U.S. considers wine tax hikes, while Bordeaux struggles
I don’t know — nobody knows — if Schwarzenegger’s excise tax hike on wine will pass. The Sonoma Valley Sun is reporting that the “potentially crippling state alcohol excise tax will be voted down this week,” but until there’s a budget deal in California, and there still isn’t one as I write on Feb. 18, all bets are off.
[breaking news: Thursday morning, Feb. 19: The Legislature just approved the budget. Not clear where the excise tax hike stands.]
The Governor’s proposed wine tax hike may be the most notorious in the nation, but one thing’s for sure: California is hardly the only state in the country looking to boost wine and alcohol taxes. Forbes.com reports that Idaho’s proposed wine tax hike just won a victory when the state Legislature approved moving it forward (taxes on wine would rise from 45 cents to $1.56 per gallon). That would put Idaho among the heaviest-taxed alcohol states, behind only Alabama, Alaska and Florida, according to this chart prepared last year by the Federation of Tax Administrators.
Other U.S. states considering a tax hike on wine or alcohol, besides California, include Indiana, West Virginia and Georgia, according to U.S. News.com. Colorado increased its alcohol excise tax collections without raising the rate, by the ingenious method of lifting a ban on Sunday liquor sales. But will raising booze taxes result in increased revenues for states? Not necessarily. Last year, Maine legislators jacked up prices on a bottle of wine by 7 cents and found themselves facing “a taxpayer revolt” as angry merchants and consumers “rallied to put an initiative on the ballot to repeal the measure,” U.S. News.com said. The initiative won, by a whopping 64 percent, and the tax hike was nullified.
In a related issue, New York State Gov. David Patterson’s proposal to allow the sale of wine in any store that sells beer (i.e., not just liquor stores, but grocery stores, drug stores, etc.) is tearing the Empire State’s wine industry in two. Liquor and wine store owners predict catastrophic loss of jobs and sales, while the proposal’s defenders point to an expected increase of $100 million in taxes, if the idea passes, says this report.
However, Patterson also appears to be considering a separate tax hike on wine. The Marin Institute (no friend of the wine industry) says “The governor also wants to see…taxes go up…on wine…from 18.9 cents per gallon to 51 cents per gallon,” a boost that would put New York just about in the middle of the Federation of Tax Administrators’ list.
Consumers already are devising strategies for pinching pennies without having to give up their daily tipple of wine. “The 3 liter premium wine
Anyhow, echoing the gloom-and-doom scenario comes this stunning, if not unexpected, headline from Decanter: “Bordeaux: wine boom may be over”
Among other bubbles (stocks, oil prices, housing, hedge funds) “The speculative bubble of Bordeaux’s great wines is currently exploding.” Thomas Jefferson must be spinning in his grave. “It’s going to be tough to sell fine Bordeaux this year,” my Wine Enthusiast colleague, Roger Voss, informs me. One death spiral is a domino effect described this way by a Berry Bros. & Rudd retailer: “All [Bordeaux] needs is a chateau or a negociant to go bust and it all crumbles.” Kind of like Lehman Brothers, last September. Any guess who it will be?

Using Google Insights as a metric for marketing
Google Insights for Search is a great tool to discover useful (as well as useless) information about who’s using Google, what they’re using it for, and the search terms they employ to find what they’re looking for. You can program it any which way. I tinkered around with it the other day and thought you all might be interested in what I dug up.
Interest over time: This tracks the number of searches over time. (Google explains that they don’t provide absolute numbers, just a relationship between the total number of searches, and the number of searches for a particular term, in this case “wine.”) During the past year, the number of searches using “wine” remained steady, except for a huge spike during the Holidays.
Regional interest for “wine”: This depends on the geographic parameters you request. For worldwide searches, the number one country that searched Google for “wine” was New Zealand, closely followed by United States and then, in descending order, Australia, United Kingdom and South Africa. But if you search only within the U.S., the top results are New York, followed by California, District of Columbia and Oregon. (To me, this suggests that people were looking for places to buy wine, not where it was grown.) However, the top city in the world where searches for “wine” was launched was — ta da! — San Francisco, followed by New York, Pleasanton (what?!?), Seattle, D.C., L.A., Sydney, Chicago and Melbourne.
