Wine and War or Wine Wars?

On OpenWineConsortium.org, there is a European Community Group founded by my friend Robert McIntosh reflecting on the meaning (or absence of meaning) of the differences between "New" World and "Old" World in the wine business. This topic must be very pertinent since the French wine industry just decided to change the laws on how to label their wines. Why? To fight back the New World wines and regain market shares worldwide!

Why is this decision so important? As most wine consumers know, French labels are notorious for their complexity while American, Australian or Argentinian wines are going straight to the point: grape name, vintage, provenance and an explicit back label. French producers will be able to produce wines under the "Vignobles de France" (French Vineyards) denomination with a lot more freedom:

• They can plant any type of vine anywhere in France: for example, Gewurztraminer will no longer be restricted to Alsace.
• They can put the name of the grape on the label.
• Blended wines from different regions of France will be available for the first time.
• Producers are authorized to use oak chips and tannins during vinification.

Those new rules mean more flexibility and reactivity to answer the new trends. Maybe it will allow the launch of more brands, such as Chamarré. This new system should bring the wine industry up, since the Controlled Appellation will be harder to obtain and the top vineyards will keep their high standards.

French Millennials drink less wine than American Millennials

This is the result of a French-American study conducted by Dr Liz Thach and Prof. Francois d'Hauteville. Thach found out that French Millennials don't drink wine because it's expensive, bad tasting, difficult to understand and alcoholic. They keep drinking an occasional glass of wine while eating at the family table but they'd rather buy beer or cocktail when on their own. This study comforts the very thorough book written by Dr. Celine Simonnet-Toussaint in 2006 on the subject, Les jeunes et le Vin (Young people and Wine) and doesn't bring any new information on the subject.

It is more interesting to make a parallel with American Millennials, one of the most interesting segment of potential or existing wine consumers. How did they get interested in wine? For some of them, their parents drank wine and they grew up with wine on the table. “My parents are both big into wine”, said 22-year-old Jennifer Hammons to journalist Deborah Pankey, Daily Herald Food Editor on November 30, 2005.”At first I didn’t like it, but then it grew on me.” Same scenario for young people in France: wine is a food always on the family table. Young children are encouraged to taste a drop of champagne or wine during family gatherings. Later in their teens, they can drink a third of a glass of wine or champagne with their meal. Why do they then reject wine to go on to beer, cocktails or liquors? Very often, as sociologist Céline Simonnet-Toussaint explains in her book , young people under 25 reject wine because it is the symbol of the family. Young people want to experiment with their freedom, but they come back to wine at around 25, when they get their first job, their first “real” apartment and start settling into their new life.

Others discover wine by themselves – during a trip to a wine country, like Napa in the USA, Burgundy in France, Tuscany in Italy, Priorato in Spain or Porto in Portugal. They get interested, go to wine classes or tastings, join a wine club and explore wine stores to get good advice. Mostly they listen to their peers, surf the Internet to read about wine and discuss their new passion in forums.

The wine industry is aware of the need of young people for more knowledge. At the same time, this new generation of wine drinkers is very different from preceding generations. They have a much sweeter tooth being the “Coca Cola generation”, they are “zappers”, having known TV and the Internet all their lives, and they are used to getting what they want and paying a high price for it. After all, they pay $3.50 for their daily Starbucks cappuccino and download their songs for $1 or their movies for $5 every day on their iPod or MP3. They know that everything has a price and usually a high price.

Taking these parameters into account, some winemakers thought about designing wines specifically targeted at Millennials and GenXers: fun labels, fruity forward wines and a high price. Millennials do not hesitate to pay up to $20 for a bottle of wine! Indeed, they do not yet have any big financial burdens: no children, often a two-income household, no parents to take care of, a good salary and a large disposable income. Unfortunately for the wine industry, they rarely buy the same bottle twice, because there is such a huge choice of brands. They want to be the first to discover a new brand or a new trend, the first to try them and share them with their peers.

At the same time, young people are not as comfortable as their elders when they buy wine. They can be adventurous but from time to time they seek quality and certainty. Whether they are American, European or Japanese, they will rely on a classic wine from Europe or a well known luxury brand from the New World. Wine is still a little intimidating for Millennials, whether they're French or American!

