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On that Prisoner deal: Brands without land? I don’t think so

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On the Sales road today in the midst of a busy week, but first I want to comment on the headline this morning that Constellation has purchased The Prisoner for $285 million.

I “get it” that some of these big wine companies are going after these mass brands, like Meiomi, which was scooped up by Constellation. [ED note: In a previous edition of this post I mistakenly said Meiomi was bought by Gallo. Mea culpa!] But here’s my question about this Prisoner thing: As the San Francisco Chronicle points out in their coverage of the deal, The Prisoner owns no vineyards; the way the Chron put it is that the sale “suggest[s] a significant departure from the model that has long dominated the wine industry, in which land carries the greatest capital. Now, it would seem, brand trumps land.”

I disagree. That’s an easy and fatuous conclusion for a reporter who doesn’t understand the wine industry to make. But guess what? Grapes don’t come from the sky. You don’t drive your pickup over to Grapes R Us and load up on Zinfandel fruit. You have to have vineyards, and, in the case of The Prisoner, if they don’t have the vineyard holdings to ensure quality fruit year after year, then the quality of The Prisoner has got to suffer, with the inevitable consequence that consumers sooner or later will figure out that the wine isn’t what it used to be.

I don’t mean to slam Constellation, but let’s face it, that company doesn’t have the greatest reputation for wine quality. All too often they seem content to let quality drift to a midpoint level, which they hope they can get away with for a long time. And perhaps they can. When it comes to these mass brands, consumers might not notice an ever-so-slight racheting down of quality. It’s the frog (or is it lobster?) in a saucepan of water on the stovetop: Gradually increase the heat and the poor thing doesn’t even known it’s being boiled until it’s too late.

Look: brands come and go. Mostly they go, because they lose their rationale and consumers then lose their reason for buying it. So, I wish Constellation good luck with this, but really, the conclusion that “land doesn’t matter anymore, brands do,” is dumb.

Anyhow, time to hit the road! Going down to Silicon Valley today for a wine lunch and talk about Jackson Family Wines Pinot Noir. Ciao until tomorrow.


A conversation with Press Club’s Aram Roubanian

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Aram Roubinian is the thirty year old assistant GM and beverage manager for Press Club, the hot, stylish wine bar and lounge on Yerba Buena Lane, tucked between Market Street and Yerba Buena Gardens. I asked Aram, who’s been there for five years, to tell me a little about Press Club.

Aram: Right after we opened, in 2009, the economy tanked. Trying times. The original concept was, we had contracts with different wineries—Miner, Chateau Montelena, Mount Eden, Hanna, Saintsbury and Fritz—with each occupying a different space. But it became apparent that wasn’t viable, so now, we showcase California wine, as well as Old World wines that inspired the wine renaissance in California, like classic Burgundy and Bordeaux. We also offer crafts beers and small plates, paired with the wine and beer.

SH: How would you describe your clientele?

AR: I’d say a Financial District crowd, mostly female, but professionals both men and women, and lots of corporate events, a nice range. I’d say the average age range is 30-40, but we do have some more mature clientele.

SH: What’s the customer’s sweet spot, price-wise?

AR: By the glass, $12-$14, and for bottles, $60-$80.

SH: What’s selling well?

AR: Whatever Sauvignon Blanc we have just flies off the shelf–doesn’t matter if it’s winter or summer. Our Pinot Noirs are very popular and, surprisingly, price point doesn’t matter. Our clientele likes premium Pinots and popular price points as well. Right now, our most popular Pinot is Stoller, from Dundee Hills, which is right in the middle, pricewise ($18 – $82). I’m also seeing a spike in Spanish wine; Tempranillo is very trendy. But the hottest trend going is Prosecco.

Aram

SH: What’s not hot now, compared to when you first came?

AR: Chardonnay is losing traction, especially the oaky style.

SH: Why do you think that is?

AR: I think it’s a little bit of what happened to Merlot after Sideways: a lot of people began to bash it–the media and, these days, everyone has Facebook, twitter, and a lot of people get their info from peers, as opposed to only from the media or a conversation with a sommelier, so I think of it as a whole collective, people were influencing each other. People call it “cougar juice,” the big buttery oaky Chards. It has this connotation that old women drink it.

