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Are Millennials killing CA wine? NY Post says for sure

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The New York Post long has been famous for its outrageous headlines: “Obama Beats Weiner,” “A-Hole” (about A-Rod’s steroid scandal), “Cloak and Shag Her “ (the Gen. Petraeus love affair). Now they have this tasty little tag, “Millennials are ruining the American wine industry,” and if you don’t feel compelled to read the actual article, you’re not a real wino!

After all, Millennials have been perceived to be the holy grail of the wine industry for years. Every winery wants a piece of the Millennial action; nobody cares about Boomers anymore—we practically have one foot in the grave–it’s all about the generation born between the early 1980s to about 2001, who within ten years will be “the largest fine wine consumer demographic in the U.S.”

So why are they suddenly villains?

Because “We’re training Millennials to drink foreign wine,” explains Rob McMillan, one of the best-known wine economic forecasters in California. The “We,” in this case, seems to be the collective industry, including media and Internet-based retailers, who apparently have convinced 30-somethings that wines from abroad are better buys than domestic wines. “[H]ow do we brand American wines?” McMillan asks. “We have to be able to say something more than price.”

What would that “more” be, besides an ineffective appeal to patriotism? Not clear. McMillan’s full report, the Silicon Valley Bank State of the Wine Industry 2016, details the major factors impacting Millennials’ economic and cultural outlook: “the digital world,” of course; “the Great Recession,” and a generally bleak outlook concerning their future prospects. Millennials do “not have the same financial environment to push [wine] spending compared to the baby boomer and Gen X cohorts.” They are “more value conscious [and] greener than Baby Boomers,” facing “significant headwinds” in their ability to spend money. They also, unfortunately from a winery point of view, “are inclined to substitute craft beer and spirits for wine.” Nonetheless, and despite this dreary prospect, McMillan writes, Millennials “are the future fine wine consumers.”

So what’s a wine marketer to do?

Well, the report doesn’t come right out and make “do this” reccos. But reading between the lines, there are some things wineries can to do take advantage of certain Millennial trends. One is to experiment with “blends” rather than varietals, and this is a trend I think is here to stay. Another is to be very cognizant of label design; Millennials “select a wine based on its label…they look for personality and originality.” The report also cites a study suggesting that Millennials “prefer fruity or semi-sweet wines,” which no doubt explains the success of something like Meiomi; but the report also acknowledges that, as they mature, Millennials, like their baby boomer predecessors, are likely to “migrate to wine that [is] more complex” and, presumably, drier. And, of course, Millennials also are prime targets for direct-to-consumer sales, which have been sharply up over traditional retail outlets this past year.

All that aside, don’t look to the Silicon Valley report for a set list on how to increase sales to Millennials. No such list exists, nor can it. Every winery has to figure it out alone. The report ends on an up note: “we are quite confident the industry will find creative ways to overcome and succeed”; but this rah-rah will be of little relief to wineries struggling to figure out how to sell wine to the elusive, fickle, always unpredictable Millennial. And don’t blame the Millennials. They’re just doing their thing, as do we all.


When generational leadership changes at a winery

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The drinks business reported the other day, based on a 2013 interview, that Aubert de Villaine is “training [his] nephew, Bertrand,” to take over the Domaine de la Romanée-Conti. That must surely have caused some to wonder if Burgundy’s most famous winery will still be the same when Aubert is gone.

My 2 cents: I doubt, actually, that the change will have any impact on DRC’s quality, reputation or price. Bertrand has worked alongside his uncle for years; the de Villaines have been preparing people for a long time. This entry, from French Wikipedia, states that, as long ago as 2009, Aubert “presented his nephew Bertrand” as his “futur successeur.” Two years later (2011), the online magazine for American Express reported, “[P]eople are watching closely as [Aubert] grooms his 40-year-old nephew, Bertrand de Villaine, to take over.”

 In other words, many times, over several years, the de Villaines have prepared people for the changeover. One certainly can appreciate, in retrospect, with what careful choreography the family has rolled out the succession, fully understanding that collectors invariably get nervous when something changes at their favorite winery: the loss of a prized vineyard, a buy-out, a change in barrel regime, financial difficulties, all these can be major causes of worry. But a change in top management, with its commanding vision of winemaking style and technique, is perhaps the most concerning, and surely prompts people to “watch closely,” especially when the wines are among the most prestigious and coveted in the world.

I can think of few things that are as emotionally fragile than the connection people have with a favorite winery. You may own a stock: it goes up and down: you ride with the tide. With a winery, as soon as the perception hits that it’s changed for the worse, it’s almost impossible for the proprietor to correct course. So many things can go wrong and derange the winery-consumer relationship. Think of all the products that have had to go into damage control, not because their quality actually suffered, but because doubt had been strewn in consumers’ minds. And when it comes to succession at wineries, things don’t always go smoothly. The classic example here in America is, of course, the case of Robert Mondavi Winery, where the succession—let’s face it—was a disaster. This is not to say that anyone did anything wrong, just that somehow misperceptions were allowed to spread, which led to actual impacts on sales, and the next thing you know, the Mondavis are out and Constellation is in.

