NoBullGrape

Non-EU products to gain EU GI protection

We always talk about the failure of the US and other countries to protect the names of distinct locations.  At the very least they do so in a manner that -- when it comes to wine -- is weaker than the protections that the EU provides.  However, there has long been a problem with EU regulations.  They are not available to non-EU countries.  Places like Napa, Santa Barbara, Willamette Valley and the Finger Lakes could not be assured that their names were protected in the EU.  This is because the EU regulations required non-EU countries to also protect EU products (e.g. Chianti, Chablis, Champagne and a number of non-C places).  As the US and others did no such thing, their products did not qualify for EU protection.  Now the EU is being forced (due to a WTO ruling forced on them by Australia and the US) to open the protection they already offer to 720 of their own products to outsiders as well. 
I am surprised that the EU had to be forced to open their system.  One would think that it would be in their best interest to export the system as much as possible.  Yet, whatever the reason, I hope that the opening of the GI system (expected to be approved later this year) provides opportunities for US wine growing regions to gain protection in the EU.  At the very least, it would assure that no Sonoma's from Austria would pop up.  In the best case scenario, there would be increased pressure on the US government to better protect its own regions (and not force the growers of Napa Valley to go to court to protect their name against wine labeled "Napa Ridge" when it is from some other place).  In either case, the consumer who wants to know where their wine comes from wins.

Couldn't have said it anywhere near as well

Guest columnist Richard Olsen-Harbich of Long Island's North Fork winery Raphael has a great piece on the importance of location -- everywhere around the world -- at the always interesting Lenndevours.

As he says:

Remember a merlot grape -- the same merlot grape -- grown in upstate New York or Sonoma or Bordeaux will not taste the same even if we used exactly the same processing techniques. It's the terroir stupid!
In our arrogance, we sometimes forget how little influence we have over the natural world. I want to know what goes into my wine if that’s not too much trouble. (And please don’t bother to tell me its organic -- that’s a topic for another post.) But when I’m enjoying wine from another region, I want to imagine what that part of the world smells like, tastes like and what the people drink. Maybe its because I can’t afford to travel there myself so enjoying the wine is the next best thing to being there.

As you think about going to pick up your turkey, take a read here.

EU wine production and the AOC system

The calls from Europe about the demise of their wine industry are getting louder and louder.
Today's Beverage News does a nice job of pulling together different strands of the story including some interesting information on the decline in AOC labeled wines (saying that they are virtually the same average price as table wines).  Some are using these arguments to say that this is the end of appellations and that everyone should merely bottle their wine with an animal (ala Yellowtail) and varietal.  While I think such talk is ludicrous, I'm wondering whether we have come to a moment in the industry where there is a major split by price as to how one markets your wine.

Clearly the Champagne's, Napa's, MacLaren Vale's of the world will continue to produce great wine that demands a higher price.  At the same time, Constellation and others will get the majority of their income from the lower end wines that they market by varietal and at specific segments of the market. In fact, Constellations basically announced this in their most recent poll of US consumers (see box).

If this graph is correct, 32% of the wine produces over 54% of the profits. 

So, whether you are the Napa winemaker or the CEO of a large Central Valley based wine company, you both have a way to make money. 

The problem the French and others are facing is that lower end AOC wines either don't have the quality or the consumer understanding to get the higher prices.  This is the same problem that many new regions have. 

So what is one to do?  Stop complaining about the consumer and price your wine more appropriately!  If the location warrants the price, it will get it.  If it doesn't you may have to lower prices...delist AOCs, etc.  However claims that the entire AOC system is to be thrown out is exactly the wrong thing to do.  Make it so that the best locations deserve to get the best prices.  And understand where you are in the 50-50 split.

This reality has another benefit.  While the lower quarter of the market (according to the graph above) are unlikely to move up market, others are.  This means that the companies that target this 2nd and 3rd tier of consumers  (and note that the poll only required those polled to buy 1 bottle of $5 or more wine a month so this could still be a lower spending demographic) could make strong inroads into a demographic that is likely to move towards higher priced wines if they start understanding the benefits of these.  Therefore, the middle 30% of consumers are great places for little companies to target and for bigger companies to seek to drive customers over time.

Insight on French industry's decline

French wine consumption... dropping.
French wine exports... dropping.
French wine land values... dropping.

According to an AFP article, Bordeaux is taking the biggest hit as the worldwide wine market changes with increased competition and new consumer markets become the reality.  We've heard this for a long time, yet the difference between the enthusiasm seen in most US wine regions we hear from and those quoted in this article is quite amazing.  It is like they are in 2 different industries.  In many ways... they are...

I've included the whole article (based on some very interesting admissions of serious problems from ONIVINS) as it looked like it was on a site that wasn't going to be around for too long...  Also please note the unique status of Champagne among French wines... Now, if that isn't a statement about the importance of quality, I don't know what is.

    Bordeaux vintners face an extraordinary dry season

Bordeaux - Hit by falling sales at home and abroad, hundreds of winegrowers in the southwestern Bordeaux region, home to some of the most illustrious French wines, are battling with the worst crisis to hit the sector in three decades.

