Las week I came across a grocery store wine sales report that outlined the main varietals and the main wine regions sold in US grocery stores (note the data does not include sales from restaurants and other non grocery stores). The grocery store data is very indicative of what is going on in the market place but not all perfect (big disclaimer). Nevertheless, let me tell you that Washington and Riesling are looking pretty good (we like that at Pacific Rim) – the data is for the past 52 weeks total dollars sold:

Main Wine Regions:

- Big #1: California: $3,000M

- Next three: Australia: $429M, Italy: $305M, Washington: $257M

- Next Six: Chile: $87M, France: $85M, Argentina: $55M, Germany: $55M, New Zealand: $52M, Spain $42M

I know this is only grocery, but look at WA, not bad at all in this channel no?

Main Varietals:

- Big #1: Chardonnay: $942M

- Next three: Cabernet: $558M, Merlot: $423M, Pinot Gris/Grigio: $332M

- Next Six: Pinot Noir: $252M, Sauvignon Blanc: $195M, White Zinfandel: $229M, Riesling: $136M, Syrah: $136M, Zinfandel: $118

Well, looks like Riesling is about to -or will soon-  pass Syrah. Next “varietal” to beat is White Zinfandel!

Now is the time to look at yields and estimate the size of the harvest. We are practically done estimating at Pacific Rim and we think we will have a normal yield with some vineyards affected with some shatter (shatter = less berries per cluster due to bad fruit set). All in all we are happy with the size of harvest and the cooler weather which will probably delay harvest 8 to 12 days.

I have also received today a crop estimation from the Washington Association of Grape Grower (hence the post) and it confirms the delay in ripening due to cool weather. The current estimate for total crop for Washington is 156,000 tons (10 million cases) which would be flat to slightly up vs actual 2009 harvest. Chardonnay would still be #1, Riesling #2, Merlot #3 and Cabernet #4. All top four varietal would be slightly down except Merlot (be ready for some cheap Merlot out there!). Major growth in volume is projected to come from Sauvignon Blanc, Syrah (Syrah is struggling in the market place, so expect bit of oversupply) and Cabernet franc (what in heaven is going on with Cab Franc +1,500 tons?).

The data monster is coming out of its cave again after chewing on a great report released by Gallup looking at alcohol consumption in the USA (full article here). Plenty of fun data in this report highlighted below:

• 67% of american drink alcohol, 33% do not. The archetype of the non drinker is over 55, has less than a high school degree, makes less than $20K/yr, attend church weekly and is Protestant – can’t wait to meet you Mr non-drinker. The classic alcohol indulger is young, college educated, seldomly go to church, make more than $75/yr and is agnostic – you sound a bit better Mr indulger but you sound too much like Gordon Gekko.
• Beer is still the #1 preferred alcoholic drink in the USA (wine is #2, spirits #3). The archetype beer drinker is male, under 34 from the midwest while the archetype wine drinker is female, 50 and older, from the East coast (guess who I am hanging out with? hint: I am more comfortable at the Opera than at a Rodeo). Women from the south also ranks the highest for spirit consumption – go southern girls!

Just reviewed the lastest Nielsen data ending March 6th and Riesling is still the fastest growing varietal in the US in dollars (+10.7 % over last 13 weeks, +8.7% over last 52 weeks). It is ahead of Pinot Noir, Sauvignon Blanc and Cabernet Sauvignon in growth. Riesling is also gaining ground on Syrah (it is now 80% as big as syrah vs 77% a year ago) and could overtake Syrah as the #8 varietal in the country. I’ll let you guess who is #1 through #7! #10 is Zinfandel. GO RIESLING!

I am offically obcessed with the idea that Riesling can be a larger category than Syrah – that is only the first step to the global Riesling domination that we have plans for (hehehe). Looks like we have a shot at seeing Riesling passing Syrah before the end of the year and become the #8 varietal in the country. Right now the index shows the following rank among varietals (52 weeks ending 2/6/10):

- #1: Chardo: 25% MS (marketshare) growing at +2.5% – Yep, still a lot of growth at that size..

- #2: CabSauv: 16% MS +4.8% – American love story with CabSauv. Can we grow Gamay that fast? Surely is not foreign to the Malbec Growth (Malbec is not part of the topd ten and is about half the size of Riesling right now)

- #3: Merlot: 12% MS -1.9% – Keep losing steam. might never recover…

- #4: Pinot Grigio/Gris: 9% MS +3.7% – Wake up folks, this is not that great of a wine

- #5: Pinot Noir: 6% MS +7.3% – Amazing to see PN in #5 now…

- #6: White Zin: 6% MS +0.5% – Do me a favor, drink Riesling instead of this White Zin thing

- #7: Sauv Blanc: 5% MS +7.7% – This is the white we need to follow on the way up

- #8: Syrah: 4% MS -7.5% – Ouch, this varietal is just going back in the dog house

- #9: Riesling: 3% MS + 8.9% – #1 growth in the top ten. ‘nuf said

#10: Zinfandel: 3% MS +3.7% – Yes, Riesling is bigger than Zinfandel

Lately I have heard so many wine buyers talking only about scores, scores, scores. I even went to retailers that only buy 90+ wines. This is just plainly bad for our wine industry and for consumers. All those scores are just opinions, not science, not hard facts, just opinions. it does not matter if it is blind or not, with a panel or not. One day consumers and buyers will realize that wine reviews are one opinion from one person at one moment of time (wine is just not like toasters, it can age and change). One day someone is going to give 95 points to a wine that will poison people, it was just an opinion mind you! Moody gave AAA ratings to mortgage back securities, those were also opinions (they recently won a lawsuit against the US governemnt based on their first amendment right to voice an opinion) – at the end of the day the bankers were thinking that Moody’s opinions were good as gold. I think no one will believe a AAA rating is good as gold now. Please be careful with ratings – they are just opinions.

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.