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Some lessons learned from the first decade of the 21st century

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Hard to believe in just 37 days the first decade of the 21st century will end. Seems like only yesterday we were partying like it was 1999 (wait, it was 1999) and in a panic about the Y2K meltdown. Now here we are on the verge of 2010. In the blink of an eye, a decade has flown by.

It’s been ten years of discontinuity and discombulation for everything in America, and that includes the wine industry. I went back to review some things I wrote for Wine Enthusiast back in 2000, to see what we were thinking and talking about then. The wine market was, of course, robust in 2000, coming off the previous decade of up, up and away. In August of that year I wrote a column that reflected on the historical swings of the Bordeaux market over the preceding, well-documented two centuries. “Switch now from Bordeaux to California, and especially Napa Valley,” I said. “Many of the top wines, particularly Cabernet Sauvignon, have doubled in price since 1990…the price of many, if not most, expensive wines has got to come down, and will…If you don’t believe that the world’s most prestigious wines can suddenly, exuberantly collapse in price, just read ‘The Wines of Bordeaux’ and find out.” That book, by Eddie Penning-Rowsell, traces the sine curves that Bordeaux prices always have described.

The dot-com bust and Sept. 11 dealt blows to the wine industry, but nothing like the staggering knockdown that the Great Recession of 2008-2009 delivered. I still see “suggested retail prices” of $100, $150, $250 for certain Cabernets, but frankly, I don’t believe them. A winery owner can claim to be asking (and getting) triple-digits for his wine but that doesn’t mean he is. So I was right that prices would collapse, but it’s a prediction anybody can make, at any time, because sooner or later, prices always tumble. But that has never stopped certain people from trying to talk prices back up, as for example this article from Investors Chronicle, which argues that “the market for quality wine has enjoyed a rapid turnaround” and cites somebody from something called The Wine Investment Fund as saying that fine wine “has earned it[s] place alongside gold, equities, bonds and other assets in an investment portfolio.” We may forgive The Wine Investment Fund, which is based in London, Bermuda and Hong Kong, for hyperbole, since it’s hardly a disinterested party.

I asked, also in a 2000 column, the following question: “Have you noticed that wine is getting sweeter and softer?” Apparently, I had, although 2000 was a little before I remember actually becoming convinced that California wine had a real problem, namely lack of acidity and excessive residual sugar. Later that year I wrote a little story about Jess Jackson stepping down as Board Chairman of Kendall-Jackson, and quoted him as saying, “I’m seventy. I’m retiring.” Some retirement! But along less happy lines, at the end of 2000 I reported on the news that Robert Mondavi Winery had “extended its reach to a fourth continent, Australia,” with its announcement of a joint venture with Rosemont. In retrospect we can see that this really was an early warning sign of the winery’s impending demise, caused by the hubris of exalted ambitions. RMW’s actual death dragged on for another four years, but finally occurred in December, 2004, when the company was sold to Constellation.

Several conclusions can be drawn. Wine prices are down now, but unless this is the End of History they will rise again, pace Penning-Rowsell, although it could take a while for the high end to recover; there were eras when Bordeaux took decades to come back. Softness and sugariness remain stubborn problems in California wine, but there’s evidence that that trend-line has peaked, thankfully (although it’s a Dracula that threatens always to rise again from the grave). Jess Jackson happily remains with us, at the helm of a great wine company. And the unhappy experience of Robert Mondavi should be a warning sign to ambitious empire builders. What are its lessons? Be careful what you wish for because you might get it. The Devil’s in the details. The bigger they are, the harder they fall. Dot your i’s and cross your t’s. The fundamentals still apply as time goes by.

casablanca-splash

And speaking of the second decade of the 21st century

The world will have heard by now that Gary Vaynerchuk has won Wine Enthusiast’s “Innovator of the Year” Wine Star Award for WineLibrary TV. I am personally thrilled by the prospect of finally meeting Gary when we all gather, in black tie, at next year’s gala ceremony, at the New York Public Library’s 42nd Street branch. I feel like I know Gary from his comments on my blog, and he is obviously a force to be reckoned with as we head into the two thousand and teens. Congratulations to Gary and to all the Wine Star Award winners!

GaryV


Michael Brill on Crushpad’s big new deal with Twitter

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They’re already calling it “twine.” San Francisco-based Crushpad will make wine for Twitter, in a move (dubbed the Fledgling Initiative) to benefit the charity Room to Read.

I talked with Brill, Crushpad’s president and CEO, last Friday.

SH: How did the deal come about?

