions the wine is very good (it is!) but not much more. We were watching the episode on Lazio a few weeks ago and just about melted down. At one point he visited the Frascati region (a good sign) and mentioned that they make wine (go on, go on). But that was about it. Oh, there’s wine here, too. Sigh.

Toward the end of the same episode Tucci dined with a winemaking family in another part of the region and asked about how they came to make wine. A good start. And you could see that there was a different kind of wine in each glass. What about that? But that was all. If there was more discussion about wine at that lunch it was left on the cutting room floor. A missed opportunity for sure.

Not everyone sees the situation the way that I do. I was surprised to read a recent article accusing Tucci of over-hyping wine experiences in his shows and making wine tourism problems worse! One of the issues seems to be his interest in the Florentine wine windows. Maybe I need to revisit Tucci’s old series because I think there needs to be more wine, not less.

Bringing Wine to the Table

Why does this matter? Well, the wine industry in general and Italian wine sales in the U.S. market in particular could use a little boost these days. It wouldn’t hurt if wine were highlighted a little bit in a popular television show, especially one about Italy. Wine is already on the table. Doesn’t it make sense to talk about it?

Stanley Tucci isn’t alone in missing obvious opportunities to bring wine into the food and travel frame, as we were reminded recently while watching the Croatia episode of the insanely popular Netflix series “Somebody Feed Phil.” There was wine on the table most of the time and Phil cven commented on how good it was at least twice. But the next step (to say something more specific and therefore useful) was never taken.

To be fair, Phil might have gotten the message. The most recent season features a visit to Georgia (the country, not the U.S. state) and the episode begins with Phil in a vineyard harvesting grapes. He visits the Teliani Valley winery, learns about Georgian wine history, and appreciates the famous Qvervi wines. I think he gets it! (Sue and I visited Teliani Valley in 2016 and had our own “ah ha!” moment as we reported in this Wine Economist column.)

This isn’t the first time I have complained about this situation. Here is a Wine Economist flashback column from 2021 that bemoans wine’s absence in Tucci’s earlier CNN series.

I think Tucci could do a lot with (and for) wine in his television series. Let’s hope the message gets through.

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Memo to CNN: Searching for Italian Wine?

The Wine Economist / March 9, 2021

Dear CNN,

Sue and I have been watching the CNN original series “Stanley Tucci: Searching for Italy.” Tucci visits six Italian regions, talks with the people, enjoys the food, and tells some stories. Maybe it is because of the pandemic, but there is something very satisfying about following Tucci on his journey. You might want to check it out.

Tucci starts his Giro d’Italia in Naples and then moves on to Rome, Bologna, Milan, Tuscany, and Sicily. The title suggests that he is “Searching for Italy.” Will he find it? Not if he thinks that Italy is a single thing with a single cuisine, because that Italy has never existed. But if he is willing to accept that Italy is its regions — and I am sure he is — then he’ll be fine and so will we.

Searching for Italian Wine

The chapter on Italy in my book Around the World in Eighty Wines is a Tucci-esque search for Italian wine. My quest to find one wine that can represent all of Italy’s wines comes tantalizingly close to success at one point, but ultimately I realize that Italian wine is impossible. There are only the wines of Italy’s regions. No wonder the Italian wine map is perhaps the most complicated in the world.

So it seems to me that Searching for Italian Wine would make a great series for the same reasons that Tucci’s program is so popular. But what would a program about Italy’s wines be like? Walking though beautiful vineyards is great and makes good video, but you can only do that so often before it gets a bit old. Ditto for visiting cellars, inspecting barrels and tanks, and wondering at the majesty of shiny new pneumatic presses and speedy bottling lines.

Watching wine being made isn’t as interesting as watching food being made for some reason (perhaps because it takes so long) and in any case Tucci’s producers seem to realize that there’s a limit to how many times they can show onions being diced or pasta being rolled and cut. So instead they show the hustle and bustle of markets — that never gets old to me — and focus on real people, who they are, what they do, and how they define and are defined by the local products and food. That’s a model that works every time, if you don’t lose sight of your goal.

Searching for Italy and Its Wines

This leads me to my main point, which is that Tucci’s Searching for Italy could be the perfect Italian wine show if it just brought wine more fully into the frame (note: I write this before the Tuscany episode has been aired). Wine shows up all the time in Searching for Italy, but it is just something the people drink with the food, never an important element of the story. Wine in Italy is so much more.

The Bologna episode is a case in point. Yes, the Prosciutto, Mortadella, and Parmigiano Reggiano cheese are amazing. We were fortunate to enjoy them almost every day when I taught at the Johns Hopkins School of Advanced International Studies Bologna Center a few years ago. Our apartment was on a little alley called Via Pescherie Vecchie in the heart of the heart of the famous central market area. It is an inescapable element of the city’s life so naturally it was on Tucci’s Bologna itinerary. Here’s a video of a visit to this street to give you a sense of the place.

So what do you drink with these intensely local products? Well, wine of course, but there is a particular local wine that we think is magical. It is called Pignoletto and it is so local that I doubt you will easily find it anywhere else. As I wrote ten years ago after a return visit to our old neighborhood …

Pignoletto is a dry white wine grown only in the hills outside of Bologna. “Lively, crisp, aromatic” is how Jancis Robinson describes it in her Guide to Wine Grapes. Pignoletto is distinctly Bolognese — grown there, made there and I think that every last drop of it is consumed there, too, since it goes so well with the rich local cuisine (almost as if they evolved together … which I guess they did). It would be hard to beat the simple meal of salumi, cheese and bread that we had with a bottle of Pignoletto frizzante at Tamburini‘s wine bar in the Bologna central market.

