Two Faces of Wine Innovation & Sustainability: SIMEI and Amorim

Sue and I recently returned from the biennial  SIMEI trade show in Milan. SIMEI stands for Salone Internazionale Macchine per EnologIi e Imbottigiiamento, which translates as International Enological and Bottling Equipment Exhibition.

SIMEI By the Numbers

The trade show’s focus  is narrow (equipment and technology) compared to the all-things-wine Unified Wine & Grape Symposium here in the U.S, which is my point of reference for these things. But its scope is broad, including not just the wine industry since tanks, bottling equipment, etc. are used in other sectors such as olive oil and so forth. No wonder so many people found a reason to attend.

By the numbers (according to SIMEI’s press release) there were 46,000 visitors from 90 countries, 600 exhibitors from 28 countries, and 12,000 tons of equipment and products displayed. The trade show took up 4 huge halls in the vast Fieromilano Rho exhibition center. The video below gives you a sense of the scale and scene.

Technology was the star of the show and one of the highlights was a gala dinner where awards were presented for outstanding new innovations. Wines & Vines reported on the top innovations.

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Sustainability Congress: Theory vs Practice

SIMEI is organized by the Unione Italiana Vini (Italian Wine Association), whose members account for 70 percent of wine production in Italy. They organized two international congresses in conjunction with the trade show as well as a number of presentations and demonstrations that took place in the halls among the big machines.

The congress on “Sustainable Viticulture as a Tribute to Wine Quality” followed up on a similar session in SIMEI 2013. The earlier meeting worked to agree a universal definition of sustainability in the wine industry, which is either easy or difficult depending upon how you approach the question.

It is easy to agree in theory that sustainability includes economic sustainability, environmental sustainability, and social sustainability “pillars” — this is now conventional wisdom. But just what exactly is meant by each concept and how can they be evaluated in practice? Not so easy.

The 2015 meeting probed some of the issues and trade-offs between and among the three pillars. One line of discussion noted the need for sustainability to be certified according to objective criteria, which is important if the concept is to mean anything. But what and whose criteria should be used?

I think there was a consensus in the room that a common or universal set of standards was needed (“harmonization” is a term often used here). Although I am probably wrong about this as I am about many things, I spoke in opposition to the single-minded pursuit of universal standards.

I see each country or region starting from a different base and often facing different economic, environmental, and social issues and constraints. I argued that at this moment it is more important that each region make the most progress it can towards sustainability. I cited programs in South Africa and New Zealand as good examples.milano

I worry that putting the main emphasis on having universal standards will  result either in diluted “least common denominator” rules or will squeeze stakeholders out of the sustainability movement altogether, limiting its reach and effectiveness, because the common rules do  not address their particular situations and concerns.

One size does not necessarily fit all, even if there is some wiggle room built in. It took only a moment for an EU representative to rise and explain to the audience why I was wrong, but I will stick to my viewpoint.

I admit that my views are based on an American way of looking at things (I love the grand Federalist laboratory that is the United States), but I don’t think this is exclusively an American attitude. I do not see universal wine sustainability rules happening soon within the US much less on a global scale.

Amorim’s Sustainability Initiative

If turning theory into practice was not easily accomplished in the congress center, there was plenty of evidence of strong efforts out in the trade show. Sustainability isn’t just ethics or philosophy, it is also good business and many of the exhibitors have embraced this concept.

An example is Amorim, the innovative Portuguese producer of corks for the global wine industry and many other cork products. We stopped by the Amorim exhibit and talked with Carlos de Jesus, marketing director of Amorim, and Carlos Santos, the head of Amorim Cork Italia. They were both excited to tell us about Amorim’s cork recycling programs, which tick all three sustainability boxes.

Cork is a natural product so it would seem that recycling it in a sustainable way would be easy, but it is not. You cannot, for example, simply re-use a wine cork on another bottle of wine — health and safety laws as well as common sense rule that out.

So the challenge is to collect the used corks and then repurpose them in some way that adds value to society without bankrupting all involved. The Amorim approach (which is implemented in different specific ways in each country where it has been rolled out) partners with local non-profit groups to collect the corks, keeping them out of the landfill.

Amorim pays these groups for the corks (thus supporting their social programs) and then grinds up the cork and partners with various producers to make useful products. In the U.S. you might have seen shoes with soles made from recycled cork, for example.

In Italy the cork is used to make the sort of building insulation panels that would otherwise by made out of foam. Cork is an excellent insulator and the price is competitive with the conventional product.

The Amorim program promotes social and environmental goals. What about economics? Well, I was told, this isn’t designed to be a profit center for Amorim. The idea is not to make a lot of middleman money reselling the corks that the non-profits have collected, but rather to facilitate the recycling system itself.