MB: We have a couple Twitter employees who are customers of ours. They contacted us about making some barrels for employees, as a team building exercise. They also at the same time were trying to hook up with Room to Read, their favorite corporate charity. Over the course of 45 minutes, we all came up with the idea of why don’t we create a wine, sell it, and the profits will go to Room to Read.

What is the significance of this, beyond raising money for charity? I mean, Crushpad getting involved in social media. You’re already calling it “social winemaking.”

Great question. We’re all about getting people involved in the winemaking process and co-creating a product with the customer. So this is an extreme exaggeration of what we normally do. Instead of 5 or 10 people involved in the process, we’ll have hopefully tens of thousands [buying the wine]. And all this is being tweeted as we go along. It’s a way to expose winemaking to many thousands of people who could not ordinarily afford it or be involved in it.

Tell me about the wines. Varieties? Sources? Price? Production?

Pinot Noir and Chardonnay. The grapes are from different vineyards — Santa Lucia Highlands, Santa Rita Hills, Russian River, Sonoma Coast, all the stuff we normally deal with. The price is $20.

I read that only $5 of that will go to Room to Read, with $15 going back to production costs. That seems high.

Well, if you look at our hard materials costs and labor, we’re not making any money on this. And we’re eating shipping costs. We’re probably losing money. People making wine from the same vineyards [charge] $40 or $50.

Why is the brand is called Fledgling?

That was Twitter. Biz Stone [Twitter’s co-founder] came up with that. They like things that are bird-related.

What is case production?

Between 1,000 and 10,000.

Can you be more specific?

No. Twitter is concerned about not wanting to commit to specific dollar amounts to give to Room to Read, so they don’t want to set specific expectations, even though we have internal targets. I think Twitter’s taking a huge risk on this. Some people have been snarky on the blogs [such as]  “Twitter should figure out its business model.”

Is this a one-time thing? Will production and variety type increase?

We’ll see how it works. We’ve never made anything on this scale. This is an order of magnitude larger than our Vayniac Cab [which Crushpad made for Gary Vaynerchuk].

Crushpad has a Twitter account with 63,425 followers. Has that resulted in any additional business, or is it mainly a P.R. device?

It’s the latter. Social media and Twitter are fine for brand building, relationship development, getting your name out there, but it’s a horrible mechanism for generating revenue.

Could that change with a killer app?

Well, there are challenges with Twitter in that there‘s no structure. Personally I believe Twitter for business will only be successful when there’s structure built into it, whether by Twitter or a third party. A tweet is just an event. How do I take advantage of it? So my perspective is, Twitter is great for updating people, but not great now for selling.

Has the recession affected Crushpad’s business?

It’s put a crimp in, especially in the first half of this year. Most of our clients are pretty affluent, but the uncertainty about the economy earlier this year pushed people back. But there’s more optimism now. We saw a big jump this harvest.

That brings up another point. You speak of “democratizing” wine, yet doesn’t the Crushpad model actually only apply to wealthy individuals?

It’s a process. Ten years ago, you needed tens of millions to make wine. Then custom crush facilities brought it down to $100,000. We brought it down to $10,000.

Last words?

I think a lot of the Room to Read piece gets lost [in media coverage]. It’s a great story. Twitter doesn’t get any P.R. value from this; they have nothing but risk associated with this project. It’s about all of us helping Room to Read, which in turn helps kids.


The death of high-end wine?

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Ever since last Fall, every wine writer has written about how hard high-end wines have been hit by the recession. I have, for sure. The latest is the Santa Rosa Press-Democrat’s Kevin McCallum, who wrote this piece entitled “Makers of high-end wines caught in ‘dead zone’.” It does a good, and scary, job of describing “the demise” of Flanagan Family Winery, whose owner sank his heart into the project, only to see the recession come along and kill the ultrapremium tier he hoped to conquer.

Kevin gets to the point when he writes “Some think the reversal will be short-lived; others say something has fundamentally changed in the wine business.” This is, of course, the 64 dollar question, and I won’t attempt to answer it because I don’t have a crystal ball. But it is worth speculating about the second premise of Kevin’s statement, namely that “something has fundamentally changed in the wine business.”

Has it? Or are we all just prone to making cataclysmic prognostications of gloom and doom, when, actually, things don’t ever change that suddenly or radically? Well, to begin with, some things do change that suddenly. Sept. 11 changed almost everything in America. I think historians will refer to pre- and post-Sept. 11 for a long time (and possibly to pre- and post-fourth quarter of 2008 as another epoch-shattering event). And it is, of course, to the fourth quarter of 2008 and the massive recession that the question has to be addressed concerning the wine industry: Has the deck been fundamentally reshuffled, or just temporarily? How long will expensive wine suffer?

