Are California wineries consolidating at an historic pace? Nobody can predict the future, but we can remember the past. And what I remember from the early Nineties were dire predictions that wineries were consolidating fast, with big wine companies snatching up little ones, until some people were worrying there’d be only a handful of wineries left in a few years.
The cause, it was said, was phylloxera, and the billions of dollars it would cost to replant thousands of acres of vines. The little wineries, it was further said, would go broke, and have to sell off.
I was just a cubby wine writer at the time, but even so, I didn’t believe it. I just couldn’t envision a scenario where hundreds of wineries would go out of business overnight. And, as it turned out, they didn’t. California sailed through the phylloxera crisis pretty smoothly–in fact, the conventional wisdom is that it was good for the industry. Vintners were able to replant the right varieties onto the right rootstocks, in the right terroirs, and many even reconfigured their vineyards, in accordance with the latest scientific thinking. The outcome, of course, was that California wine emerged from the 1990s healthier than ever.
We again began to hear the consolidation theory (or its twin sister, the bankruptcy theory) as the Great Recession took hold, in 2009-2010. Those prognostications I took more seriously. Not only was it the worst financial crisis in the country’s history since the 1930s, but imports, from dozens of countries, as well as competition from the other States, were putting more pressure than ever on little family wineries in California.
Well, here we are, supposedly emerging from the Great Recession, and, aside from a couple acquisitions over the last few years (by Charles Banks, Jean-Charles Boisset, Gallo and the Jackson family, among a few others), most of the wineries that existed in 2007 are still here, joined by a bunch that weren’t. The economy seems poised to continue a slow recovery, which would seem to be good news for wineries. Our best glimpse into the future might be the recent Silicon Valley Bank report, summarized here, that takes a glass-half-full approach: it hedges its bets, suggesting that things will get better, but there are snags in the road ahead.
What are those snags? As the Silicon Valley Bank report states, Baby Boomers, who fueled the modern wine boom to begin with, are likely to be drinking less, as they retire, live on more modest incomes and [shudder] die. And our successors, Millennials, “can’t pick up the slack immediately, due to lower income, and access and the proclivity to purchase more foreign wine.”
But there’s another snag I foresee that doesn’t seem to have been mentioned in the SVB report: the proprietors of many of California’s older wineries also are retiring, dying or otherwise cutting back, raising succession issues. I can name a hundred wineries in Napa-Sonoma alone that were founded in the 1960s and 1970s, meaning their owners are getting old. What is the future of those wineries?
The kids don’t necessarily want to stay in the business. They may have seen their parents struggle through the hard times, and feel like they’d rather have a safer, more predictable life as a doctor or lawyer or something (or just live off their trust funds). Not everyone is cut out for the agricultural life and being at the mercy of Mother Nature–especially when she throws a drought of historic proportions at them.
What happens when these older wineries no longer are viable? In part, this is what some acquirers base their business model on. From the consumer’s point of view, it matters not who owns a winery, so much as what happens to quality when it changes hands. There are some big acquirers out there whom I trust: the ones I mentioned above (Banks, Boisset, Gallo and the Jacksons) have proven that when they buy a property (whether or not it was previously distressed), they not only maintain quality but actively improve it. There are other major buyers out there about whom I cannot say the same thing and whom I will not name.
What does all this bode for the future–say, 15 years from now? I suspect the California winery landscape will look pretty much as it does now. The big wine companies will be bigger (unless they do something really stupid, which is unlikely), but California has been fortunate to have an incursion of young, new winemakers into places like Paso Robles, Monterey County, Lodi and the Sierra Foothills, meaning that the plant is constantly being watered from the roots and will continue to grow.
* * *
Just so you know…
Got a press release this morning from VINEXPO stating that “China becomes world’s leading red wine consumer…Having downed more than 155 million 9-litre cases or 1.865 billion bottles of red wine in 2013, up 136% compared to 2008, China, including Hong Kong, is now the largest red wine market worldwide, followed by France, now in second place with nearly 150 million cases and Italy with 141 million.” Wow, did not know that.
This ridiculous weather has everyone scratching their heads. As I write on Tuesday morning, a major storm is moving into the North Bay, with up to 1-1/2 inches of rainfall expected. They’re even predicting thunderstorms in Napa tonight. Precipitation will be less the further south you go, with a 20 percent chance of showers along the Central Coast. Today will be the fourth day in June that California has had rainfall. Beyond that, temperatures will be up to 20 degrees below average. But a big warmup later this week, as a ridge builds in and temps in wine country get back to the 90s.