SH: Kiss of death!

AR: Yes, right, especially for the female clientele, they don’t want to be perceived as older, out of touch. And also, with our younger clientele, they don’t want to drink domestic wines. Which is scary for the domestic market.

SH: Again, why is that?

AR: This Millennial generation, the rebels and hipsters, want to go back to more of the old world wines. But I feel like that too will change in time, and people will discover there’s wonderful wine everywhere.

SH: Where do you see the Millennials going in the future?

AR: I see a move towards more natural winemaking–that’s on everyone’s mind. Not a wine that’s necessarily certified organic or biodynamic, but a more natural process, with less pesticides, sustainable, and people are conscious about the environment, global warming. And I see more solar power being used; it’s growing in production. People want to know what they’re consuming. These days, there’s a lot of fillers in wine, and people are becoming more aware that wine can be easily manipulated. Ridge lists all the ingredients. I like that; I like the transparency there. But overall, I see people becoming a more self-sophisticated wine consumer. They realize, while they may have enjoyed consuming that buttery chardonnay and it was pleasure to the palate, they found out with a more delicate, balanced wine they could find more nuances and actually enjoy it more.

SH: Thank you Aram!


Scores, stores and wineries: a new analysis

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Every day, I get blast email advertisements from wineries or wine stores touting the latest 90-plus point score from Suckling, Parker, Vinous or some other esteemed critic. Here’s an example that came in on Saturday: I’m reproducing everything except the actual winery/wine.

_____ Winery’s ____ Napa Red Wine 2013 Rated 92JS.

Notice how the “92JS” is printed in the same font type and size as the name of the winery and wine. That assigns them equal importance; the rating and critic are virtually part of the brand. Later in the ad, they have the full “James Suckling Review” followed by a full “Wine Spectator Review” [of 90 points]. This is followed by the winery’s own “Wine Tasting Notes,” which by and large echo Spectator’s and Suckling’s descriptions.

Built along similar lines was a recent email ad for a certain Brunello: The headline was “2011 ____ Brunello di Montalcino DOCG”; immediately beneath is (in slightly smaller point size), “94 Points Vinous / Antonio Galloni.”

We can see that, in these headline and sub-heads, through physical proximity on the page or screen, the ads’ creators have linked the name of the winery and the wine to the name of the famous critic and his point score. One of the central tenets of advertising is to get the most important part of the message across immediately and strongly. (This is why so many T.V. commercials begin with the advertiser’s name—you hear and see it before you can change the channel or click the “mute” button.) In like fashion, most of us will quickly read a headline (even if we don’t want to) before skipping the rest of the ad. The headline thus stays in the brain: “Winery” “Wine Critic” “90-plus point score.” That’s really all the winery or wine store wants you to retain. They don’t expect you to read the entire ad, or to immediately buy the wine based on the headline. They do expect that the “Winery” “Wine Critic” “90-plus point score” information will stay embedded in your brain cells, which will make you more likely to buy the wine the next time you’re looking for something, or at least have a favorable view of it.

This reliance of wineries and wine stores on famous critics’ reviews and scores is as strong as ever. There has been a well-publicized revolt against it by sommeliers and bloggers, but their resistance has all the power of a wet noodle. You might as well thrash against the storm; it does no good. The dominance of the famous wine critic is so ensconced in this country (and throughout large parts of Asia) that it shows no signs of being undermined anytime soon. You can regret it; you can rant against it; you can list all the reasons why it’s unhealthy, but you can’t change the facts.

Wineries are complicit in this phenomenon; they are co-dependents in this 12-Step addiction to critics. Wineries, of course, live and die by the same sword: A bad review is not helpful, but wineries will never publish a bad review. They assume (rightly) that bad reviews will quickly be swept away by the never-ending tsunami of information swamping consumers.

Which brings us back to 90-point scores. They’re everywhere. You can call it score inflation, you can argue that winemaking quality is higher, or that vintages are better, but for whatever reason, 90-plus points is more common than ever. Ninety is the new 87. Wineries love a score of 90, but I’ve heard that sometimes they’re disappointed they didn’t get 93, 94 or higher. Even 95 points has been lessened by its ubiquity.

