The 2009 National Agricultural Statistics Service report for grapes is out and it is full of interesting information for the data junkies that some of us are (disclaimer: all those numbers are preliminary and will be revised one more time in July 2010). 2009 saw a 14% hike in the total amount of grapes harvested vs 2008 and we have picked 165,000 tons in 2009. California harvested 3.4 million tons in 2009 (for comparison) - or 11 million cases for WA vs 221 million for CA (note Washington is the second largest wine producer after California). Whites were 55 percent of the harvest (growing 20% vs 2008) and reds 45 percent (growing 7% vs 2008). Riesling (yeah) was the number one varietal as expected, though only beating Chardonnay by 300 tons and representing 21% of the total harvest. Riesling has grown by 23% in 2009 (yeah twice). Grape prices seem to be softening accross the board, down 4% overall probably reflecting a large increase in supplies combined with a softening super premium wine market. Top white varietals: Riesling YEAH (2.275 million cases worth), Chardonnay (2.255 million cases worth), Pinot Gris (.429 million cases worth), Sauvignon Blanc (0.279 million cases worth), Gewurztraminer YEAH (0.266 million cases worth). Top red varietals: Cabernet Sauvignon (1.852 million cases worth), Merlot (1.735 million cases worth), syrah (0.715 million cases worth), Cabernet Franc (.175 million cases). Go Washington!

I was reading Steve Heimoff’s blog this morning and he had an interesting question about revieweing wines: should the wine be reviewed with the winemaker or should it be reviewed blind with no context. I have, as usual, an opinion. The more time I spend in our wine industry, the more I think that it is difficult to separate the winemaker (I use winemaker as a broad term, not the individual, but the set of circumstances that leads to make a particular bottle of wine) and the wine itself. Of course one can try to be very analytical and cold about wine reviews and that is a viable way to test a wine no question. But there is so much more in a bottle of wine than just the taste - how was it made (what techniques were used), where are the grapes from, what was the intent behind this wine. The value of knowing the tid bits are as important to me as the wine itself. I relate wine to Classical music; some folks just like to listen to a piece and give it a thumb up or down while others want to know how was this written, why was the composer pushed to write this - sometimes a not so good sounding piece of music becomes interesting once one knows the reason for its being. The details are not for everyone, many people just want to know the score and that’s it and we should respect that. For the few for whom the context matters, wine should be reviewed with some emotional background and I would love for us to keep some of that.

Anyone that pretends to know me is aware of my love of food and restaurant. I love to go out to new food scenes and try new treats. I must say that restaurants that put some thoughts into their menus and are showing a preference in local food score more points for me. My parents used to own a restaurant and I understand that fresh, locally produced food, mean the difference between a great plate or an average one.

I am blessed to live in a city where local food is just as common as stop signs. I have been a bit frustrated lately to find that so many places that claim their dedication to local food have no local wine on their wine list - that’s right zippo localo vino, no American wines, only Europeans. Some say that it is because European wines go well with the food and that domestic wines are too heavy. Well, to that I say booooguuuus - they are plenty of great balanced wines made domestically. More likely it is because foreign wines are easier to mark up because patrons can’t recognize the names or because the wines are not available else where (make the mark up invisible). This mark up shell game is silly - think about the cost of a coke, or a coffee, or anything on the menu for that matter, do you think the customers does not know there is a markup?

Why are restaurant owners keep ignoring the fact that in grocery twice as much domestic wine is sold versus imports (and the trend is accelerating)? And why not having local wines or your menus? When I go to Michigan - I want to try a Michigan wine, when I go to New York - I want to try a New York wine. The last two times I went out I had only European wines on the menu and I ended up drinking water in one instance and beer in another. Not that I don’t like foreign wines at all (I buy and drink my fair share) but in a local restaurant I want to have the possibility of drinking a domestic wine. I am not suggesting boycotting foreign wines but at least give them a shot on your wine list and see what happens. Gee, you might sell much of it.

