Tuesday, November 29, 2005

One More Try For Bronco

Fred Franzia is making a final(?) try to stymie the Napa Valley Vintners with another petition to the Supreme Court.

While I feel that this has gone on long enough, I do wonder if there are NVV members that contribute to the fight to keep Napa labels made with Napa grapes with the right hand, while the left hand is busy making and labeling Napa "Port"....? Can't think of any sparkling wine producers in Napa that label their product Champagne, as I think they have all adopted the "sparkling" moniker, but that would apply equally if so. Will Rutherford Hill have to stop making wines from outside the Rutherford AVA?

While I generally agree with the position of the NVV, it seems there might be a bit of hypocrisy in Napa...

Monday, November 28, 2005

Louie, Louie...

[link - Decanter.com]
An oak tree planted during the reign of Louis XIV has been sold to a Bordeaux cooper for €37,700.

So it's estimated it'll produce ~60 barrels, so say ~€630/barrel just for the wood...

...add on a nice cooperage fee, and the hype from the PR and I'd nominally put the final price @~€2,000+/barrel. That means the added price per bottle for wine in that wood will be ~€6.75 before losses...rest assured the amount charged to consumers will be much, much more...

I have a feeling that somehow the buyers/users of these unique barrels will charge much, much more, and milk those barrels' reputation for at least 50 years hence...possible biological infections and all...

...and naturally they're already positioning themselves in the "it's super-aromatic" camp, and the tree hasn't even been felled yet.

Wednesday, November 23, 2005

Brett: fault update

Well, nobody who's read this blog would expect me to have Brett listed as anything else but a fault, right?
That's not to say that I don't understand there are people who actually like their wines to smell like manure (or sweaty saddles, phenolic medicines, etc), and that this topic will always be somewhat controversial...

After reading a post on Beau's Basic Juice about whether Brett is seen as a fault in other countries than the EU (no, it's not universal - much to my chagrin) I thought I'd post my thoughts & some recent links:

The short answer is "yes" and "no"...

While it remains as controversial as ever, there is a slow tide turning against it in my opinion.

Most people who 'enjoy' (sorry Beau, I feel using that word to describe it needs some qualifiers) Brett probably...
  1. have an association of those aromas with some positive experiences in their life [grew up on a farm, had a horse, etc], or...
  2. aren't very sensitive to those compounds, and therefore don't detect it at the same levels as others, or...
  3. a combination of the above, and were perhaps exposed to Brett as part of their initial introduction to wine as a normal component of fine wines...

Anyway, I've digressed a bit, so here is some links to other sites with some good perspectives from the UK, US, and Australia:

But, I think the first point to make would be that even the French (Pascal Chatonnet, et al, various papers from 1992~2005) have declared 4-ethyl-phenol to be a fault above 425 ppb (Chatonnet, Jamie Goode). Pascal, as I'm sure you all remember, was the researcher who tested over 100 EU wines and pronounced that half were infected with Brett, and 1/3 were above the "fault" level back in '95. Then just this last year revisited EU wines to find that 2/3~3/4 were infected, and half were now above the fault level.

In England, Brett is many sites have it listed as a fault, as is 'bell pepper' (good example @

In Australia, the once imagined 'terroir' sweaty-saddle trademark of the Hunter Valley was disavowed as a fault of Brett infections (
Tom Stevenson)(Richard Gower).

Certainly we in the States don't like Brett as a group, and studies have shown that most other New Worlder's don't either.

See this site as well...Moody's Weekly Wine Review (2003 Hope Shiraz)

I'm sure the debate will continue to rage, with the rather large variation in people's ability to detect it driving the discussion.


Tuesday, November 22, 2005

Lulu B - another Branded French Wine Launched

I know that I've long lamented France's inability to sell its wines and the general malaise of American consumers toward French wine, but somehow I don't think this is the solution. Lulu B is a good idea gone bad because it just screams "cheap knock off that's late to the party". Fat Bastard and Red Bicyclette worked for much differeent reasons - they didn't have to hit you over the head with cheesy packaging to tell you what it was - they were also well-planned brands that were very carefully launched.

Good luck to Boisset, Lulu's importer who bought DeLoach out of bankruptcy and the Seven Peaks brand from Southcorp (both for pennies on the dollar). My money is on seeing LuluB in the Trader Joe's discount bin by next spring.

I still think this (branded varietal wine packaging) is the way to go for much of France's table wine oversupply, I just think it could be done much, much better.

Thursday, November 17, 2005

French Wines For Thanksgiving?

Last year, I warned people about the coming onslaught on Thanksgiving wine suggestions. Well, here they come again. The NY Daily News is suggesting Rhone wines this year. Now, I love Rhones and I'm not looking to make this into a "freedom-fried" political statement, nor am I looking to point out that the French could create a white blend called "White Flag", but rather to point out the merits of the most American of wines for this most American of holidays - Everyone knows the best thing to match the diverse flavors (tart/sweet, bland/spicy), and not be too tannic is - what else? - Zinfandel...accept nothing less this year.