The food and this wine evolved together in Bologna. No wonder they are such a perfect match. And they say something about the importance of place in a footloose world, don’t you think? It would have been easy to include this wine (and some others, too) in the Bologna episode, CNN, and your viewers would have thanked you for opening this door to Italian wine, food, and culture.

Dear CNN: Who Ya Gonna Call?

So, CNN, you are probably wondering who can help you take Searching for Italy to the next level by adding the magic of wine to the mix? Well, our team here at The Wine Economist stands ready to lend a hand (and pull a few corks) and we have no end of ideas for season 2 in the Veneto, Friuli, Alto Adige, Piemonte, Liguria, Sardinia — and that’s just getting started! Let’s take that Italian map and search for Italy and Italian wine in every corner.

Italy is a mosaic of people, places, wine, food … and wine, too. Let’s work together to tell the story of Italian wine in context, one beautiful region at a time.

Sincerely,

The Wine Economist team

Bodegas Tradición & Gonzalez Byass: The Jerez File (Part 2)

July 1, 2025 By Mike Veseth in Spain, wine, wine history, wine markets Leave a comment

This is the second part of our report on the five very different wineries that Sue and I visited during our brief stay in Andalusia. Click here to read the first half of the story.

Bodegas Tradición and Bodega Gonzalez Byass

We’d like to finish with an exercise in compare and contrast involving the smallest winery we visited (Bodegas Tradición) and the largest (Bodega Gonzalez Byass).

Big barrel rooms and small libraries were featured in both wineries. The barrels are easy to understand. Sherry wine ages in ranks of barrels called soleras, which slowly transform the wine and develop its special character. It is impossible to produce great Sherry any other way.

But before we surveyed the barrels we visited the small rooms at both wineries where records are stored. Time is integral to Sherry production and so is history. They recognize that the company records are important historical documents.

Gonzalez Byass, the largest Sherry producer and the only one still in family hands, was founded in 1835 as a shipper focusing on the British market. You will probably recognize its famous Tio Pepe brand. Like Port and Bordeaux, Sherry’s development was shaped by the fact that export markets could be reached by sea more economically than domestic markets that (until the arrival of trains) required costly and cumbersome land transport. Amazingly, the business has remained in the Gonzalez family through seven generations!

All in the Timing

The roots of Bodegas Tradición go all the way back to 1650 when Bodegas CZ (for the initials of the founder) was formed. The records room was filled with antique ledgers that told the story of the winery and the region. Exports were key here, too. The winery was named supplier to the British crown (1771) even before it received the same honor from the Spanish royal family (1887). One entry (I think it was from the 17th century) detailed exports to China!

Bodegas Tradición did not have a smooth journey through the Sherry industry’s booms and busts and was re-founded in 1998 as Bodegas Tradición CZ by Joaquín Rivero, who located the winery in an old building in the historic center of Jerez. It was, as I understand it, an attempt to revive the producer and rescue a particular way of making Sherry and the old soleras necessary for that process. Production is small both because the firm is relatively small (especially compared with Gonzalez Byass) and also because so much volume is lost a little at a time to the “angel’s share” during the long aging process. Time is the essence of Bodegas Tradición.

The Gonzalez Byass campus, Bodega Tio Pepe, sits prominently on a hill, next door to the cathedral and just below the Alcázar de Jerez de la Frontera and Mezquita. Production is spread over a number of big buildings and there are tourist and hospitality facilities along with the Hotel Bodega Tio Pepe, where Sue and I stayed.

From Jerez to the World

It is interesting to compare and contrast the two producers by visiting their retail wine shops. Tradición radiates age and time. The Sherry wines and brandies are old and older (and almost insanely old) and command prices that are high when you think about it in bottle terms and cheap when you consider the time, history, and quality of the experience. It reminds me of a lunch we had in Seville at Bar Casa Plácido, where the proprietor was so proud to serve Tradición wines.

The wine shop of Bodega Tio Pepe is larger and brighter and reveals the company’s depth in Andalusia and breadth across Spain and increasingly around the world. The wall of wine and spirits brands from around the world (and the corresponding list you can find online) is really astonishing. Just as ships once set out from Seville and Cadiz to explore he world, Gonzalez Byass has charted a global course: Austria, Australia, Chile, Spain, France, Hungary, Italy, New Zealand, and South Africa. And that is just for wine. You can add the U.K. if you include spirits such as a Sherry-cask-aged gin!

Final Thoughts

The ships that forged Spain’s Age of Discovery set sail from this region (Seville and Cadiz). There is much exploration going on here now. Bodegas Tradición explores the past without losing touch with the present. Bodega Gonzalez Byass embraces the world of wine while firmly rooted in family and Jerez.

I thought I knew a bit about Sherry before we visited Jerez and maybe I did, but there is so much to learn and we love learning! But maybe the most surprising thing we discovered here is this: I have always seen Sherry as a special wine, something different from others in terms of both production and sensory perception. And it is unique.