One obvious place to look for the answer is personal income. Americans have lost literally trillions of dollars over the past year or so. That’s spending money, folks. And that loss means that tons and tons of stuff is not going to be bought by consumers, including wine. We know this, so the followup question is, will Americans recover the money they lost? If they do, then sales of expensive wine will recover. If they don’t, then it won’t. It’s that simple.

Even if you assume that the recovery is upon us, and employment goes back up, and salaries stabilize if not actually rise, there’s still a big problem: peoples’ retirement incomes — their 401Ks and IRAs — have been demolished. Let’s say someone was making $75,000 a year before the recession and had $750,000 in a retirement account. That person didn’t mind spending $15 or $20 for a bottle of wine, because while she didn’t exactly feel rich, the retirement account was reassuring.

But assume now that the value of her IRA has fallen to $350,000. Assume she still has her $75,000 a year job and is reasonably secure in keeping it. Will she still spring for a $20 bottle? I don’t think so. If she’s like many folks I know, her reasoning is, “Gosh, I’ve really lost a lot of money. I have to rebuild my nest egg. And my employer has been talking about us contributing more toward healthcare premiums, as well as higher co-pays and prescription drug costs. So, while I’m not ready to give up wine, instead of spending $20, I’m going to start looking in the under-$10 category.” She does, and you know what? She finds that there are lots inexpensive wines that are as good and satisfying as what she used to buy. She becomes a permanent under-$10 buyer. (Along these lines, I recently gave a high score to an $11 wine. The winemaker called to tell me that it was really a $40 bottle from a winery that couldn’t sell it at that price, so he bought it, retailed it for $11, and still made a tidy profit. There are innumerable instances of this happening every day.)

Multiply our hypothetical consumer by millions of people and you have a permanent shift in American wine-buying habits. The only thing that could change this would be psychology: people are conditioned to think that if something costs more, it’s better, and nowhere is this more true than with wine. It’s a fundamental part of human nature to associate price with quality, however mistaken this is. Here’s where the Millennials and Gen Y come in. In ten years, when they’re at the peak of their purchasing power, will they revert to the old “if it costs more, it’s better” way of thinking, or will they — the smartest generation of wine consumers in history — recognize that cost and quality aren’t always related? Again, I don’t know, but I suspect  they may be bamboozle-proof. If so, then we really, truly are witnessing the death of high-end wine.


Hurricane Vaynerchuk: Cat 4 and strengthening

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Disclosure: Gary Vaynerchuk is a nominee for Wine Enthusiast’s “Innovator of the Year” Wine Star Award. I hope he wins. If he does, I look forward to meeting him next Jan. 25 at our awards ceremony in New York.

If he is “a new media pioneer, showing how things can and will be done,” which is how Jancis Robinson described him in yesterday’s Pour blog in the New York Times, I wish him luck. I will be retired and living off fond memories when Gary takes over the world. So it’s not as if I feel threatened by his rise, or anointment, as the case may be.

I had lunch today (yesterday as you read this) with a Californian who was recently on Gary’s Wine Library TV show, and he told me that Gary told him he’s getting bored with WLTV, desperately longs to be as famous as Parker and is thinking of moving beyond wine into other areas. The winemaker added that he was a bit put off by Gary’s obvious ambition, but went along with it anyway. Hey, a chance to be on Gary’s hit show is not to be missed! The man moves product (although not nearly as much as a good review in Wine Enthusiast). I told the winemaker that I can understand the desire to be famous, but when it’s so obvious, it’s unseemly. (I have a problem with Gavin Newsom for the same reason.) Maybe it’s because I was raised in a different generation, where naked ambition was not flaunted, but hidden behind a veil of propriety. Perhaps my generation was hypocritical. I like to think it was tasteful.

A few weeks ago I blogged “Move over Perez Hilton, here comes Gary V.” in which I inferred, and implied, that Gary — now a certified celebrity himself — was moving closer to becoming a chronicler of other celebrities, a sort of Ryan Seacrest (who makes, what? $20 million a year). There’s a lot of cash to be earned, and Wine Library TV is probably too small a platform to really make the bigtime.

I found the most interesting part of Asimov’s Pour blog when he reported that Jancis “grimaced” at Gary’s wine descriptions when she tasted with him, which perhaps provides some insight into what she thought of his wine knowledge and understanding. Nonetheless, here Jancis is, overcoming her horror to praise him as the coming thing.

