Sunday, September 27, 2009

It's In the Stars

When I arrived in the Finger Lakes region 25 years ago, there were just over a dozen wineries in operation and about five of them were giants.

Today, there are over 100 Finger Lakes wineries. The only giant remaining is lately acting like it might be stumbling off its beanstalk.

Billed ad infinitum as “the world’s largest wine company,” the starry-named Constellation Brands has for more than a year been issuing press releases concerning its shrinkage in the galaxy. The latest shrinkage is the company’s intent to sell off or donate the Widmer Wine Cellars’ (circa 1888) vineyards and facility and to move the three or four New York State brands produced there into the company’s Canandaigua Wine Company facilities.

When the Constellation news broke in the blogging world, one fellow wondered what the New York-based giant company has done for the New York wine industry lately.

One answer might be that Constellation supports the NY Wine and Grape Foundation, the industry's state-sponsored promotion arm.

Still, it is mystifying to this writer that “the world’s largest wine company” is located in the Finger Lakes region but seems unable to help advance the cause of the local or state wine industry. Instead, it has systematically over the past year cut its interests in maintaining vineyards in the Finger Lakes. As for wine: I remember attending a Bob Dylan concert at the performing arts center that is located in Canandaigua (and connected to Constellation) but could not find a bottle of either Finger Lakes or New York wine among the wine concessions.

Despite the vanishing giants and Constellation, the New York wine industry, which comprises about a half-dozen appellations, is now home to more than 275 wineries—I believe the Finger Lakes region accounts for nearly half that number; the region has been on a growth path for the past 25 years, with much of the frenetic pace taking place within the last decade.

Yet, something is strangely amiss. Constellation’s actions notwithstanding, no fewer than a dozen people within the local wine industry have intimated that at least a dozen Finger Lakes wineries might be on the precipice.

An astute journalist doesn’t take such off the cuff remarks as truth, especially when people with competing interests make the remarks. But the fact remains that, with all its resources, the giant Constellation doesn’t seem to see the future in its home turf, and maybe that’s a window into some sort of truth. In addition, a few years ago the region couldn’t produce enough of its signature grape—riesling—but this year, the region has excess Riesling wine inventory plus, tonnage prices for the 2009 harvest have either remained flat or dropped.

What’s going on?

I wish I knew, as the promotion message is as bright and positive as promotion messages are intended to be. Yet, a dozen separate industry insiders have alluded to a problem, and I am forced to take that seriously.

Back in the 1980s, not yet at the top of his fame, but famous enough to be interviewed in magazines and newspapers, the critic Robert Parker once told an interviewer that the New York wine industry's future success is limited to being local. I don’t know what he based that opinion on, but it sure seems like he was prescient. No matter how much we hear about the Finger Lakes region and its stellar Riesling wines—which they are—there’s still a tremendous gap between the wine consumer and the wine region.

Part of the problem is that the region is graced mostly with small wineries that were not started with wads of Silicon Valley or vanity money, which leads to another part of the problem. By not being backed with money, the region falls behind both in ambition and in direction, not to mention production volume, which is manifested in a lack of national distribution.

The region is stuck in a chicken-egg conundrum: no national distribution maintains low visibility; low visibility does not attract national distributors because distributors do not generally promote and sell wine—they warehouse and distribute it. The wine industry and individual wineries are responsible for promotion and sales, and without enough money to do that, the Finger Lakes industry cannot attract national attention and therefore cannot attract national distribution. (That scenario is general. A few wineries enjoy distribution wider than just their home state or region.)

Some national magazines have lately taken notice of the Finger Lakes and Long Island wine regions and, who knows, maybe one day the recognition will pay off. Until then, the New York wine news focus is on that lumbering giant with eyes on the galaxy but can’t seem to see what’s in front of it—about a half-dozen appellations, most of which produce top-notch wine. Instead of investing in that top level of the state’s wine possibilities, the giant seems to be divesting itself of most ties with the local industry by first abandoning its vineyards and who knows what will be next to go.

