THE NEXT DECADE IN U.S. WINE
Beautiful California. Beautiful hills, sunshine, flowers and ocean. And beautiful Napa. We always look forward to an excuse to fly to Napa, which takes almost a day to get to from Texas but is well worth the distance. We had a chance to attend MKF Research’s annual summit this week and like a fly on the wall listened in on a panel discussion moderated by Michael Mondavi. In Michael’s opening comments he talks about the “silly” Sideways movie, Opus One, Two Buck Chuck and the 1976 Paris Tasting. The presentation was entitled, “The Structure of the US Wine Industry Over the Next Decade,” and included Joel Gott (Joel Gott Wines), Leonardo LoCascio (Winebow), Doug Ratto (of Safeway and remains “off the record”) and Carolyn Wente (Wente Family Estates). Let’s take a look at what the panelists consider to be the future of the California wine industry.
“I’m third generation winemaker…I’m one of the babies around here,” began Michael Mondavi.
It’s true, in a sense, if you look at the history of the California wine industry. In the 1960s, 60% of wine was Mad Dog 20/20, port and sherry, and less than 20% was table wine or champagne. Jugs with screw tops were the packaging of choice. Back then, said Michael, Robert Mondavi was called the test lube winery.
“When I went to school and told my friends my family was in the wine industry they looked at me like I was aiding alcoholism and living with the bums in the gutter,” he said.
Clearly, things have changed since then. One of the driving forces began with E.J. Gallo, who centralized his operations in Modesto so he would have more control over the winery. This move, along with pioneering steps from Jesse Jackson (?) and Robert Mondavi, took the California wine industry to a new stage. Beginning in the 1970s Napa winemakers started going to market and spreading the word.
“We would try to get people to realize that this little community called Napa Valley produced wines they should enjoy with their family and friends.” Apparently, they did something right.
The infamous 1976 Paris wine tasting did big things, along with a Time magazine cover that basically said wine was okay to drink. Another landmark was the j-v between the Mondavi’s and the Rothchild’s to create Opus One, which apparently “convinced wine snobs that Napa was okay.”
Years later, the 60 Minutes piece on the “French Paradox” left shelves empty as Americans raced to their local wine shop.
“Most people drink wine because they think it’s healthy and good for them,” said Michael. “Sales and marketing came to the forefront in the 1990s. We realized that wine is a consumer product and that we needed to work with the chains and major retailers…we also realized that wine is competing for share of stomach and we should promote that in moderation, wine is good and healthy for you.”
In more recent years, Michael credits Sideways and Two Buck Chuck for helping to spread the good news.
“That silly ‘Sideways’ movie brought awareness to consumers and really showed the power of Hollywood.”
Most American had probably never heard of Pinot Noir until Miles declared his love for it. Now almost every major player produces the delicate varietal as it continues to climb in share points.
“Two Buck Chuck was introduced in the 1990’s. Some people love it and some people hate it, but it brought so many more people to wine…and once they trade up, we got ‘em baby. They’re ours.”
I could almost hear a silent groan when Michael uttered these words, but there’s so much truth in the statement.
People in the United States drink more wine today then ever before. Fact. California’s wine quality is better today then ever before. Fact. So, “is it too much to ask that in ten years the consumption rate goes from one glass a month to one glass a week?” asked Michael.
PORTUGAL’S IN, EASTERN EUROPE’S OUT. Leonardo LoCascio, president and chief of Winebow, Inc. and an expert on Italian wine, predicted the future of imports in the US. In his opinion, Spain, Portugal, Greece, Argentina and Chile have a bright future, while Europe, New Zealand and Australia are limited by one thing or another.
“By 2009 the US will be the largest wine market in the world…we have a lot of tail winds, a growing population of 2% a year, rising per capita consumption and disposable income. This is not something we are seeing in Europe,” said Leonardo.
Many years ago fine wine was almost exclusively French, he said, remarking on how bad the majority of wine was back then. He used words such as “thin,” “too many tannins,” “jugs,” and “overly oaked” to describe what they were like. Since then, obviously, most countries including the US have made a huge turnaround and are producing decent wines at the least.
