The Future of Imports in the US Market

I admit that I've been bullish on domestic wine's ability to compete with imports, but some recent data shows that I may be wrong. If I'm wrong, its not for our lack of trying, or lack of quality, its because we don't have enough vineyards planted!

Stay with me while I do some math here....

The US wine market sells about 300,000,000 cases annually, including all price points and origins. Annual growth is a steady 3%, which seems modest, but work it out and you get 9,000,000 cases per year! According to the wizards at Gomberg-Fredrikson, imports rose to an all-time high last year, 20% of the market - if we extrapolate that back to our 9 million cases of growth, domestic wines need to grow by 7,200,000 cases (9 million x 80% of market) just to keep pace. Working backwards 7,200,000 cases at 65 cases per ton means we'll need 110,000 tons annually. Still working backwards, 110,000 tons divided by the average crop yield of 7.5 tons to the acre (that's the three-year running average statewide) means we'll need 14,000 new acres planted annually to maintain market share.

California currently has approximately 20,000 acres of planted, but non-bearing acres. Since it takes three years for a grape-vine to become non-bearing, we can assume that approximately 7,000 acres have been planted annually for the last three years (20,000 / 3). Given banks' reluctance to lend for new vineyards and wineries' general reluctance to give contracts for planting (which would allow a bank to lend), any new plantings are probably still a year or two away and we'll start to "run short" after the coming 2007 harvest.

If you skipped math in high school, start reading here:

So what does it all mean? California currently can't supply enough grapes to maintain market share and imports will have an unprecedented opportunity in the next six or seven years to make large strides in this market. Interestingly, it won't really hurt domestic wineries as they should be virtually able to sell everything they make. It may, however, present opportunities for imports (I'm thinking Old World here) to reshape consumer tastes a bit. Should be interesting, it always is.

Sustainability

Many people are waving the flag of sustainable agriculture these days. In particular, we hear it mentioned more & more often in regards to viticulture and wine production.

But what exactly does it mean, and how does it shape our agricultural practices?

"It's easy to understand why key individuals and organizations in agriculture have flocked to this term. After all, who would advocate a 'non-sustainable agriculture?'" [Charles A. Francis, "Sustainable Agriculture: Myths and Realities," Journal of Sustainable Agriculture (1990) 1(1): p.97]. Sustainable Agriculture: Definitions and Terms

Rightly observed seventeen years ago, the allure of the term alone makes it something which most people would assume is a good thing without asking what it entails. Note that I’m not knocking it – in fact the ideal of the sustainable philosophy is something we should all strive for - but this subject needs a little more light on it, as Biodynamic producers (and some media advocates of BioD) continue to claim that they practice the most sustainable form of agriculture. An interesting claim to make when decades of studies have merely reinforced the notion that the organic foundation of biodynamics is what makes it effective, and not the preparations, the “cosmoculture”, nor the celestial calendars they use. Perhaps they are making that claim based solely on BioD’s prohibition of all pesticides? even the naturally occurring ones? Hmmmm…..

Unfortunately, the concept of sustainable agriculture is somewhat nebulous – even 15 years after the NGO Sustainable Agriculture Treaty of 1992. But the majority of definitions seem to agree on a few core topics:

§ Reduce use of synthetic agrochemicals
§ Reduce the risk of waterway pollution
§ Conserving natural resources and energy
§ Promote responsible use of fertilizers and pesticides
§ Minimize environmental impacts of agriculture

After that, definitions start to vary quite a bit. And nowhere in the mainstream definitions do we see a prohibition of all fertilizers or pesticides. Why?

Here’s a list of what we see on the major points:

Interesting, eh? Note that Sustainable and Conventional are identical in that there isn’t anything actually prohibited as far as sources of agricultural inputs. IPM (Integrated Pest Management) isn’t prohibited either by any of the three systems, or by the Sustainable philosophy (except where the use of pesticides would be prohibited under the system in question).

But perhaps a few working definitions of the three systems are in order…

CONVENTIONAL

This is the standard 20^th century agriculture. Nothing (originally) was prohibited form being used, and over time laws were put in place to prevent the greatest threats from products that later turned out to be too broad-spectrum or too long-lasting.