I could cite many other examples of failed successions. Napa Valley alone is strewn with the remnants of once-great wineries that slipped after their founders ceded control. What are the lessons to be learned, then, concerning succession, for wineries that wish to remain vital for generations? One is to make sure than someone—a son or daughter, a nephew, anyone close to the family—is ready, willing and able to step in when the time comes. Second, the family has to thoroughly saturate the future leader in best practices; even the greatest winemaker, if she takes over the helm of a great winery on short notice, will require a period of time, usually measured in years, to get up to speed. A young family member who’s been working alongside the father all his life can much more easily step into dad’s shoes.

Finally, the older generation has to prepare the general public well in advance of the coming shift, not spring an overnight surprise on them. Wine consumers do not like surprises. As we’ve seen, this careful fore-warning is something the de Villaines accomplished with superb finesse and timing, which is why nobody is going to worry about DRC’s future under Bertrand’s leadership.


Does DTC mean the death of the wine store?

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Yesterday’s big new from ShipCompliant that direct to consumer wine sales grew four times faster than sales from traditional wine retailers is quite stunning. If you project the rate of increase out into the future, you can easily foresee a time when the DTC sales line crosses the retail sales line, eclipsing it. And the sooner the pesky states that currently do not allow direct shipping come around and enter the 21st century, the faster DTC will become the default mechanism by which consumers buy most of their wine. I’m talking to you, Alabama, Delaware, Kentucky, Mississippi, Oklahoma, Pennsylvania, and Utah. There’s hope they may actually come around: Last year, South Dakota finally allowed direct shipping of wine.

Will DTC really be the next big thing? I mean, everybody talks about it as the Holy Grail, but let’s face it, there are difficulties. For one, consumers have to pay the added cost of shipping in DTC, which they may be reluctant to do on all but expensive bottles—the kinds of wines they buy for gifts, to impress somebody, to cellar, and other special purposes. They’re not going to buy, say, a $10 bottle direct from the winery, then pay for freight. As Forbes Magazine recently pointed out, “Shipping is the top deterrent to buying wine online.”

Another reason why DTC may prove to have its limits is because consumers seem to enjoy the browsing experience that off-premise stores allow them. I do. I like to look at bottles, pick them up, read the front and back labels, talk to the floor staff (at least, in a decent wine store) and maybe even check out a few reviews on my smart phone if I have the time.

Leaving those concerns aside, the big shipping companies are eagerly trying to grab their fair share of what they perceive as a booming DTC market. GSO hopes to compete with FedEx and UPS by pitching itself as the DTC wine shipper of choice; they just presented their Select Wine Delivery Service at the Unified Wine & Grape Symposium.

At any rate, wine stores don’t have much to fear from DTC at this moment, but they’re going to have to figure out ways to make themselves more relevant over the coming years. One way to do it is for the wine store to become the direct shipper, not the winery itself. This is the position taken by the National Association of Wine Retailers.

But is “retailer direct shipping” the same as “winery direct shipping”? In both, the consumer ends up with the same bottle of wine. But wine consumers who buy direct from wineries tend to have a greater emotional attachment to the wine than they do if they buy from stores, and this is why the Holiest of the Holy Grail for wineries is to form a personal relationship with the customer, a relationship they hope will last for a long time.

Anyhow, it’s great to witness this growth of DTC. It’s too bad that, for so long, the anti-alcohol, anti-common sense forces in this country have had so much sway over what Americans can drink and how they can buy it. That is so unconstitutional, so contrary to our value, so inimical to the free market system, it deserves to be buried once and for all.


Fred Franzia largely got it right

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I’m largely in agreement with Fred Franzia when he defends the Central Valley and “California”-appellated wine, as he did the other day when he presented the keynote address at the Unified Wine & Grape Symposium.

Fred’s affection for the Central Valley comes naturally: he runs Bronco Wine Co., whose scores of brands, including Two Buck Chuck, are based on Central Valley fruit. Fred’s point, if I understand it correctly, seems premised on two things, one explicit, the other implicit.

The explicit point is that wine production in the Central Valley could be greatly increased, offering consumers greater opportunities to buy inexpensive wine, as well as for restaurants to sell bottles for $10 each. This latter point is something Fred’s long called for.

As a diner myself, I wouldn’t mind $10 bottles of wine in restaurants, where a bottle can frequently exceed the cost of the food itself. Indeed, everyone I know who isn’t rich—and that’s most people I know—sees expensive wine as the single biggest hassle of eating out. So I’m all onboard the Fred Franzia train on this one.

