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Friday Fishwrap

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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.


Wine Train highlights problems, opportunities of vino-tourism

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I’m always fascinated by the tension that so often arises in wine country between those who promote tourism and locals who don’t want a bunch of strangers traipsing all over their neighborhoods — even if they come armed with credit cards to spend in the stores and restaurants.

A couple years ago, I recall, there was a big brouhaha up in Knights Valley, that tranquil stretch of the Mayacamas Mountains that separates Alexander Valley from Napa Valley. Kendall-Jackson had wanted to build some kind of visitor’s center. Local residents opposed it. They called me up to see if I’d write about it. I decided not to, but in essence, their complaint was “Look, we have a nice, quiet little piece of God’s country up here, and we don’t want tour buses and traffic jams screwing it up.” I never did find out what happened.

There’ve been similar eruptions of passion in wine country. Another longstanding complaint is that when a region decides to glamorize itself as wine country, the price of real estate soars (well, it used to, anyway, before the housing bubble burst), forcing locals to pull up stakes and move. That happened in the Santa Ynez Valley, where lots of winery employees, who can no longer afford to live there, have to reside in faraway places like Lompoc or Santa Maria. And I remember when Wente wanted to develop the Ruby Hills area of Livermore Valley. Some bad feelings about that one.

Back in the ‘90s, when the owners of the Napa Valley Wine Train wanted to activate it as a tourist draw, the citizens of Napa Valley reacted with fury. It was a real pitched battle. Eventually, of course, the Wine Train was allowed to run along a stretch of Highway 29, but not as far as St. Helena, which surely is the leading tourist destination in the central-north part of the valley. Some of the local shops in St. Helena wouldn’t have minded the train coming into town and discharging tourists eager to spend money in the fancy chochky shops, clothing stores and art galleries. But St. Helena’s general citizenry said, Hell, no.

That was before the Great Recession. Now, the St. Helena Star is reporting that “[T]here’s been a thaw in the cold war between the Napa Valley Wine Train and the city of St. Helena.” Seems the city council has agreed to a trial period in which the train would bring passengers into town at 11 a.m. and let them wander around and spend money for two hours.

The issue of “sustainable tourism” is of worldwide concern, from scuba diving in endangered barrier reefs to eco-tourists plundering through the ancient preserves of indigenous people. In the case of wine, or what has come to be called vino-tourism, the downside was aptly described in this essay about wine tourism in Mexico’s Baja peninsula. Rising real estate prices are bringing about “land wars with aggressive buyers trying to corrupt land transactions,” and hotel and resort owners and wealthy Americans looking for second homes “roaming the valley…bused in from Ensenada to ride ATVs and ORVs, drinking wine and roaming the formerly quiet and peaceful neighborhoods.” Nor is there enough water for all the newcomers.

I imagine this is the very sort of thing the people of St. Helena wish to avoid.


Let’s cut the crap and stop accusing the alcohol industry of “causing” problems!

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I’m of two minds when it comes to California raising taxes on wine, beer and spirits. (Yes, that issue is still on the table, and was the subject yesterday of a hearing by the Assembly Committee on Health.)

California, like other states, is in the toilet financially, and Schwarzenegger and the (mostly Democratic) legislators are looking for every dime they can raise. (Republicans are calling for spending cuts.) Schwarzenegger is a Republican, of course, but at least he has the cojones to admit he’s raising taxes after promising not to because California is on the verge of fiscal Armageddon and he has no choice. Ronald Reagan did the same thing when he was Governor; he raised taxes after saying he wouldn’t. Reagan and Schwarzenegger, like most Governors, are political pragmatists in the long run.

I don’t mind an honest discussion over taxes vs. spending cuts. But the discussion turns dishonest when the likes of Assemblyman Jim Beall (who introduced the alcohol tax hike bill) and the Marin Institute step in to spread their skein of lies and half-truths. The Democrat from San Jose and the fiercely anti-alcohol Marin Institute insist their support for the alcohol tax hike isn’t because the money is needed, it’s because the alcoholic beverage industry “causes” fetal alcohol syndrome and DUI fatalities and must “pay” for its sins.

“The industry must start paying its fair share for the problems their products cause,” Beall insists. On his government website, he goes even further:

“The alcohol industry creates devastating problems – traffic accidents, alcoholism – and walks away with money stuffed in its pockets while the public — including non-drinkers — are left to pay billions for the mess.’’