My problem with Gary, Wine Enthusiast’s nomination notwithstanding, is that he seems to be a pure product of our celebrity culture. Although he’s not particularly young and, as I understand it, losing his hairline (who am I to talk?), he could be the host of an MTV entertainment show, which is what I alluded to in my blog. His personality is perfectly suited to television and the video Internet: raucous, irreverent, hyper, funny, quick-witted, a little coarse, able to take a punch and come back with a stronger one. He’s not hard on the eyes. Think Seacrest, Craig Ferguson or even Conan O’Brien. These are celebrities who are famous because it pleases us to watch them, not because of anything they “know” or have to teach us. Gary V. is the Conan O’Brien of wine media these days.

“His persona is as much about marketing as it is about wine,” Asimov wrote, insightfully. Gary’s marketing blitz — so naked, so lustful — worries me a great deal, but I also admire it. Anybody who can come so far, so fast, basically on his own merits, has got to be deemed a great success, in the way we define success, American-style, as entrepreneurial skill, and a corresponding penchant for making money — in Gary’s case, a lot.

What causes me worry is the implication Gary’s meteoric rise has for the future of wine writing. In Jancis’s description — “showing how things can and will be done” — the operative word is can. Things can happen the way Gary has made them happen because our media culture increasingly is about entertainment, not content; about sizzle, not steak; about eccentricity, amusement, shock, bread and circuses. The media culture is endlessly manipulatable by those who understand how it works. That’s wino-tainment, folks! Just because something can be done doesn’t mean it should be done. But for me to complain about that is tinkling into the wind, meaningless, and it just blows back on me.

As a lover of fine wine writing and education, I really hope the high-end version of our craft doesn’t go away. I don’t think it will. I suspect Gary will go on to an amazing career in which wine is only tangential. I also suspect that fine wine writing will always attract people who get into it, not because they expect to earn a lot, but because of their passion, and the way wine writing lets you live a wine lifestyle without lots of money.


Public to choose wines for top London restaurant using Twitter

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That’s the attention-grabbing headline from Decanter, explaining how L’Anima, an Italian restaurant, is asking the public to vote for wines to go onto its wine list, in an online election to be held via Twitter. Decanter says this is believed to be a “world-first.”

That’s a pretty clever idea. As soon as I read it, I was reminded of Murphy-Goode’s “A Really Goode Job” contest, which was also a world-first, in a way: the first time (to anyone’s knowledge) a winery hired a Director of Social Media. (There was also a sort of online election-that-wasn’t-really-an-election tied to that one, but let’s not go there.)

As we all know, in retrospect it turns out that what was so interesting about “A Really Goode Job” was that the ensuing media attention, which was worldwide, gave Murphy-Goode around $17 million worth of free publicity. I wonder if that’s behind L’Anima’s move? After all, here I am, in California, reading about this London restaurant I’ve never heard of, and probably never would have heard of, had they not done the Twitter thing. And Decanter in all likelihood never would have written about L’Anima otherwise.

The restaurant certainly seems keen on the contest. I went to their website to read their sommelier praise “the power of Social Media [to] help me select those [wines] that should be given a chance.” Two comments here: One, are we now capitalizing “social media”? Who makes these decisions anyhow? And two, has there ever been a self-respecting sommelier who didn’t feel capable of making his own wine list selections, without asking a bunch of total strangers, with no obvious skill set, for advice? I mean, on L’Anima’s website they say this about their wine list: “When writing the wine list, we had the challenge of finding wines to accompany [chef’s] innovative menu and representing the true Italy and its diversity.” I don’t quite understand how they’ll be able to use the word “we” after thousands of voters with, one suspects, no particular skills, and with little reference to “chef’s innovative menu” or even what “true Italy” means, do the actual selecting.

I suppose the least you could say is that all wines on the ballot were pre-selected by the sommelier and his team, so they were all qualified to be on the list. I guess, but still… Is this the ultimate challenge to authority, sponsored by no less than the Court of Master Sommeliers?

Meanwhile, the P.R. train seems gearing up for action. Jancis Robinson has already tweeted about it (“Creative use of Twitter to shape excellent London restaurant, L’Anima’s, wine list”). And when Jancis publicizes something, it will be noticed. (I know, the irony is that I’m publicizing it too.)

