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Concerning those controversial .wine domains

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I’ve been watching developments for the last few months concerning these new .wine and .vin Internet domain names. Not closely, just sort of casually. I knew there was some controversy about them, but I wanted to keep an open mind, and besides, who has the time nowadays to research every complicated issue of social, economic or technological policy?

So it was that yesterday’s big article (by my old friend Chris Rauber) in the San Francisco Business Times really grabbed my attention.

“Noted wine regions, including Napa and Sonoma, protest new .wine Internet domain names,” the headline screamed. In addition to the Napa Valley Vintners and Sonoma County Vintners, those opposed to the proposed domain names include the Paso Robles Wine Country Alliance, the Santa Barbara County Vintners’ Association and—in other states—the Willamette Valley Wineries Association, the Walla Walla Wine Alliance, and even the Long Island Wine Council.

Pretty impressive lineup. These are power players. I know the California regional associations quite well from my many years of rubbing elbows with them; with the power of their member wineries behind them, they possess clout. And they’ve been joined in their opposition by some powerful Congressional representatives: Mike Thompson (one of the senior Democrats in the House) and Anna Eshoo.

I can’t remember a time when so many regional associations joined forces publicly in opposition (or in support of, for that matter) a pending issue. So I figured I ought to look a little more deeply into what’s going on.

At first blush it makes sense to carve out .wine and/or .vin domain names. We all know the Internet is running out of domains and has been for years.

This is why ICANN, the corporation in charge of domain names, added additional ones to the more familiar .com, .org, .gov, .edu and .net—because “the internet—or .com at least—is running out of space. So many names on .com are taken that people and businesses have to struggle to find a suitable one.”

Enter .wine and .vin.

Two years ago, ICANN, in response to the problem, announced it would accept applications for additional domain names. It got nearly 2,000, many of them contested. ICANN decided to auction off the non-trademarked domain names to the highest bidders; the first auction was a year ago, and brought in over $9 million, through the sale of such domains as .club, .college and .luxury.

So what’s the problem with .wine and/or .vin? After all, even the U.S. government approves of the auction plan, which, after all, is an expression of classic free market principles. Last March, an agency of the Commerce Department declared that “ICANN is uniquely positioned…to develop the transition plan” toward a new set of domain names. Although the department urged ICANN “to convene global stakeholders to develop a proposal” for the transition—an encouragement to compromise and conciliation—the wine associations aren’t buying it.

Rauber writes: They “contend that ICANN’s plan includes ‘non-existent to grossly insufficient safeguards from illegitimate companies’ hijacking their names, histories and legacies. They claim ‘unscrupulous’ bidders could grab web names such as napavalley.wine or wallawalla.wine and in effect hold them hostage.” A spokesman for the Napa Valley Vintners told Rauber, “[H]is organization fears the proposal would ‘provide a new playground for nefarious actors to poach the place names of famous wine regions around the world.’”

These are serious and legitimate concerns. Nobody wants to see a situation wherein some for-profit wine company buys the rights to, say, “napacabernet.wine”, thus misrepresenting itself and its association with venerable Napa Valley. Napa “has had our name ripped off” before, the Napa Vintners spokesman said (most of us remember when and by whom that was!) and isn’t about to let it happen again.

You’d think that ICANN and other legal entities could address the concerns of those opposed by building in rights and protections for stakeholders, and that’s exactly what ICANN has proposed to do. They’ve created a “Legal Rights Objections (LRO)” mechanism by which disputes can be resolved when someone objects to “a third party’s application for a new TLD [top-level domain].” Negotiation is more or less normal operating procedure in our era of contention and litigiousness, but the wine region associations remain unconvinced, and certainly they have a point when they fear they’ll be forced to spend a whole lot of money, either on lawyers or on buying back the rights to names they want.

This is a sticky one, and I have to admit I’m not sure which side I come down on. What do you think? Should .wine and .vin be up for sale to the highest bidder?


America is no longer a young wine drinking country–compared to China!

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Yahoo News says that four factors in China are driving “a soaring number of consumers” to drink wine.

