Silicon Valley Bank is out with their annual State of the Wine Industry Forecast and Recommendations, and it makes for sobering reading. It begins with an understatement:
“The attitudes and preferences of the U.S. taxpayer and wine consumer are in markedly different places today than they were a year ago.”
Then it cites a veritable witch’s brew of bad news:
- 4th quarter of 2008 was “the worst in memory for the fine wine business.”
- depressed restaurant sales, higher unemployment and foreclosures and lower consumer spending will continue through 2009 “as we seek a bottom.”
- wines between $40-$125 are in a “dead space.”
- winery sales “at bargain prices” are to be expected.
- Most scary of all, “Distribution has all but ended as a viable sales channel for small wineries.” (Which is exactly what I said last week.)
- Meanwhile, “credit markets are nearly frozen.”
- The secondary market for collectible wines has softened. (What?!? You mean you won’t pay me $10,000 for my bottle of 2001 Screaming Eagle?)
- And between the drought and sin taxes, whatever wineries are still standing will get hit with a double whammy.
Well, it could be worse. California hasn’t fallen into the sea following a 9.7 earthquake on the San Andreas Fault. Yet.
In this toxic atmosphere, it comes as no surprise when the report states that “Central Valley suppliers [are] the most optimistic and Napa and Sonoma suppliers [are] the most pessimistic.” That’s because all anyone can afford anymore are jug and box wines — fortunately, for the economies of San Joaquin and Madera counties.
But wait, there’s even more bad news. Small and mid-sized family wineries are facing “capitalistic Darwinism,” a dog-eat-dog fight to the death from which the weak will not emerge. The report’s recommendations are not surprising; they’ll be familiar to regular denizens of the wine blogosphere. Wineries must
- keep prices moderate
- get better at Internet direct-to-consumer selling and e-marketing. In other words, develop a “digital plan.”
- contain costs
Meanwhile, the Sonoma County Economic Development Board has a new 2009 Wine Industry Insider report that echoes the Silicon Valley Bank’s gloomy forecast. Among its findings:
“The spread of economic weakness around the world creates a
disadvantage for Sonoma County wine exports to top international
markets and will expand import competition here in the U.S.”
“Consumers are shifting away from high-priced wine purchases; high margin on-premise sales, such as those at restaurants, fell sharply… Wine drinkers and retailers are shifting to value, putting downward pressure on wholesale wine prices for local wineries. Some wineries are adapting to the shift by upping production of lower-priced wines.”
“The outlook for the Sonoma County wine industry in 2009 is for limited unit sales growth and the continuation of consumers’ shift toward value from high-priced wine purchases.”
Tough times, but good for wine consumers — if they have any money to spend.
P.S. I’m taking a few days off. I may be able to blog from the road — not sure. Check in, just in case. If not, I’ll be back on Monday.
For a classic example of a fad that fizzled, you need look no further than California’s brief, disastrous experiment with Super-Tuscans.
It started when Piero Antinori, of Tignanello fame, bought a chunk of land on Atlas Peak and planted what was then the biggest Sangiovese vineyard in California. (Seghesio, and maybe a few others, had planted Sangiovese long before that, but it was off anyone’s radar.) When people heard that the Titan of Tuscany was planning on producing a Sangiovese-Cabernet Sauvignon blend — a “Super-Tuscan” — in Napa Valley, the wine media’s collective head exploded, and Cabernet producers looked nervously over their shoulders. Was this where the industry was going? Nobody wanted to miss that bus.
So everybody put in a few rows of Sangiovese. But a funny thing happened: California Super-Tuscans came, they saw, and they flopped. It turned out that Sangiovese by itself wasn’t very interesting, so there was simply no point in dumbing down a perfectly good Cabernet with it, except for the purpose of creating a novelty. Besides, there was something vaguely un-Californian about mixing Sangiovese with Cab. We had worked so hard at perfecting Cabernet and Bordeaux blends; it was as if Napa’s heritage were being disrespected, or even deliberately compromised for marketing purposes.
In Italy, some people in Tuscany had always felt the same way about Cabernet. They thought Sangiovese and Chianti should be made the traditional way. But there was no denying the money and fame that Tignanello was getting, so copycat Super-Tuscans began rolling off the assembly line.
But even in Tuscany, Super-Tuscans may have had their moment in the sun. A recent article in the World of Fine Wine magazine is headlined Rebels Without a Cause? The Demise of Super-Tuscans. It explains that “consumers are apparently turning their backs on these once trailblazing wines,” even in Italy. Why? Because they’re so muscular and powerful, “they’ve become less and less Tuscan,” the article quotes a Tuscan winemaker as saying. In other words, they could be from anywhere.