Much maligned for early abuses, the system as a whole also suffers from public perceptions that it’s the cause of such environmental damages as waterway and stream pollution from pesticides, fertilizers, and “factory farm” waste runoff. While the indiscriminant use of synthetic pesticides and herbicides HAS been a contributor to this problem, the “factory farm” (e.g., large concentrated feedlots with poor sanitation and living conditions for the animals in general) is wrongly attributed in the public eye solely to Conventional Ag.

While I believe that those runoff and living condition problems are very real, they represent an extreme of the conventional ideology which has largely been exploited by bigger farming operations. This of course, is the crux of the objection to Conventional Ag, as concerned people point out the need for farms to be profitable and the (potentially) large amounts of capital spent for those synthetic pesticides and fertilizers – a need to grow the operation and maximize the return by using a larger scale (the much dreaded “scale of economy”). The Government has been somewhat successful at combating those problems, but they haven’t been eliminated yet.

As for pesticide residues, they are regulated by the Government (FDA) and those limits should represent a fair consensus of what research has shown to be safe. Still, objections are made appealing to the paranoia (perhaps correctly) that big business interests have somehow corrupted the system at the consumers’ expense.

ORGANIC

Improving on the Conventional perspective, Organic eliminates the reliance on synthetic chemicals, and substitutes a more holistic view of the farm within its environment.

As such, runoff from synthetic chemicals is essentially eliminated. But note that runoff problems (erosion, manure, etc) may still exist.

With a reliance on compost, crop rotation, and better tilling practices, Organic provides the best system to date which balances the need for production and environmental preservation. Naturally occurring pesticides (B.thuringenesis, rotenone, etc) and fertilizers (compost, guano, etc) can still be used. This allows the farmers some protection from pests without the reliance on synthetic chemistry and hopefully a more specific effect. Pesticide residues are still regulated by the Government.

More flavorful food is one of the effects most touted by the Organic quarter, though some research has shown the improved flavor may be due more to the “local” nature of most organic production to date. Generally the produce isn’t shipped as far, and is consumed before too much time has elapsed since picking. As more large farms are converting to Organic, the hardcore natural (“Green”) movement is decrying this as an attempt by big business to cash in on (and corrupt) a good idea. However, I would wonder out loud if perhaps that scenario isn't such a bad thing after all...

...unless of course they are forming large “factory farms” (e.g., large concentrated feedlots with poor sanitation and living conditions for the animals in general) where overcrowding and other factors produce waste runoff which pollutes waterways or otherwise unnecessarily degrades the environment...etc.

BIODYNAMIC

Eschewing all natural and synthetic fertilizers and pesticides, Biodynamic (BioD) relies on a cosmic philosophy to keep pests at bay and fertility at its peak. Created by Rudolf Steiner in 1923, the system has taken many years to reach it's current acceptance but still struggles with the same issues of clarity and logical idea flow that hindered it when first revealed. That being said, the agricultural base is that of Organic, when stripped of all of the cosmic trappings.

Personally, I think any system which totally prohibits any fertilizers or pesticides – even naturally occurring ones – is myopic at best. With a constantly increasing world population, this civilization we have is more prone than ever to ravages brought about by drought, failed harvests, insect pressures, or even just reduced yields in one geographic location or another. And while the utopian dream of having a world free of any manipulation is admirable, it is not remotely realistic…not without putting all of Humanity at great risk. (Don't even get me started about the potential curveballs that global warming could throw us to exacerbate our sometimes tenuous existence...)

BioD’s main tenet is exactly that, and makes it unacceptably naïve from a long-term perspective (all of its other naïveté aside). Another thought about limitations brought about by adopting BioD is that “[s]ustainable agriculture does not mean a return to either the low yields or poor farmers that characterized the 19^th century. Rather, sustainability builds on current agricultural achievements, adopting a sophisticated approach that can maintain high yields and farm profits without undermining the resources on which agriculture depends.” (Union of Concerned Scientists, 1999 – see link)

With BioD’s possibly erroneous emphasis on low yields (see my yields-quality post), one has to wonder where it will possibly put us if it were adopted across agriculture as a whole. Would there be a lower profit margin for farmers as they have less produce to sell, and higher prices for consumers? That’s something which could cripple emerging countries as well as condemn them to endless cycles of starvation…and would the current position that irrigation is taboo also hurt us with the possible changing weather brought about by global warming? (Point in fact, Steiner never prohibits higher yields in his agriculture lectures, he merely prohibits achieving them via modern fertilizers…
He also never prohibits irrigation. In fact, I don’t recall him ever mentioning it at all in his lectures. But somehow the modernized application of BioD adopts low yields and dry farming as signatures, at the very least within context of the viticultural movement. Another late addition to BioD is the prohibition of GMO’s, which again Steiner never envisioned.)