But from an economic perspective, the Sherry industry is not so different from wine in other parts of Spain and the world. The booms and busts that the five Sherry houses we visited have navigated and the very different courses they have charted to their current success provide lessons that apply far beyond the Sherry Triangle.

A Volta ao Mundo em 80 Vinhos Named Best Wine Book Translation

June 24, 2025 By Mike Veseth in globalization, Shameless Self-Promotion, wine, wine awards 5 Comments

The Portuguese translation of my book Around the World in Eighty Wines has received an award. A Volta ao Mundo em 80 Vinhos, published in Brazil by Editora Valentina, was named best wine book translation by Gourmand International. The book is available from the publisher as well as through the usual online sellers, including Amazon.com in the United States.

I am grateful to Gourmand International founder Edouard Cointreau and to the team at Editora Valentina. Special thanks to everyone who helped me write and publish the original book! Here is the Gourmand Awards press release.

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A Volta Ao Mundo em 80 vinhos – Best Wine Book Translation in the World

A Volta Ao Mundo em 80 vinhos, by Mike Veseth and translated by Editora Valentina, was named Best Wine Book Translation in the World at the Gourmand Awards, during the Cascais World Food Summit in Portugal.

The announcement was made on stage at the Estoril Congress Centre by Edouard Cointreau, President and Founder of the Gourmand Awards, who praised the work for its depth and cultural significance:

“Congratulations to Mike Veseth on the Brazilian edition of Around the World in Eighty Wines, a true masterpiece that blends travel, culture, and wine into a captivating global adventure. Inspired by Jules Verne’s classic, Mike takes readers on an unforgettable journey across continents, exploring the stories behind eighty wines that reveal not just the richness of terroirs, but also the spirit of the people and places that produce them. With insight, curiosity, and charm, he invites us to see wine not just as a drink, but as a lens through which to experience the world. A warm welcome to Brazilian readers joining this inspiring voyage!”

Founded in 1995, and with participation from over 200 countries, the Gourmand Awards are the only international competition dedicated to publications on food and drinks cultures. The competition is free and open to all languages. Each year, Gourmand organizes a global symposium in a location of notable gastronomic relevance, bringing together leading voices from the diplomacy, culinary, publishing, and cultural sectors.

The next world gathering of food culture professionals will take place in Riyadh, Saudi Arabia, during the Saudi Feast Food Festival, to celebrate the 30th anniversary of the Gourmand Awards.

Five Faces of Andalusia Wine (Part 1)

June 17, 2025 By Mike Veseth in Spain, wine, wine history, wine markets Leave a comment

Sue and I recently spent more than two weeks in Andalusia, Spain, about half of the time exploring the wine scene and the other half enjoying the region’s history and culture.

We covered a lot of territory and were a little surprised that the dominant feature of the landscape was not grape vines as you might expect, but olive trees! As far as the eye can see. Olives everywhere! We even visited an olive oil cooperative and learned that the main factors that lead an olive oil cooperative to either success or failure are much the same as those we observe in wine cooperatives.

But we came for wine. We tried to pick wineries that were very different from one another and so would together give us a more complete picture of this fascinating wine region. Let us tell you a bit about each one over the next two weeks.

Bodegas Alvear

Our first stop was Bodegas Alvear in the Montilla-Moriles region near Cordoba. The wines made here are much like Sherry but of course cannot be called Sherry because they are not in the Jerez D.O. (Confusingly, Pedro Ximenez grapes from Montilla can be made into Sherry wine by producers located in Jerez. PX grows really well in Montilla but struggles in Jerez.)

Alvear makes up for the absence of a famous appellation by having a famous brand. Indeed, Alvear is both the oldest winery in this area and one of the most respected in all of Spain. I haven’t seen many Montilla wines at local shops, but I have seen the Alvear PX Reserva, which I remember as the very first Robert Parker 100-point wine we tried (the current release is rated 98 points).

We had an excellent tour and tasting at Alvear and were impressed with the combination of tradition and innovation that we found there. The tradition is obviously the classic wine styles such as Fino and the PX. The innovation takes many forms. Important today is the development of non-fortified wines such as the refreshingly light El Rebate we sampled at the tasting and the complex red Palacio Quemado shown here that we were served a couple of nights before at La Montillana restaurant in Cordoba.

But maybe the most important innovation is the Alvear Vermut. Alvear is one of the pioneers in making Vermouth from Sherry-style wines. Alvear’s Vermut is popular (it was listed as “The Classic” at a Vermut bar we visited in Madrid) and has opened up opportunities for other producers in the region.

Bodegas Williams & Humbert

Bodegas Williams & Humbert occupies a vast industrial space on the edge of Jerez. The barrel room sort of takes your breath away. This is the home of famous brands such as Dry Sack (the go-to aprétif of White House dinners in the 1950s) and Canasta Cream Sherry among others.

We were there because of the memory of a dinner we had 20 years ago at a restaurant called La Madonnina del Pescatore in Senegalia, Italy. At the end of a fabulous seafood dinner we were served glasses of Don Zoilo PX. This was probably our first PX and it simply blew us away. You know how some wines are impossible to forget? That was the Don Zoilo PX and it is made by Williams & Humbert. We had to visit.