This argument is essentially the same one you hear in California: that Cabernets, Syrahs, Pinot Noirs and other (mainly red) wines have become so big and ripe that, luscious though they may be, they define an “international style” rather than one reflecting a particular terroir. In recent years there’s been some critical speculation that the pendulum is swinging back to more nuanced wines; in part, this may be due to relatively cooler vintages. But I can’t say that California wines are particularly nuanced. Barolo is nuanced. Bordeaux is nuanced. Young Burgundy is nuanced. The best California wines are explosive and fruity, which is what we like about them. Europeans can criticize them for being “international” in style, but you know what? California invented the international style. “International” is just another word for “Californian.”
When you think about it, California Super-Tuscans were the only ambitious wine experiment California ever tried at and failed. Are there lessons to be learned? I thought about this for the better part of a week. Don’t do something just because Antinori did? Make small, experimental lots before you jump off the cliff? Don’t always be thinking you have to seize onto the “new hot variety” train before it leaves the station? Stick to what you know you do well? I couldn’t come up with anything specific. Maybe the lesson is that there is no lesson. The development of wine in a new region like California is like Darwinian evolution: some branches led to us, while others led nowhere.
Robert Parker should have seen it coming.
In a way he reminds me of Bill Clinton. The former President was at the height of his populist popularity when the Monica Lewinsky scandal struck, making him look like a lying hypocrite. Some of us (me, included) didn’t care all that much. Hell, it was “just sex,” and there were lots of weightier things to worry about.
But Monica led to impeachment and the tearing apart of the country, proving that sometimes, even trivial pursuits (and let’s face it, kneepads in the Oval Office were pretty trivial) can have enormous consequences.
Cooler heads wondered how Bill could have let it happen. He was so smart — too smart for his own good? Why didn’t he see it coming? We’ll never understand what makes a person don the blinders and not see the freight train heading straight at him.
And now we have the Wall Street Journal’s account of the Parker “Travelgate” affair, which I blogged about last week. I wrote that the reporter, David Kesmodel, had called to interview me. We had a long chat but, alas, my part ended up on the cutting room floor, as it were; there was no mention of “noted wine critic Steve Heimoff,” and while that disappointed me, I’m not surprised. For I didn’t say quite what Mr. Kesmodel wanted me to. I didn’t harshly condemn Mr. Parker or his “independent contractors,” Mr. Squires and Mr. Miller, for the latter two having accepted free travel (although I did note that, if Parker had failed to alert readers to that fact, he was at fault). I didn’t condemn the air travel, accommodations and lavish meals of “crayfish on a bed of squid-ink linguini” Squires and Miller were treated to by their hosts, whose wines they then reviewed. And I did note that there is an ambitious clutch of bloggers out there who hope to be the Woodwards and Bernsteins of the 21st century, finding scandal and malfeasance wherever they can and exposing it to public condemnation and ridicule.
Look, folks. Every wine writer with any influence or connections has partaken of gourmet meals for free. Every wine writer with any influence or connections has been hosted, or limo’ed, or accommodated, by his or her hosts, to some degree, and at one time or another. I have, and so has each critic I’ve ever known — because over the years I’ve run into them at the same feasts, in the same hotels, at the same festivals whose entry fees were waived for members of the media. I don’t know Dr. Vino personally; perhaps he is that rare bird, a wine writer and critic who has never taken a dime from a winery or winery organization. If that is so, he must be independently wealthy, which few wine writers are.
As for the hypocrisy factor, if, as I said, Mr. Parker led his audience astray by implying that, not only he but his “independent contractors” never accept freebies, then he deserves this egg on his face. But let us not make mountains out of molehills. I have always insisted that, no matter what I accept, it doesn’t influence my scores and reviews. Most people, I am happy to say, have taken me at my word. At this point, I’m willing to take Parker, Squires and Miller at theirs.
We say “Chateau,” Europe says “Shut up!”
The spat between the European Union and American wineries flared up again last week, as a group of members of Congress teamed together to urge the U.S. Trade Representative, the nation’s top trade negotiator and principal advisor to the President, to clear the “traditional expressions” logjam with the European Union.
So-called “traditional expressions” are words on labels. They include chateau, clos, classic, noble, vintage, sur lie, champagne and ruby, among others. The E.U. long has objected to their use on American wines, claiming they poach on traditional European territory and mislead consumers. Back in 2006, the U.S. agreed to stop using the terms, but under a “peace-making clause,” wineries using them at that time were grandfathered in, and allowed to continue their use for 3 years.
That 3 year exemption ended in March. The expectation was that the E.U. would issue 2-year renewals, in order to further the peace-making period, while the hard issues were hammered out. “But they didn’t renew it,” says a source with close ties to the industry. It is this impasse that the U.S. Trade Representative is now being pressured to resolve by the politicians.
(For a good background story on this issue, see this Wines & Vines article.)
