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How come the Chinese don’t love California wine the way they love French wine?

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It’s odd, when you think about it, that the Chinese have embraced French wine so fervently.  I mean, why wasn’t it California wine? China, over the course of its long history, has had very little to do with France. But the relationship between China and California goes way back–to a sad time (the 1800s) when California imported Chinese laborers to build its infrastructure, including some of Napa Valley’s buildings and wine caves. But today, that relationship is thriving. San Francisco is the gateway from China to the rest of America, the city’s Mayor is Chinese-American, and business interests in and around the Bay Area have been cultivating ties with their Chinese counterparts for decades.

So why did France beat California in the Chinese wine sweepstakes?

The conventional wisdom is that the Chinese are motivated by status, and nothing says “status” louder than a bottle of Lafite. That may partly be true, but it doesn’t fully explain the phenomenon. Of equal, and perhaps greater, importance has been the investment, in time and money, of the French government in promoting French wines abroad, and especially in China. Such organizations as the French Wine Society, which is endorsed by a range of French agencies as well as regional-based ones, have long been actively educating consumers and trade in China. And the CIVB–the Bordeaux Wine Bureau–has cultivated ties to Chinese consumer organizations. As links between the two nations have thickened, the French government has stepped up its efforts to promote wine to China’s growing legions of middle class. As Decanter recently reported, “France accounts for around half of the wine leaving the EU for China annually and the French government has not missed an opportunity to build bridges with the Chinese authorities.” (This is despite issues of taxes and “dumping” that have arisen between the two countries.)

I know that Wine Institute has been trying to cultivate ties with China for a long time. But my sense is that the American government, riven by political differences, has been hesitant to support or promote the sale of wine abroad, to a degree not present in France. That is, I think, due to the historic role wine has played in France. It is part of the essential French patrimony.

Still, I can’t understand why France beat California. It seems so counter-intuitive. As usual when I want more information on something, I turned to my Facebook friends and asked them, “Why do you think the Chinese prefer French wine to California wine?” I got a ton of replies. Here are some of them. Since their names already are public, I repeat them here.

Chris Kassel: “Cachet. Credit the CIVB for having done the required footwork…”.

Peter Nowack agrees. “French has more cachet than Californian. A lot of wine that moves into China is given as business gifts, so prestige plays a role…”.

Fred Swan: “Outreach and availability. European wine merchants have spent a lot more time reaching out to the Chinese market.”

Tim Vandergrift: “Fred Swan is correct. At a trade show I went to the French didn’t have booths: they had pavilions three stories tall, and they knew how to flatter, coax, schmooze and outright bribe Chinese buyers…”.

Bob Cranston: “Having lived and worked in Hong Kong I can tell you it’s simply a matter of familiarity. The French have been working the market in Asia for a very long time.”

Raymond Tosti: “The Chinese are still neophytes to the wine game, and probably still buy into the pre-1970s dogma of how the French are at the pinnacle of quality and California wines are the Charles Shaw of the world!”

Chris Brown: “Newer wine drinkers like lighter wines.”

Bartholomew Broadbent: “The answer is culture. Red is culturally a very important color [in China], so red is the wine of choice. And the Chinese are hardly exposed to anything worth drinking [from California]. Look at the wine list in a Chinese restaurant. They’re serviced by big distributors who put really bad wines on the list.”

Robert Conrad: “In Chinese culture, older is better. If something has been around for a long time it is more respected.”

Sheldon Richards: “I would suggest the British influence in Asia and the French wines they drank when they dominated.”

Doug Wilder: “From Wikipedia: French wine was the first foreign wine imported into China, in 1980.”

Barbara Lardiazbal: “This is a generalization, but in my experience Chinese people like French people more than they do Americans.”

Well, there were a lot more comments; you can see them all here.

As usual, thanks to my Facebook friends for always being so enlightening!


Winery P.R. and social media: Make the product cool, and make stars of the everyday people who drink it

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The great advertising genius David Ogilvy, who founded one of Madison Avenue’s most successful firms and served as the inspiration for generations of Mad Men, in his 1963 memoir “Confessions of an Advertising Man” quoted his own father. “[He] used to say of a product that it was ‘very well spoken of in the advertisements.’”