If you are reading this entry anywhere other than on the vinofictions blog, be aware that it has been lifted without my permission (and without recompense), and that’s a copyright infringement, no matter that the copyright information appears with it.

Copyright Thomas Pellechia
September 2009. All rights reserved.

Monday, September 21, 2009

Champagne redux

A second consideration of the problems in the Champagne region covered in the previous Vinofictions post points to the possibility that the Champagne region and its 2009 marketing problem may be telling us much more.

Generally, as inventory builds, wholesale and retail prices should fall. Conversely, as inventory shrinks, prices should rise. Of course, the two movements are based on demand, and in the case of Champagne, rising inventory clearly says that demand is not growing as fast as production.

You might logically ask: with rising inventory of Champagne in the cellars, why aren’t prices falling?

The prices should fall, but they won’t—at least not for now.

We all know that Champagne’s image is one of luxury. It’s too bad for general wine drinkers that it is, since the sparkler is a fabulous product to pair with a variety of foods and, well, it’s just a fabulous product—period.

When you think of luxury, do you also think of it as a volume commodity?

Almost 300 million bottles of Champagne have been sent into the market each year lately—that equals 25 million cases, and that represents 60 million gallons! Surely, a case can be made for more affordable Champagne on the market.

A great portion of Champagne is under the control of a conglomerate known as the LVMH Group, the LV refers to the super luxury Louis Vuitton Company. LVMH controls Mo√ęt & Chandon, Veuve Clicquot, Ruinart, Mercier, and Krug.

Luxury companies are adept at cultivating customers with money who are willing to ask few questions and pay more for the privilege of enjoying the luxury mystique behind a brand name—it’s a formula of success that has spawned a global frenzy over brand names. The concept of branding is so pervasive that individually we are nothing unless we become recognized brands.

Companies that deal in luxury image brands have every interest in keeping their image up, because the profit margins are fantastic so long as there isn’t a problem like an economic meltdown or major across-the-board recession. At that point, in order to keep the profits up, luxury goods companies must go all out to reduce their costs so that they can meet the weaker demand but at the same high per-unit price to consumers lucky enough to still afford it.

With most consumer goods, profits flow to many who simply move things around. That’s why Champagne middle merchants are in line with LVMH to get their grape buying costs down while maintaining Champagne prices to consumers at present levels—and so, the 2009 Champagne harvest will be cut (maybe in half and maybe by government decree) to slow Champagne inventories and to reduce Champagne maker’s costs.

An argument can probably be made that the so-called luxury market shines a glaring light on the gullibility of people with money, but there is nothing wrong with producers and merchants wanting to protect and maintain their exorbitant profits; that’s capitalism.

Unfortunately, capitalism also means that for luxury brand names to maintain their status in a recession it’s the suppliers who suffer. In this case, the farmers who are being told how much grape volume they will be allowed to sell in the 2009 harvest. Farmers take the loss because they haven’t the luxury of charging a luxury company an arbitrary price—here prices are set by the buyer and not by the seller.

Put all this into perspective and it looks pretty much like class warfare: the corporate elite sticking it to the laborer.

In this case, the corporate elite is also sticking it to the consumer because, since they are in the position of holding too much inventory, they could easily reduce the price of Champagne and let more of the public get to try some. While a move like that could potentially open up and create a new market for Champagne, it would also mean that the luxury brand would have to antagonize its rich customers, making both the brand owners and the rich feel uncomfortably like the rest of us.

It isn’t all about grapes and wine.

If you are reading this entry anywhere other than on the vinofictions blog, be aware that it has been lifted without my permission (and without recompense), and that’s a copyright infringement, no matter that the copyright information appears with it.

Copyright Thomas Pellechia
September 2009. All rights reserved.

Saturday, September 19, 2009

Appellation downside

In 1908, the French government made plans to delimit the geographic area that would be the appellation called Champagne. The decree came after years of disaster in the region from a phylloxera devastation of about 15,000 vineyard acres, a string of bad vintages, and the complaint that grapes from outside the Champagne region were being bottled as Champagne, giving bottlers and merchants profits and leaving Champagne growers in the lurch.