Pleasanton? WTF?
Top search terms related to “wine” in the U.S.: In descending order, red wine, white wine, wines, wine bar, food and wine, wine tasting, wine bottle and wine festival. Nothing unusual there, except, maybe, that “wine bar” was in fourth place. Sweet.
Top search terms related to “wine,” worldwide: red red wine (not a typo), wine bar (!!!!), white wine, wine linux (I think “wine” is an operating system of some kind), wine tasting, ubuntu wine, food and wine, new wine.
Rising searches in the U.S.: Not the greatest number, but coming on strong: wine aerator, vinturi wine aerator, barefoot wine (good for Gallo), total wine delaware, wine library tv, sangria wine, sangria, mulled wine recipe and bevmo. (Sangria got there by having a humungous number of hits last June/July, suggesting the coming of summer had people looking for cool alcoholic beverages to drink.)
I changed the search term from “wine” to “wine blog.” Most of the searches for this term originated in the U.S., followed by Canada, the U.K., South Africa, Singapore, New Zealand, the Netherlands and Italy. Within the U.S., the greatest number of searches for “wine blog” was launched from California, as you’d expect, but — hold onto your hats — the 2nd, 3rd, 4th and 5th highest were from the “W” states: Wyoming, West Virginia, Wisconsin and Washington. (Memo to Google: Can this possibly be true?) After that, Vermont, Virginia, Utah and Texas. New York not even in the top ten? What’s up with that?
Search terms related to “wine blog” within the U.S.: None. “Not enough search volume to show results.” Lest we wine bloggers get swelled heads and think everyone is looking for us, consider the fact that, umm, they’re not.
You can play with Google Insights for Search yourself, using any search term you want. For example, I entered “wine brands” for worldwide searches. The top countries of origin were India, the U.S., Australia, Canada and the U.K., but also on the top ten were Singapore, Philippines and Malaysia. This strongly underscores the emerging importance of the Asian markets.
By the way, if you’re wondering what vinturi wine aerator and ubuntu wine are (I certainly did), click on the links and find out. (Blog disclosure: The Vinturi Wine Aerator is sold through Wine Enthusiast Catalog, a fact I did not know until I wrote this post.)
Incidentally, I searched for “wine ratings” and here in the U.S., Wine Enthusiast beat out Parker! We’re #7, he’s #8. Worldwide, though, he beats us, #6 to our #8.
Is micropayment the killer revenue app for blogs?
No wine blogger in his right mind expects readers to pay $25 or $50 a month for access — that pipe dream is dead — and no reader would pay that, even for a great blog like Fermentation or The Pour. But what if the price were far less — 5 cents a day, on-demand? Would readers pony up?
Former TIME managing editor Walter Isaacson thinks so. Check out his fascinating cover story, “How to Save Your Newspaper.” It appears in the Feb. 16 issue of the magazine. (Credit to my boss, Adam Strum of Wine Enthusiast, for alerting me to the story.)
Isaacson uses as his jumping off point the fact that, if people are willing to pay 99 cents to download a song from iTunes, they might be willing to part with five cents to read a blog. It’s called micropayment: shelling out small, even negligible amounts of money for something you really want. “The system could work for all forms of media,” Isaacson writes, “magazines and blogs, games and apps, [even] porn…”.
Isaacson’s analysis comes as the realization dawns on us all that the future of print journalism is very much in doubt. Advertising is drying up, and newspapers and magazine cannot depend on subscriptions to make up the difference because, with almost everything available online for free, why would anyone pay for access? (I read the New York Times for free online every day, thereby saving myself $348.40 a year.)
Micropayment assumes several things. One is that readers are inherently moral and understand that nothing creative can be produced unless the creator is paid a fair price for his work. Another is that the technology of micropayment must be, in Issacon’s words, “cheap and easy.” If it takes more than a click (once the reader has registered), it’s doomed. (One model of easy micropayment familiar to motorists in the Bay Area is FastTrak: the driver sets up an account and the cost of crossing a bridge is automatically deducted with each transit.)
There is currently no working model for a micropayment approach to blogging, so far as I know, nor is there currently a technology that exists that could accommodate it. PayPal, Isaacson writes, “has transaction costs too high for impulse buys of less than a dollar.” Other emerging micropayment models include Bee-Tokens, Kindle (Amazon.com’s digital book service) and Tipjoy, which links to Twitter, which itself has a form of micropayment, Twitpay.