Many Small Steps Can Add Up

But that doesn’t mean that it isn’t good for business, Carlos de Jesus stressed. Amorim mainly markets to its direct buyers — the wineries — and doesn’t have as much interaction as they would like with the people who ultimately open the bottles. Programs like this give Amorim an opportunity to tell cork’s sustainability story directly to consumers and to establish a very positive image of cork with them. And since producers want their products to appeal to consumers, if consumers have a reason to choose cork  … well you can see where this can lead.

Amorin’s program is important even if it is a small step toward the goal of sustainability. If each sector of the industry can search out an appropriate strategy (and each region of the wine world do the same), then all these small steps can potentially add up to the more sustainable future that is the goal.

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Book Reviews: “Thirsty Dragon” and “A Decent Bottle of Wine in China”

Brief reviews of two new books on wine in China.

Suzanne Mustacich, Thirsty Dragon: China’s Lust for Bordeaux and the Threat to the World’s Best Wines (Henry Holt, 2015).

Suzanne Mustacich’s new book is rightly being hailed as one of the wine books of the year (the Financial Times named it one of 2015’s best business books). It is a great read and deserves both critical acclaim and your attention.

I have tried to follow the China wine scene closely over the last ten years, but I still found that I learned something new in every chapter. Mustacich deftly connects the dots and supplies depth and detail. The stories she tells are incredibly interesting and relevant. Each chapter reads like a New Yorker magazine investigative reporting piece — that’s meant as high praise.

In broad terms, you might say that Thirsty Dragon is a love story. First China discovers that it loves Bordeaux, then Bordeaux realizes that it desperately needs China whether it loves her or not, then finally China realizes that its lust for Bordeaux might have been a mistake. In the end we have Chinese-owned Bordeaux chateaux and French investments in China and, in a funny way, if is hard to know where one set of influences and dependencies stop and another begins. Bordeaux may never be the same after its China fling and China has changed a lot, too.pogo-we-have-met-800wi

Along the way we are introduced to many fascinating personalities, both the usual big time suspects and smaller players whose stories reveal a great deal.  This is the perfect book if you are interested in China or in Bordeaux or in wine or in how globalization is changing business culture. Highly recommended.

The subtitle suggests a “threat to the world’s best wines” and I struggled just a bit trying to decide what Mustacich meant by this. Is the threat due to fraud and counterfeit, which are analyzed in detail here? Is the threat the collapse of Bordeaux’s en primeur system, which is analyzed in detail. Or is it the of the rapidly growing Chinese wine industry itself, with its peculiar characteristics?

Certainly Bordeaux has reason to feel threatened by changing economic circumstances, but it is not clear who is to blame for that! Sometimes, as Pogo said, we are our own worst enemies.

I was fortunate to moderate a panel discussion of wine in China that featured Suzanne Mustacich and I asked her about the threat. Two threats, she said. The first is from the rampant fraud, which undermines the market for top wines. The second was the greed that drove China’s speculative wine bubble. I agree, that’s a real threat — one of those Pogo problems.

Thirsty Dragon is a must read if you want to understand how China is transforming the world of wine.

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Chris Ruffle, A Decent Bottle of Wine in China (Earnshaw Books, 2015).

Chris Ruffle is a Chinese-speaking Yorkshire native who specializes in finance. So it makes perfect sense that he would decide to plant vineyards in Shandong and build a winery designed on the model of a Scottish castle. His quest to produce A Decent Bottle of Wine in China is a very personal account of his ten-year castle-building, vineyard-planting, wine-making journey.

Ruffle writes that he began this book project intending to write one of those popular romantic ex-pat stories like A Year in Provence or Under the Tuscan Sun, but the business side of the winery just wouldn’t be left out. Indeed, much of the book follows the author and his family as they deal with pesky neighbors, inconvenient local officials and inefficient workmen and contractors in a very Year Under the Shandong Sun sort of way.

But the book this really reminds me of is Caro Feely’s excellent Grape Expectations: A Family’s Vineyard Adventure in France. Feely and her family moved from Ireland to France to follow their dream and the winery they restore is nobody’s idea of a castle, but otherwise there many similarities. Both books teach a lot about wine-growing, wine business, the clash of cultures that ex-pats experience, and the power of wine to overcome obstacles.

One big difference is that the Feelys went all in on their project. No day job safety net. Ruffle kept his investment fund job and it is a good thing. Ten years in and with enormous work and investment, his Treaty Port winery is just about breaking even (if, of course, you don’t count the value of his time).