(Aside: According to their website, La Madoninna del Pescatore no longer serves the Don Zoilo PX. They offer a Williams & Humbert PX instead. The PX seems to have stood the test of time!)

We toured the winery and tasted through the wines. It was quite an experience because each of the many brands and styles and different aging treatments. Every time we thought we’d found our favorite we encountered something new and delicious. This is not a bad problem to have.

It was at Williams & Humbert that we first saw the light wood barrels surrounded by traditional black barrels. The black casks age Sherry (many of them were signed by celebrities including all four Beatles when they visited the winery years ago). The light wood barrels also contained Sherry, but the point was to condition the wood for eventual use in production of Sherry-barrel-aged Whiskey.

It was also at Williams & Humbert that we first realized the significance of Brandy to many Sherry producers. Sherry is a fortified wine, so stills are a common sight. Brandy is often produced in addition to the spirits that fortify Sherry. This Brandy is popular in Spain and other countries including Mexico and the Philippines. The Brandy market is so important for Williams & Humbert that the company is actually co-owned by a Spanish family and a Philippine firm that markets the Brandy there.

It is interesting to consider how a sip of PX at a restaurant on the Adriatic coast could lead us to such an interesting experience.

Bodegas Lustau

It wasn’t hard to convince us to visit Bodegas Lustau, which is a well-known brand in the United States. The bottles and labels are attractive, the wines are full of character, and the products are well-priced and widely available. Lustau was always on our list and our Jerez friends encouraged us as well because a visit to Lustau gives a glimpse of Sherry history and tradition. Our tour started in a conference room overlooking the big barrel cathedral. That’s got to be one of the best office views in the world.

Originally a family business, Lustau has weathered the booms and busts of the Sherry game. In 1990 it was acquired by the Luis Caballero Group, a Spanish family-owned company specializing in wine and spirits. With strong backing, Lustau has both expanded its Sherry business and also ventured into Vermut, Brandy de Jerez, vinegar, and Sherry casks for spirits.

The Lustau wines are impressive and we spent a very happy hour barrel-tasting with our host. But what I remember best is the importance of branding. Building the Lustau brand was important right from the start, especially in the export market. Indeed, Lustau was better known abroad than in Spain until recently. The advent of Sherry-based Lustau Vermut, wildly popular in Spain and now available in the U.S., too, brought the brand to the attention of the Spanish market.

I guess the success of Lustau Vermut shows that the company hasn’t lost its ability to create and develop successful brands. The winery hosts about 10,000 visitors a year, 40 percent from Spain and 60 percent from abroad.

Last week we analyzed the strategies that Andalusian wineries use to broaden and deepen their businesses while avoiding the boom-bust cycle. It is interesting to see these strategies at work at Alvear, Williams & Humbert, and Lustau. It is even more interesting to see the power of brands in this industry. Each of these wineries has succeeded in part by creating and maintaining powerful brand identities, some with global reach.

How Sherry Went from Boom to Bust to Today

June 10, 2025 By Mike Veseth in Spain, wine, wine history, wine markets 1 Comment

We published an article here at The Wine Economist a few years ago, asking “Can Sherry be the Next Big Thing?” “Probably not,” we said. “But it doesn’t have to be. It is a timeless wine waiting to be re-discovered by a new generation of wine drinkers.”

I’m glad we didn’t go too far in our assessment of Sherry’s potential back in 2017 because Sherry producers who have been around for a while are cautious about booms because they know they can be followed by busts. That was one message we heard when we met with César Saldaña, the President of the Sherry D.O. Consejo Regulador, the industry organization that makes and enforces the rules that govern Sherry production and promotes the product, too.

A Sherry boom? Not a good idea, he told us. Sherry has a history of booms and busts, and what it needs today is stability to build a foundation for the future.

UK Supermarket Boom

Sherry’s most recent boom occurred in the 1980s when British supermarket wine sales were growing so fast. Britain has long been the key export market for Sherry wines, and the surge in sales of inexpensive private label Sherry combined with government subsidies to encourage exports caused the industry to explode. How big was the boom? Vineyard area increased from about 7000 hectares to over 20,000 hectares!

Booms are often followed by busts, and Sherry sales have fallen. The crisis came in 1986-87 when Spain entered the European Union and the flow of subsidies suddenly dried up. Sherry’s diminished reputation made it difficult to command prices necessary to sustain production without government assistance.

It has taken a while, but vineyard areas are finally back in the 6000 to 7000 hectare range again. Consolidation has occurred, with the large bodegas growing and acquiring brands as the number of independent producers has fallen. Cooperatives, which account for about half of total production according to my sources, sell young base wines to the big bodegas where they are aged, blended, bottled, and sold.

Sherry Crystal Ball

What does the future look like for the Sherry industry in this market environment? We will answer this question in more detail next week, when we look at five specific wineries and their particular strategies. But here are some general patterns we observed.

Innovation: Think about Sherry as an ingredient and not just a beverage. Sherry-based cocktails were featured in that Financial Times article about Sherry’s chic appeal, for example, and a popular drink hereabouts is Fino and Sprite or 7-Up. It is called Rebujito.

And then there is Croft Twist Fino Spritz, a delicious white spritz wine that blends Fino Sherry with elder flower, lemon, and mint cordials, along with sparkling water. It reminded us a little of the White Port Spritz drinks we enjoy in Porto. Finally, Sherry can be the base of delicious Vermut (Vermouth) drinks, which is another growing category.

