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Wine prices heading up? Looks like it

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A very interesting article by economist Michael Veseth on his always compelling blog, Wine Economics. In it, he traces the economic forces currently impacting the global prices of wine. Concluding that “Wine prices in the U.S. appear to be heading up,” he asks the logical question, “what’s a bargain-seeking shopper to do?”

Among the external forces sending prices higher, Veseth writes, is the dollar’s weak position against the Euro (which is pushing the price of imports up) and high energy costs (which is boosting the price of everything that has to be transported). Another factor, which Veseth didn’t mention but is enormously relevant, concerns this report, from the Western Farm Press, that “2008 [California] wine grape prices [are the] highest in seven years.” Seems that Allied Grape Growers, the state’s largest grower coop, is reporting “better prices than any of the past seven years,” due to decreased acreage in the Central Valley. For example (I got these figures from the 2007 California Grape Acreage Report), standing acreage of red wine grapes in District 11 (San Joaquin and Sacramento counties) District 12 (San Joaquin, Stanislaus and Merced counties), District 13 (Madera, Fresno and Tulare counties) and District 14 (Kings, Kern) all dropped from 2006 to 2007. And that doesn’t take into account the loss of crop due to this past Spring’s historic freezes, which mainly impacted premium coastal grapegrowing areas. Meanwhile, wine from the 2005 and 2006 bumper crops is largely gone from the bulk markets, and consumption of California wine continues to grow, even as California wineries are experiencing increasing export success due to the weak dollar. As Record.net, an online publication, reported, “this price uptick could be the start of a long-term upswing” in both grape and wine prices.

Veseth looks to Southern Hemisphere (especially South African) wines for value, as well as his native Washington State. (He teaches at the University of Puget Sound.) Washington wines, he suggests, are as good as any, but “they suffer somewhat from an undervalued reputation” and so prices are lower. I myself have noted fewer “Best Buys” lately in my reviews of California wines at Wine Enthusiast. They still come in, but not with the frequency they used to. My impression is that prices are creeping upward in the under $12 category, while quality is either staying level or, in some cases, dipping. On the other hand, quality at the ultrapremium level is higher than ever — but hey, that doesn’t help the average consumer who’s looking for a bargain.

P.S. Check out this blog for a side-splitting “interview” of Sarah Palin, the Republican nominee for Vice President, on her favorite wine. It’s hilarious.

Please visit my posting on Gary Heck’s new luxury wine at Wine Enthusiast’s Unreserved.


Michael Mondavi on his new wine, high alcohol, high prices and lessons learned

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Michael Mondavi, Robert’s eldest, is releasing his first super-ultrapremium wine. M by Michael Mondavi, a 100 percent Cabernet Sauvignon, will be out this Fall. With a case production of about 700 and a retail price tag of $200, it’s his priciest launch yet, through his family-owned Folio Fine Wine Partners company. [I have not yet reviewed the wine.]

SH: What is the vine sourcing for M?

MM: A small vineyard on Atlas Peak, Animo. I was fortunate in that, in 1997 at Robert Mondavi [Winery], we were looking for a hillside vineyard as a component of the reserves and Opus [One]. But hillsides are not your best investment, so I said, “Why don’t I buy a small hillside [vineyard] for our highest-end wines, and we can do an arms-length contract year to year so there’s no conflict.”

Michael, in front, with Robert

SH: How did you arrive at the price?

MM: We went out and bought a number of the top wines, the usual suspects — the cult wines, as well as Dominus and Opus, et cetera. We lined them up, blind, and instead of saying which is first, second, third, we said, “What would I pay for this?” So it was a “priced tasting.” And it came out that, relatively speaking, our [wine] was way above many of those, so we priced it below a number of them and slightly above the others it showed better than. The other factor is, What are your costs? On a 15-acre vineyard, we had 12 separate days of harvesting.

SH: You told marketwatch.com last Spring, in a question about the economy, “When times are tighter, instead of buying a $200 bottle…people will go to their retail store [and] buy that for about $70.”