But, and this is the point, he is by his own account finally making that decent bottle of wine in China and not losing too much money in on each sale! A fascinating story, full of great information about China, wine and life.

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These two books could not be more different, but because they are both about wine in China I kept waiting for them to intersect. And they did in at least two places.

Mustacich gives a good account of both Chinese wine investments in France and French projects in China. One of these is a vineyard and winery that DBR Lafite, one of the most famous Bordeaux names, has built-in Shandong. In fact the project is next door to Ruffle’s Treaty Port winery and the first Lafite Chinese vintage was actually made in Ruffle’s cellars.

This would seem to give credibility to Ruffle’s project, and it does, but I feel a little sad for Lafite because Ruffle reports all sorts of mold and fungus problems in the vineyards (not especially good news for nearby Lafite) and, just when it looks like things are getting better, the government decides to build a big highway through both the Treaty Port and Lafite vineyard properties. Yikes!

The award-winning Silver Heights winery is featured in Thirsty Dragon and it makes a cameo appearance in Ruffle’s book. Chris Ruffle and his wife make a trip to visit this highly regarded producer and, at the end, Chris’s wife turns to him and says she’s really glad they went. They are even crazier than you are, she says. Always good to put things in perspective, I guess!

Do you have to be crazy to make a decent bottle of wine (in China or anywhere else)? I will leave that up to you.

Legendary Fred Franzia to Speak at Unified Symposium Luncheon

Sue and I will be at the Unified Wine & Grape Symposium in Sacramento on January 26-28, 2016 where I will once again moderate the State of the Industry session featuring presentations by Steve Fredricks of Turrentine Brokerage, Nat DuBuduo of Allied Grape Growers and Jon Fredrikson of Gomberg, Fredrikson & Associates.

I always look forward to the Wednesday “State of the Industry” panel because the speakers are so well-informed and the information so timely and interesting. But if I am honest, this year I am even more excited about the Tuesday luncheon gathering because that speaker will be the legendary Fred Franzia (a.k.a. Mr Two Buck Chuck) of Bronco Wine. Wouldn’t miss this for the world!

Bronco By the Numbers

Bronco Wine Company is a major force in the U.S. wine industry. According to the most recent Wine Business Monthly report, Bronco’s 20 million annual case volume makes it the fourth largest U.S. wine company after Gallo, The Wine Group, and Constellation Brands. Although Charles Shaw (a.k.a. Two Buck Chuck) is the best known Bronco label, the company has more than 50 brands. One of the products that Bronco does not make is Franzia, the popular box wine, which belongs to The Wine Group. Franzia doesn’t make Franzia? It’s a long story that I will tell another time.

Bronco’s history began in 1973, when Fred Franzia and his brother Joseph met with their cousin John and pledged to go all in to build a new wine company. Equipped with a tiny bank loan, their knowledge of the business side (Fred and Joseph) and of winemaking (John), plus a major measure of determination, they set out on the twisting road that has brought them to their current position.

Their accomplishment is quite breathtaking when you think about it.  Bronco today boasts impressive winemaking facilities, a packaging and distribution center in Napa and about 40,000 acres of vineyards. No, I didn’t make a mistake, the number is 40,000, making Bronco one of the largest vineyard owners in the world.P1100664

The Miracle of Two Buck Chuck

One of Bronco’s greatest achievements, of course, is the success of the Charles Shaw wines sold at Trader Joe’s stores. These clean, balanced, and affordable wines played an important role in the democratization of wine in the United States. So many previously intimidated consumers were drawn into the wine market by Two Buck Chuck and the other wines it inspired or provoked.

I wrote about “the miracle of Two Buck Chuck” in my 2011 book Wine Wars. The quality of these inexpensive wines forced other winemakers to raise their game and give better value, which in turn gave consumers more confidence and expanded the wine market’s reach. If you think about the U.S. wine world before 1973, well it really is a miracle that we have come so far. The Franzias played an important role.

The View from Bronco Wine

What will Fred Franzia talk about at the Unified Symposium luncheon? Obviously I don’t really know, but I hope that he will look back at some of the inspiring figures that he has known in his life in American wine and look ahead at some of the challenges he sees for the future. I’m hoping to be  informed, entertained, and inspired.P1100655

Sue and I had an opportunity to talk about the past, present, and future of American wine with Fred Franzia back in September. Fred invited us to come down to see what a large-scale grape harvest looks like. Fred’s son Joey took us to see the night harvest at a 4000-acre vineyard ranch near Lodi — quite an experience to see the big machines at work under the stars.

We also visited the Napa bottling and distribution center and the main winery in Ceres, where we had lunch with Fred, Joseph, and John Franzia. Then John took us through the working winery (he designed it and supervised its construction), which was receiving grapes picked the night before (more than 300 big truck loads a day at that time).