  1. more affordable prices
  2. globalized palates
  3. younger demographics
  4. e-commerce

Assuming this is true (and it appears to be), I thought it would be interesting to see how these same four factors are playing out in America.

More affordable prices. We certainly see a plethora of affordable wines for sale here. The Yahoo article doesn’t define “more affordable,” but let’s say that in the U.S., that would be $15 or less per bottle. There’s a ton of wines in that price range available here, so we’re even with the Chinese on that.

Globalized palates. Again, no definition, but one has to assume this means that the Chinese like the same flavors of Cabernet Sauvignon, Chardonnay, Sauvignon Blanc, Merlot and so on, as we do. Since these wine varieties are widely available on the international market, including here in the States, that makes us again even with the Chinese.

Younger demographics. The article refers to “urban, educated Chinese consumers in their 20s and 30s” who are driving the soaring sales. Well, we have people like that, too, but from what I hear, a lot of them are preferring liquor and beer to wine these days, so that may be keeping our own consumption down.

E-commerce. As I blogged the other day, e-commerce is indeed becoming “the distribution model of choice” in China, although it’s not entirely clear to me why this should be helping to fuel increased demand there. In my previous post, I interpreted e-commerce as meaning a business-to-business model. The Yahoo interpretation is much broader than that, and includes consumers buying wine directly from the Internet, rather than from brick-and-mortar places, both on-premise and off-premise. We certainly see direct-to-consumer sales via the Internet in this country, but it doesn’t seem to be contributing to greatly increased consumption. According to Wine Institute, our per capita has held pretty steady, with total wine consumption per resident per year being 2.4 gallons in 2006 and rising only to 2.73 gallons in 2012.

I think wine hit China with such drama and uniqueness in the last five years that it was bound to excite consumers, especially younger ones with a little extra money to spend. It reminds me of the atmosphere in America (or, at least, in the coastal cities) in the 1970s and 1980s, when wine really was the most exciting alcoholic beverage. It was the zeitgeist in America that fueled wine’s meteoric rise, but zeitgeists change. Right now, wine is in that same position in China, so it’s not surprising that these western-oriented, educated urban drinkers are buying and liking it. They want to feel, and be perceived as, smart, tasteful members of global society, and wine is one of the best portals to enter that rank.

The funny thing about China is that is changes the way we view ourselves in America. For my entire career, it’s been apropos to describe America as a young wine drinking country. But how can we continue to say that, now that an even younger wine drinking country is out there? On the other hand, we’re not an old wine drinking country, like France, Italy or Spain. I guess that makes the U.S. a young-to-middle aged wine drinking country. We now have several generations of wine lovers—starting with my own Baby Boom generation and extending through Gen X and Millennials—each of which has discovered wine and, in the process of interpreting it for themselves, ended up reinventing it. The same will happen in China, and faster than it occurred here, because everything happens faster these days.


The next big thing? Probably not

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We’ve seen it plenty of times before: “the next big wine variety” is just around the corner. But it usually turned out there wasn’t anything around the corner, except another corner.

Remember Sangiovese? In the late 1980s-early 1990s everybody swore it was the next big red wine. Cabernet Sauvignon, they said, was all well and good, but… And then there was poor Merlot, which had gone through its own “next big thing” earlier, but the pundits eventually decreed that it wasn’t good after all to achieve “next big status.” Thus, Sangiovese.

Why do we need “a next big thing” anyhow? We don’t, in reality, but “reality” needs to take account of the people in the wine industry who profit from a “next big thing” mentality. Those would be the so-called tastemakers: sommeliers and MWs, of course, who play an increasingly big role in the culture; wine writers (some of them), who have the journalist’s addiction to breaking “news”; and merchants, to some extent, who hope to capitalize on a “next big thing” by stocking their shelves with it before their competitors can.

Every few months, somebody discovers a “next big thing” and now, it’s the turn of the drinks business, a very good online journal that makes for must-reading every day. Their writers now tell us that “A native Armenian red and a white variety from the Peloponnese could be ‘the next big things in wine…’.”