In the end, BioD is no guarantee that the system won't be applied on such a large scale as to produce some of the same problems that any "factory farm" might produce. And lastly, any system can cause runoff problems from improper fertilization or manure storage...

Where SUSTAINABILITY fits in...

Sustainability offers something flexible enough to be used in both the developed and emerging worlds: adaptability to various social and economic pressures while promoting well thought out usage and minimal long term effects.

All agriculture is in some way an invasive and destructive act, even while it creates food and textiles for our civilization. And that includes BioD agriculture (the very thing it proposes to promote is somehow lost when we extrapolate to its logical end).

Sustainable philosophy doesn’t lead to artificially low yields, overly high prices for consumers, or to starvation of the farmers. What the Sustainable philosophy preaches is responsible use of resources in our drive for production, while striving for an equitable exchange of goods - regardless of farming system employed.

From that platform, one can start to make some reasoned decisions about what practices to use that will allow the best protections of the environment without placing modern civilization in peril.

**********

Arm yourselves with knowledge! Read more here:

USDA: Sustainability publications list

The Wine Institute : Sustainability values statement

The Wine Institute : Benefits of Sustainability

Parker, Global Warming and Fuzzy Thinking

The following excerpt was taken from a Michael Apstein column at winereviewonline.com

Global Warming

Ducasse believes it is "obvious" that global warming has hit Bordeaux. And if it continues, all vintages will be like 2003. He looks back over the last 20 years and sees that the average alcohol in red Bordeaux has gone from 12 to over 13 percent as a result of a warmer climate and a change in the public's taste.

Wait....its "obvious" they're already seeing the effects of GW ...unless those affects are due to change in style preferences (or Parker, whom he acknowledges has an ever-increasing impact)? Now that's clear thinking!

He says it is impossible now to produce a wine with 12% alcohol because consumers are accustomed to wines with more than 13% alcohol. He points out that in the past it was "a miracle" when Cabernet Sauvignon reached ripeness to give a potential alcohol of 12%.

It gets better.....its "impossible" to produce a wine at 12% because of changing tastes (we've already forgotten about the "obvious" GW issue?), yet it was a "miracle" when Cabernet became ripe at 12%. Where's the downside here?

Now, every year the Cabernet Sauvignon comes in with potential alcohol of 13%. The change has been a result of drier, sunnier, and warmer summers.

I thought it was changing wine styles? Which is it?!? Also, doesn't the fruit have to pass through 22°Brix (~12% alcohol) BEFORE it reaches 24°Brix (~13% alc)??
So, what's to stop them from picking at the lower sugar? [hint: answer is "nothing"...]

Ducasse notes, "Since 1995, there has been a run of good years, they've all been good or excellent. None have produced light or thin wines. Compare that to the 1960s or 1970s when you would see two or three good years per decade. The young generation of Bordeaux winemakers and proprietors don't know bad years." Certainly over the same time period, there have been huge advances in winemaking and viticulture, but the warmer, drier climate has been the primary reason for better wines in Ducasse's opinion.

Sigh....this is probably California's fault. Damn our deliciousness!!! [shakes fist]
But again...where's the downside here? Are light and thin wines all that great? Is it a complaint that the new generation of vignerons haven't suffered enough for their "art"?

He believes that a poor vintage will be rare in the future--and certainly will never compare with 1963, 1968, or 1977--because of better technology and warmer climate. Also, the media's attention on the details of the industry has forced people to focus on quality.

Ahhhh......the 'q' factor, which the French only focus on when "forced" to do so (chuckle). Never mind that improved quality might make all of the above debate irrelevant!

More bad news...

WHAT !
Why do I have to post on this a second time?!
Haven't we learned ANYTHING in the past few years??