Big and Bigger

The scale of the Ceres operation got our attention, of course. We saw some tanks that held 350,000 gallons of wine each. Big as they are, they were dwarfed by other tanks that held twice as much. Amazing.

Once we got used to the scale of the Bronco winery we began to appreciate the tremendous attention to detail, which was apparent in all of the other Bronco operations we visited. So many moving parts coordinated so efficiently. Very impressive. We enjoyed the opportunity to sit and chat with Fred in his modest trailer office and to hear some stories from the past and his vision of the future. I’m hoping to hear more along these lines when Fred gives his luncheon talk.

The Name is Shaw, Charlie Shaw

Let me share one story. Fred told us that he was making a call  at a Trader Joe’s store — he still handles that account himself — and struck up a conversation with a young man who was stocking a Charles Shaw display. Fred asked about how the wine was selling and what customers were saying and so on and the clerk asked who he was and why he wanted to know. Well, Fred replied, I’m one of the people who help make this wine — I work at the winery.

Wow, the clerk exclaimed. You’re Charles Shaw? You’re Charlie Shaw! No, no, my  name’s not Shaw, Fred tried to explain, but it was too late and a minute later the store PA system announced that Charles Shaw was visiting the wine aisle. Amazed customers surged to the Two Buck Chuck display to thank their hero and Fred spent the rest of his visit happily autographing wine bottles. A rock-star moment!

I hope I have the details of that story right (and I apologize if I’ve messed up) because it says a something about the pride and personal touch that we found everywhere at Bronco and about the warm enthusiasm that Charlie Shaw inspires in his fans.

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Sue’s photos above show the blur of the Charles Shaw bottling line at the Bronco Napa facility and a tractor driver during night harvest.

Georgia to Host UNWTO Global Wine Tourism Conference in 2016

I think the United Nations has a thing about wine. I recently wrote about the surprising number of wine regions that have received Unesco World Heritage site recognition, for example. Now the United Nations World Tourism Organization (UNWTO) is getting into the act.

The 1st UNWTO Global Conference on Wine Tourism will be held in the Kakheti wine region of Georgia from 7-9 September 2016. “Wine tourism represents a growing segment with immense opportunities to diversify demand. In the case of Georgia, this potential is well-known and we are very pleased to be holding the first UNWTO Global Conference on Wine Tourism in the country,” according to UNWTO Secretary-General, Taleb Rifai.

Why Georgia? History is part of the story, but it is also true that wine is an effective way to promote tourism and economic development. Come for the wine (and food) and stay for the people, culture, history and geography. Trade and investment flows may follow the wine route, too. Georgian officials appreciate this logic.

“Georgia’s unique wine-making traditions date back 8,000 years and are part of UNESCO’s intangible heritage, creating the ideal base to host the Wine Tourism Conference. Herewith, the country’s recent success in attracting a growing number of tourists, its development in terms of tourism products, branding and marketing present an excellent platform to share best practices, experience and knowledge¨ according to Dimitry Kumsishvili, Minister of Economy and Sustainable Development of Georgia.

U.S. regional wine associations with a strong interest in wine tourism may be able to participate in the Georgia program, but I am not sure about the details.  More information can be found here.

I wrote about wine tourism in my book Extreme Wine, so I am going to be following this initiative closely. Best wishes to Georgia and the UNWTO for a successful inaugural conference.

A Kenyan Wine Mystery: Whatever Happened to Richard Leakey’s Il Masin?

I’m working on a project about wine in Africa and I need some help. Does anyone know if Il Masin in Kenya is still making wine? Here’s the label of their 2005 Pinot Noir. I can find references to Il Masin on the internet up until about 2012 and then … nothing. Are they still around?

Il Masin is interesting in many respects starting with the basics: Pinot Noir in Kenya? Really? But the fascinating thing for me is who is or was behind the project: paleoanthropologist Richard Leakey! 

Here’s a link to the blog that Leakey’s daughter (and his winery partner) Louise maintained until 2011. Whatever happened to Il Masin? Please use the comments function below to leave a message if you have any information.

Thanks in advance for your help!

Looking Back at the European Invasion of California Wine

The Beatles’ Boeing 707 landed in the USA on February 7, 1964 and pop music has never been the same. It isn’t that the British Invasion conquered American pop music as much as that a creative dynamic was accelerated. The influence can still be felt more than 50 years later.