I was looking at the lastest Nielsen data and there was plenty of good news for Riesling lovers (and for our winery) in this report. First, overall white wines have been growing faster than reds over the past 13 weeks and 52 weeks (3.7% vs 2.4% and 4.0% vs 3.5% respectively) - good to see some love for the whites. Second, domestic wines are making a huge comeback (is this price driven due to a not so favorable exchange rate? is it a “buying domestic” trend that is often seen during recessions?); 4.9% growth for domestic wines (52 weeks) ve 0.1% growth for imports. Finally, among major varietal, Riesling is still the fastest growing varietal (+9.5% 13 weeks and +8.5% 52 weeks) ahead of Pinot Noir and Sauvignon Blanc. Now Riesling sales are about a third of Pinot gris/pinot grigio!

Last Friday night I had the opportunity to present our wines at the Beaujolais Nouveau party at the Heathman Hotel downtown Portland. The event was sponsored by the French American Chamber of Commerce as well as the Alliance Francaise of Portland. This was a very well attended (sold out) event in a perfect location with, quite frankl,y some of the best food in the city. The chef (Daniel Boulud) and the sommelier of the Heathman (Jeff Groh) were present and kindly accepted a couple glasses of wines of Washington wines lost in a sea of Beaujolais Nouveau (I did not give them a choice). We were the only white wine poured, so I got lots of attention and since the event was four hour long, I had the opportunity to tell our story to everyone that wanted to hear it. All our wines were a hit and I ran out quickly of Sparkling and Dry Riesling. Many people were having fun tasting different sugar levels and trying to find their “sweet spot”. Interestingly enough, I had plenty of people coming to me for our Autumnus red (tired of Beaujolais nouveau already?). Great event in the Portland area, I recommend it highly.

Note:  That same week end we were also pouring at two Cost Plus in the Portland Metro (thank you Shawn and thank you Brian) and on Saturday night Chris was pouring at the 20 something event in Seattle. Busy week end for the team.

Just back from a quick trip to Hong Kong to gauge the local market. The opportunity presented itself with an invitation to participate to the Hong Kong Wine and Spirit Fair at a much reduced price and I cannot say no to a good deal. Beyond the good deal, Hong Kong was an interesting market to understand for several reasons. Firstly, a large contingent of US citizens live in Hong Kong (about 30,000) in a city of 7 millions and those folks like wine and are good ambassadors for US wines. Secondly, the average income is relatively high and years of British occupation have raised the awareness of the population to wine and food (and what is better with Chinese food than Riesling, eh!). Thirdly, they are no taxes on alcohol and no sales taxes on any goods; additionally the Hong Kong dollar is 100% pegged on the US dollar - no currency risk for US companies. All that to say that Hong Kong is probably the best market for US wines in Asia right now and an entry door to mainland China. That being said competition is fierce and finding a good agent is tough (I feel fortunate to have a decent importer myself). FOr me the highlight of the trip was definitely the last day of the show where exhibitors could sell their stock at what ever price they wanted (I made $300 that day!). Beyond the amusing fact that it felt like behind at the farmer’s market on that day, I gathered two very interesting learnings.

To start, there is something very refreshing about having a free market for wines: no price fixing, no third party, no licenses - I have noticed that prices would fluctuate out there and often were low which is great for consumers. I guess this fact points out to what a free market can do to prices (remember that Hong Kong has been ranked as the “freest economy in the world” for 12 years in a row by the Cato institute - the USA ranks 6th). That made me think about the US system and all the monies that go to government (think taxes) and to the distributors (think distributor margins) that really inflates the price of wine and brings up barriers to competition because not all wineries can afford that burden of taxes and margins and stay competitive.

Secondly, no one was drunk and, even if they were some drinking ,everyone behaved very well. Same in the streets, never saw a drunk person. That goes to public safety concerns that often are raised as a reason for our US alcohol market control system. It seems to me that there is no a great correlation between the level of control and the behavior of the population.