Part of the problem lies with changing consumer trends, which have seen the French cut back on their wine drinking by half in 40 years.

Only 21 percent of French people aged 15 and over regularly drink wine, down from 24 percent in 2000 and 51 percent in 1980, the National Interprofessional Office of Wine (Onivins) said last month.

Many French consumers have also turned away from Bordeaux wines, seen as having hiked up their prices unreasonably during the 1990s.

But the industry has suffered most from a steady drop in French exports, increasingly outperformed on the international market by "New World" wineries in Australia, Chile, South Africa and the United States.

The vine-cloaked hills sweeping up from the Gironde estuary, on France's southwestern Atlantic coast, are home to the largest number of wines listed under the Appellation d'Origine Controlee (AOC) classification system.

Exports of all French wines were down in the first half of this year -with the exception of Champagne - but Bordeaux wines suffered the most, with a 11.4 percent drop in export volume and a 17.9 percent fall in export revenue.

"We are in the eye of the storm. Prices are low, the market is crowded, and sales are sluggish. The situation is serious," warned Jean-Claude Pichon, the regional head of the Credit Agricole bank.

Rising debt and overproduction are rife in the region, and the regional industry is growing ever more concentrated - from 20 000 producers 20 years ago, the number has fallen to 10 000.

One major industry player, speaking under cover of anonymity, expected the number of winegrowers to fall again by half, to 5 000, in the next 10 years.

Many growers face crippling debt, having bought vineyards between 1997 and 2002, when prices were peaking at €45 000 per hectare. Average prices have since slumped to €20 000 euros per hectare.

"This year, for the first time, we are seeing winegrowers turn to the courts for a solution," according to Philippe Abadie, an official at the chamber of agriculture of the Gironde department surrounding Bordeaux.

Under French law, companies can place themselves voluntarily under legal administration, in the hope of avoiding bankruptcy.

For these growers, "banks and suppliers can no longer help with their financial troubles. The courts can offer them a recovery plan over 10 or 15 years," Abadie said.

Even the most prestigious producers - from Medoc to Bordeaux AOC - are affected by the crisis, according to Abadie.

In the longer term, however, observers expect the industry will emerge stronger from this difficult spell.

"Will remain those who have managed to adapt, who can strike the right balance between competence, quality and price," according to Pichon, whose banks counts 500 to 600 producers suffering in varying degrees from the crisis.

"They need to be more thorough, more determined - and they need  to lower their yields," he said.

Elderly winegrowers are most likely to throw in the towel - "people of a certain age, who lose hope and decide either to rip up their crop or hand over to someone else," according to Pichon.

More than one third of Bordeaux producers are aged over 55 - and a quarter of these are over 60. - AFP   

Italian wine exports to US up!?!

Just Drinks reports:

Wine exports from Italy to the US rose considerably in the first eight months of this year, according to recent figures. Italian farmers’ union Coldiretti said yesterday (27 October) that exports to the country were up by 16.2% year-on-year between January and August.

Coldiretti added that the US market absorbs about a quarter of Italy’s wine exports in value terms.

With all the news about the demise of the French wine industry, I find this suprising. Anyone have any insight?

Center for Wine Origins in Chicago

We’ve all been talking about the recently launched Center for Wine Origins.  So instead of talking, I went to see what they are all about.

While at the Chicago Wine & Food festival last weekend, I attended a seminar sponsored by the Center. Led by a speaker from the Society for Wine Educators (Lisa Airey), the seminar was all about the terroir of the Champagne region and the Duoro Valley (the group uses Champagne and Port as examples when talking about protecting wine origins). She really knew about these places and brought them to life.  For example, I knew Champagne was chalky and cold, but the Lisa Airey brought soil composition, microclimates, history (Napoleon, WWI, etc.) together in a way that was really informative and – frankly – cool.  She brought the uniqueness of Port and Champagne places to life. 

Of course, the discussion was helpful, but everyone came for the wine… I found the tasting greatly improved by my better understanding of the distinct place where the wine came from.  Sort of like tasting a Napa Cabernet Sauvignon after you have visited Napa.

We tasted two Champagnes that I had never had– Pommery Brut Royal and Nicolas Feuillatte Rosé. I guess I had just passed over them at the stores as they are both relatively available.  In any case, found the Pommery to be somewhat yeasty and quite dry, which called to mind the chalky soil that Airey mentioned. With its higher pinot noir content, the rosé was slightly fruitier and a truly different wine than the first, yet the notes on location, grape type, etc. came in handy when tasting the two.  While different, both blends from multiple places, vintages, etc., it was clear that they were both from this special winegrowing region.

The Center followed the Champagne with two Ports. The first was a Quinta de Ventozelo 10 Year Tawny, which I’ve never had – I don’t think it’s sold in the U.S. The wood aging gave it a really nice full, round flavor and a beautiful color. We finished up with a Vista Alegre 1997 Vintage, which the staff had nicely decanted prior to the seminar. It was a little on the young side, but the contrast between it and the tawny was incredibly sharp – a testament to how greatly differences in the aging process are reflected in the bottle.