Ogilvy’s father lived in an era when being “well spoken of in the advertisements” was convincing enough for a gentleman to buy the product. Ogilvy understood, partly through his readings in mass psychology, that it was important that the person speaking in the advertisements be credible. He was a stickler for the authoritative figure: in “Confessions” he cites Escoffier as “the definitive authority” in cooking; he recalls his own stint as an assistant chef under Monsieur Pitard, “the arch symbol of authority”; one of Ogilvy’s first clients, when he set up his advertising firm, was “an eminent authority on rare books”; in advising how to sell proprietary medicines, he notes that “A good patent-medicine advertisement conveys a feeling of authority”; and, finally summing up what it takes to be a successful ad man, suggests practitioners “become the acknowledged authority” on subjects ranging from ad budgets and media planning to getting scholarly articles published in the Harvard Business Review. An ad man who can do that “will be able to write your own ticket.”

David Ogilvy died in 1999, at the age of 88. His career spanned a period when authoritative advertising really could push products because consumers trusted the information in the ads. Ogilvy specialized in inventing “personalities.” Oldtimers will remember Colonel Whitehead, the cool white-bearded guy who told us of the benefits of Schwepps tonic water, and “the man in the Hathaway shirt,” with his eye patch (who was the spiritual father of “The Most Interesting Man in the World,” the Dos Equis guy). Believe it or not, there really was a time when advertising seemed to express the honest, objective truth, and people were credulous enough to believe it.

Today’s P.R. and advertising specialists constantly refer to “the story” as the backbone of capturing the consumer’s attention. Although the term “the story” wasn’t really part of Ogilvy’s lexicon, it’s clear that his character-driven narratives anticipated it. He refers to another advertising man’s use of the term “story appeal” in photographs: “the more of it you inject into your photographs, the more people will look at your advertisements.” (One of my favorite Ogilvy images, and one of his most famous, is this ad for Rolls Royce.

ogilvy-rolls-royce-ad

 

It’s almost impossible for the eye and the mind not to dwell on it. Who is that woman driver? Are those her kids? Where are they coming from–private school? What are they carrying? This is “story appeal” to the max, amplified by the photo’s caption, which captures the imagination.)

Hence, the modern goal of P.R. to “tell the story” is hardly new. Mucha did it in 1897 with this poster advertising Nestle’s:

Mucha

a self-confident, classically beautiful maman mixing up the cocoa for her healthy, happy baby. When P.R. professionals take their first meeting with a new client, they prod for the story–and if they’re good at their jobs, they never stop refining and, if necessary, re-defining it.

But today we have the game changer called the Internet, and specifically social media, a paradigm shift if ever there was one. Businesses no longer need P.R. people to take them public; they can go public all by themselves, with more exposure than even David Ogilvy ever dreamed of on his most creative, three-martini day. However, as we know all too well, some companies, and particularly small wineries not well versed in social media, don’t know how to take advantage of the opportunities, thus leaving room for P.R. consultants for ply their trade, especially if they’re adept at social media. One successful example of a neat fusion of telling a story through the use of social media concerns Vans, the popular shoeware company (I own several pairs and love them). Vans has a new, online documentary series in which four filmmakers were asked to find interesting young people who embody the spirit of the brand and tell their story. For instance, here’s a short YouTube of an East L.A. guy named Anthony. He’s pretty cool: it’s interesting to get into his life, and he just happens to be wearing Vans, which gets a transfusion of Anthony’s cool via the miracle of emotional transference. We know for a fact that video is the future of social media. If a picture is worth a thousand words, an interesting video is worth its weight in gold.

The American public today is less susceptible to believing something just because it’s “very well spoken of in the advertisements.” I mean, we passed that milestone long ago. Nowadays people are more likely to skip through the commercials on T.V, and slip past the ads in newspapers and magazines. They do, however, respond to interesting and clever videos. The Vans YouTubes are wonderful to watch, and even though they don’t say a word about Vans, the shoes are part of the show. I’m not saying that traditional P.R. is dead or has no place, but the skill set for successful P.R. has changed. It now involves–not just the ability to make a good video–but proper insight, even more important, into the content of the video. Consumers will not respond if they’re hit over the head with product ads–at least, they won’t with wine. (I never fail to be amazed by the brutality and noise level of car commercials. I hate them, but maybe they work, or else the industry would have abandoned them long ago. But you can’t sell wine that way.)

