NoBullGrape

US wine market: Big and soon to be the biggest

In a statement similar to those of my child (he is all about what is big, bigger and biggest), Jon Fredrikson proclaims that the US wine market is in very good shape and predicts it will be the biggest wine market in the world soon.  Speaking at the Unified Grape and Wine Symposium yesterday, Fredrikson said "From the perspective of 3½ decades in the wine industry, I can assure you right now that things have never been better in this market and the future looks outstanding." 
Here are some key points from his speech (as reported here):

• Americans purchased an estimated 300 million cases of wine last year, worth more than $25 billion (both records). 
• Census numbers show drinking age adults in the United States is growing as well, from 164 million in 2000 to an estimated 184 million in 2010.
• If per capita consumption continues to go up 3% every year, the US will be the largest wine consumer in the world by 2010.
• Wine drinkers bought an estimated 187 million cases of California wine last year, 6.5 million more than 2004 and a 4 percent increase.  At the same time they bought 8.4 million more cases of imported wine than in 2004, soaring to 81.5 million cases, an 11 percent increase. 
• sales as Baby Boomers and 20-somethings bought more - and more expensive - wine.

Thoughts on this:
I am particularly struck by the fact that this report shows such broad based expansion.   Fredrikson is saying is that the US wine market is not just growing in volume, but also in price (a weak, but useful indicator of quality).  The price increases are being fueled by a. Baby Boomers and, most interestingly, by 20-somethings who are paying more for bottles than previous generations.  This is most pleasing as it shows that the growth is not just targeted on those who are greying, but also on those who will be drinking wine for the next 60, 70 or 80 years. 

Would think that this kind of data would keep investment in the US and those who import to the US up and support more pushes to improve the quality of the wines produced for consumption in the US.

Also very interested in the faster growth rate among non-US wines.  Past years this kind of stat would be attributed to Australian wine, yet the growth over past years seems to indicate an even broader growth in who is successfully importing wine.  Doubt you will see brilliant numbers from France as they announce annual industry wide results over the next few months, but quality players in France, Italy, Portugal and Spain clearly are improving their ability to pierce the US market.  These import numbers may also be boosted by other countries such as South Africa, New Zealand and Argentina whose wines seem (anecdotally) to be getting more shelf space each year.

Please note: some of this comes from personal notes, but the majority of the info here comes from a very comprehensive article in today's Press Democrat titled "US Forecast to become world's #1 wine market."

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.

Countries that export have little negotiating leverage

On rereading my last post, I was struck at the disparity of wine trade around the world.  Australia exports $3 billion in wine to the EU.  The EU exported $2.3 billion to the US in 2004.  The US shipped only $736 million to the EU (its largest non-North American export market).  Can these numbers be right?

When one looks at the trade agreements (EU-Australia and US-EU) it is pretty clear that the country that exports the most gives up the most at the negotiating table as their politicians can't afford any strategies that could hinder trade in any way as it would hurt their own businesses and farmers most.  Australia gives into EU demands, yet the EU gives into US demands as neither Australia nor the EU want anything to interrupt their very lucrative wine export businesses.

Governor goes to bat for Napa and place names

So the Governor of California is in China and -- apparently -- is demanding that the Chinese stop misusing the name "Napa" on wine produced in China.  You go Terminator!

The contrast between the importance placed on protecting place names from the Governor of the largest wine producing state (and the clear position that the Napa Vintners are taking in this piece) and the stance taken by the US government in the recently initialed Wine Accords is quite stark.  Read more from Tuesday's San Francisco Examiner. 

        