I went down to the Center’s booth in the festival’s main tent afterwards and tasted the 1997 Vintage one more time – it really outshone some of the other more standard Ports being tasted at the festival.

At the end of the day, I think I learned two things about the Center:
1. They are passionate about location.  While Champagne and Port are clearly their primary focus, complaints by others that this is some sort of scheme by the Europeans to attack the US, etc. are unfounded.  The Center goes out of its way to talk about location being important for all wines – one of the main themes of this blog.
2. They are the real deal.  Instead of just another association pitching a theory, they had smart, engaged spokespeople at the seminar and the booth who were willing to spend time talking about wines, etc…. not just handing out glossy materials (or dressing in red spandex with little to say like those trying to get us excited about Wines of Rhone….).  In addition, I found them very focused on the consumer -- not trying to  just be a voice for the other Ports and Champagnes that were displayed at the event.

Overall, found the Chicago Wine & Food event interesting.  A bit of a pourathon, I still found lots of smart, interesting people who care about wine and are excited about telling potential consumers about their wines.  All in all, a good sign for the future of the US wine market. 

Names, location talked about everywhere!

Tom over at  Fermentations makes some very good points about the previously mentioned Center for Wine Origins.  By the way, they seem to have launched a very nice web site since we last spoke about them.

I highly recommend reading Tom's piece.

In addition, Daniel Sogg of the Wine Spectator does a great job outlining how the California Supreme Court (protecting the name Napa against the Fred Franzia's of the world who want to use the words on bottles that do not include grapes from Napa) are in direct opposition to the position of the US Government (read Wine Institute) in the Wine Accords.

In the end, all 3 -- Sogg, Fermentations and the Center for Wine Origins -- come to a similar conclusion.  Place names matter and semi-generics should cease being used.  As Fermentations makes clear, these names do not inherently guarantee quality, but -- whether it is a truth-in-labeling issue or time for everyone to stand on their own two feet -- they certainly should only be used by these particular regions. 

Center for Wine Origins launches and Location Matters

Just noticed that the "Center for Wine Origins" launched via this press release.  They seem to have a survey that shows 57% of those surveyed (and they seem to be higher income folks) "believe where a wine comes from is one of the single most important issues in choosing a wine. This underscores the increasing importance Americans are placing on location when it comes to selecting quality wines. Whether a wine comes from Napa Valley or Champagne, France, Walla Walla, Washington or Oporto, Portugal --location really matters," said Shannon Hunt, director of the Center for Wine Origins.
These guys were also at the Napa Declaration that we covered earlier.

Developing clones: EU vs. rest of the world

This blog is dedicated to discovering and celebrating great winegrowing locations.  Yet the discussion often returns to the vines that go into the ground in these places to produce the wine we like so much.  As such, clones (the different sub varieties of grape vines) are very important.  Many of the wine regions that we (as consumers) are just discovering (e.g.Mendoza) are using relatively new clones as the backbone of their resurgence. 
In many places around the world local governments are funding important research into the discovery of newer and newer clones that are disease-resistant and favor certain characteristics that impact grape quality and production.  This is happening in Australia, New York and many other places. 
However, there are some who believe that this is a scandalous attack on the industry and the environment.  An interesting insight into the tension that a very small project in France can be read in this article in today's NYT.   
In addition to being useful in understanding grape clones, this is yet another talking point in the ongoing (and important) dialog about the future of the French wine industry when the rest of the wine world (and not just the New World) is moving so quickly.

Despite Spectator claims, still no US consumer benefit in sight from US-EU Wine Accord

I think the Wine Spectator has been central to the increase in US consumers who are interested in wine.  In short, they expose consumers to more wines, educate them and make them more confident shoppers.  However, an article on the Spectator's site mischaracterizes the outcome of the EU-US wine accords (at least how I understand them) and falsly claims that US consumers gain something....

Daniel Sogg claims:

At least one aspect of the negotiations does benefit American consumers: EU wines are exempted from U.S. certification procedures. That has been a source of concern to U.S. importers since October 2002, when the House of Representatives passed a bill that would have required imported wines from Europe to be accompanied by a certification form and laboratory analysis. Importers who purchase wines on the secondary market (or so-called gray market), which is a major source for many of the finest European wines, would likely be unable to obtain that certification. Although the bill died in committee, the wine provisions were still in play.

A few corrections:

1. The certification procedures mentioned were passed in December and the TTB rules were only published in August.  Not one bottle of European wine has been impacted by these regulations yet.  The link to the article he had written in 2002 shows that similar language had been passed by the House of Representatives in 2002, but the Senate never passed it and the President never signed it.
2. The law was written by and passed at the insistence of the Wine Institute to increase pressure on the negotiations.

Now, this is just a subtle point (and I'm glad they are covering this issue and looking for the consumer benefit), but the inaccuracies still lead me back to the question I asked before: Everyone is talking about how great this is for producers and world trade, yet what do US consumers get out of this agreement?