Wednesday, November 16, 2005

Beau: 2001 Castelmaure Coriberes

Thanks to Beau at Basic Juice for the invite to taste this wine...

From the Languedoc area near Embre-et-Castelmaure & Villenueve-le-corbieres,
South of Narbonne, on France's Southern coast. I opened it the other night with the Mrs....

Aromas stayed on the cooked red stone fruit side, with some stewed plum notes, and what I would characterize as "tomato bisque" aromas.

And while -thankfully- the Brett aromas were not overpowering, the effect muted the fruit quite a bit. Some earthiness came across, but it lacked any true barnyard or manure aromas. With wines like this one I always end up wondering what it would've been like had they been free of the Brett infection...what was the fruit really like? What would the intensity of the wine have been? Oh, well...

Acid level was on the average-plus level, and the muting effect of the Brett left the wine somewhat simple on the palate. Length in the mouth was slightly longer than average, and tannins were at a decent level - though I don't think it'd be really age worthy. Drink within a few years of vintage...

Overall, I don't think I'd be out searching to get another bottle, but would probably have a glass if someone brought it over to the homestead. In other words - not bad, but something to have with food that has some character (like rack of lamb, with a lamb-juices/wine reduction sauce & garlic-rosemary potatoes). The unanimous conclusion for it was "ok", but not top flight or a wine to write home about (sorry Beau! You'll have to save the Beret for another time...). Not a wine we thought we'd pick for a relaxing sip by itself, seemed like 'vin ordinaire' to us.

And it does serve as a good example of how low level Brett can affect a wine without making it a total disaster, but without making it anything better than it would've been otherwise, IMHO.

Tuesday, November 15, 2005

More on Consumer Confusion

Here is another summary of the confusion consumer's find in the wine marketplace:


Monday, November 14, 2005

Wine Consumer DNA

I know this is old news by now. No doubt you've already read about Constellation's "ground breaking" survey of the wine consumer market. Constellation probably paid $250k for this study - Hell, I would have done it for half that and a lot quicker too.....My results would have been:

"Wine is confusing to consumers, which turns them off and alienates them, which leads to lower sales and profits."

Is it news that wine is hard to understand? Think its simple? Einstein is credited with saying "You do not really understand something unless you can explain it to your grandmother." Try explaining the following to your grandmother:

* Appellation
* Vintage
* Why it can say Napa on the label and not be all from Napa
* Meritage
* Syrah or Shiraz
* Explain to her what all the terms on a French or Italian wine label mean
* etc
Or, just take a novice wine consumer shopping and watch his/her mind reel.

This is the challenge faced by the wine industry. I have been highly critical of its lack of success (particularly the wine market council) in the past. Let's hope this new study provides a successful roadmap to the future.

Tuesday, November 08, 2005

Is Constellation a House of Cards?

There has been much rumbling of late as to the reality that exists behind the veil at Constellation. Some analysts worry that Constellation's "organic" growth (growth from existing brands) is insufficient and that their only growth has been through acquisitions (Ravenswood in 2001, Blackstone in 2001, BRL-Hardy in 2002, Mondavi in 2004, Rex Goliath in 2005 and Vincor in 2006?). The concern being that one bad acquisition will send the company into a financial tailspin as debt will overburden the decline in profits.

As I understand it, however, this is exactly what their strategy has been for some time (growth from acquisitions, not the tailspin). Their older brands (Almaden, Cook's, Wild Irish Rose, Inglenook, etc.) provide very nice cash flow since, without growth but with nice profits on still-high volumes, they aren't sucking up cash through inventory reinvestment. It is this very cash flow that allows them to continue to look for new things to bolt onto their existing machine.

Further, the debt they've added ($3 billion since 2003 and likely another billion or so if they acquire Vincor) has been in line with the assets they've acquired at is still running at historic levels - debt at 64% of asset book value. Obviously, they have significant cash flow to service this debt (cash flow from operations was $320,000,000 last fiscal year!).

Interestingly, Moody's and S&P have looked unfavorably on Constellation's bond rating recently, perhaps because they feel that the proposed purchase of Vincor would over-leverage Constellation. I find it a bit tough to believe that Constellation is looking to buy something that won't pay for itself cash-flow-wise as their purchase of Mondavi caused not a blip to the company's performance for an acquisition of roughly the same price.

Of interest recently, though is an article on a strategic acquisition of STZ (Constellation's ticker symbol) by Anheuser-Busch :

"Flood said the company would be better off joining or acquiring a wine and spirits company like Constellation Brands Inc. or privately held Bacardi."

Bud at $16 billion in assets is roughly twice the size of STZ, but wouldn't that be a fascinating buyout in light of the way STZ is treating Vincor?

Friday, November 04, 2005

Vincor Goes on the Offensive

The excerpt below is a pretty interesting read, taken from Vincor's formal response to Constellation's offer. It shows a bit of the hardball tactics that are taken in these transactions and that Constellation doesn't mess around when they make you an offer you can't refuse...