Non-fortified wines. If fortified wines have plateaued, as they have in Spain and also in Portugal, attention naturally shifts to unfortified wines, which are seen as an opportunity for both growth and diversification. As noted last week, Sue and I found the red wines we sampled (made by Alvear and Gonzalez Byass wineries) more interesting than the white wines we sampled with a couple of exceptions (Forlong Blanco from Cadiz, for example).

Spanish brandy. Sherry wines are fortified with spirits, so stills are everywhere in the Sherry Triangle, and brandy production is common. Spanish brandy is popular both in Spain and in the Spanish-speaking world. In fact, I think brandy from Jerez is probably better known and more popular in some places than the region’s signature Sherry wine. It is an important source of revenue for the Sherry producers we met.

Sherry barrels. Forget the wine. Sometimes it is the barrel customers want. If you have ever toured a Sherry house you know that the barrels are painted black, so when you see a bunch of unpainted barrels they really stand out. And we saw many of these barrels because whiskey aged in Sherry barrels is a popular beverage these days. Sherry firms age their wines for a period in new barrels that they profitably sell to whiskey makers. It is interesting that some consumers who would probably not drink Sherry wine want to enjoy Sherry’s influence in this way.

Wine tourism. Jerez is a popular destination with good tourist facilities. The sherry bodegas receive about 240,000 visitors today. The region hosts many fairs and festivals and, when we were there, MotoGP races at the Jerez circuit that once was home to Formula One competitions. You can find Jerez wine tours out of both Seville to the north and Cadiz, a popular cruise ship port, to the south. Many Sherry houses have ambitious wine tours and hospitality programs with restaurants and even hotels (we stayed at the Hotel Bodega Tio Pepe, for example, and dined at the winery’s Pedro Nolasco Restaurant).

Multi-region wine businesses. Finally, we have noticed in Spain (and in Italy, too) the tendency of wine businesses to build a portfolio of wineries across different regions. The ability to fill efficient production and distribution pipelines with a variety of products can be an advantage if done well. The addition of Sherry to a Spanish wine portfolio makes as much sense today as linking Port and Sherry producers together (think Sandeman or Osborne) did at an earlier stage.

César Saldaña is right. Sherry doesn’t need to boom (and bust) to succeed. There are many ways for the industry to broaden and deepen without supercharging sales. Next week, we will examine several case studies to see what paths individual producers are taking to move beyond boom and bust.

Field Notes from a Visit to the Sherry Triangle

June 3, 2025 By Mike Veseth in Spain, wine, wine history, wine markets, wine tourism 1 Comment

Sue and I recently returned from three weeks in Spain. We spent a few days in Madrid (where we dropped in at FEV General Assembly meetings), but most of the time in Andalusia, home of Sherry and Montilla-Moriles wines. Great wines, good food, and welcoming people. We soaked up a lot of information (and wine, too).

This is the first of a brief series of Wine Economist columns about our experiences and what they tell us about these wines and their wine market more generally. We begin with a “field notes” column, a kaleidoscopic collection of observations meant to give you a sense of what we saw and heard on the wine road in Spain. More focused articles will follow shortly.

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Sherry, which is fortified, is from the Jerez-Xérès-Sherry region and made from Palomino, Pedro Ximénes, and Moscatel grapes. The Sherry Triangle is the name given to the Jerez D.O., the only region where true Sherry wines are made. The “triangle” is roughly defined by lines connecting the cities of Jerez de la Frontera, Sanlucar de Barrameda, and El Puero de Santa Maria, where the wineries are located.

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People like to say that wine is made in the vineyard, but in the case of Sherry, what happens in the cellar is key. It is difference in cellar processes more than grape quality or variety that determines what type of Sherry will be in your glass. In this regard, Sherry may be more like Champagne and Port.

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About half of our time in Spain was focused on wine; the other half on the history, culture, and people of Andalusia. We visited five wineries chosen to give us a view of the wine industry’s diversity in this region.

Bodegas Williams & Humbert, the producer of Dry Sack, Don Zoilo, Canasta, and other brands.
Bodegas Lustau, whose Sherry wines are widely available in the U.S. market.
Bodega Gonzalez Byass, maker of a wide range of products both in Spain and around the world, including the famous Tío Pepe brand.
Bodegas Tradición, a relatively young winery making very old wines.
Bodegas Alvear in the Montilla-Moriles region near Cordoba. The Montilla wines are kissing cousins of Sherry, but can’t wear the official Sherry seal.

We enjoyed conversations with many wine industry people including Susana Garcia Dolla of OIVE, César Saldaña of the Sherry D.O. Consej0 Regulador, and Mauricio Gonzalez-Gordon of Gonzalez Byass. We benefited from advice from our friend George Sandeman. Many thanks to everyone who hosted us, answered our questions, and helped us get the most out of our visit.

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We usually taste wines with trade groups, not “civilian” consumers, so we were very interested to see what would happen when we accompanied a typical tour group to Bodegas Alvear. We first tasted a light, fruity unfortified white wine and then three of the traditional wines: Fino, Olorosso, and Pedro Ximenez. At the end of the tasting the question was asked: Which ones do you like? All hands went up for the fruity white. Only a few hands were raised for Fino and Olorosso with a few more for the PX.