The weather hasn’t been that bad the last two weeks, which is why most of us were hoping that our hideous Spring-that-wasn’t was over. Apparently not. I personally think it’s due to climate change, but the deniers out there will still be denying when the midwest boils away and the oceans flood New York and Miami.
* * *
No writer can write for everyone. We’re a tribal nation now. Each group gravitates toward its favorites, be it the older, white, rich collectors who favor Parker, or the younger independents who look for their voice in the blogosphere.
It’s hard for any individual critic to span all worlds. The elitists are not going to waste their time (in their view) on anything that doesn’t have a famous name and cost an arm and a leg. I recently ran into a rich Napa winery owner who said, basically, that anything under $30 sucks. That was his cut-off point, and his vast cellar–which he proudly showed off to me–was crammed with priceless treasures, more than anyone could ever drink in a lifetime. I explained to him that the U.S. wine industry is a pyramid. At the tiniest tippy top, he exists; without a broad base beneath the top, the wine industry would come crashing down. I don’t think he heard my message, but that’s all right.
* * *
Nice summary of Napa’s various climate zones in this snippet from the Napa Valley Register. It explains how the county’s weather changes fairly dramatically from Zone 17, the coolest area around Carneros, to Zone 14, the Coast Warm area, which is the floor of the valley. I’ve been studying Napa’s climate for 30 years and I still discover new stuff everytime I turn my attention to it.
* * *
Yesterday I reviewed the new PharoahMoans, a Rhône-style red blend from the westside of Paso Robles. It was the fourth vintage I have reviewed it since 2005, and I swear the wine is getting richer and more decadent every year. It is becoming a serious rival to the wines of Saxum, which I love, and which are (I thnk) the most expensive in Paso Robles. I first met Saxum’s proprietor/winemaker, young Justin Smith, when I profiled him for my book, New Classic Winemakers of California: Conversations with Steve Heimoff, which was recently republished in a new edition, with a new Intro by moi. Justin’s attitude toward high alcohol then, and now, was: If people don’t like it, they don’t have to drink my wines. Good for him. PharoahMoans’ winemaker, Guillaume Fabre (who studied with Michel Rolland), seems to have a similar philosophy. Yes, the 2009 is high in alcohol (15.9%), but it is really a deliriously heady, flamboyant wine.
The 2011 growing conditions are starting out eerily like notorious 2010, when “summer never came.” Winter was long, wet and cold. We had a couple of warm days in April, but nothing out of the ordinary. Since then, it’s been nothing but cool, abnormally so. And now, rain.
Significant quantities of rain and hail and even snow at higher elevations (3,000 feet) fell overnight, particularly in the North Country, with rain expected to move south today. This is really crazy for the middle of May–and it’s not over. Rain will pick up in the Central Valley today, and move into L.A. on Wednesday, as a deep trough more typical of January cuts through the West. The National Weather Service yesterday said “winter-like weather will return to Northern California later this afternoon and tonight. Periods of heavy snow will likely redevelop across the northern Sierra Nevada this evening.”
By Thursday, fortunately, it should all be over. But what will the damage be to tender young grapeshoots?
And the extent of the April 8-10 freeze, when temperatures plunged as low as 24 degrees in the Central Coast, is becoming clearer. I was in Paso Robles last Friday, and it was the main topic of conversation. Paso Robles, southern Monterey and the Santa Ynez Valley were especially hard hit. The Western Farm Press reported that “Damage is unquestionably extensive”; several people told me that the Paso Robles crop has been wiped out by 50%. A local radio station reported that, of 25,000 planted acres in Paso Robles, “about 15 to 20,000 acres of those were affected at some level by the frost.” I can scarcely believe the quantity of blasted fruit is that high; maybe it is. There are reports that some wineries in Paso’s western hills will produce no crop this year. I asked a grower about secondary crop. He replied, in effect, don’t count on it.
I know nobody wants to hear about 2011 being as weird as last year, but why shouldn’t it be? Every vintage since 2005 has been cooler than the one before it. We thought 2008 was cool (despite the wildfires) and then came 2009. Then came 2010, the coldest year in memory. People are still freaked out by it. So far, 2011 is showing no sign of being any different.
* * *
I speak today at the International Special Events Society, which is meeting in Sonoma County. They asked me to talk about trends in the wine world. I plan on mentioning the different values and outlooks between Boomers, on the one hand, and Millennials and Gen Xers, on the other; the search for value; a movement toward lower alcohol levels in wine; new negociant models; a spate of M&As in California; social media, and a boom in the acreage of “alternative varieties.” Maybe one or two other things will occur to me. I don’t like to be too prepared when I speak to groups. I like things loosey-goosey. It’s more interesting when nobody, including me, knows what’s going to happen. I like to encourage questions and comments. Good feedback, even disagreement, from listeners inspires me; it makes me say things that surprise myself, things I didn’t even know I knew. Unfortunately, the drive up to Sonoma is likely to be a drag, with all the rain and fender benders. More tomorrow.