So how is “Anthony,” the East L.A. guy, an “authority”? The fact of the matter is, for a younger generation the definition of “authority” has changed. It’s no longer some stentorian font of wisdom who knows more than you do, telling you what’s up. It’s someone just like you. Anthony is an authority on being a cool young kid who’s having fun who just happens to be into Vans. That’s way different from some talking head on a T.V. commercial blathering away about the quality of Vans soles or the durability of their laces. People don’t need that anymore, at least in everyday footware. Nor do they need it in wine. They want to see and hear from people they can relate to. That’s the lesson for wineries, for P.R. pros and for marketing execs in general to take home.


Tuesday twaddle: winery consolidation and “red” China

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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.


Putting myself in the consumer’s shoes

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I saw Inside Llewyn Davis, the new Coen brothers film, the other day, and I frankly couldn’t tell if I liked it or not. Afterwards, when Marilyn asked what I thought, all I could say was, “I don’t know.” I wanted to Google it and see what the reviewers and other moviegoers thought.

Which is exactly what I did when I got home. It turned out that lots of folks were as puzzled as I was, but the point of this post is that, by myself, I just didn’t know what to think, and needed to know how others felt before making up my own mind.

Which is pretty odd, because usually I know if I like a movie or not. So I had to wonder why it was that I felt the need to know how others reacted, before coming to my own conclusion–and then it hit me. That’s pretty much the situation lots of consumers have when it comes to wine. They don’t know what to think (i.e., what to buy), and so they turn to the opinions of others for guidance.

It’s only natural, I suppose. Sometimes we know precisely how we feel about things, for or against. Other times, though, we’re kind of in the middle, and need a nudge, one way or the other, to arrive at a conclusion. I’m not sure why some things are clear to us while others aren’t. In matters of taste (gustation), things are usually pretty simple. You like sea urchin; I don’t, and that’s that.

But wine can be trickier than food. For one thing, wine is more complex than most food. While it can be a simple pleasure (and for most of the world, that’s all it is), at the higher levels wine requires the consumer to bring something to the table. It’s like art in that respect. It’s hard for the average person to appreciate, say, Keith Haring, without an understanding of his context: New York City of the 1980s, street art/graffiti, AIDS, the Studio 54 scene, break dancing, cocaine, a certain anti-”high art” attitude.. If you have some knowledge of those phenomena, then a Haring piece becomes much more than the cartoon it can appear to be to the uninitiated.

Haring

There are, I suppose, two kinds of people: those who aren’t interested in expanding their perspectives, and those who are. The latter are curious about things, especially things that seem to be important to others. In the Jewish tradition, there is the story, told during the Passover seder, of the Four Sons: the simple son (too lazy to wonder about anything), the wicked son (who believes in little except himself), the son who doesn’t know enough to ask (his ignorance is his limiting factor) and the wise son (who inquires into the nature of things). The implication of this tale, of course, is that we should be like the wise son: inquisitive, open to expanding our knowledge, curious to increase our understanding of the world.

It was this curiosity to understand Inside Llewyn Davis that drove me to Google it. I can’t claim to have a proper understanding of it even now, but my little expedition online made me think. And the more I think about Inside Llewyn Davis and what the Coen Brothers and the actors were trying to do, the more interesting I find the movie in retrospect. Because it challenged me, it forced the limits of my mind to expand a little bit. And opening my mind to new concepts has always been a great pleasure to me.

So we return to wine. There are two kinds of people with regard to wine, too: those who like it and like to drink it, but have little or no curiosity about learning anything about it. And then there are those who are willing to take steps to understand wine. These begin with small, simple steps: Why are some wines white, some red, and some rosé? Why are some wines sweet while others aren’t? Why do wines of the same variety differ so widely in price? These are perfectly good, logical questions for the beginner to ask–and from there, you can branch out wherever you want, even into things like what the chalk of Chablis contributes to Chardonnay.

It’s in that area–the branching out, the effort to understand what doesn’t come easily to the mind, to penetrate more deeply into the heart of a topic–that people need guidance. I needed guidance to help me understand Inside Llewyn Davis. And the curious wine consumer–the “wise son” (and daughter)–needs guidance to help her understand wine.