Fred’s implicit point, or so it seems to me knowing the man a little and reading between the lines, is that there long has existed a certain disrespect and dismissiveness towards California-appellated wine on the part of the establishment: sommeliers, high-end restaurateurs, certain wine critics and, through trickle-down, some consumers. According to this crowd—and I think Fred is sensitive to their attitudes—if the grapes come from the Central Valley then they wouldn’t touch it with a ten foot pole.

Actually, the way I see the Central Valley is as California’s Midi. And there’s nothing wrong with that. The Midi is the vast, sprawling region of southern France that produces oceans of vin de pays wine that is inexpensive and quaffable. These are the kinds of wines I personally drank and immensely enjoyed in the 1980s, when I was a broke grad student living in San Francisco. And such wines can be, as Hugh Johnson reminds us, “charming trinkets.”

I’ve long given Fred and Bronco immense credit for allowing Americans the opportunity to drink affordable wines on an everyday basis. I, personally, never turned up my critic’s nose at his brands, to which I gave dozens of “Best Buys” over my years at Wine Enthusiast. So I think Fred has the right to feel a bit of righteous indignation at what he perceives are the snubs and slams he sometimes endures.

I do differ, though, with his statement, reported in the Modesto Bee, that “’California’ should be the one and only appellation for our home-grown, best-quality wines.” That’s stretching things a bit. The best table wines in California come from the coast, where weather conditions are more compatible with the nobler varieties of vitis vinifera. Winemakers back to the Greeks and Romans understood the importance of proper terroir, and so too did the Holy Roman Emperors and the monks who planted the great vineyards of Europe. When Charlemagne noticed the snow melting early on a certain slope in Corton and ordered grapes to be planted there, he acknowledged how vital mini-terroir conditions were for wine quality. When the Duke of Burgundy banished the “very evil and very disloyal” Gamay grape from growing in his kingdom of Burgundy, he too testified to aspirations for a higher union of grape variety and local terroir. And when Andre Tchelistcheff turned to the Carneros, not Napa Valley, to grow Pinot Noir, it was because The Maestro understood that Pinot Noir had to be planted in what he called “my North Pole,” Carneros, “because it’s cooler” (a realization Louis Martini also experienced).

I just think that not all wines are created equal, and that the Central Valley does not produce wines of the quality of the coast. But I recognize that reasonable people can disagree. Still, the fact is that Fred Franzia has a knack for saying things that drive the elitists crazy, and I like him for that. The Modesto Bee article reported that, at the conclusion of his keynote, The speech drew a standing ovation…”. I suspect that was because, no matter what you say or think about Fred Franzia, the industry understands he’s been good for it. Very good.


A wine review, and a Millennial take on wine snobbery

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King Estate 2006 Block 4D Clone 777 Pinot Noir. Originally $75. The appellation on the label is “Oregon.” Wine Enthusiast (I think it was Paul Gregutt) gave it 92 points back in 2009; oddly, they said nothing about its ageability. Spectator gave it only 89 points and recommended drinking it only through 2014. I think Enthusiast was more accurate about the score. It really is a very fine wine; I’d rate it 94 if I were scoring it now. Here we are in 2016 and it’s rocking with a good future. Loads of blackberry, boysenberry, cassis, and such nice, sweet toasty oak and vanilla. Great tannin structure, good acidity, lowish alcohol (13.5%) and a rich earthiness, like Portobello mushrooms and an umami tang, like prosciutto. At nine years of age, a wonderful, rewarding, silky wine that offers plenty of pleasure. Just what you want in a fine West Coast Pinot Noir, and I think that earthiness signals its Oregon origin.

*****

And now to some controversy. This post raises so many issues that it’s impossible to address them all in a single post, but let me just say that I sympathize with the sentiment expressed by the author, Maxwell Leer, who says he’s a sommelier. To some extent it’s a rant against the 1 percent but, hey, that’s fine with me: Maxwell had me when he compared Cristal to Prosecco and said “you can…be fucking happy, too” with the cheaper wine.

Now, Maxwell’s position is something that every wine writer has expressed since, well, forever. I know that the meme of post-Prohibition wine writers was “Wine snobs make wine sound too fussy” and probably there was someone running around ancient Rome saying the same thing. Every generation has to discover the same truths, so I cut Maxwell some slack. Still, that doesn’t take away from the force of Maxwell’s argument, which he expresses strongly and well.