The wines were great (Alvear is the oldest winery in Montilla and one of the best in Spain). The wines from Montilla-Moriles focus more on Pedro Ximenez, which grows there the best, with similar techniques but they not generally fortified. Very hot temperatures, very ripe grapes, high natural alcohol levels. That’s the story of Montilla.

The fruity white, which is called “El Rebate” after the step at the entrance of a Montilla house, is meant a welcoming gateway to the world of wine. It was a familiar taste to our touring friends and they loved it.

The Fino and Olorosso presented them with unfamiliar tastes, dryer, nutty, without fruit notes. The excellent PX, an Alvear speciality, was really well balanced, but sweeter than our new friends were accustomed too. Sue and I loved it. Most of our friends didn’t understand it or the other traditional wines very well.

The same wines at a trade tasting would probably have an entirely different ranking from the civilian group. We report these results because they help explain why Sherry (and the similar Montilla) wines are unlikely candidates for broad consumption. They are different and it takes a little effort to understand and appreciate them. It is effort well spent, but a barrier nonetheless.

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Sherry is not one specific wine. Many styles, many aging regimes: Fino, Amontillado, Manzanilla, Oloroso, Palo Cortado, Pedro Ximénez. Cream sherry (made sweet by the addition of rectified grape must or, even better, sweet PX wine) is what people think Sherry is, but isn’t. Lucious PX is sweet but balanced. One of the most memorable tastes of the trip was at a Taberna la Montillana in Córdoba where we were served a Bodegas Toro Alba Don PX 1955 at the end of the meal. Amazing.

However, Sherry is often stereotyped as a sticky, sweet apéritif that granny drinks at Christmas, which might be an insult to Sherry, granny, and Christmas! But most Sherry wine produced is dry, the style preferred in Andalusia. It reminds us of the problem that Riesling confronts. Riesling is too sweet, people say before they have even tasted it. But most Riesling that we encounter today is dry or off-dry.

Some Sherry wines are sweet, of course, just as some Riesling wines are sweet. In Sherry’s case the stereotype probably results from very popular and widely distributed brands like Harvey’s Bristol Cream, which are sweet; people generalize from that experience. Getting people to embrace dry Sherry can be as hard as getting them to try dry Riesling.

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Sue and I had an “ah ha” moment at Bodegas Tradición. We were tasting through their wonderful wines. Did we want to try the Cream Sherry? We hesitated (which is not like us). Maybe not, we said. Cream Sherry has a bad reputation (see above). Well, try our Cream Sherry. And it was great, a blend of Amontillado and PX with superb balance. We had to abandon our prejudice. Back home, we bought and enjoyed some Harvey’s, too. Time to review stereotypes for Sherry and more generally!

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As in the Douro Valley, there is a movement in Andalusia to produce more non-fortified wines using the traditional grape varieties. Sue and I were on the lookout for these table wines during our visit and we were a bit surprised by what we found. We expected white wines because Sherry grapes are white. But we were disappointed with the white wines we found. It seems that Palomino does not ready yield really great wines (I am sure there are exceptions because we only had time to taste a few of them.

The red wines we tried surprised us. First came a Palacio Quemado Crianza produced by Bodegas Alvear from an old vine Tempranillo vineyard north of Seville. Distinctive, wonderful with the traditional foods of Córdoba. Then we enjoyed the Finca Moncloa, produced by Gonzalez Byass in the Cadiz region. It is a special project designed to preserve and promote the native Tintilla de Rota grape. The blend of native and international grape varieties was terrific both times, especially with roast lamb.

The Trouble with Tribbles, Tariffs, & Wine

May 28, 2025 By Mike Veseth in economic crisis, Economic impact, EU wine market reforms, trade policy, wine Leave a comment

The Trouble with Tribbles, if you remember your Star Trek history, is that they are adorable. People fall in love with the fuzzy little creatures. But Tribbles multiply like crazy, and pretty soon the place is overrun with them.

Tariffs are not very much like Tribbles, to be honest, but they do have a few things in common right now. First, some people are really in love with tariffs to the point where just saying the word seems to make them feel good.

But, a bit like Tribbles, tariffs tend to multiply both because one tariff often calls for another (did you see the Liberation Day list of tariffs that included some countries that barely exist?) and because of tit-for-tat responses. Tariffs beget tariffs, and pretty soon things can get out of control.

Get Specific!

Tariffs are also like Tribbles in that they really gum up the works and make the economic system less efficient in both creating jobs and meeting consumer needs. To see this, suppose that the government has a specific goal, such as to create jobs in the auto industry. It may or may not be a good idea for government to step in here because anything it does will introduce a distortion. But assume there is a good case for intervention. What’s the best approach?

As an economist, I favor something I call the “specificity rule,” which holds that the best policy is the one that most specifically targets the problem and so introduces the fewest distortions into the system. In the auto worker case, training programs to develop skills and specific investment incentives would make sense. Stimulus to purchase new autos would help, but would be less efficient because they would subsidize existing jobs as well as any new ones created. A tariff on imported cars would create additional unnecessary inefficiencies as well as shrink the car market overall by raising prices. That’s bad. A tariff on all imported products would depress overall demand and do little for the auto workers.