There are many reasons why wine so often is so challenging for so many people. Maybe I’ll try to analyze that in depth someday. But for now, I want to say the answer to wine’s complexity is not to become one of those people who says he or she is in the business of “demystifying wine” or “making wine simple” or “taking the snobbery out of wine.” All such boasts should be seen for what they are: transparent attempts to take advantage of people’s insecurity in order to make money.


Lessons learned from recent fake wine scandals

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It’s clear that fake (often expensive) wine in China has become a monumental problem. As much as 50% of the foreign wine for sale in that enormous country appears to be phony, and that nation has been “reluctant to address the issue of counterfeiting,” Maureen Downey, a rare wine appraiser based in San Francisco, told the South China Morning Post.

The problem is especially acute in Hong Kong, due to the oceans of money there, and also in part to “the Asian fear of losing face,” Downey says. The rich dislike admitting that they’ve been victims of scams. Of course, the recent conviction of Rudi Kurniawan, an Indonesian, only adds to this fear on the part of wealthy collectors that all is not well. “Even if you’re rich, you’re still being hoodwinked. You’re still being taken for a ride,” Michael Egan, a witness for the prosecution in the Kurniawan case, said. This must make it difficult for collectors to look over all those marvelous bottles in their cellars and wonder what’s real and what isn’t.

It’s not just in China that bogus wine is a problem. Twenty percent of all the wine sold in the world may be fake, with online sites like eBay particularly notorious for peddling bad bottles. (I mentioned bogus Screaming Eagle on my blog nearly two years ago.)

That this wave of fakery is happening today should come as no surprise. In an era where phishing and identity theft are big business, brewing up a phony batch of Romanée-Conti is right in tune with the international criminal ethos that seeks to liberate people from their money through fraudulent means. The crooks who sold $12,000 bottles of  fake DRC, mainly in China, were, in fact, merely the latest in a long historic line of wine counterfeiters who have practiced their black craft for centuries. In their 1992 book, The Chemical Revolution, the authors cite an 18th century London scholar who described how “a fraternity of chemical operators,” working “in underground holes, caverns and dark retirements,” could “squeeze Bordeaux out of sloe [prunes], and draw Champagne from the apple.”

What is it about humans that makes us so credulous a species? You can’t fool most animals, who can sniff out the false, dishonest, dangerous and insincere things of the world. But people seem willing to be fooled and fleeced. Added to the problem is that many people who buy these bottles either don’t even bother to open them (they just flip them online), or, if they do pop the cork, they don’t have the experience to know what the wine should taste like.

To understand why people are so easily duped, you have to ask, as Marcus Aurelius did, “This thing, what is it in itself? What is it doing in the world? And how long does it subsist?” What “this thing”–wine fraud or more specifically the willingness of people to be its victims–is, is the desire to have something rare, which most other people cannot have, and thus to raise, in one’s own eyes, one’s own self-esteem, and also one’s esteem in the eyes of others. This implies, naturally, that humans suffer from low self-esteem, a problem I will leave to psychologists to explain. I suppose it has to do with ego. Animals don’t have egos; only we humans are blessed, or cursed, with them.

Victims of scams, fortunately, can learn from their experiences. Once burned, twice shy, goes the old saying. I’m sure the Chinese have their own version of our slogan: Fool me once, shame on you. Fool me twice, shame on me. So perhaps, in a few years, we’ll look back at the explosion of fake wines in China as a temporary glitch in that country’s upwardly spiraling learning curve.

These episodes of wine counterfeits also point up the importance of third-party certifying agents who can guarantee the wine’s provenance. Would you ever spend thousands of dollars on a bottle if you didn’t know exactly where it had been all its life? I wouldn’t. I’m basically a trusting person, but–having been ripped off myself–I’ve learned you can’t be too careful these days, what with scam artists and sleazeballs waiting for the slightest opportunity to steal our money. As for Aurelius’s question, “How long will it subsist?,” P.T. Barnum had the answer for that a long time ago: There’s a sucker born every minute.