It reinforced my belief that a free market is totally the way to go for any goods and alcohol should be no different (especially wines and beers). If a tax is levied it should go 100% toward educating the population about alcoholism and the potential negative impact of alcohol on one’s life (our industry would support this 100% and it would allign everyone on the same goal ie safe consumption of alcohol). I would for sure keep the distributors (we could not live without them really) but open the doors to competition and alternative channels of distribution - looks at California, it has allowed many wineries to compete in many different ways keeping intact the distributor system - this is possible.

Once again Riesling is on the top of the charts my friends. Looking over the the 13 weeks Nielsen data, Riesling is showing the fastest growth among all major varietals; Riesling is ahead of Chardonnay, White Zinfandel, Merlot, Cabernet Sauvignon, Pinot Grigio, Sauvignon Blanc, Syrah, Zinfandel, Pinot Noir and Sangiovese. Riesling is growing at 8.2% versus last year! Now Riesling is clearly a larger category than Zinfandel (believe it or not) and I would not be surprised if within 6 month Riesling takes over Syrah. Riesling now represents 2.5% of all wine sold in the USA which is about twice what it was 3 years ago. Much deserved growth for a fantastic varietal.

I know, you should never rush through the Rheingau…

Another stunning wine region with a beautiful south facing slope. My two visits there were Schloss Johannisberg (the mother of all Riesling wineries!) and Weingut Spreitzer. Two different businesses in their structure but both primarily Riesling and both 100% estate.

I went through a very interesting tasting at Schloss Johannisberg with a good technical conversation (picture of the great tasting below).

I focused on winemaking on that day (though I saw the vineyards at Schloss Johannisberg) and toured the beautiful wineries and focused on their winemaking techniques. The wines in the Rheingau are mostly “Trocken” so very different from the Mosel. Below is the new tank room at Schloss Johannisberg, a very nice set up to make great wines (plenty of small tanks to keep every parcel separated). A Riesling geek heaven of some sort…

I have finally turned the last page of this great book full of great stories about our beloved American wine industry. The book did a great job to lay out the prohibition years and the long lasting impact of the consequences brought by the way the 21st amendment was repealed. The birth of the three tier system is very well explained and so is the rebirth and transformation of the California wine industry. The other regions in the US are also well covered, New York, the Pacific Northwest, Michigan, Ohio and more. It is very interesting to read about how the three tier system was set up and really how unimportant the alcohol business was at the time this was done. Think about it, California was barely the size of the current Washington wine industry and no alcohol had been sold in the country for more than 10 years. No one thought that alcohol sales would grow the way they have, so really it was not a front burner issue and the Federal government gave the right to regulate alcohol to each State as it desired. The results of the repeal are still with us today, 75 years later, a patchwork of different rules, taxes and systems that are a strong barrier to innovation in our industry. A great read.

Quietly Congress is gearing up to hike taxes on wine. They are proposing around $0.50/bottle. That seems small, but the problem is that wineries pay this tax when they ship out of their warehouses to distributors’ warehouses. Therefore the little $0.50 becomes $1.00 on the shelf (accounting for distributor margin and retailer margin). That might not seem like much but in a difficult economic environment that could send many wines above their perceived price treshold ($9.99 becomes $10.99, $14.99 becomes $15.99). With that in mind it is likely that many producers will eat most of the tax hike themselves thus reducing their profit. What wrong with reducing profit? Well, less profit means less investment, less employment, less creativity and in the long run more company failure and increased consolidation. I don’t think this is good, do you?

I have two ideas to help out the wineries with this tax increase (which is likely and in some way is meant for a good cause i.e. financing a national healthdare system): 1) truly liberalize the wine business, go away with the three tier system  2) allow wineries to pay federal taxes 90 days after the wine as left their warehouse to mitigate the impact on our cash flow.

I doubt any of those ideas would fly…

Nicolas

I don’t usually like to talk about m private life on a blog, but I am getting really excited about my July trip to Germany. It will be short (I will be on my way to a family event in southern France) and I am lining up two days of Riesling frenzy. Here is a glimpse of my trip so far:

• Dinner with the Selbach on the 8th;
• Visit of Selbach Oster, Sankt Urban Hof and Schloss Lieser on the 9th (Mosel)
• Visit of Schloss Johannisberg, Von Mumm and two other on the 10th (Rheingau) and fly out…

I have my Audi shift stick with GPS unit rented. feeling just like a little boy going to Disneyland…

Yesterday I had a good chat with the sommelier of a local restaurant called bluehour.  We were chatting about making money with by the glass pouring and he had an interesting take on it. First some facts:

1) Usually restaurants get on average 5 pours per 750ml bottles.

