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Why are the most ardent defenders of a free market so dead-set against DTC?

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Republicans and Democrats alike take campaign contributions from liquor wholesalers, as you can see from this data compiled by The Center for Responsive Politics, but perhaps the poster child for alcohol distribution companies is the Republican Senator from Texas, John Cornyn, who heads CRP’s list.

Our system of wholesalers and distributors is, of course, an anachronistic relic of the Repeal of Prohibition. As Tom Wark cogently pointed out last week in his blog, the original reasons for creating this “third leg” between producers and buyers might have seemed logical in the 1930s, but today, the system has become a “self-serving…monopoly” that “provide[s] the means for wholesaler coercion of producers and retailers.” The effect of this, as we all know, is that smaller wineries too often find themselves shut out of distribution channels, forcing them to try to sell their products directly to stores, restaurants and individuals. DTC is in fact the Holy Grail for wineries for the simple fact that the three-tiered system so ignobly makes fair distribution impossible. Wineries, especially small family ones, find themselves thwarted at every turn by a wholesaler industry that desperately wants to keep its monopoly intact.

Now, Cornyn is the senior senator from a state, Texas, which is one of a handful of American States, all of them in the so-called Bible Belt, that still has “dry” counties—those in which the sale of alcoholic beverages is illegal. This is a dreary leftover of the “temperance” movement in America, a religious-based crusade that began quite early in our country’s history, picked up steam throughout the nineteenth century, and finally resulted in the calamity of Prohibition, which, for fourteen years (1920-1033) made the sale and distribution of alcoholic beverages, including wine, illegal, except in the rarest of circumstances.

What people should understand about Cornyn, who also is against almost any form of gun control including background checks, is that politicians like him are the reason why liquor wholesalers continue to hold so much power over what the American people can and cannot drink. When Tom Wark says today’s lawmakers tend to support this wholesaler manipulation and control of the alcohol beverage marketplace,” he must have had John Cornyn in mind.

Politicians often claim that their votes can’t be bought even if somebody contributes a lot of money to their campaigns. (I know, I know, Hillary says the same thing about her Wall Street donations.) But an analysis of where Cornyn gets his money shows an outsized presence of liquor distributors, almost all of them based in Texas. When Dallas-based Andrews Distributing, one of Texas’s biggest beer wholesalers, contributed to Cornyn, what did they get for it? How about Texas City-based Del Papa Distributing, or Corpus Christi-based L&f Distributing, or Amarillo-based Budweiser Distributing? The list goes on and on.

Why would any reasonable person be against direct sales from small family wineries to whomever wants to buy their wines (as long as they’re of legal drinking age)? Tom Wark points out the many reasons why the three-tiered system is antiquated. But it’s more than that: it’s also anti-democratic (with a small “d”) and thus anti-American. It’s ironic that people who argue with such passionate conviction about the virtues of a free market should side with one of the nation’s most monopolistic trusts, the liquor wholesalers. “Let the free market work,” Cornyn endlessly yammers—and yet, when it comes to putting his money (or rather, the distributors’ money) where his mouth is, Cornyn is conspicuously silent, a lacuna that helps to crush the very free market he praises.

The ironies pile up. A fund-raising company called the Aristeia Group held a “wine tasting reception” for Cornyn that asked for a minimum contribution of $1,000 for PACs and $250 for individuals. What is Aristeia Group? Well, in a single year, 2014, they gave more than $281,000 to “Texans for Senator John Cornyn,” but they also gave large amounts of money to the Rand Paul Victory Committee and the Alamo PAC, whose Federal Election Commission statement lists only a single individual “Leadership PAC Sponsor,” John Cornyn. And where does Alamo PAC get all this money to donate to its favorite politician? From the interests and lobbyists who attend the many BBQs, breakfasts and “dove hunts” they sponsor, every one of which lists as its sole beneficiary “John Cornyn.” Your cost of admission: at least $1,000 per event. A sweetheart deal, and we can only guess at the things Cornyn is forced to do for his benefactors.