There are at least two different “wine communities”–and they don’t talk to each other

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We often speak of a “wine culture” or “the wine consumer” but of course these phrases are wildly inaccurate. They imply that all American wine drinkers are part of one big, happy, thirsty family, when in fact just the opposite is true. There are at least two wine communities–and they couldn’t be more different from each other.

On the one hand, we have the Occupy movement’s version of the one percent: Extremely wealthy people who keep the Colgins, Harlans and Screaming Eagles in business. This community largely lives among, and associates with, its own kind. The own their own homes, usually large, well-appointed ones, golf at country clubs, spend their vacations on tropical isles and live lives of opulence. Price means little or nothing to them: if they want something badly enough, they go out and get it.

On the other hand, we have the 99% of consumers who have to think of their budget every time they buy something. To them, there’s a big difference between a $15 bottle of wine and a $12 one. That differential would be meaningless to the 1%, assuming, of course, that the 1% would even deign to buy a $15 bottle of wine. But to the 99% consumer, saving $3 on a bottle of wine mounts up; if she buys 100 bottles of wine a year–not an unreasonable quantity–that’s $300 she saves, or doesn’t. These are the sort of financial calculations that drive the 99%, and they’ve become more profound since the onset of the Great Recession, in 2008.

As a wine writer/critic/journalist, I have to take cognizance of these two communities. I need to understand both of them, which involves different sorts of analysis and empathy. In this, I feel that I, and Wine Enthusiast, have taken an independent approach, one that not all wine publications have chosen.

For example, some critics cater to the 1%; I’d put, say, Antonio Galloni and James Suckling in that category. Nothing wrong with that. It’s perfectly honorable. But it’s important for readers to understand that their approach is necessarily geared toward the desires and motives of the 1%. By that I mean that they are dealing almost exclusively with luxury products, and they bring a certain attitudinal exclusivity to their reviews that by and large discounts any appreciation of everyday wines. By way of an extended metaphor, it’s analogous to those art critics whose esthetic is concerned only with “museum-quality” art. To them, street art–graffiti–isn’t true art, it’s vandalism. This is not a viewpoint that is shared, however, by street artists themselves, who take their pursuit  very seriously, and for whom its freely distributed, populist nature is precisely the point: for them, it is art of and for “the people,” not the uber-wealthy.

The appreciation exclusively of expensive wine has never been my thing. I’ve never drawn any severe distinctions between cult wines and very good ones that are “merely” affordable. For example, a $625 Yao Ming is clearly a very great Cabernet Sauvignon–but so is a $50 Sequum, and for that matter a $45 Terra Valentine might beat them both in a blind tasting on any given day. By the same token, it pleases me to no end to be able to review, say, a Benziger 2010 Cab, or a Katherine Goldschmidt 2011, both of which retail for $20, and give them high scores. What could be better than that?

Producers have to figure out which end of the great divide they wish to appeal to. Some larger wine companies, like Kendall-Jackson and to some extent Gallo, can span the gamut, with something for everyone. But for the most part, wineries can’t do that. The ones who cater exclusively to the 1% or the 99% seem to be doing well; they’ve defined their markets. But some other wineries fall into the squishy center. They’re not expensive enough for the 1%, and they’re too expensive for the 99%. This is where sales tactics and strategies enter the picture, but that’s another story.

By the way, before you start telling me that social media is the key to these tactics I’m referring to, read this blog post from Tablas Creek, which appeared yesterday. In it, Jason Haas discusses the new Facebook policy “would be reducing the organic reach of pages and requiring those pages that wanted to reach a significant percentage of their fans to advertise to do so.” By way of illustration, he writes, “an average [winery] post to a page with 5000 fans will be seen in the news feeds of just 600-700 of those fans,” unless the winery pays for a more extensive reach.

I did not know that, but this trend doesn’t bode well for the continued [free] use of social media. It seem to me that the ability of wineries to use social media will increasingly by threatened, or neutered, as these social media companies increasingly force everybody to pay up; and the less you pay, the less of a reach you’ll have. In other words, the social media companies–having gotten us hooked on the use of their products–will now jack up the price, which, in accordance with the free market theory of capitalism, will send users away, in search of cheaper competitors. Am I reading this wrong? I’m sure my social media-savvy friends will be happy to explain to me my utter misinterpretation of reality.


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