Napa Wine Pricing: Up Escalator Only?

In a February 18th Freakonomics blog post, Robin Goldstein described two wine pricing models.  The supply-side model uses the cost of production, other ancillary costs, a modest profit, and distribution costs to arrive at the price of the wine to the consumer.  The demand-side model says that the wine should be priced at whatever level the market is willing to bear.  In the halcyon days of yesteryear, makers of premium Napa wines embraced the latter model wholeheartedly and consistently priced their products to market.  As prices continued to rise, new players entered the market in order to get a piece of the pie.  They saw the model as simple: buy a piece of land in Napa (never mind the price); contract with a "name" winemaker to put your juice "through its paces"; get a 95-point score from Parker; and you are off to the races.

But, things did not quite work out like that.  According to Nobel-Prize-winning economist Paul Krugman, the US lost 8 million jobs in the last recession and recent job gains have only put 500,000 people back to work.  Wine consumers and prospects are either unemployed or, if still working, have cut back drastically on things that are not perceived as core to existence in today's straitened environment.  The wine industry, as a result, has suffered significant sales declines (the $15 and under market increased it sales by 15% in the last year) and some of the players face uncertain futures.  The April 30 issue of The Wine Spectator, in an article on Napa wines, notes that "the distribution chain is clogged up with unsold wines."

If you subscribe to the demand-side model, and demand evaporates, you should be reducing your price to spur demand or to bring it into equilibrium with the existing demand levels (Of course you could also dump product to reduce glut levels and, in that fashion, bring supply and demand into equilibrium.  I do not see that happening in Napa.).  Instead, the winemakers are utilizing strategies such as giving price breaks to restaurants (hoping that they keep the increased margins for themselves rather than passing it through to the customer) or pushing "premium" juice into lesser-pereceived-value brands.  There have been a few cases of high-profile wineries (Joseph Phelps Insignia, Caymus Special Select) lowering their prices but that is more the exception than the rule.  While prices ramped up rapidly in the face of perceived high wine demand, they are very "sticky" on the down side of demand.

The industry definitely has a short-term problem to solve but, if Mr. Krugman is right, they may also have a longer-term problem.  According to Mr. Krugman, "We may be heading for a Japan-style lost decade trapped in a prolonged period of high unemployment and slow growth."  If that is the case, then winery strategies of waiting this out may not be the best way forward.  If demand does not rebound, the industry will have to cope with an excess-capacity problem.

Night of Debauchery

What happens when a room full of testosterone meets a sick line up of wine? Correct. Nobody made it to work on time the next day. Thanks to an invite from fellow wine-lover Robert Alfert, Esq., from the Robert Parker online wine forum, I was able to attend one of his highly touted, local-cycling-group wine dinners. Granted, I've only tasted with Robert once at a local wine tasting so I wasn't quite sure what awaited me as I rolled into the beautifully landscaped neighborhood of Lancaster Park. The wine theme of the night was 07’ Napa Cabernet’s. This is probably the loosest wine-themed dinner I’ve ever attended since only 3 of the 11 bottles met the 07' Napa requirement. Nonetheless, the wines and the dinner brought great pleasure and exceeded my expectations.

One wine I would like to mention specifically brought new meaning to the words world class. The wine of distinction is the 06’ 2006 Didier Dagueneau Pouilly-Fumé Silex pictured second from the left. With the 06’ Silex, the late Didier Dagueneau leaves behind a great legacy. Silex is named for the flinty rock that comprises the French Pouilly-Fumé’s soils.

As you know, Wineorl recently consumed a previous vintage of the Silex as part of Master Sommelier Andrew McNamara’s Wine Journey. Since reading his glorious notes, I have been dying to get my palate around this wine. So it was of no surprise that I greedily smiled with great anticipation while I swirled the glass. As I carefully placed my nose into the bowl I knew I was in for a memorable ride. The bouquet brought intense complexity. The rich exotic nose laced with notes of stable, stone, peach and pear spoke to me. Tasting this wine brought me to a new place for, along the way, I had completely lost interest in Sauvignon Blanc. Oh man, I’m back. This is a huge wine. On the palate, the acidity brought a laser-like focus, accented by soft pamplemousse, creamy peach, lemon hints and minerality. The long finish is framed by exotic fruits. The wine brought a cavalcade of decadence. I have no problem dubbing the Silex as liquid sex and quickly pointed this out as my wine of the night. No easy feat given the competition. This wine is a must for any wine collector and should be sought out yesterday.

It was a wonderful night filled with new friends, great food, wine, conversation and swollen livers. Until next time…

A Wine Journey: 1982 Pichon-Longueville, Comtesse de Lalande

The author is engaged in a quest, a journey in the footsteps of the Master (Sommelier) Andrew McNamara who, as it has been told, in days of yore, slew 115 bottles of very good wine -- the so-called Wines of the Decade.  Today's tale relates the pursuit, capture, and tasting of that vibrant beauty, the 1982 Comtesse de Lalande.