2) Restaurants like to mark up wines up to 4 times (especially for by the glass vs by the bottle).

3) Restaurant buy wines wholesale, sometimes with a special “by the glass price”. Let’s assume that wholesale is about 30% less  than retail.

Now here is the math that most restaurant do: Buy a $9.99 retail bottle of wine ($7 wholesale), mark it up at least 4 times ($7 X 4 = $28), pour 5 glasses out of it and sell them at $6 each. Profit would be: (5 X 6) - 7 = $23 per bottle. Not bad….

My Sommelier friend was arguing that it was crazy math because a) you really rip off the customer (the customer could almost buy a whole bottle at that price) and b) you do not maximize the take home per bottle for the restaurant. Here is his math: Buy a $30 retail bottle of wine ($21 wholesale), mark it up gently 2.5 times ($21 X 2.5 = $52.5), pour five glasses out of it and sell them at $11 each. Profit would be (5 X 11) - 21= $34 per bottle. 50% better than the previous calculation. Not only you got more money per bottle but you also offered a great wine to your customers at a more reasonnable cost (you definitely could not buy a bottle retail of that $30 wine at $11).

I think he has a point….

More than 600 wineries (including Pacific Rim of course) are calling Washington State home. That is more than three times the number of wineries that were in Washington 10 years ago. Of course, many of those wineries are fairly small. Still, this is a testament to the Washington State wine industry’s dynamism. The planted acreage is following up the growth in wineries and has raised to 33,000 acre from 24,000 in 1999 (though the average acreage per winery went from 122 acres/winery in 1999 to 55 acres/winery in 2009). As a comparison, Napa Valley alone has 44,000 acres planted and New Zealand has 70,000 acres planted (that makes Washington looks so small, doesn’t it?). According to the latest Nielsen data, Washington was one of the fastest growing appellation sold in grocery store across the country. I’ll raise a glass of Washington Riesling to that!

The Organisation Internationale de le Vigne et du Vin (OIV) has just released their report on global production and consumption and since I am sucker for statistics I thought I would share the summary of it all.

Global acreage The EU has lost 82,000 acres in 2008 (vs 2007) mainly from France (half of that number). The world is seeing also a reduction in acreage by about 70,000 acres total. New Zealand and Russia are the “growth poles” in 2008. Global acreage stands at 19.6 million acres

Wine Production: The EU has lost about 2.1 Million Hl in 2008 (vs 2007) but the picture is mixed with France and Spain losing big volume while Romania is gaining. EU production stands at 161 MioHl. In the remaining of the world, the USA lost some volume (-0.7 MioHl) and Australia recovered from a serious crop failure in 2007. The world overall was pretty flat to slightly up (+ 1MioHl) at 269.4 MioHl.

Yield in 2008: Thought it would be fun to divide the estimated global production (269.4 MioHl) by the estimated vine area (7.861 Mioh) and get about 34.2 Hl/ha or 2.15 tons/acre. Pretty low I thought.

Global wine consumption: EU was down again (2.2 MioHl) at 125.8 MioHl. That does not compare well to the 2008 production at 161.6 MioHl - whao 35.8 MioHl surplus in 2008 for Europa…  The reverse is seen in the US with a small domestic production (19.2 MioHL) relative to the now #1 worldwide consumption (27.2 MioHl). Guess why everyone is fighting over the US market… Overall world consumption has been eroding and now stands at about 242.9 MioHl (which is about 27 MioHl surplus worldwide). Most countries see erosion in wine consumption except the Netherlands, Sweden, the USA, Australia and the Czech republic (what is going on in the Czech republic?).