Stop shipping plants around with this pest on it, PERIOD.
FOUND: First sharpshooter eggs of season

...in Sonoma County.

Fightin' the good fight

There are a number of articles hitting the traditional wine media pages lately which are troubling at best.

TIME magazine, Wine & Spirits, and Bloomberg have carried articles just in the past two weeks about Biodynamics. Sadly, each case has presented BioD in a rather benign light, and dismissed or just glossed over the "cosmoculture" and use of arcane rituals. But without those practices, there's really nothing left but organic agriculture - a point again which isn't emphasized in the latest spate of media attention....

The good news is that there are people fighting onward to see that the truth of BioD ag isn't misrepresented. In the last week there have been several letters written to the publishers of these magazines in rebuttal...like the following which was sent to the editors at TIME:

"March 1, 2007

To the Editor:

It is telling that in the week Time Magazine chose to publish an article praising biodynamics (“Virtuous Vino” - Lisa McLaughlin, February 22, 2007) a discussion panel convened by AAAS reports that Americans increasingly believe in pseudoscience (“U.S. Has More Science Smarts - Sort Of” - Randolph E. Schmid, Associated Press, February 18, 2007). According to Dr. Carol Losh (Florida State University), "Pseudoscience discussion often is absent from the classroom," so "we have basically left it up to the media." Time magazine apparently is contributing to this dubious honor.

Biodynamic agricultural practices are identified by recourse to astrology, homeopathy and alchemistic or voodoo-like preparations. They are simply pseudoscience in green clothing. To claim that biodynamic is somehow "überorganic" in virtue of these practices does a disservice to valid organic practices, to wine drinkers and to science literacy in the US.

[signed] Linda Chalker-Scott, Ph.D. (Associate Professor and Extension Urban Horticulturist, WSU Puyallup Research and Extension Center), Douglass Smith, Ph.D., [and] Lee M. Silver, Ph.D. (Professor of Molecular Biology & Public Affairs, Woodrow Wilson School of Public & International Affairs, Princeton University)."

At least there are people out there - educated people - who are willing to put a little time into rebuttal of such nonsense as BioD.

Terroir! Huh! Yeah! What is it good for?

(I've been waiting to use that post title, apropos or not!)

Dan Berger, editor-at-large of Appellation America, has another post about his perception of the move away from terroir, this time as it relates to Napa. What I find interesting about the article is that he sets up the current lack of terroir with a brief history of Rutherford and the argument about Rutherford dust. Oddly, he even concedes that the presence of Rutherford dust, even during the days of Andre Tchelistcheff, was not universally accepted. Despite his statement that "terroir now plays second fiddle to brawn", it appears that the terroir of Napa Valley has never been well-defined or agreed-to.

This has been my problem with the mission of Appellation America from the get-go. I think they're well intended, but attempting to define and fight for regionality in California presumes that such a thing can be defined or even exists. At a tasting they hosted on Carneros Pinot Noir, no distinctive regionality was even found (though it was "remembered")! Remembering what older Pinots of the region once tasted like is hardly a suitable starting point for the wines of today.

Perhaps wine styles today obscure the underlying terroir, but IMO, that's a gross oversimplification as there is so much more going on in the vineyard and the winery than just riper grapes. Glorifying wines of the past is fine, but if we can't agree that they showed what we want (terroir), aren't we blindly running backwards toward them? Seems like the undefinable and unmapple Rutherford dust problem of Tchelistcheff's time is more a parable for today's continuing lack of unity within regions more than it is something to aspire to.

The Passing of an Icon

This will go largely uncovered in most blogs, as they go on about their latest cult Pinot mailing lists, or pontificate on other minutiae, but I want to put out a virtual moment of silence for the passing of Ernest Gallo.

[...........]

Say what you will about the quality of the wines or the various "skid-row" products, Gallo did something important and monumental in this country - they got Americans to drink wine. You may turn your nose up at it and joke about how your grandmother drinks it, but you cannot deny that Gallo got people drinking wine. That hugely significant fact, in a country that previously did not drink wine (save largely for Gallo's fellow Italian immigrants), brought many of us to where we are today in wine. Whether you are a consumer, producer, retailer, or distributor, you owe E&J a debt of gratitude. I know I do.

Godspeed, Ernest.