Hosemaster lampooned this, likening 100-point scores to Oprah Winfrey giving out cars to the studio audience on her T.V. show. (“You get a car! And you get a car! And you get a car! And YOU get a car! Everybody gets a car!”) Why does this sort of thing happen? Enquiring minds want to know. In legalese, one must ask, “Cui bono?”—Who benefits? In Oprah’s case, she’s not paying for the cars herself; they’re provided by the manufacturers, who presumably take a tax writeoff. It’s a win-win-win situation for Oprah, the automakers and the audience.

Cui bono when it comes to high scores? The wineries, of course, and the wine stores that sell their wines (and put together the email blast advertisements). And what of the critics?

Step into the tall weeds with me, reader. A wine critic who gives a wine a high score gets something no money can buy: exposure. His name goes out on all those email blast advertisements (and other forms of marketing). That name is seen by tens of thousands of people, thereby making the famous wine critic more famous than ever. Just as the wine is linked to the critic in the headline, the critic’s name is linked to the 90-plus wine; both are meta-branded. (It’s the same thing as when politicians running for public office vie for the endorsement of famous Hollywood stars, rock stars and sports figures: the halo effect of fame and glamor by association.) There therefore is motive on the part of critics to amplify their point scores.

But motive alone does not prove a case nor make anyone guilty. We cannot impute venality to this current rash of high scores; we can merely take note of it. Notice also that the high scores are coming from older critics. Palates do, in fact, change over the years. Perhaps there’s something about a mature palate that is easier to please than a beginner’s palate. Perhaps older critics aren’t as angry, fussy or nit-picky about wine as younger ones; or as ambitious. They’re more apt to look for sheer pleasure and less apt to look for the slightest perceived imperfection. With age comes mellowness; mellowness is more likely to smile upon the world than to criticize it.

Anyhow, it is passing strange to see how intertwined the worlds of wineries, wine stores and wine critics have become. Like triple stars caught in each others’ orbits, they gyre and gimble in the wabe, in a weird but strangely fascinating pas de trois that, for the moment at least, shows no signs of abating.


Why wine is cool

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Years ago, during the heyday of Sex and the City, the San Francisco Chronicle ran a spoof piece on what “the girls” would be doing if they lived in the “cool gray city of love.” Samantha, you’ll recall, had her own high-end P.R. firm in Manhattan, where she represented restaurants, celebrities, clubs and so on.

In San Francisco, the Chronicle’s writer determined, Samantha would still be in P.R.—only it would be winery public relations. When I read that, I remember thinking that wine had finally and definitely come to dominate the zeitgeist. It was the cool-hot thing to do, the field everybody wanted to work in, whether in PR, writing or production.

(Sidebar: When I started out, nobody, but nobody, wanted to be a wine writer. I sometimes wonder, if I was beginning my career today instead of in 1989, if I’d even be able to get a writing job at a magazine, much less Wine Spectator. The field has become that competitive.)

Wine remains a highly coveted field for young people to work in, maybe hotter than ever, according to this article in the drinks business, which claims that winemaking and beer brewing are “among top dream jobs” for young people just starting their careers or thinking of changing. (The study was done in Britain, but there’s no reason not to think attitudes here in America are any different.)

So desirable are these winemaking and beer-making jobs that over a third (35%) of people said they would consider quitting their job to re-train in their chosen profession – regardless of money.” That’s good, because these types of jobs typically don’t make a ton of money. Funnily enough, Security guards (95%), IT consultants (91%) and accountants (87%) were by far the most eager to pack in the typical 9-to-5 and take up a craft career” such as winemaking.

I know people in both the wine industry and craft brewing, and most of them seem to be very happy. It’s true that the pressures can be difficult, but the joy seems to outweigh any of the inconveniences (such as basically having your normal life put on hold during crush). When I look back over my years in the wine biz, despite all the bitching and stress I went through (or put myself through), I consider myself incredibly lucky to have been able to do what I have. Coming up through the Golden Age of wine in America—the boutique era, the rise of the wine print media, the enormous popularity of wine (and beer), and the emergence of social media—has been a privilege, and also a great opportunity to see history being made, close-up, and perhaps to have been a tiny part of it. No wonder people want to work in this industry.

Have a wonderful weekend.


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.


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