Another invasion took place from about 1970 to 1990 when a number of Europeans made significant wine investments in the United States, stirring the creative pot in ways big and small. Last week I talked about the Skalli family’s Mondavi-inspired investment in St Supéry and the recent sale of that property to the brothers who own Chanel.  That event got me to thinking about the other invaders. Where are they now? Here are a few quick case studies.

Chandon’s French Invasion

Domaine Chandon, for example, has thrived as a sparkling wine producer and now also a maker of fine still wines.  Chandon California (1973) is part of Moët Hennessy’s  global luxury wine portfolio that also includes Newton Vineyard in Cailfornia, Chandon Argentina (1959), Chandon do BrazIl (1973), Chandon Australia (1986) and Chandon China (2013) as well as Cape Mentelle, Cloudy Bay, and other famous brands.

(Newton Vineyard is the part of the answer to one of my favorite trivia questions. What two California wineries were featured in the Japanese re-make of the film Sideways, which was set in Napa Valley? Answer: Newton and Frog’s Leap.)

Boisset Comes, Goes, Returns

Chandon was not the only French firm to invest in the California wine industry. Boisset, known today for DeLoach, Raymond, and Buena Vista wineries among others, came on the scene in the early 1980s. In fact, Boisset sold Robert Skalli  the Rutherford property on Highway 29 that became the St Supéry winery.

Boisset first entered the California market as an importer and producer in 1980. The Rutherford property was purchased in 1982 (the Victorian home you see there was used as a summer residence for a couple of years). But it was sold to Skalli in 1984  as the result of a strategic shift to focus to building the company back in France rather than expanding further into California.

Jean-Charles Boisset returned in California in 2003 with the DeLoach purchase and has gone on to become an integral part of the wine industry here with a large wine portfolio and deep local roots. He is married to Gina Gallo and the couple live in the old Robert Mondavi house.

Water to Wine: Hess Collection

Donald Hess wasn’t looking to start a winery when he came to the U.S. from Switzerland in 1978, although he ended up creating the Hess Collection vineyard and winery on  Mount Veeder and starting an international wine portfolio that now reaches out to California, Argentina and South Africa. Hess wanted to produce and sell bottled water in the U.S. and he traveled across the country looking for both a production source that appealed to him and evidence that there was a growing market for bottled water.

Having failed on both fronts when it came to water (he was obviously just ahead of his time), Hess became inspired by some of the wines he tasted and changed direction. He invested first in the vineyards high up on Mount Veeder and then took over the historic Christian Brothers winery up there, which is quite an inspiring place to visit now that Hess has strengthened and restored it after the Napa earthquake. Hess’s signature modern art collection is spectacular, too, and some of the wines we tasted were memorable indeed. 

Atlas Peak to Antica Napa Valley

As we drove the winding road to Antica Napa Valley I had that feeling of déjà vu: have I been on this road before? Impossible? Nothing much out here except Antica Napa, the Antinori family’s Napa Valley winery (the Antinori are also involved in Stag’s Leap Wine Cellars and Red Mountain’s Col Solare in partnership with Ste Michelle Wine Estates) and this was our first visit.

But I think I had been there before, back when it was called Atlas Peak. The winery and its famous cave system are a fascinating story. Piero Antinori first came to California in 1966, when Robert Mondavi was just starting out with his new winery. Antinori fell in love with the place and started a slow, thorough search for the right path to enter the region.  He finally found it in 1986 when he entered into agreement to purchase land for vineyards and a site for a winery in the beautiful Atlas Peak area. Antinori formed a partnership with Whitbread, Inc., the British brewer, and Christian Bizot of Bollinger Champagne, who were also keen to get a toe in the U.S. pond.

The partnership did not go quite as planned (a long story that Richard G. Peterson outlines in part in his new book The Winemaker) and in 1993 Antinori bought out the Whitbread and Bollinger shares and in 2006 renamed the operation Antica (Antinori + California) Napa Valley.  The road from 1966 to today has been as full of twists and turns as the road to the winery itself and I think it is fair to say that the journey continues with growing confidence. The Townsend Vineyard Cabernet Sauvignon we tasted speaks volumes about this winery’s capacity, vision and direction.

Two for [Opus] One 

No one remembers for sure, it is said, whether it was Mondavi who approached the Rothschilds or if it was the other way around, but whoever had the idea for a French-California partnership it proved to be a good one. The terms were simple: fifty-fifty. No one had a controlling interest, everything had to be mutually agreed.

The first Opus One wines were made in 1979 and 1980 and in 1981 a single pre-release case sold for $24,000 at the Napa Valley Wine Auction. It was the highest price ever paid for an American wine at the time and still quite a lot of money for a case of wine today. The first wines were released in 1984.

