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What electric car patents and some AVAs have in common

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Elon Musk made a bit of news last week when his Tesla Motors announced that the company is “opening all its electric car patents to outside use.”

This “open sourcing” means that anyone can use Tesla’s proprietary procedures without having to worry about a patent lawsuit.

Why would a successful company like Tesla give the farm away? Originally, Musk had hoped that “the big car companies would copy our technology and then use their massive…sales and marketing power” to promote electric cars. While this would have presented Tesla with serious competition, it also would have promoted the concept of the electric car, which is a hard sell for most consumers. This “rising tide lifts all boats” concept would, Musk hoped, in the end benefit Tesla.

But it didn’t happen. “The unfortunate reality,” he said, “is…electric car programs…at the major manufacturers are small to non-existent.” Musk therefore is gambling that giving his manufacturing secrets away for free will help lift the tide that will help lift Tesla.

This story neatly dovetails with something that’s been on my mind lately, namely whether a winery in an appellation should promote only itself, or promote also its appellation, which means promoting all the other competing wineries in its appellation. This can be a tough decision for a winery. For example, I remember when I was a critic how surprised I was that Fess Parker Winery almost never put local appellations on their wines, like Santa Ynez Valley. Instead, they put Santa Barbara County. I thought it was wrong then, and told company officials so, but they argued that in their judgment no one had ever heard of Santa Ynez Valley, whereas everyone knew about Santa Barbara (which conjures up images of white-sand beaches, palm trees, movie stars and affluence). When I asked them, in turn, how the public ever would learn about Santa Ynez Valley, if wineries wouldn’t put it on their labels, there was radio silence.

We have a similar situation with regard to the Santa Maria Valley. It’s a great place to grow wine grapes, as I assume readers of this blog know. But it’s off the beaten path; even wine tourists to Santa Barbara County are more likely to visit Santa Rita Hills or Santa Ynez Valley than this northwestern, fairly remote part of the county. How, therefore, should S.M.V. wineries deal with the situation?

In different ways. Although they all (to my knowledge) put Santa Maria Valley on their labels, they still struggle with the public’s general absence of understanding of this region (which is shared, alas, in too many cases by sommeliers and merchants). Therefore, it would stand them all in good stead to promote the valley, but this would mean cooperating together, which is easier said than done. There have been efforts over the years to promote Santa Maria Valley, mainly through a local association, but, having followed these efforts, I have to admit they’ve been fairly tepid. Some influential local powers organized the Chardonnay Symposium a few years ago (with which I was involved), and held it at Byron Winery, where it largely showcased Santa Maria Valley wines. But this year, the Symposium closed up shop and moved north to Shell Beach, so now, even that slight exposure of the valley’s wines to consumers has ended.

My own feeling is that a single winery can’t promote its appellation, especially these lesser-known AVAs. A winery doesn’t have enough money, manpower or clout to pull off the massive consumer educational program that’s needed. It takes collaboration between all the local wineries, but as I said above, this can be politically difficult to achieve, because after all, these wineries are competing against each other. But in the end, collaboration is something they should do. It’s like Ben Franklin’s old woodcut says: Join, or die.

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Unity is better than disunity. It worked for Napa Valley: that region promoted itself with ruthless efficiency, so that now, a winery that isn’t even making very distinguished wine benefits from having “Napa Valley” on the label. Even earlier than that, it worked for Bordeaux. Promoting the appellation is a tried-and-true practice.

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I’m off to Anderson Valley today, to spend a little time at Edmeades. It’s been a couple years since I’ve been there and I’m looking forward to it. I’ll be reporting from there for the next several days.


The shift from print to digital is getting stronger

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Two articles in yesterday’s Wall Street Journal, taken together, suggest that the transition from print to digital journalism is gathering steam.

 

The first, “The Vanishing Everyman’s Art Gallery,” actually is a bit of nostalgia for the old days when newsstands were on every street corner of every city in America, and their publishers hired artists to paint pictures for the covers. (The classic example is Norman Rockwell’s relationship with the Saturday Evening Post.) The writer asserts that millions of American thus gained exposure to, and an appreciation of, good (if sentimental) art—thus the “Everyman’s Art Gallery” heading. He laments the passing of those days (and also the passing of LP album covers, replaced by not-so-interesting CD covers).