“I’m a big believer in wines from Spain and Portugal and I would put money on those two markets gaining share in the next decade…There’s a lot of new things going on in the Iberian Peninsula…they’re rediscovering local varietals…huge chateaus…and Spain is becoming rich.”
He also claimed there will be an increased interest in Greece “just like it happened with Italy. Greek restaurants are becoming more popular in the country.”
Leonardo pronounced his faith in Argentina’s “very interesting and valuable choices” and Chile’s “emergence of boutique wines anchored by very large producers.”
All other countries, however, have something standing in their way of great success according to Leonardo.
“I don’t see Eastern Europe becoming a significant import to this country…I’m not convinced the climate is that great…it’s not a very marketing savvy industry.”
“When it comes to New Zealand, I’m sold on their Sauvignon Blanc, but still skeptical about pinot noir. I don’t know that it’s something we’ll see in the next 5 or 10 yrs.”
“Australia is clearly a player in the inexpensive category but the jury is still out on the staying power and aging potential of its more expensive and boutiquey offerings. Those brands don’t offer enough identity and terrior distinctions among producers…Large branded items are on their way but the other half is still looking for identity.”
“France will continue to lose market share in this country due to…currency issues…high French prices…I really don’t see what the value is for consumers when it comes to Bordeaux and red Burgundy which is experiencing some turbulence in this market…I see more interesting brands from other parts of France.”
“Italy has some of the pricing issues like France, especially from Piedmont,” he continued. “Tuscany is in better shape. The prices haven’t risen as much…central Italy will be the real action in the next couple of years, and especially southern Italy.”
Imports aside, Leonardo believes white wines have real staying power in the US, particularly Pinot Grigio.
“People tell me that they really need alternatives to white wine…people don’t know what to do with Sauvignon Blanc, it’s too flavorful.”
Apparently, consumers want “whites that aren’t oaked…Pinot Grigio is not a fad, it’s here to stay. For every four bottles of chardonnay sold there is one bottle of Pinot Grigio. I import Pinot Grigios from Italy and they’re all growing double digits.”
Because consumers like strong aromatics, he said, “We can look forward to the continued growth of inexpensive, unoaked whites whether they are imported or domestic.”
WINE WITH A STRAW. Joel Gott, owner of Joel Gott Wines, pointed out that packaging will play a large hand in the future of the wine business, most notably single-serves and tetra prisma packs. Joel also developed the Three Thieves wine brand – known for its innovative packaging and labels – along with Charles Bieler and Roger Scommegna.
Prisma packs have taken wine drinking to the next level. The convenient, portable packaging allows everyone from golf players to WWF viewer to sip wine with a straw. It’s all about non-traditional packaging for Joel, particularly in regards to the millennial generation.
“We’re moving to Prisma… we want to be in the alternative packing section in grocery stores.”
Single serves and 187’s (the most successful PET package) have made a big impact in getting millennials, according to Joel. Retailers and ever-growing variety of brands have also played a huge part in helping the industry.
“Lifestyle stores and Target has brought in a new group of consumers. Also, sticking a million labels against the wall to see what sticks is giving consumers move variety. It’s how you drive consumption.”
Not only is alternative packaging the future of the industry, but alternative production will also play a huge role. And by that we mean organic.
“We were able to release True Earth [owned by Three Thieves] last year…I think organic grape sets will stay in the next ten years and we need to rewrite the rules for organic wines.”
KEEPING IT IN THE FAMILY. Carolyn Wente, fourth generation winegrower of Wente Family Estates, touches on the importance, for her winery at least, in staying small and family-owned.
“Is it realistic to be able to have a fifth generation business? Can you pass it down; will the next generation be interested in taking over? That is a challenge for us coming up.”
“Having a story and having a legacy…is all important…people want to know where that grape came from that’s in the bottle…we’re all different sizes in this room so it’s not realistic for everyone, but that would be a key point of differentiation for us.”
“Something that’s worked for us at Wente Vineyards is being able to touch the consumer through these lifestyle businesses [restaurant, golf course, ect.]. We now gross about $16 million in revenue and 3,000 visitors a year at our winery. Consumers are there to have these lifestyle experiences.”