I hope the specificity rule makes sense. Specific solutions are often slower to implement and often require targeted expenditures, but are better in terms of losses in efficiency, growth, and consumer benefits. All policies have a cost that’s either paid through taxes to fund programs or higher costs and prices (or sometimes both) on producers and consumers. Keeping the total cost low and distortions minimized while achieving results is the goal.

Uneven Field

What does this have to do with wine? Well, the global wine industry is in a slump right now, and winegrowers around the world are suffering with low prices, reduced demand, and acres and acres of surplus fruit. Because wine is an important industry in many countries, governments are supplying aid in order to stabilize agricultural incomes, facilitate adjustment to different land uses, and promote wine sales, especially in export markets.

You can argue whether this aid is a good idea or not, but much of it (especially the adjustment assistance) more or less adheres to the specificity rule. The policies are focused on the intended results.

Wine is an important industry here in the United States, too, but government policies to stabilize, adjust, and promote are much less forthcoming here, which creates, as many have noted, an uneven playing field for U.S. wine and winegrape growing. To a certain extent, U.S. growers bear a part of the burden of foreign adjustment. They would be justified in seeking similar specific assistance to better balance competitive forces.

Darn Tribbles!

Enter the Tariff Tribble. The chances of securing the targeted aid that American winegrape growers need seem very low in the current environment. (Indeed, this applies to agriculture generally, much of which has already been harmed by foreign reaction to American tariffs.) If more effective, specific assistance is not available, then it is understandable that some in the wine industry would turn to embrace tariffs.

But tariffs are the wrong solution to the problem because they cause collateral damage, invite retaliation, and, by raising prices, act to shrink the wine market and squeeze distribution generally.

Darn Tribbles. So lovable. But they can love you to death if you are not careful.

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Can’t resist including a scene from the original Star Trek episolde. Reminds me of how much tariffs and Tribbles have in common!

Tenuta Licinia: In Praise of Philosophers & their Wines

May 22, 2025 By Mike Veseth in Italian wine, wine, wine markets 1 Comment

If you flip to the back of my 2017 book Around the World in Eighty Wines, you’ll find a list of the wines from my global adventures. I didn’t want to just list them alphabetically or sort by price or critic rating. Organizing them by country of origin didn’t seem right, either. So I invented categories that would link wines with similar characteristics.

The Joy of Lists

The first category, “Wines of the People,” includes Two Buck Chuck, Mateus Rosé, Mouton Cadet Rouge, and Four Cousins Sweet Rosé from South Africa, among others. These are very different wines united by their popular appeal and market success. Do you see the connection?

Next up is “Noble Wines,” and it starts with Chateau Petrus and continues with Henschke’s “Hill of Grace” from Australia and several others. You can probably think of the wines that you’d add to the Noble list. I admit the lists are totally subjective. I’d probably include different wines today. That’s part of the joy of wine (and of lists).

One of my favorite groups is called “Philosopher Wines.” Sometimes we encounter wines that demand more attention than others and provoke a certain amount of introspection, too. You don’t drink them so much as contemplate them. And we are sad when the glass is finally empty.

Philosopher vs Philosopher’s

These are the “Philosopher Wines” and just reading the list (which starts with a 100-year-old Tawny from Seppeltsfield in Australia and ends with Methode Ancienne Cabernet Sauvignon from Springfield Estate in South Africa) gives me a special feeling.

I don’t plan to revise or update my 80-wine journey but, if I were to update the list, I think I’d have to add a new category. In addition to “Philosopher Wines” I’d have “Philosopher’s Wine,” wines made by philosophers. I’ll bet there are more than a few (didn’t Warren Winiarski of Stag’s Leap Wine Cellars study political philosophy at the University of Chicago before he went down the wine rabbit hole?).

This thought is provoked by an online tasting of Tenuta Licinia wines that Sue and I took part in a few weeks ago. Tenuta Licinia is a small (6.5 hectares of vineyards) winery in a part of Tuscany that doesn’t get too much attention. This particular area near Lucignano had a long history of wine that faded in the 20th Century. Now it is coming back.

A Certain Idea of Wine

The project started about 50 years ago as the personal mission of Jacques de Liedekerke, a prominent Belgian attorney. He recognized the potential of certain vineyard plots in the region and, over 20 years, slowly brought them back to life. His vineyards and his mission eventually passed to his grandson, James Marshall, who, like Winiarski, has followed a path from the serious study of philosophy to the serious study of viticulture and enology.

Talking with Marshall via Zoom reminded me (in a good way, I want to point out) of any number of conversations I have had with philosophers during my academic years. There were thoughtful pauses and occasional clouds of self-doubt mixed with sure statements of principle and intent.

Marshall has for sure a certain idea of wine (to paraphrase Charles De Gaulle), which is based on particular sites with their aspects and soil profiles and particular grape varieties and getting the combinations just right. Winemakers, like philosophers, need to have strong principles that they constantly question, I guess.

Marshall has a number of provocative ideas about wine and one that I like a lot is that his wines should be so good that they appeal to novices, people who don’t know much about wine or don’t have much experience with it. This struck me as odd at first because we normally think of novices as having simple tastes that need to be developed over time to appreciate the best wine.