The 1908 decision was not the first attempt by the government to fix matters. Its first response was a law that demanded any wine labeled Champagne include a minimum of 51% from local grapes, but it was not enough to stem the growers’ frustrations. Since Champagne producers held all the clout, they sent representatives in the field who were paid a commission based on how low they could get grape prices from growers, forcing growers to compete with one another at their own disadvantage.

The government’s delimiting plan also failed at first. It did not include the Aube district of the region, which housed the region’s recognized capital city, a fact that did not sit well with growers in that district. In 1910, riots began slowly and blew up in January 1911. The growers’ targets were the wealthy wine producers; they smashed equipment and facilities throughout the region. When mobs burned nearly the entire village of Ay, the government sent in troops.

In an attempt to appease the Champenois in the Aube district, the government wound up creating more animosity, this time in the Marne district where growers did not like their status being reduced by the elevation of the Aube. Soon, however, the breakout of World War I saved the day, as everyone suddenly had even bigger problems—Champagne was a major passageway between Germany and France during the war.

It wasn’t until 1935-36, when the Champagne region gained DOC status and a classification system to control grape prices among the villages. Over the decades, it’s been up and down, as this or that problem resulted in this or that group complaining.

In 2009, it’s the producers and merchants doing the complaining. Champagne sales are dropping like a thermometer in a Finger Lakes winter. In 2007, 338 million bottles of Champagne moved out; in 2008, 322 million bottles sold; and the projection for 2009 is under 300 million bottles will sell. The British and American markets seem to be the cause of much of the problem.

Reducing the harvest is the only way for producers not to add to their already bloated inventory of Champagne in the cellars where an extra full year’s supply is already being held. Building anymore inventory would surely put downward pressure on prices to export markets (Champagne prices in France have already dropped). Producers and merchants have no interest in telling the export market that Champagne is cheap.

It looks like for the first time in its history, Champagne enjoys agreement among growers, producers, merchants, and the government about what to do.

Well, not so fast.

Producers and merchants want to cut the harvest in half, but the growers aren’t sure about that plan. You see, merchants and producers want to keep prices for the wine buoyant but they have no plan to pay a higher price to growers for less volume. Growers are expected to take the loss from a reduced harvest.

The joke in farming is that it is the only business that buys retail and sells wholesale. A farmer is that rare vendor that does not get to set the price of its own goods. That’s because producers and government continually intervene to either cause serious price drops or serious price increases (sadly for farmers, it seems to work out mostly as price drops). In grape farming, there are those appellation controls for farmers to deal with and worry about.

Forget the effect of a bad economy farmers suffer even worse from the fallout of public policy or of bad producer forecasting for and marketing of the end product. In the case of Champagne, if the farmers and the merchants cannot come to agreement on the harvest figure, the government will step in and set a number. Any farmer who exceeds the government’s imposed limit would then have a legal problem on his or her hands.

If there is a down side to appellation controls, this is it: Champagne grape farmers will be told how much revenue they will be allowed to take in for their 2009 labor, and without an avenue for recourse.

If you are reading this entry anywhere other than on the vinofictions blog, be aware that it has been lifted without my permission (and without recompense), and that’s a copyright infringement, no matter that the copyright information appears with it.

Copyright Thomas Pellechia
September 2009. All rights reserved.

Thursday, September 10, 2009

Define dogma

It’s been my experience that whenever someone starts a conversation with the words, “you should,” the listener will soon be standing in a morass.

You can almost bet that the person who says, “you should,” will be strident. It’s sad, especially when you realize that the most strident opinions often don’t come from the ones who do the work—they know better.

“You should” really means that the opinion-maker thinks too much and probably doesn’t do enough. That’s why it is such a joy to listen to grape growers and winemakers talk about reality, and that’s why the 2009 vintage on the East Coast puts to shame those who would cling to dogma—nature has no use for exact formulas.

