Tuesday, May 29, 2007

Wine Styles - So Who's Driving the Bus?

I'm fortunate enough to get copies of all of the major wine magazines and my in-box and RSS feeds are loaded with daily content. Despite the hectic pace of life, I find it hard not to stay "in touch" with what's going on in wine. I do tend to read more writing on the "trade" side and few on the "lifestyle" side, but I think I can confidently say that one of the most pervasive and divisive issues in the wine world today is (for lack of a better word)….style.

Follow a critic for a while or just select from wines on the shelf that have "shelf talkers" with his or her praise and you get a pretty good idea of who likes what style. I think you could broadly put Parker & Laube on a tag team against Jancis and Tanzer and have a pretty good battle - Ripe vs. Unripe, or New World vs. Old World or Subtle vs. Obvious - take your pick. Other critics, bloggers, sommeliers, etc. all seem to fall into one of the two camps, stylistically.

On the production side, most winemakers and thus wineries also fall on one side of the fence, with few "straddlers". Some would say you could predict this in advance based on the alcohol level of their wines (pre-dealc that is)! I have always defended wineries making a New World/riper/obvious style as I think that is where the market (and thus the money) has been going. Wine is a for-profit enterprise after all, despite what certain aged vignerons would have you believe.

What I find interesting however, is the evolution of wine style. Some say that critics like Parker and consultants like Rolland are driving the style bus, but I just don't think that's the case. If Rolland were creating Cabernets that tasted vegetal, astringent and "barnyardy", nobody would buy them, no matter what the score given by Parker.

Wines, in my opinion, are driven by the consumer. Yes, I can concede that the consumer is influenced by scores, shiny packaging, and effusive praise, but at the end of the day that matters very little. Good tasting wines sell better than bad tasting wines and if the "New World Style" is what the consumer wants, then why are people agonizing about giving it to him?

Arrogance, simple arrogance.

The whole "my wine is more subtle than your wine" or "my wine is a 'natural' wine and yours is made in the lab" routine is just silly. Look, if you like the wine you're drinking, that's wonderful, but don't try to proselytize the rest of the wine world into liking that thin, tart number you found at some really sincere wine shop on a dusty shelf.

I do sense a subtle shift in style and I think that's a good thing. Let's see where this goes, and you can be certain that the palate of the US consumer will take us there.

Thursday, May 24, 2007

Duckhorn's Final Bidders Announced?

In his Wine Market Report, Rich Cartiere announced that the final three bidders for Duckhorn are Fortune Brands (Jim Beam, Clos du Bois, Geyser Peak, etc.), Pernod-Ricard (Mumm), and Constellation (everything from Mondavi to Wild Irish Rose).

Now I've theorized on the Duckhorn sale previously but this is a further puzzlement. I just don't see why Constellation would be able or want to buy Duckhorn. They've recently announced a major purchase of Svedka vodka for $384 million, a purchase that Constellation admits will not be accretive to earnings for several years. Constellation is already highly leveraged, its stock price has struggled recently and they already own two major Napa properties (Mondavi and Franciscan). What does Duckhorn give them, particularly if they have to pay top dollar via an auction process? I don't get it.

For Pernod, it might make a little more sense. They are a French company, the dollar is cheap right now and Duckhorn is maybe the top ultra-premium US wine brand. Buying Duckhorn would give them an immediate foothold in California and probably help the sales of their other wines (which other than Mumm Napa are all imports) domestically. Still, the French have made very very few purchases in the California wine business, particularly at top prices. I'm surprised if they are still in there.

For Fortune, who just bought the wine portfolio of Allied-Domecq last year (Pernod got the spirits and non-US wine business), this might make a bit more sense as they have limited sales at the high end (+$20/bottle William Hill, Atlas Peak, Gary Farrell - all small), good business at the middle-end ($14-20/bottle Wild Horse, Buena Vista, some Geyser Peak) and lots of business from $7-14 (Canyon Road, Clos du Bois, Geyser Peak's great Sauv Blanc). This is a portfolio that could really use an "extreme makeover", and Duckhorn could do just that for them.

So, I'll bet a virtual beer than Fortune gets it, takers?

Thursday, May 17, 2007

Power 100: mistake or showing hand?

This piece of data came out last week, but there's something in it which is just a bit curious...

Probably just a typo, but they may have inadvertently tipped someone's hand in what would be some of the biggest news of 2007 so far in the wine world acquisitions file...

Intangible Business (ok, so doesn't that sound like a 'Sopranos' euphemism for a 'legitimate business front'?) published it's Power 100 wine and spirits list [link to the *.pdf] for this year.

Wine (as a category) is fifth from the top when looking at the top 10 sectors they considered, with 16 brands represented in the Top 100, which is good news. Also of note is that Sparkling Wines continue to fall in at the lower end of the list, and I wouldn't mind seeing that trend change slightly and bring that category right up behind Still Wines.

And it also shows that Gallo Family Winery is the most powerful of the wine brands listed in their valuation of the companies.
No real surprise there, though one would expect Constellation to by right there duke-ing it out with them for top spot...which they are with Hardy's showing up in the #2 spot.

But there is a surprise, and it came when I looked at the list a little closer and noticed that they have Kendall-Jackson "owned" by Brown-Forman.

If true, it would be the best kept secret of the industry as both companies are large, and it's pretty doubtful that everyone who would know about that purchase would be able to keep it quiet.

I guess we'll have to wait and see if Jess Jackson notices that typo and decides to sue Intangible Business for a public correction..or not...


Tuesday, May 15, 2007

A Harvest a Month, That's All We Ask...