There is a section about global wine export showing EU losing share, South America and Oceania eating their lunch. The last two charts show the average price for red and white in the EU and White is ahead!!! Well deserved…

I recommend greatly this book from Neal Rosenthal (the New York wine merchant). I have enjoyed the candid and interesting journey of Mr Rosenthal as he starts his thoughtful wine import business. It helped me to realize how close to the wild west was the wine industry in the late 70’s and what great opportunities folks like Neal Rosenthal, Kermitt Lynch and Terry Theise had in their hand. For all this, they were, and are, true wine lovers and really attracted to the sense of place and family that Europe offered in those days.  I wonder what the next generation of wine importer will be like and who will replace those great wine explorers.  I also wonder if Europe is/will be like this anymore. It really made me think about what we do at Pacific Rim and the value of taking the high road not only for yourself but also for the people that drink your wines.

I think one needs to be careful about meeting with Mr Rosenthal considering the amount of drame, dead partners, car accidents, family feud and failure that he encounters during his European endeavors.

In any case a good read for those who like wines and the wine business.

Yesterday I read this story on the Decanter web site:

“Red wine increases the female sex drive

Red wine increases the female libido, research has found.
According to a study carried out by the Santa Maria Nuova Hospital in Florence, drinking one to two glasses of red wine a day increases female sexual desire. The study investigated 789 Italian women aged between 18 and 50.
Drinking red wine not only helps to release inhibitions, but also has a direct effect on sexual activity. Women who drink one to two glasses of wine a day were found to be more sexually active than those who abstain. Dark chocolate, which is rich in antioxidants, has a similarly positive effect on the female libido. ”

In one way I find the article funny but in another so tacky. The fact that the study was done in Italy adds to both of those feeling. May be this is why I like Riesling so much those days, it is quiet, delicate, complex and refined.

A couple nights ago we opened a delicious Woodward canyon Cabernet 1996 and the alcohol was 12.9% on the label. The wine was still young and just fine.  In many ways it was more balanced that most Cabernet you would find today. I don’t know about everybody but I am really tired of over extracted, over alcoholic wines, may be I am just getting old. It seems that dry wines around 12.5% ethanol and sweet wines below 11% are most attractive and I would think they should be attractive to many food and wine lovers. As we tend to go for fresher, less fatty meals, we need to make wines that match those modern food. This is definitely a theme that runs through all our wines and our winemaking. Nothing is more refreshing than a Sweet Riesling at 8.5% Ethanol with some spring rolls…

A great study was released last week by the American Association of Wine Economist about the validity of wine competitions. Great reading and very interesting to find that competitions are very unreliable according to their study. Steve Heimoff has written a great “summary” on the topic on his blog that is a must read for those of you that are interested. If you don’t have time to read it all, let me bullet point the main bits:

• Wine competitions are found to be unreliable  by the AAWE - not news to me, sometimes you get a gold, sometimes you get nothing…
• Wine competitions are unreliable because humans are unreliable - I knew that as well, my taste changes everyday and sometimes several times a day.
• This raises the question of wine reviewers in general though what can you do about it?
• This raises the question about the use of wine scores and accolades by the wine trade and the consumer - I won’t venture there because I get upset too fast on this.

Fun topic, isn’t it?

kudos to Adam Lechmere (Decanter) for the vote of confidence toward screwcap closure: “It’s official: screwcap is the best closure for the vast majority of wines, both red and white.”

Why are folks still sticking to cork especially for fruity whites? Not sure. Many times I have heard from winery principals: “the consumer is not ready”. Soooo you are knowingly giving the consumer an inferior product because some market data tells you that you won’t sell as much wine… Mmmm what should I think about all your talk about quality now?

Well, we do screwcap and I find it just perfect for our wines. Screwcap is the only closure that always guaranteed 100% freshness to the consumer and they are rated to last for 20 years (at least the ones we use).

I strongly recommend you visit Gary Vaynerchuk’s daily video blog on http://tv.winelibrary.com/.

It is always great enertainment and this fellow is making some good progress trying to bring up front the insanity of our dear wine industry.

Go Gary (and sorry for the Giant’s victory)