His friend Bruce Livingston, the Marin Institute’s executive director, backs up these incendiary falsehoods. “Now is the time to charge Big Alcohol for the $38.4 billion … in harm their products cause every year in California.”

Correct me if I’m wrong, but the alcohol industry doesn’t “cause” anything. It’s stupid people who cause problems: the idiot mother who gets loaded while pregnant, the moron who drinks and drives. Blaming a winery because someone who drinks their wine got into a traffic accident is just plain stupid-headed and unfair. It reminds me of the burglar who tried to break into a store at night through a rooftop window and fell through, hurting himself. He sued the store he was trying to rob! “It wasn’t my fault I got hurt, it’s because they put a dangerous window there and they should have known better.”

I DON’T THINK SO, KNUCKLEHEAD!

I can do no better than to quote this statement from a professor at Trinity College in Connecticut:

“Mr. Beall and Marin’s whole strategy of taxing people sober (with the long-term goal of eventually going back to prohibition) is fatally flawed…Research indicates that the heaviest drinkers do not curb their drinking in response to higher prices, unlike light-to-moderate drinkers, for whom there can be positive health benefits…If alcohol abusers are truly addicted, will an extra ‘dime a drink’ stop them? Will a career criminal decide to not get drunk before his next crime spree because of a 10-cent-per-drink tax? Of course not.”


The Calistoga AVA war heats up again

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In what’s turning into the longest-running farce in U.S. appellation annals, the Calistoga contretemps is back again in the headlines.

Just to bring you up to date on the plot, we first heard, back in 2003, that local vintners wanted the then-Alcohol, Tobacco & Firearms bureau (now the Tax & Trade Bureau) to approve a Calistoga American Viticultural Area designation (AVA). In September, 2006, Chateau Montelena formally applied for approval. At that time, Montelena’s owner told me the Bureau told him the proposal was “the least controversial one they’ve ever done.” Well, that was a setup line if ever there was one, for a year later the Calistoga AVA had been effectively sidelined. Two wineries, Calistoga Cellars and Calistoga Estate Vineyards, both challenged it, saying it would harm their businesses, if approved, because they would have to change their names, since neither sources at least 85% of their grapes from the Calistoga area.

A risk-adverse TTB thus shelved the proposal, with spokesman Art Resnick explaining, “TTB needs to take a second look at this.” (For a good summary of the situation as of last year, see this link to the Napa Valley Register.)

calistoga

Well, now Calistoga III: The Curse of the Compromise is playing in a theatre near you. Seems TTB worked out a tentative deal whereby the two wineries with “Calistoga” in their names will be grandfathered in, allowing them to keep their names going forward. But wait! There’s more. No sooner was the compromise revealed than the two Congressmen who head up California’s wine caucus, George Radanovich (R-Mariposa) and Mike Thompson (D-St. Helena) came out forcefully against it.

“We have very serious concerns that (the compromise)… could do lasting harm to the growing American wine industry,” they wrote in a letter to Treasury Secretary Timothy Geithner. On the other hand, the powerful chairman of the Senate Agriculture Committee, Tom Harkin (D-Iowa), came out in support of the compromise (leading some reporters to note that Harkin had gone to school with one of the wineries’ co-owners).

I don’t see what the fuss is. Go ahead and approve the Calistoga AVA, and let the two wineries keep their names. It’s not a big deal. Appellation names are overblown anyway. Radanovich and Thompson are engaging in a little hyperbole when they say the future of the wine industry is at stake.

So let the compromise march forward. But in return, let TTB state, once and for all and on the record, that this is the last time they’ll let a geographic abomination like Calistoga Cellars and Calistoga Estate Vineyards slip through. No more name games. TTB has got to develop a spine.


Industry gears up to fight Schwarzenegger wine tax

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California wineries and supporters of the wine industry are gearing up for their biggest fight in at least a decade: heading off Gov. Arnold Schwarzenegger’s proposed excise tax hike on wine.

Vintners are speaking out to whoever will listen, predicting the most dire economic consequences if the measure passes.

“It’s like shooting Charles Shaw in the eye,” says Fred Franzia, of his Two Buck Chuck. Franzia worries that the wine’s price could soar by 25 or even 50 cents per bottle.

The tax hike “is insanity,” says Joseph Filippi, of Cucamonga-based Joseph Filippi Winery and Vineyard. His near neighbor, Don Galleano, of Galleano Winery, in Mira Loma, predicts the new law “is going to be detrimental to business” if it passes.