Five words have been in the wine industry spotlight lately; they pop up on wine blogs, in wine opinion pieces in print, in discussions at wine tastings, at seminars and conferences, and even—sad to say—at some dinner tables. The words are:


How many of us know the definition of each word?

No fewer than 8 definitions apply to the word organic. Here’s the one that seems to suit grape growing best.

organic as an adjective: belonging to a family of compounds characterized by chains or rings of carbon atoms that are linked to atoms of hydrogen and sometimes oxygen, nitrogen, and other elements.

organic as a noun is a substance, especially a fertilizer or pesticide that presumably meets the adjectival form.

Once you understand the definition, the methods for “organic” viticulture are made clear to you.

Only one official definition seems to apply to the word biodynamic.

Biodynamic: a method of organic farming that treats farms as unified and individual organisms emphasizing balancing the holistic development and interrelationship of the soil, plants, animals as a closed, self-nourishing system.

The extension of biodynamic farming from simply organic and taken from Rudolf Steiner’s spiritualistic musings ties the word and its practice to the occult. (It should be noted that Steiner abstained from consuming alcohol, a fact that makes it seem silly to associate his name with grape growing practices but then, people do eat raisins.)

After removing the two definitions that apply to music and one definition that applies to card playing, the word natural still has 12 definitions, with the highest number of permutations of the word summed in this phrase: relating to nature.

Today, there is a wine growing and production school of thought that calls itself Natural. After listening to some of its proponents, it became clear that they don’t care to entertain completely the meaning of “relating to nature.” This is one of the movements that seems to really be all in the mind, even when it attracts people who actually do the work. The contradictions are so great it renders the concept weak at best. For an understanding of it, take a look at the discussion on Alder Yarrow’s blog—link below.

Green enjoys 13 definitions, five of which refer to the wine industry—three for grape growing and two for the environment.

When the word green is used in conversations about wine, unless it specifically addresses the color of leaves in the vineyard, it mainly refers to environmental considerations. It is a difficult concept to pin down if only for the intensity of calculation necessary to take into consideration every single environmental impact made by farming vineyards, producing wine, packaging and distributing wine, and promoting a business (how is the electricity for a business computer generated?).

In other words, to be a green company depends on the shade of green one seeks and/or accepts.

The word sustain enjoys less definition and more synonyms or alternative words like “maintain, nourish, suffer, continue, prolong, protract, and uphold.”

Sustain is a wide concept. In fact, those who practice sustainability in the wine business could very well be talking solely about how to keep their business afloat in this terrible economic climate. That desire does not necessarily include the concepts of organic, biodynamic, green or otherwise. To sustain a business takes what it takes.

Likewise, nature doesn’t care whether or not a grape grower farms organically. What nature delivers is what nature chooses to deliver. This fact was brought home on the East Coast, in the 2009 (anti) growing season. It was a bonanza year for all the mildews known to grape farming (not to mention the Japanese beetles whose populations have been exponential in the East for about six years).

Some producers and farmers say they kept up with their organic methods—some gave up. Even those who kept up are forced to admit that the levels of copper and other organic materials required as sprays in 2009 were excessive and could be damaging to the balance of the soil (copper is an organic material that is not easily washed away from the soil).

Tell you the truth, I haven’t the slightest idea where I intended to take this blog entry. I’m a firm believer in as natural a farming as is possible, in the truest sense of the word. I grow much of my own produce—even in winter, as I have a greenhouse. Petro-chemicals do not get near my produce—usually. There have been times of stress that forced me to relent, which is why I don’t fault a grape grower faced with large scale destruction who does what needs doing.

I suppose what I really wanted to say is that I abhor dogma. I abhor it even more when it comes from the keystrokes of thinkers rather than of doers; thinkers should get off their asses and go find out what it is to do the job, the way those invested in grapes and wine are forced to find out.

Natural wine

(Anyone reading this blog on a site other than Vinofictions are made aware that it has been used without permission--a violation of my copyright.)

Copyright Thomas Pellechia
September 2009. All rights reserved.