MM: And comparably, instead of paying $400 on a wine list, they’ll go to the retail store and buy it. The vast majority of First Growth Bordeaux and Burgundy are no longer bought at restaurants because the prices are so astronomical. They’ll buy those wines costing hundreds of dollars at retail. And I really wish restaurants with these high-end wines would have a sliding scale.

SH: What is the alcohol level on M?

MM: 14.1 percent. And our goal is [to get it] under 14 percent, because many of the wines I made [at Robert Mondavi Winery] in 1966-1974 were in the 12-1/2 to 13-1/2 percent range, and I’ve gone back and tasted those wines and they age spectacularly. The higher alcohol wines don’t age as well.

SH: What lessons did you learn from your experience at Robert Mondavi Winery?

MM: Not to get too big! I did that once, and I’m not going to repeat the mistake. We have two simple rules [at Folio]: We’ll only work with families we like and respect and want to spend time with, and we’ll only import and market wines we would proudly serve to our family and friends at home.


What makes a great brand launch?

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I’ve seen a lot of wineries come (and go). Some of them pop into existence with little fanfare, and operate more or less “steady as she goes,” hoping to turn a profit. But some wineries are overnight successes. Like a young Hollywood star who goes from waiting tables to the red carpet, they’re discovered.

What does it take?

You can always buy land in Napa, hire David Abreu to develop the vineyards and Helen Turley to make the wine (with Michel Rolland as a consultant). But most people can’t do that (or don’t want to). More instructive are successful brands that got there the old-fashioned way: They earned it. Here are some of the more memorable launches that come to mind, and the take-home lesson on how they got there.

- Siduri. Adam and Dianna Lee got drunk one night and, on impulse, dropped off a bottle of their first Pinot for Parker, who they heard was staying at Meadowood. The next morning, panicked, they tried to retrieve it. Too late; the concierge had delivered it to him. Parker loved it; Siduri’s reputation was secured. Take-home lesson: Get excited and take risks. (But you don’t have to be drunk.)
- Brewer-Clifton. Young Greg B. and Steve C. had a dream to make wine in the Santa Rita Hills. They made a lot of friends, worked hard not just for themselves but to promote the region, and incidentally were always around to help the wine media. Take-home lesson: Be polite, helpful and friendly. Nice works.
- Laetitia. The vineyard originally was started by Maison Deutz, who hoped to succeed in California bubbly. That didn’t happen. In 2001, the current owners purchased it, maintaining the winemaking services of the Dad and son team of Dave and Eric Hickey. Today, Laetitia’s Pinot Noirs are among the best in the state. Takehome lesson: Recognize talent and then preserve and protect it.
- Failla. Ehren Jordan had a good day job with Turley, but longed to do his own thing. He went way out on the far Sonoma Coast into no-man’s land and, with his own sweat, made a brilliant vineyard. Then he settled down and made wines of great purity. Takehome lesson: Do what has to be done, no matter how hard.
- Pisoni. Much has been said about the vineyard, but the man who planted it has been as important to the winery’s success as the grapes. Gary Pisoni’s personality is like Robert Mondavi’s on steroids. Take-home lesson: A colorful personality spills over into the wine, and can’t be faked.
- Saxum. How did Justin Smith’s Rhone reds get to be the most expensive in Paso Robles? They’re delicious. The critics love them. The vineyard is immaculate. And Justin Smith doesn’t dilute himself by making a whole bunch of stuff he doesn’t care about. Take-home lesson: Do one thing better than anybody else.
- Breggo. The story is so improbable. Douglas Ian Stewart runs a sorbet company in Brazil and an ice cream factory in San Francisco. Decides to move back to the land, in Anderson Valley. Next thing you know, he’s producing stellar Pinot Noir, with the help of consulting winemaker Ryan Hodgkins, who happens to be Hanzell’s assistant winemaker and viticulturalist. Take-home lesson: Find the best talent you can to help you fill in your divots.
- Tangent. No, the Niven family wasn’t exactly broke when they started this specialty brand that produces only dry, crisp, off-beat whites in screwtops. They owned Baileyana and a good chunk of prime vineyard land in Edna Valley. But they did come up with an idea before anyone else, and in so doing, are driving the wave. Take-home lesson: Be innovative, not me too.