Americans have finally figured out that red wine is good for them, but they don’t know that drinking too much of it is bad, according to a new American Heart Association survey.
“[W]e need to do a better job of educating people about the heart-health risks of overconsumption of wine,” said an AHA spokesperson.
I don’t think the problem is a lack of education. Doctors have been saying for decades that drinking too much is dangerous. Everybody knows that. The reason people drink too much isn’t because they’re ignorant but because they’re unhappy and want to self-medicate. That’s the real problem, and I don’t know if it has a solution.
* * *
Here’s the V-Man in the news again, reminding businesses to be “heartfelt” and “human”, to give their customers “a hug or a handshake” and “overcare” and “listen” to them, instead of “pushing.”
Can’t disagree with that. What I wonder about is why, in person, Gary strikes me as rather arrogant–just what he tells businesses they shouldn’t be.
* * *
Nice to see the Salt Lake [City] Tribune reassuring Christians that wine is “a blessing, not a curse.” I always thought that anti-alcohol Christians were being a little hypocritical. How can they condemn drinking wine when wine is practically at the center of everything people did in The Bible, both Old and New Testaments? Jesus himself made wine, and made it part of the sacrament. These anti-alcohol Christians are the same kind of people who talk about “Hate the sin, love the sinner.” I don’t trust them.
* * *
The State of Pennsylvania, some time ago, made history when it began selling wine through kiosks in public spaces. Now, “the Pennsylvania Liquor Control Board is toying with making hard liquor available in the kiosks.”
That’s a good idea, but the real problem isn’t that the kiosks, which require swiping photo IDs and credit cards and taking a breath test, are too complicated to use. It’s that PA remains a control state that doesn’t trust its adult citizens enough to let them buy booze in a grocery store. What’s all this talk about Big Government I hear coming from the right? I’d like to see the Tea Party get behind eliminating control states and coming out for the free shipping of alcoholic beverages throughout the U.S.
* * *
OMG, now it’s the Battle of the Mommy Wines!
Not exactly up there with other celebrated battles, such as Hastings, Waterloo or Gettyburg. But the war of words is heating up between Clos La Chance (an excellent winery), which produces “Mommyjuice” wine, and “Mommy’s Time out,” an Italian wine whose New Jersey importer claims to own the copyright on the “M”-word.
I say let the two company CEOs fight it out in a UFC Octogon, armed with baby carriages and used Pampers.
And that’s your news roundup for today!
There you go again: California-bashing
1WineDude wrote in yesterday, “I spent the better part of this past weekend tasting / celebrating with friends, and the majority of that group openly despised the New World, CA Cab style.” Later, he added, “It was odd being the lone dissenter.” Welcome to the club, young dude. I experience this California-bashing all the time, sometimes even from my fellow Wine Enthusiast editors, but more often from Europhiles. It makes me think: If I, who love California wines, can also love European wines, then why can’t people who love European wines also love California wines? Could it be that I lack aEdit type of snobbism that Bordeauxphiles possess in the extreme?
Think about it. You will never, ever hear a California winemaker bash French or Italian wines. But you hear European winemakers bash California wines all the time. Too ripe! Too obvious! Too oaky! Too fruity! Too Tammy Faye Bakker! Yet every time they have a good vintage — look at the 2009 Bordeaux — they celebrate their wines’ ripeness and alcohol levels (as they did in 1947). Why is that?
I do think there’s a certain self-superior smugness among the A.B.C. (Anything But California) crowd. I can’t explain it for sure, but it’s something I feel. Look, California makes really great wine, and if you can’t acknowledge that, you should re-examine your own self.
Fritz Maytag sells Anchor Brewing
Editor’s note: In an earlier edition of this story, I incorrectly wrote that Fritz Maytag passed away. He did not, and I sincerely regret my error.
You may not have heard of Mr. Maytag (even if your mom had a Maytag washing machine in the basement), but Fritz was and is a Big Man in San Francisco. He owned (from 1965) and resurrected the Anchor Brewing Company, on Potrero Hill, producer of Anchor Steam Beer, which historians regard as America’s first microbrewery. He has now sold it, and it should continue in business for a long time.
More importantly, from a wine point of view, he owned the York Creek Vineyard, which I believe he bought and expanded in 1968, up on Spring Mountain.