That's why I'm a little skeptical of Thach's conclusions: I'd like to see some figures!

New French consumers

Wine consumption was part of a very large debate in France in the last months. Some anti-alcohol lobbies were able to stigmatize wine and spirits consumers. It went so far as to drive the French wine writers association to organize a convention on the real numbers of wine consumers in France. They showed that in the official statistics the consumption of the 70 million of tourists is included and of course drives the figures very high. It would seem French people drink about 47 l per year instead of the 55l officially advertised.

Whatever the figures, I'm more interested in what and how wine consumers buy their favorite drink. The national spending average is of 516 euros a year. This figure is an average between the 1,070 euros a year spent by the 34% of afficionados who drink mostly red wine and the 64% of occasional drinkers who spend 542 euros. Not surprisingly, French people buy mostly French wines: 68% from Bordeaux, 53% from Burgundy, 46% from Champagne and Rhone Vallye, 38% from Alsace and Provence. They buy mostly red wines (83%), but also indulge in white wines (55%) and keep a little fondness for Champagne, followed by rosé and sparkling wines.

The most important part of the study shows that people buy wine to share a good time and enjoy themselves. There is only a very tiny minority buying wine for speculation. Wine is still the best way to link people together! Cheers!

Second label, bulk wine or new brand?

I just read an article in the North Bay Business Journal that raised a very interesting question: is it better for a winery to create a second label or to sell the wine in bulk when you have too much of a lower quality wine for your main brand? This discussion happened during the Business Journal’s 2008 Wine Industry Conference on April 9. Some said that their "winery had considered a second label but determined selling the excess wine in bulk was better than risking diluting the brand." Others argued that "a second label can help a winery with distributors, but it should have a different name," and be tied to the main brand at least on the back label.

The debate is still going on in the trade anyway. I can think of a few successful examples I know in the French wine industry. In 1998, the famed Château Palmer, a classified Growth of Margaux, near Bordeaux, launched a new brand called Alter Ego de Palmer. It's not a second wine but a full new brand, clearly linked to the main brand but different in its positioning: the wine can be drunk young with all the qualities of a great Margaux wine, finesse and elegance. It is not confusing for the consumer and very reliable for the distributors.

An even more recent example is "Clarence", the second wine of Château Haut-Brion, one of the five First Classified Growths. For many years, the second wine of Château Haut-Brion was named Château Bahans Haut-Brion after the plot on which the vines were planted. The name was difficult to remember and to pronounce, even for French people. A few weeks ago, Domaine Clarence Dillon, owner of Château Haut-Brion, officially announced the new name of the second wine: Clarence. "In 2009, stated the press release, Domaine Clarence Dillon will be celebrating the 75^th anniversary of the first visit of Clarence Dillon to Chateau Haut-Brion. This milestone will enable us to write a new page in the modern history of our second wine. In recognition of three quarters of a century of presence of the Dillon family at Chateau Haut-Brion, Domaine Clarence Dillon has decided to mark the occasion by renaming our second wine “Le Clarence de Haut-Brion” and by bottling our second wine in the elegant “Haut-Brion” bottle, specially engraved with the mention:“Clarence”. It was Clarence Dillon himself who fifty years ago brought this now iconic bottle design to Chateau Haut-Brion and first began using this elegant form for the 1958 vintage."

Second label and second wine are common business practice in the French wine industry. This practice is considered as a reinforcement of the primary brand instead of a dilution.

Cahors, web marketing and French Malbec

This afternoon I'll be in the train to Cahors, a little city in the South West of France - somewhere between Bordeaux and Toulouse. I'll be attending the First International Malbec days - the first ever event around the Malbec grape organized in the world. I heard about Syrah Days, Pinot Noir days in the US but never any event around Malbec.

Malbec is the grape mostly famous because of the Mendoza Malbec wines. But the grape originated in France and, after many hardships, became the "signature" of the Cahors wines, the famous "Black Wine". The professional organization of the Cahors producers, whose Marketing Director, Jeremy Arnaud, is the master mind behind the scene, organized for 3 days the major event around this famous but not very well known grape.