The story of Chateau Pichon-Longueville, Comtesse de Lalande, stretches back to 1689 when the Rauzan family bought plots in Pauillac.  The core Pichon vineyard was established after some plot exchanges with it s famous neighbor, Chateau Latour.  The new Napoleonic wine laws were responsible for the Pichon Vineyard being broken up into the Baron and the Comtesse, as it could not be passed on to a single heir while other possible heirs were alive.  The Lalande family retained ownership of its portion of the Pichon Vineyard until a sale to a consortium led by Louis and Eduoard Mailhe.  After a few twists and turns, the estate eventually cane under the control of Eduoard's youngest daughter, May-Eliane, and she quickly upped her stake from 55% to 84% by buying up the shares of other consortium members.  The Chateau was sold to the Rouzaud family (owners of Louis Roederer) in 2006.

The chateau owns 75 hectares of vines (up from 40 hectares at the beginning of May-Eliane's tenure), 64 hectares of which are in the Pauillac commune and the remainder in St. Julien.  The soil is gravel over clay and some deeper limestone and sandstone.  The vineyard is planted to 45% Cabernet Sauvignon, 35% Merlot, 12% Cabernet Franc, and 8% Petit Verdot.  The grapes are hand-harvested and then fermented in temperature-controlled stainless steel tanks.   The juice is allocated between the flagship and the chateau's second wine (Reserve de la Comtesse) after which the flagship wine is placed in 50% new French oak for 18 months.

The 1982 vintage has received widespread acclaim.  The winery refers to it as an exceptional vintage.  Robert Parker (November 1998) said "This has been the most sumptuous, delicious, and profound 1982 to drink over the last 5-6 years."  James Suckling  of Wine Spectator said "This has always been a great wine. I marvel at it each time I taste it."

This wine was bought online.  This is not a great time to be shipping wine into Florida so I had it shipped in next day air. I did not get into the office for a few days so it was languishing in the hallway outside my office.  I was very concerned.  I picked it up at the office on Friday and headed directly to our Antonio's tasting event.  They were going to be tasting this blind.

When I arrived at the venue, only HlyTerrroir and Keith M. had arrived.  I had not brought a bag with which to cover the wine so HlyTerroir lent me one (He is always prepared.).  I opened the wine without decanting and placed it on the table.  The top of the cork was covered in a greeninsh moss and the cork came out in four separate pieces.  I was concerned.  The locale filled up very quickly as this was going to be another farewell to Robert and Allison. 

The wine was a stunner from the word go.  There was very little evidence of bricking; the lighter-red  color was consistent throughout (I can see why the word claret was used in the early days by the British to describe Bordeaux wines.) .  It had a great nose.  The fruit had receded into the overall framework and the secondary characteristics were on full display.  Saddle leather. Cigarbox. Cardamom . Cedar.  On the palate the wine was very well balanced, exhibiting a full, round mouthfeel and good integration of all the elements.  It was like a Fred Couples golf swing: smooth, elegant, with a long finish and complete balance throughout.  "This is an epiphany wine."  "This is why I do this."  "This wine is begging for a roast tenderloin or a rabbit."  Those were some of the comments issuing from an awed round table.

This is, without a doubt, the best wine I have tasted in the series to date.

Derenoncourt and Montesquieu: A Match made in Biology?

The American Heritage Dictionary defines symbiosis as "a close, prolonged association between two or more organisms of different species that may, but does not necessarily, benefit each member."  A symbiotic relationship exists between Stephane Derenoncourt (noted winemaker and wine consultant) and Montesquieu (a west-coast-based, Bordeaux-style negociant), especially as it relates to Stephane's "US account."

Stephane, the Ryan Seacrest of the wine world, is as famous for his winemaking skills as he is for the reach of his influence.  Beginning with his work on the right bank of Bordeaux, Stephane has leveraged that success into consulting appointments the world over.  It is, however, the work on his own account in the US that is of interest here and how he has worked with Montesquieu to the mutual benefit of both (organisms?).

Fulfilling a long-standing dream, Stephane, at an event held at Rutherford's Auberge du Soleil on February 9th, 2009, introduced the world to his Derenoncourt California wines.  The wines, sourced from grapes grown in small, high-elevation, cool-microclimate, volcanic-soil plots, included a Cabernet Sauvignon (Caldwell Vineyard, Block 13), a Cabernet Franc (Caldwell Vineyard, Block 15), a Merlot (Stagecoach Vineyard, Atlas Peak), a Syrah (Hudson Vineyard, Carneros), and a second Cabernet Sauvignon, this one from Andy Beckstoffer's Red Hills Vineyard in Lake County.  Writing about these small-production wines in the June 15th issue of Wine Spectator, James Laube remarked that these 2006s "... are as good as any from that year and as uniformly consistent stylistically as any wines I have ever tasted."