Ridge used to bottle a York Creek Cabernet (so did Freemark Abbey). (Fritz Maytag had actually roomed with Paul Draper, at Stanford.) That Ridge bottling was an early example of a cult wine, not as important as, say, Heitz Martha’s Vineyard, but still very much in demand. Although my friend Jim Laube rated it only a Fourth Growth in his 1989 book, California’s Great Cabernets, other critics liked it better, and some of the old Ridge York Creek Petite Sirahs were über-famous. I remember, in the mid-1980s, going to the Safeway store out in Pacifica, where they always had a barrel of discontinued wines. I plucked three bottles of 1978 Ridge York Creek Cab out, for $2 each, and felt I’d hit the jackpot.
Speaking of Spring Mountain, I’m speaking at a “green” panel this Thursday up at Spring Mountain Vineyard, where I think I’m to play the role of Chief Debunker (as usual), in the sense that I don’t believe that calling yourself “green” results in better sales for a wine (although it may send the winery owner straight to Heaven). I’m not alone in this dubiousness. Check out this article, from Reuters via Yahoo! News. It says, “Organic, biodynamic and sustainable are words being used to describe wines but the eco-sounding terms have little impact on wine lovers.” One winemaker, an Aussie, said, “It’s [i.e., green] definitely a niche market, but 99.9 percent (of wine drinkers) didn’t respond to having organic on the label.” Ouch. On the other hand, going green can’t hurt.
And finally, “Don’t count me out” — Parker
The Great One makes “a rare appearance in Asia” in May, for a three-day “Ultimate Parker in Asia” in Singapore. “Parker is god,” somebody by the name of Arnaud Compas told Reuters; Compas founded a London firm called Hermitage, which sells rare and expensive wines (and obviously has a vested interest in anointing Parker to Deity status, since every time Parker blesses an Angelus, Dom or Cote Rotie, the price skyrockets, and Arnaud’s bank account swells). Okay, okay, so I’m jealous. Parker does Ultimate Asia, I get a few days in Paso Robles. But I’m not complaining. After all, I like California wine!
It was nice to see my blog listed the other day as one of seven “Must-Read Wine Blogs” on Forbes.com. Also on the list were Tyler Colman (Dr. Vino), Alice Feiring, Alder Yarrow (Vinography), Tom Wark (Fermentation), Wineanorak, and Eric Asimov’s The Pour.
Not bad company for a little blog!
Everybody’s doing the Millennial Stomp
Meininger’s Wine Business International headlines “How the Millennials think” and writes an analysis of how the wine industry can capture the their interest. I was reading it (“To communicate better to young people, we also use the Internet”) when an email came in from the Wine Institute. In conjunction with the California Association of Winegrape Growers, they’re having a “dialogue session” where we will “hear young California vintners and growers” talk about such things as “Hip and Trendy Marketing” and “The Next Generation: Passing the Torch.” An interesting move for these two old organizations — both fairly stodgy and not known for being “hip and trendy.”
So did the rains hurt, or not?
We won’t actually know for a while if the October rains harmed the grapes still on the vine (mainly Cabernet and Syrah) in the North Coast. Common sense suggests they did, along with the humid days that followed. I’ve gotten emails in the last 24 hours saying, in essence, no harm done. For example, the Russian River Valley Winegrowers put this out yesterday: “Contrary to popular belief, recent rains haven’t been the worst case scenario for most of the growers in the Russian River Valley.” And today’s Santa Rosa Press Democrat quotes Bob Anderson, executive director of the United Winegrowers for Sonoma County, as saying, “I think it has been a mad scramble ever since that big rain, but it looks in pretty good order now.”
True, the weather for the last week has been pretty spectacular: warm, dry days, gentle breezes, just about perfect. My concern, though, is whether the damage was already done, with botrytis in those bunches, especially in the cooler areas. Anderson’s money quote cuts to the heart of the matter: “Growers and wineries are still looking at some of the ‘cab’ and the debate is whether there are going to be some warming up days ahead of them this week…The problem is that the sugar levels have not changed much over the last couple weeks, so time is running out.” Yes, time is running out, and more rain is coming in. Unripe Cabernet is not good, especially if it’s infected with botrytis, although the “noble mold” may make for some spectacular dessert wines.
* * *
I am off this morning to an Appellation St. Helena tasting at the Rudd Center. This is always a fun, instructive event at which I try, and usually fail, to find something truly “St. Helena-esque” in the Cabernets and Bordeaux blends. I think I “get” Oakville (blackcurrants) and Rutherford (sour cherrry), but St. Helena confounds me. Is it possible to isolate a flavor or textural particularity, or is that paradigm a dated, 19th century one appropriated from the Médoc? I’m more inclined toward the latter explanation, although I’m sure some of the speakers will describe for us some St. Helena attributes that, once we hear them, we will instantly find in the wines.