Well, the tight little circle of PACs, campaign contributions and lobbying isn’t limited to any one political party, like I said, but a peek behind the murky scenes into the Cornyn-Aristeia-Alamo PAC-beer distributors cabal should be enough to make even die-hard free marketeers bewail the extent to which the true “free market” has been demolished, in the alcohol distribution industry and no doubt in others. Returning to a truly free market of wine distribution should be a non-partisan no-brainer, but for some reason, we’re not seeing it, and I wonder if we ever will, as long as some of these politicians are drinking off the teat of distributors.


Is it possible to create a new cult wine?

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Some years ago (and I quoted her in New Classic Winemakers of California), Heidi Barrett told me that the success of Screaming Eagle surprised even her, the winemaker. It was like a “prairie fire,” she said: lightning struck ready ground, and the winery became a legend.

Recent developments and discussions have led to me inquire about the possibility of creating a new cult wine in California. A “cult wine,” of course, is one that is of relatively low production, that amasses, not jus good, but ecstatic reviews from the most influential critics, that has a “story,” and—bottom line—fetches the highest prices. The sanctum sanctorum of cult wines is a situation where the wine doesn’t even appear in retail contexts. In order to buy it, you must get on a waiting list for a mailing list.

Before analyzing how a cult wine might be created, let’s look at a few that already exist and see how they happened. I spoke of Screaming Eagle: before it became Screaming Eagle, it was just another Napa Valley Cabernet Sauvignon. Heidi Barrett was not then the ultra-famous consulting winemaker she has since become. Screaming Eagle’s location, off the Silverado Trail in east Oakville, was not considered the best. There was indeed a “lightning strikes” serendipity to the process that is very hard to explain.

Another cult winery is Saxum, which I also wrote about in New Classic Winemakers. Rhône blends from Paso Robles weren’t exactly cult darlings when young Justin Smith began his West Side project. It took some stellar reviews from top critics to launch him to the top. Ditto for Helen Turley at Marcassin, Williams Selyem and Rochioli, Manfred Krankl at Sine Qua Non, John Alban and, up in Washington State, Charles Smith and Cayuse. They would not be where they are today without the help of famous wine critics.

On the other hand, there are wineries that have spent tens of millions of dollars to produce quite respectable wines that, while very good, have not launched into cult status. They hired the most famous flying winemakers, the hardest-to-get viticulturalists and the most expensive P.R. firms, and still they remain on the almost-cult list. Napa Valley is replete with such examples. Could it be that the era of the cult winery is over—that it’s not possible to make a new one from scratch?

That is a plausible theory. The field is so crowded that it hardly seems to have room for yet another cult wine. A younger generation is not as interested in them as were their parents and grandparents. A meme has swept the country, along the lines of “Just because it’s expensive and gets high scores doesn’t make it better.” In fact, people, especially below the age of 30, understand that to some extent the system is rigged. They may not know the details, but their cynicism has been sharpened by exposure to a U.S. media that seems to advance people and things for its own purposes, rather than for the general well-being. In this sense, it would be very, very difficult if not impossible to make a new cult wine.

On the other hand are a couple of traits of human nature. One is that we seek novelty. Even cult wines gradually lose their appeal; I could name several that have over the last twenty years. Wine people are notoriously fickle. They are also are notoriously insecure, which is why wine critics are so easily able to influence them. Since we still have wine critics—and are likely to into the future—there is the distinct possibility that “the critics” (whoever they are) could anoint a new cult wine anytime they choose to do so. Yes, the Baby Boomer critics are leaving the scene but, as I have long predicted, they’re being replaced by a younger generation (Galloni is the prime example) that’s as influential as ever. Meanwhile, the most important wine magazines and newsletters maintain their critical power; even if their newer writers aren’t as well-known as Parker or Laube, they retain the power of the Score. So we still have the infrastructure in place to create new cult brands.