The landmark winery sits just off Highway 29 across the road from the Robert Mondavi winery where those very first wines were made. The dramatic architecture of the winery gets all the attention, but the vineyards are the important thing here.  Opus One counts part of the historic To Kalon vineyard as a key asset and component in its wine.

Constellation Brands purchased Mondavi in 2005 and inherited half ownership of Opus One. The Rothschilds considered buying out the American half interest as was their right under the founding agreement, but opted instead to keep the winery with a foot in both wine worlds. Constellation and the Rothschilds reached an agreement to remain partners while assuring the winery’s independence and integrity.

Unintended Consequences

I admit to being surprised when I learned about the Constellation side of Opus One.  I could not imagine that the Mondavi family would structure things in a way that would allow this jewel to slip away.

But things don’t always turn out the way we plan and perhaps this quick survey of the European Invasion shows just how diverse the experience has been for those who came to America in the 70s and 80s to make wine here (and for American winemakers, too).

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Thirsty Dragon? Symposium on the Wine Trade in China

Suzanne Mustacich’s new book about wine in China, Thirsty Dragon: China’s Lust for Bordeaux and the Threat to the World’s Best Winesseems to have captured the wine world’s imagination.

Jancis Robinson raved  about Thirsty Dragon in her regular Saturday Financial Times column. This is a bigger deal than than you might think because Jancis is generally too busy writing great books to take time to review them! Thirsty Dragon clearly is something special.

My copy hasn’t arrived yet, so look for a book review here at The Wine Economist in a couple of weeks. In the meantime some of you in the Seattle-Tacoma area can meet the author, learn more about wine in China, and taste Chinese wines.

Wildside Wine in Tacoma is hosting a program called Symposium: The Wine Trade in China on Monday, November 30 at 6:30 PM. The cost is $25 , which includes wine and h’ors d’oeuvres. The event is nearly sold out, but if you are interested check with Carol at  wildsidewine@comcast.net.

I will be there to add what I can to the discussion, but the featured speakers will be the  China experts: Suzanne Mustacich and my academic colleagues Pierre Ly and Cynthia Howson, who have recently returned from another fieldwork expedition to China to gather information for their own forthcoming book about the Chinese wine industry.  I’m looking forward to meeting Suzanne and learning more about the Thirsty Dragon!

St Supéry Winery Sale: From Algeria to California & from Skalli to Chanel

I was surprised to learn a couple of weeks ago that Robert Skalli, founder of the St Supéry winery in Rutherford, was selling his family’s iconic winery and vineyards to Chanel, the French luxury goods producer.  Press coverage such as an article in Decanter was pretty limited — not much more than the press release version of things — lots of unanswered questions in my mind.

Sue and I visited St Supéry in September (we loved the wines and the people we met) and we were told many times how committed the Skalli family was to the project, so I was caught off guard by the change in ownership. It is natural to keep quiet about a business deal until it is finally done of course, but the quick change got my attention.

All in the Families

The facts of the sale are these. Chanel owners Alain and Gérard Wertheimer,  who are said to be worth €16.6bn, have reached an agreement to pay an undisclosed sum for the winery on Highway 29 in Rutherford, the 35-acre vineyard there and the magnificent 1500-acre Dollarhide Vineyard up north in the hills.

No reason was given for the sale, although Skalli is quoted saying he happy that his winery will be run by a firm that shares his values. The Wertheimers own two wineries in Bordeaux, Château Rauzan-Ségla and Château Canon, but there is no indication that they plan to build a luxury winery portfolio. Lots of questions — why, how much, and so forth — but winery sales happen all the time and details are not always fully revealed. So why am I so curious to find out more?

I first got interested in St Supéry when I was working on my 2011 book Wine Wars. I was examining the tensions between New World and Old World ideas about wine and I came across the fascinating story of the Skalli family wine empire.

Rise and Fall of Skalli Wine Empire

Robert Skalli is the founder of the Skalli Group, a holding company that was until 2011 one of the largest producers of wines in the Languedoc.  The Skalli conglomerate made branded varietal wines  and sold them in France and around the world. Skalli sold almost all its wine interests to Boisset in 2011. Almost all? They  held on to St Supéry.

Robert Skalli’s grandparents were pied noirs, French migrants to Algeria.  Many pied noirs emigrated to Algeria starting in the 1870s, when phylloxera wiped out vineyards and grower incomes in the Languedoc. The Skallis left France in the 1930s, presumably in search of greater opportunity in Northern Africa – and they found it.

Robert-Elle Skalli, Robert Skalli’s grandfather, built an empire on grain and wine. By the time that Francis Skalli took over from his father after World War II, the family business included a huge grain operation, Rivoire et Carré with a mill in Marseilles, the number two pasta company in France, Lustucru, a vineyard in Corsica, a rice producer, Taureau Aile, and of course vineyards in Algeria.