It’s funny when he writes about pouring Kistler Chardonnay into a glass that was rinsed with bourbon. I bet that’s a seriously tasty sip! Maxwell seems to be saying, don’t worship the Kistler itself and think you have to experience it in all the profundity that has been lavished on it by wine critics—which is exactly what you’d think from reading the critics. You want to have a few drops of bourbon in there? Fine! (Hey makes you think of an American Kir, doesn’t it?) What wine is about, as Maxwell writes, is love, peace, love, unity, and respect.” As I pointed out in my post the other day about Premier Cru’s troubles, wine is not about snobbery or elitism or the fear that just because you can’t afford Petrus you’re missing out on the best. You’re not! Maxwell understands that and it’s a message we have to continue to get across. My generation did a horrible job of it, despite our best intentions. We perpetuated the myth of “cult wines” and while I do have some issues with Maxwell’s suggestion of “simplifying” wine, he’s onto something, especially for younger drinkers. He’s right when he says that “Wine culture needs to evolve like everything else.” That doesn’t mean we have to throw the baby out with the bathwater. It doesn’t mean that you can’t trust anyone over thirty. It does mean that, as Maxwell says, “we have groups of people every day who come into the restaurant and literally say, ‘OK, show us what you got.’” They want interesting wines, wines with stories, wines that drink well with the foods they like. They don’t want to spend a fortune on them, and the good news is that they don’t have to.


More wine scams, this time in Berkeley

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We never saw this level of wine scam before. Now it’s Premier Cru, which had been a very well respected wine shop in Berkeley until their recent collapse. Coming on the heels of the Kurniawan scandal and others, Premier Cru’s problems raise a troubling question: Why so many of these wine Ponzi schemes and frauds?

My answer: The greed of some consumers, who see wine as a commodity investment.

Premier Cru was the go-to store in the East Bay for collectors who wanted that extra-special bottle. But, as so many of them are now learning, Premier Cru appears to have been selling wines they didn’t have, or selling the same wine twice, stalling buyers off who weren’t getting wines they had already paid for, and eventually ending up with “more than $70 million in unpaid debts.”

How the heck does a wine store achieve that dubious distinction? Simple: When it takes advantage of credulous customers who want to own trophy wines nobody else can get and think they have an inside track on getting them.

The regrettable seeds for this were a long time coming. I can speak only from my perspective of nearly 40 years watching the San Francisco wine market, of course, but in many respects the S.F. Bay Area has been the epicenter for this remarkable era of show-off wines. Even when I started, there was a cadre of collectors who wouldn’t touch anything but First Growths and Grand Crus. At first I thought it was because they were men of discernment and refined tastes, but I soon learned that that wasn’t it. They were label drinkers, pure and simple. I doubt if one in ten of them knew what he was talking about. But what they did know was that having a vertical of Mouton-Rothschild gave them a certain cachet in their crowd, and that’s the only thing that meant anything to them.

They weren’t bad people, just wine likers (I hesitate to say wine lovers) who’d gone astray. Something about the rarity and scarcity of these collectibles made them crazy with lust. These were the sorts of people for whom Premier Cru was a sort of nirvana. Whenever I was there—looking for some under-$20 value in Burgundy or Cabernet—I’d see them conferring with the floor staff over some missing vintage in their collection they just had to fill. They were the same sort of people I used to see at the old Draper & Esquin on Montgomery Street in the FiDi, back in the day. Snooty snobs—“snoo-snos,” I called them. I thought that was an unhealthy development in the world of wine, at least the world I inhabited, which was of people who truly loved and cared about wine, and had a curiosity about it that drove them to try new things from new places.

Sadly, this distorted psychological phenomenon concerning wine got worse during the Reagan years, when fast and easy money gave MBAs the ability to collect Bordeaux and Burgundy and cult Cabernets before their thirtieth birthdays. It seemed to level off in the 1990s, why I don’t know, but then, with the burst of wealth in San Francisco in the 21st century, it has returned, with a vengeance. People are not content simply to drink good, interesting wine anymore. They want the trophies, the bragging rights wines, the Fabergé eggs, and they’re willing to pay whatever it takes to possess them.

Well, that’s what happens when you have a critical mass of credulous buyers: unscrupulous dealers are perfectly happy to take advantage of the situation. The bubble gets bigger and bigger, until poof! It bursts, and the poor souls who entrusted these crooked businessmen get holding the bag.

Running a reputable wine shop is a wonderful career. Most wine shops are reputable. There are many I’ve been in that do a fabulous job. Unfortunately, this current atmosphere of show-off seems to be fostering some bad apples. But maybe, with the arrests, detentions and lawsuits ensnaring these Ponzi wine dealers, we’ll see less of this sort of thing going forward. I do hope so. I hope that everybody will come to see that wine isn’t an artifact for collection, much less investment, like a stock certificate. What a horrible way to see this noble, divine beverage, as the liquid equivalent of loot, to be bought and traded like pork bellies, or even worse: as the garish equivalent of a gigantic diamond pinky ring.


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