Governor working to keep Napa wine designation pure By Albert C. Pacciorini Staff Writer Working to keep wines labeled “Napa” made only with grapes from Napa is on Gov. Arnold Schwarzenegger’s list of things to do as he begins a six-day mission in China. The focus of Schwarzenegger’s trip is to promote California products and encourage Chinese officials to crack down on the piracy of copyrighted music, movies and software. He’s also promised to ask about three Chinese companies that may be selling “pirated” wine. California law requires wines with “Napa” on the label be made with Napa grapes. It isn’t just Napa fighting to protect its reputation. The Champagne region of France, Sherry in Spain, Porto in Portugal and the states of Oregon and Washington all have a similar problem. All are working together for a “commitment to the importance of place and place names to wine growing,” said Linda Reiff, executive director of the Napa Valley Vintners trade group. Reiff spoke Monday morning at the beginning of a four-day annual meeting of the Great Wine Capitals Global Network trade group at the Metreon in San Francisco. Tuesday and Wednesday the meeting will move to St. Helena. The network includes Melbourne, Australia; Bordeaux, France; Porto, Portugal; Cape Town, South Africa; Bilbao-Rioja, Spain; Florence, Italy; and Mendoza, Argentina; and works to promote international winery tourism. Reiff gave an outline of the Napa Valley wine industry, followed by representatives of the other international regions, who discussed their locations. At a time with so much friction over differences, wine can provide a chance for people to come together, said event emcee Barry Martin. Napa got its own legal agricultural area in 1981, Reiff said. Today there are 14 subappellations. The Napa vintners, just like their colleagues in Champagne or Sherry, are working hard to protect the use of their regional names, which each feels imparts a level of quality and significance, from wineries in other locals. The trade name Napa is being used illegally in 10 countries, she said, urging those in the industry to join many regions that have signed a joint declaration promoting the importance of place to wine.

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. 

PR firms and wine

While we were away there were a number of really important news events in the wine world...

Greg Norman California Estates Taps Ruder Finn for Launch

Randall Public Relations Toasts Two New Clients

I really love this quote:

"We're thrilled at the opportunity to work with such an iconic, engaging personality as Greg Norman," said Bob Seltzer, leader of Ruder Finn's Marketing Practice. "Add to that the chance to enjoy more of his award-winning wines and we couldn't be happier."

Of course you couldn't be "happier"... a huge wine conglomerate -- Foster's -- just picked your business to bring in some big $$.

Unfortunately we see these releases just about every day.  Please note, I don't use the term "news release" because they lack the "news" part. Winning a PR, marketing or advertising account isn't an event around which one should send out a release.  Instead these companies should be focusing on showing real results for the companies that are paying big bucks for their services and spend less time trying to use their new clients as a way to publicize their firms.  At the end of the day, good firms will get hired again because their good work will be recognized throughout the industry and because they put their clients before themselves.  Unfortunately not the case here.

The impact of Big Wine!

Others have pointed to this article, yet I am so astounded by these three simple points made by Hoyt Hill in the Nashville City Paper that I must repeat them...

Thirty percent of the wine sold in the United States is distributed by one wholesaler, Southern Wine and Spirits, and, in the states where Southern Wine and Spirits actually does business, they distribute more than 70 percent of the wine sold?

Approximately 80 percent of the wine produced in Australia is made by three companies? Approximately 70 percent of the wine produced in California is made by five companies? And that Foster’s is one of those three Australian companies and one of those five California companies?

One man, Michel Rolland, is the winemaker at more than 200 wineries?

And those stats don't even talk about Constellation and Gallo!

Big is not inherently bad and some of these companies/trends ensure that more US consumers are introduced to wine.  Yet, the inherent homogenizing effect that these big companies can have -- be it compromising quality in the name of "scale," undermining key wine making areas that could have wonderful futures if supported or focusing heavily on the latest marketing trends as opposed to the long-term investment that great wine requires -- must be watched.  Mr. Hill is right to highlight a few of the better known importers as sign posts for quality wine. 

Yet, consumer groups -- and maybe it starts with the small community of wine bloggers -- need to hold these companies accountable so that there is always an environment for quality wine.  Fermentations' work following the Michigan shipping issues is  a great example of this.  Their opposition to proper use of place names, their efforts to weaken (as opposed to maintain or strengthen) US vintage dating rules, their weakening of quality wines that they acquire (I've heard this is the case with Gallo's purchase of Louis Martini in Napa, yet have not witnessed anything myself) or the limited selection of wines carried  by distributors like Southern are just a few places where they need to understand that they are undermining the future of a great industry.  Finally, I do not believe that this is merely a fight to protect small producers against "Big Brother." I believe that such watchdogs actually have the shareholders (at least in Constellation's case as Gallo and Southern are private companies) long term best interests at heart. Happy to pitch in on this and am open to good ideas that can launch such an effort.  If the world Mr. Hill describes is allowed to continue to grow, we all could lose.

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.