By 1964 the Skalli vineyards in Algeria spread over 600,000 acres, which is nearly as large as all the vineyards in Languedoc today (700,000 acres, which is much less than a few years ago). This was the wine that the French négociants blended with the weaker Langudoc product to make industrial strength vin du jour and they made vast quantities of it.

Like many other pied noirs families, the Skalli eventually fled to France as a result of the Algerian war and its independence in 1962.  They settled in the Languedoc and went about rebuilding their business.  Robert Skalli entered his father’s and grandfather’s business in the 1970s and, as part of his education, studied and worked (as  a “flying intern”) with winemakers in Australia and the United States.

California Inspiration

Significantly, according to the official company history, he worked with Robert Mondavi, who introduced him to the idea of branded varietals and opened his eyes to a different vision of the wine business, one based not on the condition of supply (and the traditional practices and regulations governing production) but on demand and the development of vineyard, cellar and marketing techniques that would provide buyers with wine that they could understand, appreciate and that they would buy.

Skalli returned to France and began to organize a business to make the clean, consistent, mid-range varietal wines that he saw in California and Australia. He established partnerships with growers and cooperatives in the Languedoc, providing financing for the process of pulling out their tough old vines and replanting with market-friendly varietals like Merlot and Chardonnay. Replanting is expensive, both in direct outlays and in lost production while the vines mature.  I suppose having the backing of the profitable Skalli grain business was useful in this transformation process.

The main Skalli brand, Fortant de France, was established in 1983 to produce and market these wines both in France and in 25 foreign countries.  The Cabernet Sauvignon sold  for about six dollars a bottle back when I was doing my Wine Wars research. There was a cheaper brand, Couleurs Du Sud, sold mainly in European hypermarkets and also a kosher wine line.

Mondavi Again

The Skalli family eventually decided to concentrate on wine – the grain and pasta businesses were sold or spun off.  They had wine interests in Languedoc, the Rhone Valley, in Corsica, where they owned the largest private vineyard, and in California.   Skalli credits Mondavi with helping him make the St Supéry investment.

And in return Skalli supported Mondavi’s aborted attempt to invest in the Languedoc on the logic, I believe, that anything that Mondavi did would draw favorable attention to the Languedoc, which would benefit both family businesses.

In 2011 the Skalli family sold off their wine interests to Boisset but, significantly, retained St Supéry. This surprised me at the time and I figured that it must either signal a new direction or a special fondness for the Napa project. Now I am not sure what to think.

But it seems like the winery is probably in good hands if Chanel gives the excellent local team that Skalli developed some autonomy. Luxury goods companies are sometimes more focused on managing brands than making wine. Skalli seemed to be good at both and perhaps Chanel will take the winery to the next level. Fingers crossed for a bright future at St Supéry.

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The decade from about 1975 to 1985 featured a surprising number of European wine investments in California. Sue and I have made a point to visit many of them over the last few years to find out how they have changed or developed. How have those ambitious Euopean investments of 30-40 years ago turned out?  Tune in next week for some thoughts.

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The Wall Street Journal published an interesting article about Chateau Canon, one of Chanel’s French investment on November 11, 2015.  Unclear if this is  St Supéry’s future.

Wine Sustainability: Trade-off, Trilemma or Synergy? It’s Complicated!

milanSue and I are in Milan this week at the International Congress on Sustainability during the 26th edition of SIMEI – International Enological and Bottling Equipment Exhibition.  This event is sponsored by the Unione Italiana Vini, an association of Italian wine producers whose 500 members account for 70% of the nation’s wine.

I will be leading a discussion of the economic elements of sustainability in wine on Tuesday and then taking part in a panel that looks at the role of sensory analysis in sustainability on Wednesday.

One of the themes of the conference is that sustainability is not simply an ethical matter but also a key to wine quality and wine market success. I am looking forward to meeting the international group of speakers and participants.

I was asked to prepare a quick “ice breaker” presentation to jump-start the discussion of the economic aspects of sustainability in wine and I thought I would share its outline with you here. I begin with the conventional wisdom of the “triple bottom line” analysis: sustainability must take into account the natural, social and business environments. The question is how are these three related. The answer is “it’s complicated.”

Some people see these simply as discrete goals and focus on trade-offs. Others see sustainability as a trilemma — pick two and the third is eliminated. I can understand this logic, but I think it is possible to design for sustainability and I will try to direct the discussion towards strategies for synergy and success.