But his real point is to underline the continuing weakness of print magazines, which are rapidly moving online. There’s nothing particularly new in that—we’ve been talking about the migration from the printed page to digital for years—but what’s different now is that advertising dollars may finally be finding their way to these digital websites.

The challenge in the past for magazines that wanted to move online was that advertisers—who account for the great majority of a magazine’s income, as opposed to paid subscriptions—weren’t willing to spend anywhere near the big bucks they would pay for on a printed page. For example, let’s say a quarter-page ad in a print publication cost $25,000. On a digital version of the magazine, the advertiser would have to be content with a little button or banner, at a cost of, say, $750. That was a big hit for publishers to absorb, and nobody quite knew how to get around that dilemma.

But now, according to that second WSJ article, “At long last, TV money flows to web.” Granted, this movement of money is starting with online movie outlets, not general or specialized magazines. But it’s a start, a crack in the dike that previously kept big money from migrating online. As one ad buyer remarked, “For us, it’s really about shifting to where audiences are.” And, as audiences increasingly glue their eyeballs onto computers and portable devices, advertisers have no choice but to go there.

It’s still unclear, though, if advertising for smaller web sites—like those of wine magazines–will reach the stupendous levels currently flowing to print and television ads and commercials. “How much these [digital] outlets can draw [in ad revenues] in the near term will be determined in part” by future negotiations, the WSJ says. Smaller online digital outlets don’t draw anywhere near the number of views of major TV programs, like the Super Bowl, and so digital ad revenues aren’t going to reach those levels anytime soon.

But “Younger consumers are consuming less TV as a portion of their total media consumption,” pointed out one analyst, meaning that in eventually, the playing field could level out, as big network and cable TV attracts fewer and fewer viewers.

What this means for magazines is that they have to negotiate a delicate transition from reliance on the printed page to crossing the digital doorstep. You can’t go from the former to the latter in one quick move; if you do, you’d be out of business. Instead, publishers must seek to attract new, younger viewers and readers who prefer their mobile devices, while avoiding alienating older viewers who like their magazines the way they’ve always been. Wine magazines are in an especially vulnerable place, because the divisions have never been starker between older, Baby Boomer readers (who made today’s wine magazines famous and successful) and younger, less tradition-bound consumers. Millennials don’t drink their grandfather’s wines, their grandfathers don’t drink their grandkid’s wines, and a publication that wants to appeal to everyone might just fall between two stools.

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Finally, R.I.P. Bob Sessions. Great job at Hanzell.

 

http://www.winespectator.com/webfeature/show/id/49997


Wednesday Wraparound

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Lots of news to comment on in the last 24 hours. First, and saddest, is the news that the legendary David Hirsch, of Hirsch Vineyards, was badly injured last Saturday in a tractor accident that occurred in his vineyard, out on the far Sonoma Coast.

I first met David when I was doing research for my 2005 book, A Wine Journey along the Russian River, in which he figures prominently. The structure of that book was to profile Sonoma’s wine country by taking a year-long “journey’ along the Russian River, from its source in the Mendocino highlands all the way out to the Pacific, where the river meets the ocean at Jenner-by-the-Sea. That necessitated an exploration of the Fort Ross-Seaview winegrowing region, and David was kind enough to give me his time (and his wine). He was a gentle and patient teacher. I wish him a speedy and full recovery.

* * *

News also about an old friend, Sam Sebastiani, whom I haven’t seen in many years. I had thought him retired, living in Nebraska, but then came this announcement that he’s started up a new winery, La Chertosa, his third brand since Sebastiani Vineyards and Viansa.

Sam, like David Hirsch, was very kind to me, back when I was a cub reporter for Wine Spectator. The magazine sent me to cover the opening of Viansa, out on the Sonoma-Carneros flats, where Sam and his then wife, Vicki, had built a marvelous Tuscan-style villa for their winery and tasting center. The opening day was plagued by a horrible, driving rainstorm that turned the dirt paths into swampy slogs of mud; but all was saved by a certain poignant drama, as Sam’s mother, Sylvia, from whom he had been estranged in one of those famous intra-family feuds that seems to pop up every once in a while in the wine business, showed up to help him celebrate. It was very sweet to see that reunion, especially since I liked Sam (and Vicki) a great deal. Both were first-class humans, and it’s nice to see Sam back in the business.