That meeting was held on Tuesday, September 27, 2005. In attendance at the meeting were Richard Sands, Paul Hetterich, Robert Sands, President and Chief Operating Officer of Constellation, and Messrs. Hilson, Triggs and Jones. At the meeting, Constellation was advised of the views of Vincor’s Board of Directors on the $30.00 to $34.00 price outlined in Constellation’s approach, which views were arrived at following detailed discussion and input from BMO Nesbitt Burns and Merrill Lynch. Constellation was advised that its value indications were not compelling and that the price articulated did not reflect the very significant synergies available to Constellation that must be shared with Vincor’s shareholders, but that any proposal that served the interests of Vincor’s shareholders would be entertained. Mr. Sands said that Constellation’s analysis of Vincor as a stand-alone business suggested that with resolution of the UK issues and not in a change of control context, Vincor could be worth up to $35.00 per share in two or three years. Mr. Sands indicated that Constellation would write a letter to the Board proposing a price of $31.00, but ‘‘would not limit the upside’’ if it found that the business was ‘‘worth it’’. He stated that other than achieving a return of Constellation’s cost of capital plus a small increment, the remaining value of the synergies would be available to Vincor shareholders in the form of an increased offer price. Mr. Hilson indicated to Mr. Sands that the synergies in this situation were very significant (approximately equal to analysts’ estimates of Vincor’s 2006 EBITDA of $116 million, which do not reflect the implementation of the Company’s profit improvement initiatives, which are expected to add approximately $5 million to EBITDA in the second half of the current fiscal year), and that he should think in terms of a doubling of Vincor’s EBITDA. In discussing the general nature of the synergies, Richard Sands readily acknowledged that Constellation may have ‘‘severely underestimated the synergies available’’ to it and Mr. Sands stated that if that were the case ‘‘the sky is the limit on price’’. These positive comments are in marked contrast to Mr. Sands’ subsequent public statements regarding price and possible synergy levels. Mr. Sands then indicated there would be no top to the range offered. Nevertheless, Mr. Sands indicated that if an agreement on a transaction could not be reached at that meeting, Constellation would publicly announce its approach to Vincor. Since Constellation was not prepared to propose a price that fairly valued Vincor, no agreement was reached.

At approximately 2:00 p.m. on September 27, 2005, Richard Sands sent a letter to Messrs. Hilson and Triggs threatening to publicly announce a proposal for Vincor at $31.00 per share unless Vincor responded positively to Constellation’s $31.00 proposal by 5:00 p.m. that day. Prior to the 5:00 p.m. deadline set in Mr. Sands’ letter, Mr. Hilson responded in writing that Vincor’s Board of Directors would be meeting within 24 hours to consider Mr. Sands’ letter and that the Board would be responding after that meeting.

At approximately 6:00 p.m. that day Mr. Hilson received a call from Mr. Richard Sands calling from his cell phone. On that call, Mr. Sands warned Mr. Hilson that Constellation would issue a press release announcing its $31.00 approach in five minutes but he indicated that, if Mr. Hilson would personally support it, a price of $36.00 or higher would be available subject to due diligence (with an indication that the offer could be lowered but not below $33.00) after the signing of a confidentiality agreement containing only a 90-day standstill provision. Mr. Hilson responded that as chairman of a public company, he could not make a commitment on a matter of such significance without consulting his board and that it was unreasonable to request that such a commitment be made in just five minutes. Mr. Sands responded that Constellation must then issue its press release, which it did. Mr. Sands has denied on several subsequent occasions having offered the $36.00 or higher price and, moreover, has said Constellation would not pay that price for Vincor’s Common Shares. Notwithstanding that statement, Constellation has disclosed in its Circular that on October 6,
2005 it paid US$30.97 (the equivalent of $36.61) for 1,000 Common Shares of Vincor.

On September 28, 2005, Vincor issued its press release rejecting Constellation’s $31.00 approach as inadequate and not in the best interests of Vincor’s shareholders.

I look forward to seeing how Vincor's shareholders respond to this.

Thursday, November 03, 2005

KJ Buys La Jota - Markham for Sale?

Interesting to note that Jess Jackson, through his Artisans & Estates subsidiary, has bought the small La Jota winery from Markham. This might be the source of an incorrect rumor that Markham is for sale, but on the other hand it might be evidence that Markham's assets are truly being divested by its Japanese owners, Mercian.

Tuesday, November 01, 2005

Airline Wine

Interesting article on Airline Wine in the Monterey Herald (by way of Miami).

Truth is, airlines never pay full price (even wholesale price) for their wine. They take advantage of "problem wines" from wineries that produced too much, have old vintages being bumped by newer ones, or just plain poor-quality wines. Wineries go through the brokers or buyers described in the article to force wineries to compete for the placements (supply & demand drives the prices down here). Sometimes you can end up with a steal, other times you get a brett-laden stinkbomb.

I would point out however, that flight attendants will generally look the other way if you quietly open your own bottle (think screwcap!) and don't make an ass of yourself. Offering to share with your neighbors never hurt either....