Other key issues, in Carolyn’s opinion, revolve around “keeping up” with the rest of the world.
“The California industry is still in its infancy and has a remarkable opportunity for growth…we need to keep up with the growth in the wine market…I don’t think we’re planting fast enough to keep up with the rate of consumption.”
“Also, the mediums of distribution will be interesting for medium size wineries.”
“I’m third generation winemaker…I’m one of the babies around here,” began Michael Mondavi.
It’s true, in a sense, if you look at the history of the California wine industry. In the 1960s, 60% of wine was Mad Dog 20/20, port and sherry, and less than 20% was table wine or champagne. Jugs with screw tops were the packaging of choice. Back then, said Michael, Robert Mondavi was called the test lube winery.
“When I went to school and told my friends my family was in the wine industry they looked at me like I was aiding alcoholism and living with the bums in the gutter,” he said.
Clearly, things have changed since then. One of the driving forces began with E.J. Gallo, who centralized his operations in Modesto so he would have more control over the winery. This move, along with pioneering steps from Jesse Jackson (?) and Robert Mondavi, took the California wine industry to a new stage. Beginning in the 1970s Napa winemakers started going to market and spreading the word.
“We would try to get people to realize that this little community called Napa Valley produced wines they should enjoy with their family and friends.” Apparently, they did something right.
The infamous 1976 Paris wine tasting did big things, along with a Time magazine cover that basically said wine was okay to drink. Another landmark was the j-v between the Mondavi’s and the Rothchild’s to create Opus One, which apparently “convinced wine snobs that Napa was okay.”
Years later, the 60 Minutes piece on the “French Paradox” left shelves empty as Americans raced to their local wine shop.
“Most people drink wine because they think it’s healthy and good for them,” said Michael. “Sales and marketing came to the forefront in the 1990s. We realized that wine is a consumer product and that we needed to work with the chains and major retailers…we also realized that wine is competing for share of stomach and we should promote that in moderation, wine is good and healthy for you.”
In more recent years, Michael credits Sideways and Two Buck Chuck for helping to spread the good news.
“That silly ‘Sideways’ movie brought awareness to consumers and really showed the power of Hollywood.”
Most American had probably never heard of Pinot Noir until Miles declared his love for it. Now almost every major player produces the delicate varietal as it continues to climb in share points.
“Two Buck Chuck was introduced in the 1990’s. Some people love it and some people hate it, but it brought so many more people to wine…and once they trade up, we got ‘em baby. They’re ours.”
I could almost hear a silent groan when Michael uttered these words, but there’s so much truth in the statement.
People in the United States drink more wine today then ever before. Fact. California’s wine quality is better today then ever before. Fact. So, “is it too much to ask that in ten years the consumption rate goes from one glass a month to one glass a week?” asked Michael.
PORTUGAL’S IN, EASTERN EUROPE’S OUT. Leonardo LoCascio, president and chief of Winebow, Inc. and an expert on Italian wine, predicted the future of imports in the US. In his opinion, Spain, Portugal, Greece, Argentina and Chile have a bright future, while Europe, New Zealand and Australia are limited by one thing or another.
“By 2009 the US will be the largest wine market in the world…we have a lot of tail winds, a growing population of 2% a year, rising per capita consumption and disposable income. This is not something we are seeing in Europe,” said Leonardo.
Many years ago fine wine was almost exclusively French, he said, remarking on how bad the majority of wine was back then. He used words such as “thin,” “too many tannins,” “jugs,” and “overly oaked” to describe what they were like. Since then, obviously, most countries including the US have made a huge turnaround and are producing decent wines at the least.
“I’m a big believer in wines from Spain and Portugal and I would put money on those two markets gaining share in the next decade…There’s a lot of new things going on in the Iberian Peninsula…they’re rediscovering local varietals…huge chateaus…and Spain is becoming rich.”
He also claimed there will be an increased interest in Greece “just like it happened with Italy. Greek restaurants are becoming more popular in the country.”