* * *

Another commentator weighs in on the topic of whether or not wine writers “need qualifications.” This time, it’s from a Brit, who writes for an amusing online pub, The Dabbler. Henry Jeffreys doesn’t specifically come down on any particular side of the question, so I will: wine writers need no formal qualifications, and as proof I will offer the facts that neither Bob Parker nor Jim Laube possesses any sort of certification, nor did I when I was a wine critic. And I don’t think the absence of a diploma hurt any of us.

However, we got started during an era when no one wanted to be a wine writer, so there wasn’t any competition. Today, of course, lots of people want to be wine writers—make that paid wine writers—and, as a result, there’s a huge amount of competition for very few available slots. Hence the proliferation of certifying organizations, almost too many for me to keep track of. Were I just starting out, I might well try my hand at some sort of diploma. It can’t hurt, and can only help, but this certification mania is one indicator of what a Big Business wine writing (and wine service in general) has become. In California alone, wine is a $52 billion [with a “b”] industry, in terms of its impact on the state’s economy.

* * *

Finally, my friend Paul Gregutt has posted [on Facebook] that David Schildknecht has quit The Wine Advocate. Don’t know what that means, if anything—just worth noting.


Healdsburg’s growing pains

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One of the tradeoffs that comes with being a popular wine destination region is development. It’s as unstoppable as the seasons, but unlike the coming of Spring, not everyone likes it.

Healdsburg, as everyone knows who’s been there or just read about it, has become the quintessentially quaint wine town in California. It’s smaller and more intimate than Napa, bigger and more interesting than Los Olivos, and as for Sonoma town, well, with all due respect, Sonoma lost the battle to Healdsburg years ago for sheer glam.

I’ve been going to Healdsburg for well more than 25 years and even back then, there were folks around who complained it was getting too big. They’d recall the good old days when the hardware store had sawdust on the floor. Nowadays, of course, Healdsburg is rich and boutique-y, with fabulous restaurants, great hotels and wine country tchotchke shops where you can drop $1,000 on a vase (but don’t drop the vase!).

It’s all too much, apparently, for some locals, who have formed a group trying to slow down development, if not outright stop it. The Santa Rosa Press Democrat on Monday reported that the group, Healdsburg Citizens for Sustainable Solutions, recently sent out a voter survey they claimed supported their anti-growth stance.

This is a tough position for elected officials to be in. On the one hand, they want to be responsive to local residents’ conerns—and they themselves may feel that Healdsburg is getting a little too crowded. On the other hand, the tax dollars that development brings in do magical things for school districts, road repairs and other government functions. So what’s a City Councilmember to do?

I myself enjoy visiting Healdsburg. I like to stroll the main streets around the Square, browsing the shops and galleries, although I must admit I don’t buy too much. I like to grab a sandwich and cappuccino at the Oakville Grocery, and duck into the wine shops and see all the labels. I can see where some people might be bothered by the proliferation of hotels and the inevitable tourists they bring, with increased traffic and all the other nuisances that popular destinations attract. That doesn’t bother me—but then, I don’t live there. So I’m not weighing in on this particular matter; the last thing Healdsburg needs is for outsiders to be telling them what to do!

We’ve seen these sorts of fights for years in other wine regions. A few years ago there was the brouhaha down in the Santa Ynez Valley over Larner Winery’s plans to host special events on their property, a plan that was fiercely and successfully opposed by locals in a NIMBY-esque display of power. We’ve seen similar fights in Knights Valley, and the controversy over the Napa Valley Wine Train certainly comes to mind. I’m sure there are other squabbles I’m just not remembering right now or was never aware of to begin with.

The challenge in all these things is to find balance. We see this search for equilibrium going on now in San Francisco. That city rightfully is proud of itself for being the urban hub of high tech, which brings in so much money and is redefining entire neighborhoods. But San Franciscans also worry that all that tech money is pushing out its artists, musicians, secretaries, janitors, cab drivers and others who can’t afford the high cost of living. Politicians, whose jobs entail making laws about these things, live on the razor’s edge of this conundrum. I wish the Healdsburg City Council wisdom in making its decisions.