I wonder if this use of social media for P.R. purposes isn’t emerging as one of its main features. I mean, given social media’s tendency to talk about itself, if an organization (restaurant, winery) uses it for some sort of contest, and then the straight press (e.g. Decanter) picks up on it, the social media users will repeat the straight press’s account, creating a tornado of endless repetition of the sort we saw with A Really Goode Job and are seeing with L’Anima. It’s all very phony, in a way — a computer virus that self-generates, like a nude celebrity video leaked to a tabloid — but it obviously works. It generates buzz. Imagine a couple of tourists who hit London for vacation. They’re looking for a nice place to eat and the concierge suggests a couple of restaurants, including L’Anima. “Isn’t that the place that had the Twitter contest?” one of the tourists asks. “Why, yes, it was,” her friend replies. So they decide to try L’Anima. When they get back to Cleveland, they tell their friends, “We had dinner at the most amusing place.” “How was the food?” their friends inquire. “Oh, it was all right, but it was that restaurant that had the Twitter contest for the wine list.” “Oh. How was the wine, then?” “It was all right, too. The sommelier told us all about how some of the wines were chosen by the world’s first Twitter contest. They’re already calling it the Twitter restaurant.” “Cool! You must give us the address so we can go next time we’re in London.”

And so it goes.


Move over Perez Hilton, here comes Gary V!

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Is the famous wine personality increasingly smitten with the world of celebrities?

“Transparency” and “exposure” take on new meaning in this op-ed video by Gary Vaynerchuk. The link comes in an article on, not wine as you might expect, but on three celebrities whose menage-a-trois somehow made its way onto the Internet. The article appears in PopEater, which seems to be an online version of Entertainment Magazine.

The background: The 3 celebrities are ‘Grey’s Anatomy’ hunk Eric Dane, his wife, actress Rebecca Gayheart, and “former beauty queen” Kari Ann Peniche. Dane’s lawyers immediately leaped to his defense, calling the tape “a private, consensual moment involving a married couple, shot several years ago, which was never intended to be seen by the public.”

No, of course not. Embarrassing tapes never are.

ericdane45
To see the rest of him, go to the video

Or at least a censored version of it, here at Gawker.com. Believe me, the video isn’t even that hot. The three stars seem dim-witted but that could be because they were stoned. And there seems to be a lot of product placement, including a strategically-placed iMac.

Anyway, this truly tasteless incident never would have made it into a high-minded publication like this blog had it not been for the Gary V. video, which makes it not only wine-related but reportable.

Now, I know nothing about Gary V. beyond his celebrity status. But I’m learning. The PopEater article calls him a “PopEater Pal” and says the video is an “Exclusive Explanation for PopEater” of the videotape’s relevance to a much wider world involving “good [product] exposure and branding.” Which, I guess, means Gary V. has something going on with PopEater.

Gary’s video is 2:13 in length. Here’s a pretty accurate transcript.

“Really excited to talk about what I call the “Hugh Grant” rule…about how naked pictures and this full exposure has not always been bad for the brand, and I understand why…if people come out and say “I’m sorry” we’re kind of okay with it. And so what is going on in this new transparent world — don’t get it twisted, you take a picture or a video of yourself naked, and it’s gonna get out. And if you don’t think that these celebrities and these new internet celebrities, if you don’t realize they’re putting them out on purpose. I think you know. You guys are not naive. But what’s important to understand is it’s exposure. And it’s branding. And it’s opportunity. And as long as you follow up your mistakes with your “I’m sorries,” you’re always in a position, in our society, to build a bigger brand…So my whole take on this is very simple. It’s the movement of everything I’ve been talking about on social media. The fall of newspaper. Wait til television falls. Boxee.com, that’s all I’m gonna say. When all this becomes pure content and full exposure, this trend, this new trend of naked pictures and full exposure is going to continue, followed up with the traditional I’m sorry, and brands will continue to get bigger and bigger and bigger, because that’s how we roll, it’s word of mouth, things like Twitter are just word of mouth on steroids. Vanessa Hudgens, her second round of pictures, I knew about 6 minutes after they were online, because it was a trending topic on Twitter. So the word of mouth has changed so much, allowing these kind of micro-events for Rihanna and Sarah and other people to get really more brand value, not less.”

I could bemoan the obvious crassness of a culture that permits such things to happen. I could criticize Gary V. for not merely identifying the phenomenon but doing so glowingly, as if it represents a signal breakthrough in human morality and consciousness. I could rebuke people who think that the best way to get famous, without talent, is to put images of themselves naked on the Internet, then leak the story to barracuda “journalists” of the type who write garbage for the tabloids.

I could do all that, but I won’t. Instead, fair warning. Tomorrow, in this space: Naked pictures of me, Steve, in compromising positions. Groups. Animals. In public, with celebrity chefs, winemakers, Mayors and movie stars. I want my brand to get bigger and bigger and bigger, so I’m applying the “Hugh Grant” rule which we actually may now call the “Gary V.” rule. If it’s sleaze, it leads. After everyone is shocked, shocked at my brazenness, after I’ve offended every measure of public decency, I’ll come out with my phony “I’m sorry,” and I’ll be bigger than ever! Mwahahahahahaaa!


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