Why would the authors have chosen two obscure varieties for stardom? Well, the white grape—Rabigato—because it’s “a high-quality and high-acid, age-worthy grape,” and the red– Alfrocheiro Preto—“for its ability to retain acidity, even in hotter climates.”

Understand, I haven’t had either of those wines. They do sound good and savory and, given the authors’ use of the word “lighter” to describe them, it sounds like they’re fairly moderate in alcohol. But “global potential,” as one of the writers asserts?

Several problems, at least in the U.S. (keep in mind that the drinks business is a British publication). For one, there is no Rabigato or Alfrocheiro Preto planted here (if there is, there can’t be more than a few acres). That means if either wine hits the jackpot, it’s going to have to be through an import. And imports have a hard time cracking the glass ceiling in this country. A few have made it (I’m thinking of Terlato’s Santa Margharita Pinot Grigio), but those usually benefited from big companies with large distribution networks. As far as I know, no large wine company is going to gamble on Rabigato or Alfrocheiro Preto. Why not? Because wine companies exist to make money, not lose it. They prefer to leave the risk-taking to smaller companies, and then, if things look good, they rush in and join the party.

So will small wineries do Rabigato or Alfrocheiro Preto? I doubt it. They have enough on their hands without having the headache of convincing people to buy and drink something they’ve never heard of and can’t even pronounce.

The truth is, America is a conservative country when it comes to wine preferences. People stick with what they know; their capacity to change is limited. Gatekeepers are more adventurous by nature, but there’s a limit to how much influence they actually possess among the public. Wine gatekeepers are like inside-the-beltway Washington pols: they live in a bubble that most people don’t really care about.


From the front lines in China: The end of the three-tiered system?

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China never developed the complex infrastructure for the distribution of alcoholic beverages that the U.S. has in the three-tiered system, and it might never, because e-commerce is becoming the distribution method of choice.

That’s according to an article in the Taiwan-based China Times, which says that e-commerce is preventing the emergence of “leading brokers or end retailers,” as they’ve arisen in this country. This is also having an impact on the price of wine in China: “the popularity of e-commerce firms have [sic] shrunk the profits of wine companies,” with “most” of them seeing huge revenue falls.

No one should be surprised. “The golden age of wine e-commerce is coming” to China, according to a Chinese businessman who co-founded one of the country’s biggest such firms.

One big wine e-commerce firm, Wangliu—said to be “China’s priciest”—is venturing beyond mere sales; “The fledgling company is also looking to engage wine connoisseurs offline, opening experience stores and private clubs in major cities across China.” It’s as if Southern Wine & Spirits was opening winetasting “experience” venues in New York, San Francisco and L.A.

China does have a handful of private distributors “who are looking to source wines, beers and spirits from suppliers,” and that segment traditionally has sold wine to on-premise and off-premise accounts, as the three-tiered system does here. But “there are not many big wine distributors,” like Southern, in China, with online or e-commerce wine distribution websites instead filling the void. This would seem to make distributing wines from smaller wineries—the kind that have trouble getting picked up by big distributors in America—easier in China, although the challenge for small wineries is the same there as here: for Chinese consumers, “brand name remain[s] today the leading factor that influence[s] purchasing choices…due to the great complexity…that make[s] wine difficult to understand.” The winery that can work the e-commerce market successfully, and also help the e-commerce company to intelligently explain its wine, should reap the benefits of success in China.


On the benefits of estate bottling

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At a meeting yesterday at Jackson Family Wines, several people made the point that wines that are estate bottled—that is, where the grape source is controlled 100% by the vintner, either by owning the vineyards or by longterm contracts—are preferable for wine quality to grapes that the winemaker has to scramble for each year, or that are not farmed to his or her exact specifications.

This got me thinking back to my days as a critic, and the wines I reviewed that I gave high scores to, yet were not made from grapes that could properly be called “estate.” So, as usual per Heimoff’s Axiom, not every rule in wine is iron-clad; there are exceptions to each, and in some cases, notable ones.