Tasting with Cal MBAs, and news on the California drought

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I’m setting up my annual tasting for the U.C. Berkeley Haas School of Business, which this year will be on April 9. This is one of my favorite tastings because the students—future MBAs who are members of the school’s wine club—are totally into wine. They’re a smart, curious bunch, eager to learn, and they ask the best questions.

When you’re the speaker or moderator at a wine seminar, it’s always nice to have an audience that works with you, instead of just sitting there expecting you to do all the heavy lifting. A few weeks ago, I went to a seminar in San Francisco, on high-altitude wines. One of the moderators was a winemaker. It was a very interesting topic, and I had lots of questions, so I raised my hand often to ask—probably more so than any of the other 50 or 60 people in the audience. I’m not shy about such things! Afterwards, I went up to the winemaker to pay my respects, and the first thing he did was to thank me for asking so many questions! I knew exactly what he meant. I’ve been on panels where the audience was like Forest Lawn Cemetary. Not fun! So if I’m in any position to offer advice, it would be: Next time you’re in the audience at a winetasting and they permit questions, raise that hand! Participate! We’re all in this together.

* * *

I’m sure we’re still officially in a drought, but we had a lot of rain in March and even some good storms in February, after the driest December-January in recorded history, which got the media buzzing about the D-word. Downtown San Francisco got nearly an inch of rain during this most recent storm (yesterday), which puts it at 51% of normal. Other cities are doing better. Calistoga is up to 83% of normal as of yesterday, if this chart from the San Francisco Chronicle can be believed. Santa Rosa got .53 of an inch yesterday, bringing the annual average up to about half. This storm hasn’t yet hit the Central Coast, where the water situation is really dire, but the National Weather Service is predicting it will, although the amount of precipitation doesn’t appear to be very great. So the area from Paso Robles down through Santa Barbara really does need rain, badly. We can only hope they get it before the rainy season is over.

At any rate, this morning’s Chronicle says that despite yesterday’s hefty soaking, recent dowmpours “fall far short of ending [the] crisis.” The Sierra Madre Mountains, it says—which is where most of California’s summertime water comes from, via snowmelt—are still at only 29 percent of historical normal, meaning Monday’s thunder, lightning and heavy rain were “too little and too late to have much impact on this year’s severe drought.”

However, others are seeing a bit more light at the end of the tunnel. “The trend is improving,” the Santa Rosa Press Democrat quoted a spokesman for the Sonoma County Water Agency. That’s because the recent storms have been so soaking that “you’re looking at a lot of run-off…into the reservoirs.” For instance, Lake Sonoma, which sits at the top of Dry Creek Valley, now is at 74 percent capacity.

The rain is over, for now, and, as is typical of big winter storms moving through California, the temperature is expected to plummet as the cold front passes. It’s quite cold this morning (as I write), meaning that vintners have a new fear in mind, beyond the drought: “when these storms come through and then stop, there’s cold storms from the north and you’ve got to watch your frost protection,” the Press Democrat quoted an Alexander Valley vineyard manager as saying. Since so many wineries depend on overhead sprinklers for frost protection, if we do end up with a spurt of below-freezing mornings, vintners may be in for a real challenge.


In San Francisco, all that techie money is good news for wineries

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SPECIAL NOTE TO MY READERS: I have been forced to install a Captcha! Code in order for you to comment here. Believe me, I didn’t want to. For many years you’ve been able to get your comments posted instantly (after one initial approval), and I like it that way. But the Comments section has been overwhelmed with spam, resulting in a denial of service shutdown yesterday. So I apologize for this extra hassle, but that’s the way it is in this age of spam.

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Regular readers of this blog know that I have expressed some puzzlement over the years at the proliferation of expensive, high-end wines–mainly Cabernet Sauvignons and Bordeaux blends from Napa Valley–that are “lifestyle” wines, that is, the creations of wealthy people who made their fortunes elsewhere and now want to join the most exclusive vintner’s club of all: those who can say that they own a Napa Valley winery.

My curiosity has been how these brand-new brands can possibly succeed when they cost triple digits and yet have no provenance at all–provenance being a known history of proven performance AKA a track record. I once counted all the Cabs I’d reviewed in a year’s period costing over $100 retail and by the time I reached 400 my eyes had glazed over. That’s a lot of expensive wine and automatically leads to the question: Who’s buying it?