You can make great wine but you have to get it out the door before next year's vintage shows up; and that is where Montesquieu comes into the picture.  Stefan became acquainted with the company after meeting its President, Fonda Hopkins, at an event in Bordeaux.  He was intrigued by the business model -- connecting the best artisanal winemakers to a discerning customer base through an activist personal wine broker -- and joined the company as its chief wine buyer in 2006.  Getting Stephane on board was a huge coup for Montesquieu.  First, and most obviously, was the cachet associated with being able to say that Stephane Derenoncourt (the Stephane Derenoncourt) was your chief wine buyer.  Second, Stephane, because of his contacts and clout, could open doors that were previously closed to Montesquieu.

Montesquieu has benefitted significantly from this relationship; as has its customers. The quality of the juice they now have access to has increased dramatically from both US and international sources.  Wines from Derenoncourt proteges -- such as Greg Viennois, head winemaker for Michel Chapoutier -- and contacts -- Clos de la Terra, Heidi Barrett, Andy Beckstoffer -- are now readily available to Montesquieu clients.

From Stephane's perspective, he has access to a vehicle for US distribution of wines from estates that he is working with internationally.  These small estates, or side labels from more notable names, might not otherwise have ready access to the type of market served by Montesquieu if left to their own devices.  Further, Montesquieu has been integrally involved in the Derenoncourt California program.  While plot and grape selection is Stephane's purview, he is ably assisted in the winemaking process by Hèlène Mingot, the Montesquieu winemaker.  Distribution of the final product is the responsibility of Montesquieu with the exception of product sold on the Derenoncourt website which, by the way, was developed with the assistance of Montesquieu.

Perfect.  Symbiosis.

New Wines of Greece Marketing Initiative: NYC Seminar

In a recent post, I mentioned the fact that New Wines of Greece was spearheading a marketing initiative designed to further expose wine-market players to the wines of Greece and, further, that I had attended the New York City instance of the launch event.  The New York City event, held at the Alice Tully Hall of New York's famed Lincoln Center on Thursday, May 20th, featured a Seminar, led by Doug Frost, Master Sommelier and Master of Wine, inclusive of tasting sessions led by Konstantinos Lazarakis, Master of Wine, followed by a "Grand Tasting" of 137 wines from 60 wineries.

In his opening remarks, Doug Frost touched on some of the challenges confronting Greek wine marketers as they attempt to further penetrate foreign markets.  Greece, he indicated, was "blessed' with 350 indigenous grape varieties none of which can be DNA-linked to any other grape in any other locale in the world.  This "uniquenesss," plus varietal name-complexity, combined to steepen the climb for marketers of Greek wines.  Within that context, the event organizers were entertaining the thought of bringing Greek wines to customers by relating them to more broadly recognizable varietals and sought to utilize seminar attendees to test this hypothesis. 

The test, titled Comparative Tasting of Greek and International Varieties, consisted of tasting four flights of five wines each with, as we later discovered, three of the wines in the flight being Greek varietals and the remaining two being international varietals.  The Greek varietals were, in order, Moschofilero, Agiorgitiko, Assyrtiko, and Xinomavro.  Three points of note.  (i) Many of the seminar attendees appeared to be familiar with each other, with the presenters, and with Greek wines and these folks were not very happy with the concept of presenting these wines vis a vis others.  In their minds, Greek wines were unique and should be treated and presented on their own merits. (ii) The fact that the seminar leaders grouped Greek varietals with specific international varietals, seemed to indicate that they had some leanings of their own.  That is to say, they did not ask the testers to suggest international varietals to go with Greek varietals.  They already had the first two flights poured when we stepped into the seminar room. (iii) The three instances of the Greek varietal in each flight were drawn from different vendors.

In leading off the Moschofilero tasting, Konstantinos pointed out that Greece has some of the most complex topography in Europe.  There are very few fertile plots in the nation and the saying goes, so says he, that vineyards are only planted where the soil cannot support anything else.  The Moschofilero is a pink-skinned, aromatic grape variety which imparts a pink tint to its wines.  In the Mantinea appellation, where this grape predominates, it plateaus at 600-700 meters and, as a result, the area is cool after sunset.  Grapes mature slowly in this environment and it is difficult to get above 12% alcohol. The overarching characteristics of the Moschofilero were florality and acidity. It was later revealed that the internationals were Torrontes Crios, Susana Balboa 2009 and Gentil Hugel 2008.  The panel did not think that the Moschofilero could be in any way compared to these internationals.