Winery owners, small and large, see doom if they’re forced to raise bottle prices. Greg Popovich, president of Castle Rock Winery, in Sonoma County, says he’s been warned by Beverages, and More!, one of his leading retail accounts, “that if I raise my price by even a penny in this economy I will lose the account.”

The CBS local affiliate in San Luis Obispo quoted Gary Eberle, of Paso Robles’ Eberle Winery, as saying the tax rise “by itself probably could put a few people out of business. There are just so many things aggravating our business right now, I’ve seen a lot of people in serious trouble.”

Robert Koch, president and CEO of The Wine Institute, wrote Schwarzenegger, arguing, “[W]e strenuously object to the singling out of our industry to bear more than our fair share of the burden.” The Governor’s proposal would raise the state’s wine excise tax by 640 percent, sending it from 20 cents a gallon to $1.48 a gallon, and causing the loss of at least 6,756 wine jobs, Koch calculates.

The Wine Institute released this chart representing the effect of the proposed surtax on wine.

The industry is asking consumers to write the Governor opposing the measure. Care2, an online “healthy and green living” website, has launched a petition drive

The last time California was confronted with the threat of a big sales tax hike, Wine Institute’s then head, John DeLuca, successfully fended it off. It will be interesting to see if Koch can do the same. With California hemorhaging money, Democrats in charge of the State Legislature, and a nominally-GOP Governor who’s been acting more like a Democrat the last few years than a Republican, I’m predicting taxes are going up on wine, regardless of whether anyone likes it or not. When push comes to shove, elected officials will protect the interests of cops, firefighters, prisons and schools over those of wine drinkers. And the truth is, people who buy Two Buck Chuck can shell out another 50 cents.


Live! From D.C.! It’s Steve’s blog!

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I’m here in the nation’s capital for the big Obama inauguration, making the rounds of parties, balls and fêtes, and man, is it exhausting! One thing after another, with not enough sleep. Just yesterday I was asking Michelle how she stands up to the constant commotion and shmoozing. And she always looks so good! We were in the Bedroom Suite of Blair House — you know, the one where everything’s in pink pastels — having a glass of Chard (K-J V.R.) while the tailor was putting the finishing touches on the I.G. (Inaugural Gown). No, I can’t and won’t say anything about it, you’ll just have to wait to see it like everybody else! Except I can tell you it’s STUNNING and nobody but nobody could look better in it than M.O. At one point The Man Himself popped in to say hi. He was with Rahm (who looks even more feral in real life than he does on the telly). They were going out for a jog and Barack had on these grey cotton sweatpants with wide blue sidestripes and a light blue T-shirt with PEBO in red letters. That’s short for “President-elect Barack Obama.” After he and Rahm left, Michelle joked that the girls are already calling him PEBO or “PEBO Daddy”! So that’s a little inside gossip. Now stay tuned for some big news: I have learned the contents of the Obamas’ wine cellar! And it’s not all K-J. They have a lot of Alsatian Riesling (Michelle’s fave) and some Barolo (which she says she’s learning to like under the tutelage of her personal wine guru, Karen MacNeil) and also some Zinfandel and Pinot Noir, not to mention Champagne. I asked Michelle what Big O. likes and she said he’s down with Napa Cabernet, but that he also has a thing for a good microbrew (which we already knew). She confided, “He’s never acquired a taste for liquor, but he’ll have a cognac after a nice dinner.” Back home in Chicago, they have some Illinois wine, but Michelle said they don’t really like it, and probably won’t be having it in the White House.

Another thing Michelle was working on was the menu for the Inauguration Day luncheon. For all you little people not important enough to be invited, here it is:

Seafood Stew
Duckhorn 2007 Sauvignon Blanc
(My Wine Enthusiast score: 90)

Pheasant and Duck served with Sour Cherry Chutney and Molasses Sweet Potatoes
Goldeneye 2005 Pinot Noir
(My Wine Enthusiast score: 92)

Apple Cinnamon Sponge Cake with Sweet Cream
Korbel Special Inaugural Cuvée
(untasted)

I asked Michelle what she thought of Tom Wark’s remark last week that “I don’t expect…any public display of wine loving on the part of Barack Obama.” (She was fully aware of it, because she reads the major wine blogs every day.) She disagreed. “Wark’s a smart guy, but he’s wrong on this one. Barack will be the wine President,” she said confidently. She wouldn’t provide details, but it’s clear that we have friends in the White House, after eight low, mean, dry years of chili and milk.

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