But I would have to say that, in general, having the precision control that estate bottled wines have is a huge plus. It’s not only a matter of where and how the grapes are grown; in order to quality for “estate bottled,” according to Wine Spectator, “the winery listed on the label owns or controls 100 percent of the grapes that went into the bottle, and the wine was crushed, fermented, finished, aged and bottled all in the same place, and that place has to be located in the same viticultural area that’s stated on the label.”

That’s a high bar to clear. If you think about it, each of those specifications might in itself be of minor importance, but when you add them all up and take them together, they make it far more likely that the resulting wine will be of high quality. Having that precision control over farming is certainly the most important of the “estate bottled” requirements, but to have the entire winemaking process “in the same place,” usually the winery or a facility located very nearby, removes the risky transportation elements that can drag down wine quality. You want to move grapes, must, fermented wine or bottled wine as little as possible; wine is living food, and doesn’t like being manhandled.

By the same token, a winery that has the means (intellectual and financial) to estate-bottle its wines is far more likely than one that doesn’t to invest in the highest winemaking talent available. Why go through all the trouble to estate-bottle your wine, only to have a mediocre vintner dumb it down?

These are all reasons why estate bottled wine almost always costs more than wine that isn’t estate bottled. The costs of production are higher.

I believe all of Jackson Family’s high-end wines are estate bottled; they include Mt. Brave, Stonestreet, Matanzas Creek, Verité, Freemark Abbey, Edmeades, Hartford, La Jota, Lokoya, Cardinale and Byron, in addition to many others. What a great portfolio. It’s one of the reasons why I took this job. Jackson Family Wines, IMHO, has the greatest portfolio of wines in the world, at almost any price point except the bottom feeders—a realm Jess had no interest in entering. If you know of another family-owned company that can make that claim, let me know.

I’ve resisted the temptation to boost or promote or praise the company that employs me for the last 3-1/2 months, since I took this job, and I’m not going to do it a lot. But I’m going to do it sometimes, including today, because it really has to be said: Too many people (so I’m learning) feel or think that all the brands under Jackson Family Wines’ roof are somehow or other Kendall-Jackson. That just isn’t true; in fact, it’s a perversion of the facts. While K-J accounts for the majority of bottles sold by the company (and, I suspect, the majority of profits), it’s simply one brand among many. Jess Jackson and Barbara Banke didn’t have to assemble this world-class portfolio (which includes high-end brands on four continents). They could well have been content to be “mere” billionaires off K-J. But Jess Jackson wanted to prove to himself, and to the world, that he could make wines to stand beside anything else, anywhere, in quality. He has done that—and estate bottling is a large part of the reason–but the story hasn’t adequately been conveyed. That’s part of the reason JFW hired me. I’m going to be telling that story, to sommeliers and other “gatekeepers,” and not just telling it, but proving it, by pouring them these wines to taste and see for themselves how great they are.

Alright, got that off my chest. Now, have a great weekend!


Why do women drink more wine than men?

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I met yet another young (mid-20s) guy yesterday who told me he’s so into beer that he’s brewing it at home, while his girlfriend is a wine lover who’s always trying to up his level of knowledge about vino.

What is it anyway about this gender divide that separates the [beer] men from the [wine] women, anyway? I’ve always wondered about this. My friend and I went to a sports bar last night that was packed with kids in their twenties and I swear all the ladies were drinking wine and cocktails while all the guys were swilling suds.

I guess we could go through the usual litany that beer is “masculine” while fancy martinis and wine are “feminine.” Certainly the big beer producers capitalize on this perception with their advertising, which is geared to guys who like to crush empty beer cans against their foreheads, and to the women who love them.

A recent study, from Nielsen, says that women comprise 55% of wine drinkers in America. But things may be changing: “in the last decade, men have become avid wine drinkers while drinking less beer.” The wine industry has done a pretty good job chipping away at perceptions that it’s an elite, slightly effeminate beverage, but there’s still a long way to go.

In an hour or so, I’m heading off to Jackson Family HQ in Santa Rosa for a couple of days for meetings. Today will be pretty busy, but I’ll try to post something for tomorrow morning (Friday). Have a great day!


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