Leonardo pronounced his faith in Argentina’s “very interesting and valuable choices” and Chile’s “emergence of boutique wines anchored by very large producers.”
All other countries, however, have something standing in their way of great success according to Leonardo.
“I don’t see Eastern Europe becoming a significant import to this country…I’m not convinced the climate is that great…it’s not a very marketing savvy industry.”
“When it comes to New Zealand, I’m sold on their Sauvignon Blanc, but still skeptical about pinot noir. I don’t know that it’s something we’ll see in the next 5 or 10 yrs.”
“Australia is clearly a player in the inexpensive category but the jury is still out on the staying power and aging potential of its more expensive and boutiquey offerings. Those brands don’t offer enough identity and terrior distinctions among producers…Large branded items are on their way but the other half is still looking for identity.”
“France will continue to lose market share in this country due to…currency issues…high French prices…I really don’t see what the value is for consumers when it comes to Bordeaux and red Burgundy which is experiencing some turbulence in this market…I see more interesting brands from other parts of France.”
“Italy has some of the pricing issues like France, especially from Piedmont,” he continued. “Tuscany is in better shape. The prices haven’t risen as much…central Italy will be the real action in the next couple of years, and especially southern Italy.”
Imports aside, Leonardo believes white wines have real staying power in the US, particularly Pinot Grigio.
“People tell me that they really need alternatives to white wine…people don’t know what to do with Sauvignon Blanc, it’s too flavorful.”
Apparently, consumers want “whites that aren’t oaked…Pinot Grigio is not a fad, it’s here to stay. For every four bottles of chardonnay sold there is one bottle of Pinot Grigio. I import Pinot Grigios from Italy and they’re all growing double digits.”
Because consumers like strong aromatics, he said, “We can look forward to the continued growth of inexpensive, unoaked whites whether they are imported or domestic.”
WINE WITH A STRAW. Joel Gott, owner of Joel Gott Wines, pointed out that packaging will play a large hand in the future of the wine business, most notably single-serves and tetra prisma packs. Joel also developed the Three Thieves wine brand – known for its innovative packaging and labels – along with Charles Bieler and Roger Scommegna.
Prisma packs have taken wine drinking to the next level. The convenient, portable packaging allows everyone from golf players to WWF viewer to sip wine with a straw. It’s all about non-traditional packaging for Joel, particularly in regards to the millennial generation.
“We’re moving to Prisma… we want to be in the alternative packing section in grocery stores.”
Single serves and 187’s (the most successful PET package) have made a big impact in getting millennials, according to Joel. Retailers and ever-growing variety of brands have also played a huge part in helping the industry.
“Lifestyle stores and Target has brought in a new group of consumers. Also, sticking a million labels against the wall to see what sticks is giving consumers move variety. It’s how you drive consumption.”
Not only is alternative packaging the future of the industry, but alternative production will also play a huge role. And by that we mean organic.
“We were able to release True Earth [owned by Three Thieves] last year…I think organic grape sets will stay in the next ten years and we need to rewrite the rules for organic wines.”
KEEPING IT IN THE FAMILY. Carolyn Wente, fourth generation winegrower of Wente Family Estates, touches on the importance, for her winery at least, in staying small and family-owned.
“Is it realistic to be able to have a fifth generation business? Can you pass it down; will the next generation be interested in taking over? That is a challenge for us coming up.”
“Having a story and having a legacy…is all important…people want to know where that grape came from that’s in the bottle…we’re all different sizes in this room so it’s not realistic for everyone, but that would be a key point of differentiation for us.”
“Something that’s worked for us at Wente Vineyards is being able to touch the consumer through these lifestyle businesses [restaurant, golf course, ect.]. We now gross about $16 million in revenue and 3,000 visitors a year at our winery. Consumers are there to have these lifestyle experiences.”
Other key issues, in Carolyn’s opinion, revolve around “keeping up” with the rest of the world.
“The California industry is still in its infancy and has a remarkable opportunity for growth…we need to keep up with the growth in the wine market…I don’t think we’re planting fast enough to keep up with the rate of consumption.”
“Also, the mediums of distribution will be interesting for medium size wineries.”
posted at 7:50 PM
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