Agiorgitiko, according to Konstantinos, is primarily from the appellation Nemea, which, though close to Mantinea, is warmer and subject to autumn rains and vintages are definitely affected by weather patterns.  The appellation can be dividied into valley floor -- hotter, produces sweet, soft reds -- 350 to 500 meters -- classic Nemeas are produced here --- and the top subzone -- 700 meters and up; previously only rose but now high-acidity, quality wines are produced here.  The wines from this region have soft tannins and go well with oak.  The Agiorgitiko was much less floral than the Moscofilero with, depending on the producer, a preponderance of black or red fruit.  The international wines paired off against the Agiorgitko were the Monticello Reserva 2005 and Mt. Difficulty Pinot Noir 2008.

Konstantinos described the Assyrtiko from Santorini as a "gifted grape variety" with extremely good acidity even in hot weather.  Santorini is a difficult place to grow grapes in that it is "too windy, too hot, and too sunny."  The vines have to be trained in baskets in order to generate humidity and production is 12 hectoliters per hectare.  There is no clay in the volcanic soil so it is phylloxera-free and phylloxera-resistant.  The vineyards are very old with some root systems being hundreds of years old.  The wine ages phenomenally. The wines have excellent texture and exhibit fruit and acidity with high stone minerality.  The international wines tasted were Chablis 1er Cru Vaulorent, Brocard 2007 and Reisling Gobelsburger, Schloss Gobelsburg 2009.

The final varietal tasted was the Xinamavro, described by Konstantinos as "a punch in the face of globalization."  This wine manifests black fruit and some limited phenolics as well as good acidity.  The international wines paired with it were Barbaresco, Produttori del Barbaresco 2006 and castel Giocondo Frescobaldi 2004, Brunello di Montalcino.

The panel mostly held to its opening position that Greek wines were unique and could not be marketed via other grapes without further confusing the issue.  These wines would have to stand on their own and be supported by stories appropriate to them.  In his closing remarks Konstantinos opined that, in the future, being good would become irrelevant because people would take that for granted.  Being different with what is in the glass, he said, is what will make sense going forward.  Meta data will be needed as a part of the selling process.  The data are the contents of the glass and the meta data are the stories that surround the contents.

A Glass a Day Keeps the Doctor Away

We have all heard that wine secretly harbors some magical health benefits; a powerful elixir that bestows its heart-healthy benefits upon those willing to partake. In addition, scientific studies have revealed a whole host of benefits to the winedrinker. Well the secret could be due to a flavonoid compound found in wine called Resveratrol.

In recent mouse and rat experiments, anti-cancer, anti-inflammatory, blood-sugar-lowering, and other beneficial cardiovascular effects of Resveratrol have been reported. Resveratrol, found in grape skins and seeds, increases HDL cholesterol (good cholesterol) and prevents blood clotting. Flavonoids, on the other hand, exhibit antioxidant properties helping prevent blood clots and plaque formation in arteries. Red wine may help reduce the blood vessel damage caused by fat deposits. But wait, before you do your best impression of a drunken sailor, lets back up a bit. Sorry to dampen your enthusiasm but let me remind you to do this right. That means everything in moderation. Oh, I just heard a collective sigh out of 90% of you. That means 1 glass a day for women, double that for men. Though I think you will still get the benefits even if you indulge a bit more. Unfortunately, for those who like to burn the candle at both ends, excessive consumption can actually damage your heart. Let’s not forget the stress it places on your liver. So a glass a day means approximately 5 ounces. Too much indulgence could lead to a fatty liver. A fatty liver will lead to higher triglycerides. High triglycerides prevent the endothelium from producing the most cardio protective protein nitric oxide in addition to thickening of the blood and fatty plaque. Fatty plaque is unstable plaque which can dislodge causing blockage elsewhere. Hello heart attack.

Currently, pharmaceutical giant Glaxo has a synthetic version of Resveratrol in clinical trials. Whether it will become part of the pharmaceutical market is still unknown.There is some further evidence of Resveratrol’s effects on the sirtuin gene to slow the aging process. In the meantime Resveratrol is available over the counter or in your glass!

New Wines of Greece Marketing Initiative

New Wines of Greece, a joint venture of 31 top Greek wineries, has recently formed a North American Wine Bureau (NAWB) for the express purpose of managing a campaign to increase the awareness of Greek wines among consumers, trade, and influencers.  The initiative is sponsored by the Greek National Inter-Professional Organization and funded by the European Union and the government of Greece.  NAWB will operate out of offices in New York, Montreal and Toronto.


New Wines of Greece held a series of seminars and grand tastings in Montreal (May 11), Toronto (May 13), Chicago (May 18), and New York (May 20) as a part of its 2010 road show and NAWB launch. I attended the session in New York and, in subsequent posts, will address the NAWB, the seminar, Greek wine regions, Greek grapes and wines, and tasting Greek wines.