Assuming that the technology — fast and easy — is forthcoming, will it be a game changer for wine bloggers, the killer revenue app that bloggers are looking for? Admittedly, Isaacson’s motive for pushing micropayments is to preserve journalism for civic-minded purposes, not to enable bloggers to make money. (If print journalism dies and online journalism is free, then “who will…be able to fly off as freelancers to report in Rwanda…?”) Putting the question another way, who can afford to produce high-level wine blogs day after day, month after month, year after year, if there’s no money coming in?
Let’s crunch some numbers. This blog had 50,000 visitors during the month of December, 2008. If each of them paid 5 cents for access, that would amount to $2,500. But would all 50,000 pay? Isaacon is hopeful. “Some surfers would balk,” he writes, “but I suspect most would merrily click through…”. I, myself, am not so sure, but if only a few hundred did, it would still be more than I’m making now, which is zero.
On provenance, shipping and harmful temperatures
I don’t usually recommend or even mention specific for-profit schemes in the wine industry (and Lord knows, everyone’s trying to figure out how to create a viable company these days). But I got a press release the other day for something called eProvenance, a French-based company that claims to have discovered significant problems in wine shipping, wherein as much as 7 percent of wines (which would exceed the percentage of cork-tainted bottles) moved around the world suffer from being exposed to temperatures exceeding 30 degrees Celsius (86 F) for long enough periods of time to effectively ruin the wine.
eProvenance says their business goals “are to improve the distribution channels and share best practices, as well as provide the ability to verify and communicate the high-quality provenance to consumers.” To all of which I say, amen.
The truth is that poor shipping is the dirty little secret of the wine industry. This is something that all people who deal with a high volume of wine understand all too well. And I don’t think the average, or even the above-average, consumer has the slightest idea of how damaging temperature extremes, particularly heat, can be to that expensive bottle of wine.
I myself used to not understand it, until one day when I was talking with a noted collector, T., who lived in Southern California but had a vacation condo in Hawaii. (This was back when I wrote the Collecting Page for Wine Spectator and the nation’s leading collectors returned my phone calls in exchange for the ego trip of seeing their names, and sometimes pictures, published in that magazine.) T. flew out to his condo, opened a few bottles, and found something wrong. He checked, and, sure enough, the power had briefly failed — it was just a matter of hours — but it was long enough, he told me, to kill his wines.
Of course, you and I might not have detected anything wrong with wines that had experienced a few hours of temperatures above 70 degrees, but T. was known for the sensitivity of his palate. On the other hand, there is little doubt that a wine that has been in the back of a UPS truck all day long during a summer heat wave (when the temperature inside that metal oven can soar above 130 degrees) will be effectively baked. (When this happens, I ask the winery to re-send me new wine to review.)
The eProvenance people drew up this chart of a shipment that went from Bordeaux to Brazil.

Basically, you want the line to be near the green zone. Anything above the green zone is too hot; as you can see, there’s a lot of line above the green zone.
I’m not sure that there’s ever going to be a solution to this problem. Even if wineries the world over stopped shipping their wine during their warm season — which is obviously not going to happen — they might be shipping it into someone else’s warm season. Even with companies like eProvenance, it’s likely that tens of millions of heat-damaged bottles will continue to be bought and sold around the globe. And with hot places like India, Hong Kong, Singapore and the Emirates now developing a taste for expensive French and California wines, imagine how much more extreme heat those Lafites, Harlans and Crystals are going to be exposed to.
The funny thing about all this is to imagine a rich “collector” who shows off his latest trophy wine at a dinner party. Nobody likes it, and for good reason: it’s baked. But no one is secure enough to admit it, so they all ooh and aah about how fabulous it is. The lesson? Res ipsa loquiter: the thing speaks for itself.
The 2006 wines from the Domaine de la Romanée-Conti
Thanks to Wilson-Daniels I’ve been able to taste the new releases of the Domaine de la Romanée-Conti nearly every year for the last twenty. (I remember back in the 1980s when the tasting was at Fleur de Lys restaurant, in San Francisco, where chef Hubert Keller would occasionally join us. Today, it was in a grand meeting room at the St. Francis Hotel.)