Oh, and one more thing: None of the wineries above relied on gimmicks.


Blogging different from print? Not according to this poll…of bloggers

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The Wine Bloggers Conference is slated to be held Oct. 24-26 in Sonoma, and I’ll be going. It’s my first participation in group blogdom since I launched this site last May and I value the experience.

Ever since I started paying attention to the wine blogosphere, I’ve noticed a current of feeling that blogging is somehow different in essence from traditional print — purer, more honest, less driven by concerns for advertising, profit and similar nasty pecuniary obsessions. This feeling is best expressed, of course, by bloggers themselves, as you’d expect from revolutionaries who operate outside the MSM box.

As one who straddles both worlds, I think that the similarities between blogging and print are more apparent than this view permits. Check out this “Feedback Forum” on the Wine Bloggers Conference website. It polled participants as to which among a list of possible breakout session topics they wanted most to attend.

Their choices reveal, not anything outstandingly radical or different about the wine blogosphere, but how its concerns are precisely those of print journalism. As of this date, here are the readers’ top 2 choices, with my commentary in italics.

- Increasing visitors to your blog. This is the same thing wine magazines want. Just substitute the word “subscribers” for “visitors” and “magazine” for “blog.”

- Making money from your blog. Duh.

I point these things out not to disparage blogging, although I do wonder if the Conference will address the topic of the ethics and practices of blogging, which I have recently called into question. I happen to believe blogging represents a wave of the future (although it’s unclear where that wave is taking us). But I don’t think blogging’s essence is fundamentally different from print journalism’s. It’s just a new medium, and if blogging is indeed something new, bloggers need to develop a set of ethics not only as stringent, but more so, than those under which print journalism operates.


Premier Pacific, environmentalists battle it out over Sonoma forest lands

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Premier Pacific Vineyards, the big vineyard development company whose leaders include former Napa vintner William Hill, finds itself embroiled in a heated tussle with local environmentalists, including the Sierra Club and Friends of the Gualala River, over PPV’s plan to develop 1,800 acres of vineyards in the high coastal hills near Annapolis, on the Sonoma Coast. According to a report published in th Santa Rosa Press Democrat, PPV purchased the land in 2004 for $28.5 million. Despite the company’s promise to plant 1 million new trees, critics of the project worry that development will invariably harm the mountainous region’s ecosystem and diversity.

It’s always hard in a case like this to know who’s right. I know from experience that some of the more extreme environmentalists in western Sonoma are basically against any development of the land at all, which seems to me to be an unrealistic attitude. Some years ago, Marimar Torres told me how eco-terrorists repeatedly struck in the middle of the night, vandalizing her property and spraypainting roadsigns, because she wanted to develop a beautiful, organic, highly progressive vineyard in the Green Valley.

But I also know that a big corporate entity can be insensitive and ride roughshod over the concerns of locals. PPV owns many thousands of acres of vineyard from Napa, Sonoma and Mendocino, on up to Oregon and Washington and down into the Santa Rita Hills. When PPV first began development down in Santa Barbara, some vintners there privately expressed their concern that the area’s personality and natural infrastructure might be harmed. Yesterday I asked a friend of mine, who is a player in the Santa Rita Hills, what has been the local reaction to PPV, and he replied, “It is with no hesitation that I say that they have not been favorable shepherds of the land down here.  I fear that a lot of their development has been irresponsible (and dangerous for crews down the road) and they are unscrupulous about taking crews away from other farming companies.”

As I said, it’s hard to know who’s right. In the case of the Sonoma project, it’s on hiatus until an EIR has been completed. And even that might not satisfy some of those involved.

P.S. Please check my final word on the Spectator issue at Wine Enthusiast’s unreserved.


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