Today I am reminded of the story of a young consultant working for a large winery. The consultant comes running into the client's office saying that he has found a solution for the winery's underutilized asset base. "You're only putting wine through your crushing and pressing equipment one time each year! If you can just double that, you will be twice as profitable". This particular consultant is no longer in the wine industry, but his "genius" was simple not understood at the time........

Today's article in the New York Times provides a fascinating look at some recent vineyard developments in Brazil. Yes, that's correct, Brazil, the tropical one. Among the interesting tidbits, there's this nugget:

"....these companies are challenging the centuries-old dogma that viticulture is about terroir, the belief that a wine reflects the area where its grapes were produced, and temperate climes."

(France's official response: "Sacre bleu! They're onto us!")

While the ultimate proof will be in the Pinot, so to speak, its first of all great to see those who challenge the norm and strike out on their own. Sure, the purists will denigrate their efforts and even lovely Jancis doubts their success “I still find it hard to believe that new latitude wines will ever be seriously good” its hard to miss one key point.....multiple harvests!

That is why I'm reminded of the story of the consultant, he was just working in the wrong region. Had he been in Brazil instead of Napa, it would have worked nicely for him.

“We have around 50 lots of four hectares each and we have grapes growing all the time," Mr. Santos said. “That means we collect grapes two or three times in January, two or three times in February, two or three times in March and so on. The cycle is continuous.”

While I don't think that these kinds of grapes are going to threaten Caymus, it does make one wonder what will happen in the "plonk" sector of the world? Will the so-called "commodity" producers from North Africa to Chile to California's Central Valley be affected by this? If the cost of transportation doesn't rise sharply, I can't see how a region producing 4 or 5 crops won't be able to beat the cost structures of regions with just one. Further, with brands like Lindemann's going to global sourcing, one would think this would work well for them as well.

Austra-Brazilian Chardonnay anyone?


Thursday, May 10, 2007

Talking dirty

Here's a nice article on Terroir - or more exactly, on what's NOT terroir - from Harold McGee and Daniel Peterson from the New York Times last Sunday.

Some great quotes are inside, like this gem...

“Plants don’t really interact with rocks,” explains Mark Matthews, a plant physiologist at the University of California, Davis who studies vines. “They interact with the soil, which is a mixture of broken-down rock and organic matter. And plant roots are selective. They don’t absorb whatever’s there in the soil and send it to the fruit. If they did, fruits would taste like dirt."

Mainly it reinforces points that have been brought to the topic on this blog - that "minerality" is not due to a large presence of minerals in the wine, that there is not "translocation" of the minerals in the soils directly into the fruit, etc.

It's definitely worth a read...

Labels: ,

Wednesday, May 09, 2007

India & China: wine consumption to rise

I have posted a few times regarding the economic boom that China and India will bring to bear on the future world wine industry, and the economic news continues to reinforce that idea.
Below, I've included links to several articles which speak to this topic - and after reading, may just persuade you to pick up a few courses on "How to Speak Cantonese" or Hindi...

The recent news points to the day in the future - maybe near 2024 (a year of the Dragon) - when China and India will make up quite a large bloc of the consumer market (India predicted to be fifth largest consumer nation by that time, and if China plays it's cards right, Beijing might take a spot in the top five also. And with plenty of banking infrastructure (4 out of the top 50 largest banks in the world are Chinese institutions in Beijing already), will probably have no trouble continuing to fund it's massive growth rate...

Anyways, I've digressed a little: what's this all mean for the wine industry? Plenty...

Asian nations are already smitten with the trappings of traditional Western success and status, most notably wine. One interesting article points out that in China, well-to-do entrepreneurs seek out high priced wines and serve them at various functions - even if they don't like them and they don't match with the cuisine (this applies all the way up to State sponsored functions).
Olivia Wu (5/7/07) stated that Cab Sauvignon is the most popular varietal in China due to the impression that "it is the most revered of the noble varieties". She also noted that much of the wine consumed in China (this is true for India as well) is mixed with soft drinks as a sort of ad hoc wine cooler - which I have pointed out before. Obviously, this would change the Cab quite a bit, and the lessened tannic profile and increased sweetness would help the wine pair with the local cuisine, which often tends towards spicy and sweet characters.

Looking at the numbers for their population, the future is obvious: China has roughly 1.314 Billion people, of which 20.8% are under the age of 15, and India has a population of 1.112 Billion, 32.1% of which are 15 or under! Talk about a large influx of potential consumers!!!

The links:
Aussie exports to China now at 164% of last 12 months (China still roughly 10% of Aussie-US export volume)
Michel Rolland working with wine in Bangalore
Luxury brands ignite interest in the Chinese market ("I'm drinking increasingly expensive stuff. At first only 100 or 200 yuan a bottle, but now up to 1,000 yuan [~$130 US/btl]," said the smartly dressed businessman...)
China to replace US as World's most important economy
India to become fifth-largest consumer economy by 2025
Indian Middle-Class ready to burst forth

Labels: ,

Monday, May 07, 2007

Good winery communication skills

This item is from a monthly check of the WineBusiness.Com postings of winery jobs:

Texas Hill Country Winemaker

Some of the highlights of the posting are these...

"Other Requirements: Final Applicants will be required to submit to physical and mental testing..."
(While not sure exactly how they meant that phrase to be read, I'm reading it as "if you've applied, you need to get your head examined...")

"Good effective written and oral communication skills"

...which would have come in handy for the above item and the final line:

"Salary Information: Commiserate with Experience"

Well, if that don't just scare y'all away!
I think the word that was needed was commensurate...