The conventional wisdom is that it doesn’t matter who’s buying it: these proprietors are rich enough to go for years losing money. After all, what price lifestyle? There is, however, now a bit of a hint that the audience for these wannabe cult Cabs may be coming from an unexpected place.

The evidence lies in the newly-rich techies for which San Francisco lately has become famous. There’s a lot of money being made, fast, in Northern California. Last year, 2013, was “a banner year” for initial public offerings, the biggest since 2000 (immediately preceding the dot-com collapse); more than $54 billion was raised, more than twice as much as in 2008 when the Great Recession started, and believe me, a lot of that money is washing around San Francisco, which is enjoying (if that’s the right word) its greatest glory days since, well, maybe since the Gold Rush.

San Francisco know it well, and is trying to adjust to the news. Now, even New York City has taken note, a little jealously, it seems, since the Big Apple is not used to having its supremecy challenged as the nation’s leading financial and cultural center. This article, from New York magazine, even compares San Francisco to “West Egg circa 1922” (i.e. the Great Gatsby, the Roaring Twenties); Fitzgerald’s North Shore mansions and balls have become San Francisco’s downtown condos with split-level swimming pools and personal masseurs. What particularly has grabbed New York’s attention are the “Upscale restaurants [that] pop up at regular intervals, each with a more elite clientele” chowing down on “kombucha pairings with sustainable-seafood dinners.”

I don’t think one can say precisely when this Age of Surfeit started, but for me it was 2011 when the launch of Saison signaled that something was up. A few months later, Josh Sens, the restaurant writer at San Francisco magazine, wrote this glowing review of the $498-per person chef’s 22-course, 18-wine menu. (Confession: at that time the restaurant invited me for a full dinner. It was very, very, very good!) Josh wrote about the “hyperdevoted food pilgrims, IPO millionaires, and other assorted members of the city’s discerning gourmand club” who were flocking to Saison, proof enough that the Recession–which hit San Francisco hard in 2008-2010, forcing the closure of many restaurants–had ended in the City by the Bay, even as it was tightening its grip on other parts of the country.

It wasn’t just the price of a meal that caught my eye: it was Saison’s locale, in a disreputable Mission District neighborhood far from the glamour of the Financial District and even from the shabby-chic of South of Market. Saison seemed to glory in its downscale digs; the come-as-you-are dress code blared that, no, you’re not at Fleur de Lys anymore.

It is not difficult at all to conjecture that these newly-rich folks who can afford a splurge at Saison also are on the receiving end of these rare, limited quantity Napa Cabs that most people will never experience in a lifetime. Somebody knows somebody who knows the owner, and gets a bottle. Friends go out to dinner and drink it–perhaps at Saison. What began as a little story ends as buzz. Everybody wants a bottle–for now. But at this level, the consumer is incredibly fickle. Today, winery “X” is a star. Tomorrow, somebody meets somebody who’s friends with a different owner, and procures a different bottle; the cycle begins a new. Only a few of these rare and expensive wines will make it in the long run: this is Darwinian natural selection among wines, as it is among living things.

It’s increasingly apparent that well-paid Millennials, at least in San Francisco, are looking for upscale new drinking experiences and willing to pay for them. Check out this article, from the March 24 Bon Appetit, which argues that Milllenials “love wine…even more than their parents love wine.” They love it “because drinking it is classy and it makes them feel sophisticated.” Of course, a Millennial making $60,000 isn’t going to buy expensive Napa Cabernet. But lots of San Francisco Millennials are making a lot more than that: median family income in The City is $91,037, and keep in mind that a lot of those “families” consist of unmarried persons without kids, so they have a ton of disposable income. And their salaries are only heading higher: the San Francisco Business Journal reports mobile app developer starting salaries at $135,500-$195,120.

Thiis New Money has got to be a good thing for a local wine industry that, only a few years ago, looked teeter-tottery. If I were doing outreach on behalf of wineries, I would make San Francisco the Mecca of my evangelism, and I’d go after the Millennials where they live, play and hang out, starting with online.

 

 

 

 

 

 


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