There’s something very churchlike about tasting DRC. I’m the first to poke fun at puffery and pretense, but a DRC tasting — especially with Aubert de Villaine presiding — really is something special. Yes, the hushed atmosphere and serious silence lend themselves to parody, but if ever there’s a wine event that approaches sanctity, it’s this one, even for a hard-boiled boozehound like me.
I won’t formally review the wines here, since France is the turf of my distinguished Wine Enthusiast colleague, the urbane Mr. Roger Voss. Suffice it to say that after all these decades of sampling DRC, the 2006s were the most classic in my experience, in the sense of each of the different bottlings tasting precisely as it is supposed to. Richebourg showed its authority and power yet also its sheer charm. La Tâche was enormous, gigantic, an impossibly large wine, but opulent and delicately refined. And then there’s Romanée-Conti itself. Coming right after the La Tâche, it seemed almost deferential, a David in the shadow of Goliath — not as dramatic or fleshy. But then, as Aubert pointed out, all the wines needed to breathe (they were poured straight into our glasses as we sipped, from bottles that had been opened only an hour before). As the Romanée-Conti took in air, it expanded and became something breath-taking. In Aubert’s words, “More than in any other year, this Romanée-Conti gathers and concentrates the characteristics of all the other wines.”
I had always wondered why the DRC presents Romanée-Conti, which is so delicate in many respects, after La Tâche; a case could certainly be made for reversing the order. This year, in the presence of distinguished writers and sommeliers, I mustered up the courage to ask Aubert. (You don’t want to ask a stupid question in such rarified company, although the truth is that there are no stupid questions. By the way, do you know how to tell the writers from the other members of the trade? We’re the ones without ties. Which reminds me: Why were 90 percent of those present men?)
Anyway, I asked Aubert, and here’s what he said: “Romanée-Conti is a feminine wine, and in a sense is moody.” [huge laugh from the audience] “It is very open, spheric, with length. La Tâche on the other hand is always more spectacular, direct, visible. I suppose that the size of La Tâche [tasted first] could hide the finesse of Romanée-Conti.” I thought he would follow that up with some kind of explanation of how he would allow Romanée-Conti’s finesse to be hidden, but he didn’t. Maybe he thought my question unworthy of a more detailed explanation. I think it’s mostly a matter of tradition to show La Tâche before Romanée-Conti. Certainly, if Aubert reversed the order, it would cause consternation among the Burghound crowd.
Aubert had other interesting things to say. “Forget about the idea of a great vintage versus a lesser vintage. They’re just different, each showing a different character. It’s like music: some years are symphonies, some are jazz.” He likened 2006 to “chamber music with more discrete notes.” Nice.
Someone asked a question about how barometric pressure affects wines. It seems that some people had detected differences during tastings in France, New York and, now, San Francisco. I thought, If we now have to worry about barometric pressure before we can drink wine, we’re in worse trouble than I thought. But it did bring up, indirectly, the question of bottle (or sensory) differentiation over time and place. Earlier, Aubert had actually revealed he’d discovered “deviations” from bottle to bottle in the 2006 Echézeaux.
Aubert always closes the red wine part of his DRC tasting with a treat: The new vintage of Montrachet. I must say the ‘06 was everything that fabled white Burgundy can be. It was a study in exquisite, dramatic tension: racy yet elegant — absolutely dazzling, but always refined and well-behaved — unctuous and oily, but firm and taut and dry. All 8 wines (Aubert also showed a wonderful Vosne-Romanée) are obvious cellar candidates. If you can afford them, they all, in their own ways, want a minimum of ten years, and in the cases of the bigger reds, 15, 20 and even 25 years are not out of the question. (The Vosne will be the earliest drinking, by this summer.) On the matter of ageability, the red wines, as Aubert pointed out, very shortly will enter into a period of “sleep,” a diminution that will last for many years. “We’re catching them [today] at the last minute when they’re showing their flesh. They will soon close.”

By the way…
The forecast is for a really big storm to roll into California Saturday. Bigtime. And after that at least a week more of rain.This, after basically the last week of rain and showers. Could the drought be over? Stay tuned.