I plan to get the ball rolling by talking about the case of Durbanville Hills winery in South Africa, a success story in terms of both wine quality and sustainability. Durbanville Hills isn’t sustainable by accident but rather results from the combination of effective leadership, a progressive organizational design and strong institutional commitment by all stakeholders. Inspiring! I hope the participants will contribute other success stories that will collectively point the way forward.

The key, of course, is to bridge the gap between theory and practice. and to identify the key pressure points. Sustainability is important in wine both for the success of the industry and as a beacon to other sectors. Wine, with its strong social and cultural connections and its deep agricultural roots, presents a clear example of how complex thinking about sustainability pays off.

Ciao a tutti — hope to see you in Milan!

Book Review: Richard G. Peterson, An American Life in Wine

Richard G. Peterson, The Winemaker. Meadowlark Publishing, 2015.

I was going to title this review “A Life in American Wine,” but Richard Peterson’s autobiography is all-American through and through starting from humble Iowa origins on to university at Iowa State, a tour in the Marine Corps and then  a Masters in Food Science and PhD in Agricultural Chemistry at the University of California at Berkeley (the Davis campus was not yet a reality). Quite a journey for a coal-miner’s son.

Wine was part of the story from the early days. The photo on the cover shows Peterson making his first batch of wine in Iowa. The grapes were Concord. The year was 1948. He was 17 years of age.

The Research Lab at Gallo

As he was finishing his Ph.D. in 1958 Peterson was approached to come work in a new research lab at E&J Gallo, which was at that time the third largest wine producer in the U.S. after Roma and Italian Swiss Colony. Gallo was riding high on the basis of the success of Thunderbird and they wanted scientific rigor as they worked on both developing new products and improving the quality of existing ones. In retrospect, this was probably one of the best places to be in American wine at the time as the Gallos were willing and able to put resources into wine research and development.

Reading Peterson’s account of his time at Gallo and the people and products he found there is pure pleasure. It is a very personal account, not an academic study, and it gives the best insight I know into what was happening deep inside the industry in the 1960s when the foundations for the rise of American wine were being laid.

Working with Tchelistcheff

Peterson moved his family to Napa Valley in 1968 and started a new job. Where do you suppose one goes from Gallo? It is easy to think about American wine as being sharply divided into industrial wine and craft wine, but I have always maintained that American wine is more complicated than that and Peterson’s next step proves it. After much thought and many interviews, Andre Tchelistcheff hired Richard Peterson to work with him and eventually to take his place at Beaulieu Vineyards, one of Napa’s crown jewels.

Peterson stayed at Beaulieu through the sale to Heublein, leaving in 1973 and moving to an ambitious new project called The Monterey Vineyard. He stayed on as this project evolved into Taylor California Cellars with Coca Cola and then under Seagrams ownership. He moved to another ambitious new winery project, which Sue and I have recently visited. Today it is called Antica Napa, an outpost of the Antinori family in Napa Valley, but it was originally called Atlas Peak, a partnership between Whitbread, Inc., the British brewer, Christian Bizot of Bollinger Champagne and Piero Antinori.  Peterson built the elaborate cave system that we visited on our trip among other achievements here.

Gallo, Tchelistcheff, Antinori — quite a resume, don’t  you think? Peterson’s book takes the curious reader through wine science, wine history and wine business. There are several key themes. One is the importance of quality, even for inexpensive wines. This could be called “the Curse of the Thompson Seedless Grape.” A second theme deals with Peterson’s experiences working with people who know the wine industry or are willing to learn (Gallo and Coca Cola get good grades here) versus those who don’t understand wine or prefer to be ignorant (Hublein and Seagrams among others).

Bronco and Peynaud

One of my favorite parts of this book is a story that Peterson tells about some consulting work he did for Fred Franzia. Fred wanted to make sure that the Bronco winery in Ceres was doing everything right, so he paid Peterson to come around regularly and be a snooping “Big Brother” — seeing all, hearing all, and calling Bronco out if there was an issue. Peterson had contracted with Bronco for wine stocks when he ran Taylor California Cellar and he had a high regard for the winery’s quality and consistency. The attention to detail he saw on his inspections explained it all.

I was also fascinated by the brief section on Peterson’s work with Emile Peynaud. They couldn’t speak each other’s languages, but they found a way to speak wine, which I guess is a universal language. So many interesting stories here. Peterson is a lucky guy — what an interesting life!

Richard Peterson is generous with his praise and sympathetic with those who made honest mistakes, but very sharp with people and companies who tried to take unfair advantage of situations. Not everyone will be pleased with how they are portrayed in this book. It is a very personal account of American wine, told by a real insider. It is very much worth a place on your wine bookshelf.