What varieties are most likely to be the new cult wines? Pinot Noir for sure. In my opinion, its future is unlimited; someone, somewhere, is going to make a single-vineyard Pinot Noir that rockets to the top. Cabernet and red Bordeaux blends are more problematic. There are so many; the market is so saturated. I suppose if a First Growth started a new Napa Valley winery (the way Petrus, or rather Christian Moueix, did at Dominus), the media at least would be waiting with baited breath for the first release, and if they universally praised it, it could soar to the top. But that’s unlikely. Nor is it likely that there will be a cult Chardonnay or Zinfandel. What about Syrah? It’s poised for a comeback. Growers are putting in new plantings in the best coastal locations, especially along the Central Coast. Prices for grapes are up. In selected locales, Syrah and red Rhône blends are doing very well, hand-sold by gatekeepers to audiences who don’t seem to be aware of, or care about, the conventional wisdom that red Rhônes are dead. So, of all the varieties, I think Syrah, or a Syrah-based Rhône blend, is in the best position to give birth to that rarest baby in the wine world, a cult wine.


That Lagunitas-Heineken deal

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“Achieving scale doesn’t change things unless you allow it to change you.”

That’s what Lagunitas Brewing Company’s founder, Tony Magee, told the San Francisco Chronicle, which today reported that beer giant Heineken has bought a 50% interest in the Petaluma, CA-based craft brewer.

(I couldn’t find the Chronicle link, but this is the L.A. Times story.)

I’ve long said that the prejudice against alcoholic beverage companies based on size alone is exactly that: a prejudice. There is no reason, in principle, why a big winery can’t produce wine exactly the same way as a smaller winery—except in larger quantities.

Viticulture? Pretty much the same. Grow in the right [coastal] areas. Do your pruning and cluster thinning, and hope Mother Nature gives you a good vintage. Get the best barrels you can. Apply artisanal techniques: sur lie, pumping over, hand-punchdowns. If this can be done successfully for 500 cases of wine, it can be done for 50,000 cases—or 500,000 cases.

Just why and how “small is better” became the prevalent theme in winemaking is a bit of a puzzle. The Bordeaux chateaux were never particularly small. In an abundant vintage, they can produce 40,000 cases of wine. Much of our notion of the importance of smallness derives from Burgundy, but there, the situation is completely anomalous. Burgundy is a patchwork of small vineyards due to France’s inheritance laws. One could, I suppose, argue that, if Burgundy had evolved another way, with large individual landownings a la Bordeaux instead of tiny parcels, the world would have been deprived of the glories of the terroir for which we rightfully celebrate Burgundy. But we speak of terroir in Bordeaux, and there’s no reason we can’t speak of it in a very large vineyard whose parent company produces many thousands of cases.

If that line of reasoning doesn’t resonate with you, try this: Even in a very large vineyard, you must grant that, if you subdivide it into blocks, you wlll discover nuances of terroir. And that is exactly what many, if not most, large coastal vineyards in California do.

I do hope that Lagunitas doesn’t change. I’m a big fan of their IPAs, which are inexpensive (I pay $8.99 a sixpack at Whole Foods). I will take Tony Magee at his word when he says things won’t change. If they do—if the beers get diluted—I’ll find some other beer: Sierra Nevada, Deschutes, the supply is endless.

But before I trash Lagunitas for “selling out,” I’m going to give them the benefit of the doubt. I won’t leap to conclusions “just because” Lagunitas has partnered with Big Beer!


Gone Fishin’

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Back tomorrow.


Friday Fishwrap

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No new post today. We’re gearing up for the Warriors parade this morning in Oakland and are so excited we can’t even think! But I want to give a big “thank you!” to the lovely people who came to my talk last night at the Napa Valley Wine Technical Group.

Have a great weekend.


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