The Magic Words

But then he said the magic words, Chateau d’Yquem. D’Yquem is widely recognized as one of the world’s greatest wines (indeed, it is often named the world’s best). Yet, Marshall noted, it is immediately appealing to both experts and rookies. His goal isn’t to make a Tuscan d’Yquem, but to make wines as delicious and appealing in their own ways as d’Yquem is in its way.

We were lucky to receive four wines to sample. The Tenuta Licinia Montepolli (named for the vineyard) is an IGT Toscana blend of Merlot and Petit Verdot that was elegant and delicious. The IGT Toscana Sasso di Fato, a blend of Cabernet Sauvignon, Cabernet Franc, and Petit Verdot, was complex, elegant, and memorable. One of the best wines of the year so far. Both wines were light and bright and refreshing, but serious at their core.

Sue and I agreed that the wines did not especially remind us of their component grape varieties. They tasted like … well, I guess they tasted of the place more than the grape and, if this is true, it reflects Marshall’s intent and his attention to detail.

The Petit Verdot Question

We also received half bottles of varietal Cabernet Franc and Sangiovese and we are working on a sampling strategy for them. But the wine that I would love to taste is the 100% Petit Verdot Sasso di Licinia because Marshall brought it up so often in the Zoom interview.

He really doesn’t like the Petit Verdot, he said a couple of times. Wrong grape, wrong place. Subsoils not exactly right. Not what he wants to do. But it is really good with the local Tuscan steak and in fact a neighborhood restaurant wants him to put some in bag-in-box for by-the-glass sales, which makes sense. Marshall really doesn’t like the idea of bag-in-box any more than he likes the Petit Verdot itself, but the wine is really nice with the steak. That’s a fact. So maybe he should do it.

And so on, around and around. Maybe yes, maybe no. It’s kind of fun to turn it over in your mind and see where you come out. Oh, philosophers, you are so interesting! And some of you make really good wine. I’d love to hear from other philosopher winemakers in the comments section.

Don Melchor & Chile’s Good Value Curse

May 20, 2025 By Mike Veseth in Chilean wines, economic crisis, trade wars, wine, wine markets 4 Comments

Sue and I have been looking for the right excuse to open a bottle of Don Melchor, the famous Chilean Cabernet Sauvignon that was named 2024 Wine of the Year by Wine Spectator magazine. Finally, we decided that the act of pulling the cork was excuse enough, and we enjoyed the wine with a nice steak.

Don Melchor is the flagship winery of Concha y Toro, one of the world’s most respected wine producers. The wine was world class, balanced and elegant, and paired perfectly with a dry-aged steak. I admit that I don’t really know what it means to be “wine of the year,” but this wine (and everyone who helped make it) deserves whatever recognition they receive. Bravo!

Message in a Bottle?

You would think that the year’s top wine could be the wine with the highest score, but if you pay attention to these things, you have already noticed that, while all the highlighted wines have high scores, the final rankings are not simply by the numbers.

Sometimes, it seems to me, the people who put together Top 10 or Top 100 lists (and not just Wine Spectator) want to send a message. Sometimes it is to highlight particular regions or to balance Old World and New World recognition. In 2009, in the aftermath of the global financial crisis, for example, a Reserve Cabernet Sauvignon from Columbia Crest was Wine Spectator’s top wine. It was an excellent wine (a friend opened a bottle for us last year), but I think it was chosen in part to send a message that excellent wines didn’t have to cost a fortune (the release price of the Columbia Crest was just $27) or come from Bordeaux or Napa, either.

In the same way, I suspect that the Don Melchor was chosen at least in part to draw attention to Chile’s excellent wines and the fact that they can command high prices. (The Don Melchor we enjoyed was an editorial sample, but the local Total Wine has it in stock for $140.) Chilean wines have long been filed under “good value,” which is much better than a “bad value” label that some other regions have earned. But I think many producers see good value as a barrier to their quest for higher status. The Wine Spectator award helped in this regard, and the Don Melchor wine has the quality to make the label stick, if you know what I mean.

The Good Value Curse

You can see the good value curse in the numbers. U.S. wine market data in the most recent issue of Wine Business Monthly put the average bottle-equivalent price for Chilean wine at $5.04 for the previous 12 months, lower than the import average of $9.66 and even lower than Australia’s $5.49.

Not surprisingly, measured U.S. sales of Chilean wine are down with the rest of the market, falling 3.6% by volume and 0.3% by value. (These declines are actually less than the overall market’s decline.)

Chile is more dependent on export markets than most other major producing countries, so wine market contractions in the U.S., U.K., and perhaps especially China have been a major blow. Factor in the uncertainty caused by the Trump tariffs and the list of Chilean wine’s challenges grows.

It is, therefore shocking, but perhaps not surprising to see this graph from the OIV database, which shows that the vineyard area in Chile has quite suddenly declined back to levels last seen at the turn of the century. Wine grapes are unprofitable, especially in the O’Higgins region, according to a Department of Agriculture report. Growers are shifting to cherries, citrus, and other crops with better prospects and margins.

Quality and Diversity

Sue and I have sampled many Chilean wines and we have been impressed by both the surprising diversity of wine types and styles and the steady rise in quality. The challenge, or perhaps one of the challenges, is to bring the best of Chile’s wine into sharper focus for consumers who confront a dazzling array of wine choices. Not an easy task, especially in this market environment.

Don Melchor has a role to play here as a sort of beacon to draw consumers closer to the world of quality Chilean wines.