I asked the industry source what is likely to happen next. “It remains unresolved what the people with trademarks are supposed to do, like Chateau Montelena or Korbel [Champagne Cellars]. So we probably have a case for the World Trade Organization,” the international body that resolves trade disputes between nations.
My guess is that every winery currently using traditional expressions will be allowed to keep them. After all, nobody expects Clos du Val to change their name! I also suspect the list of words the E.U. objects to will be narrowed. I mean, sur lie? Come on.
Beckstoffer’s big Mendocino gamble
“Are we really too early?” That’s the question top grower Andy Beckstoffer asked rhetorically when he was quoted, in the Santa Rosa Press-Democrat, concerning his planting of 300 acres of organic Chardonnay vineyards by the banks of the Russian River in Hopland, which is in central Mendocino County.
Andy B. is one of the smartest guys in the industry, a veteran who came up through the ranks and bears the scars to prove it. (I have a chapter on him in my book, New Classic Winemakers of California: Conversations with Steve Heimoff.)
Andy’s question concerns, of course, when the Recession will end. Since nobody knows, it’s something of a gamble to be developing a big new vineyard at this time. Beckstoffer’s optimism runs in his genes, but it’s based also on his assumptions that (a) downturns always end, and (b) inland Mendocino County has been underrated as a source of premium wine.
I remember when I first tasted a Chardonnay from the old Jepson winery, which was made from the same area as Beckstoffer’s new vineyard. I thought it was one of the best I’d ever had. Chardonnay remains America’s favorite white wine, and there’s no reason to expect that will ever change. So, if Beckstoffer can keep his prices moderate — and if the wineries that buy his grapes don’t charge too much — his gamble is likely to pay off. I’d expect the Chardonnays to retail in the $10-$15 range.
Fred Franzia’s been getting a lot of print for his belief that no bottle of wine is worth more than $10. Eric Asimov weighed in on this the other day, suggesting that cheap wine is more likely to be insipid than expensive wine. Last Fall, the British newspaper, Telegraph, reported that some “Judges taking part in Decanter magazine’s World Wine Awards” argued that “£6.99 should be enough to buy what [the judges] would consider a ‘decent’ bottle in a British shop.” [(That would be about $10.80 at today’s exchange rate.] Above that figure, the judges concluded, “the differences were more about ‘individual taste’ than quality.”
Wow. If this is true, then Petrus (you can buy a bottle of the 2004 at Wally’s Wine & Spirits, in L.A., for $1,249.99) isn’t any better than the Kirkland Signature 2006 Cabernet Sauvignon, from Alexander Valley. It cost $11 and I gave it a Best Buy (the review will be published in Wine Enthusiast in the Aug. 1 issue).
What are we to make of this? The relationship between price and quality is the most profound question facing the wine industry today. I recently met with a California winemaker to talk about his wines, which I did not particularly care for. This is an uncomfortable situation for a critic. But he’d asked me for the unvarnished truth, so I gave it to him. He took it well, then added, “Well, it’s all about individual taste, isn’t it?” In other words, it wasn’t that his wines weren’t good, it’s just that I didn’t care for them.
The wines weren’t flawed in any way — not spoiled or tanky or bretty or V.A.’d or undergoing a secondary fermentation or anything like that. I faulted them for being overly sweet and lacking the acid-tannin structure for balance. (They were from a warm region near the Delta.) Anyone who follows my reviews knows I don’t like that style in California wine. The fellow then said I appear to have a European palate, and asked if it’s fair to hold California wines to a European standard which is in general drier, earthier and less alcoholic.
I think it is fair. (We could also have a discussion on whether “dryness” and “Europe” are synonomous.) It’s true my palate was initially informed by European wines. Early on, I developed the idea of “dryness” as a lofty goal toward which a table wine should aspire, more or less the way a citizen should aspire toward being law-abiding. Dryness is a virtue, in my mind. (Of course, I exempt certain wines that are off-dry, like German Riesling.)
But obviously, there are millions of people out there who prefer a soft, fruity table wine with a little residual sugar. Are they wrong? No, they’re not.
Which brings us back to Mr. Franzia’s contention that no wine is worth more than $10. Maybe no men’s suit is worth more than $100 at The Men’s Wearhouse, and no car is worth more than $22,000 for a Camry. Still, many men still like to buy Armani and BMWs, if they can afford them. This is a topic we’re going to be talking about for a long time, and never resolve.
More interesting than resolving it, though, is the fact that this conversation is taking place, and in a serious vein. One hundred years ago, it could not have; nobody would have dared suggest that a bourgeois Bordeaux could be as good as a First Growth. Even twenty years ago, in egalitarian California, there were clear distinctions drawn between pedigreed wines and common ones. The commoners aspired to be pedigreed, and the pedigrees charged prices the commoners could only dream of. But here we are, in the 21st century, with a new, skeptical generation coming up. These are transformational times, and these questions of price and quality are the right ones to ask.