I had the privilege of creating and animating the blog in English of the Cahors Malbec since December 2006. Over the last few months I met enologists, consumers, wine makers, producers who explained to our readers and listeners what Malbec is about. I talked to journalists, tasted wines, recorded podcasts, made interviews and read a lot about Malbec.

The guest of honor, for this first event, is Argentina, of course. Cahors and the province of Lujan will sign agreements and cooperation contracts. Tomorrow morning, I'll speak at the convention on French Malbec on the Net and on the importance of the Web in promoting an event. It's going to be a fascinating experience and certainly a very positive event.

See you on Monday with all the news!

The contradictions of the European market

The European press - whether on line or off line - on the wine business in Europe gives the readers very mixed signals on the state of the industry. I'd like to try - "try" being the key word - to sort out what I read lately and what it means in comparison with the "New World" wine industry.

First of all, today is the opening day of the famous "Futures" week in Bordeaux. Journalists and wine professionals gathered to taste the 2007 vintage still in barrels and that will be on the market at the end of 2009. This tasting will allow importers and buyers to set a price for those expensive and luxury bottles of wine - usually between 30 to a few hundreds euros for the most famous names (Haut-Brion, Palmer, Petrus and other Yquem). Those estates represent hardly 5% of the Bordeaux wine market: there are thousands of other properties whose wines will be sold between 2 to 10 euros for the luckiest.

Surfing on the wave of those luxury wines are a few upscale on line wine stores, such as 1855.com introduced on the Paris stock exchange and vins-fins.com (fine-wines.com). Both companies just released their new projects: expanding their business by opening their catalog to international fine wines. They might very well succeed because the wines they sell are the very symbol of a lifestyle full of elegance and classicism.

At the same time, France, Italy and Great Britain are campaigning against alcohol consumption. "Alcohol" is the key word. There is a strong confusion, in the mind of the law makers, between wine, beers and spirits, all labeled "alcohol" and demonized. In France, the "Evin" law prohibits advertising on any kind of alcohol, including wine, in the press and on TV. The law is used by a very strong and active network of anti-alcohol lobbyists, subsidized by... the French government. This lobby won two court cases lately: one against Heineken that had to close its French site (by so, making all French wine sites and blogs illegal) and an other one, against a newspaper who published an article recommending a few Champagne brands before the holidays (what about freedom of the press and freedom of speech?). At the same time, Champagne wines are so much in demand that a law included more villages in the Champagne "Controlled Appellation" area. In Italy, a law against wine (this link was provided by my friend of OpenWineConsorsortium, Ronald) might be passed by the Parliament. In Great Britain, one of the most important markets for imported wines, a campaign against drinking was recently launched to prevent "binge drinking" and female consumption. "Binge drinking" is a real and true concern for everybody since it affects mostly young people: they get badly drunk in the evening - so much as they can't stand on their feet anymore or are getting very violent. Women are a totally different case: they are the buyers of wine and food for the family and as such are very much targeted by marketers, producers and retailers. They are also - except for a few of very young women who sometimes join the "binge drinking" crowd - moderate drinkers. Unfortunately recent medical studies, in UK and in the US, linked alcohol consumption to breast cancer: more than one glass of alcohol a day could increase the risk of breast cancer. Worse, in England, Dr. Janet Treasure identified a new female drinking pattern, the drinkoresia: women are drinking without eating to compensate the calories taken with the alcoholic beverage. The damages done to the stomach are very fast and deep, which is a subject of concern for public health.

After the worries and the horror stories, the dream: Spain made wine a part of their patrimonial history and just allowed 32 millions of euros to support the export of Spanish wines. Spain wants to become the n.1 exporter in the world. By doing so, Spain joins the club of "proactive" countries, such as Australia or California - wine producing areas giving themselves the financial and human means to develop their wine industry.

What kind of logic can we find in this contradictory information coming from wine producing or loving countries? There is a confusion between wine and spirits: wine is not as strong as spirits in alcohol contents (even in warmer countries); it is part of a lifestyle and a cultural subject. Young men and women are not getting drunk on wine in bars and night clubs but on hard liquors and cocktails. Law makers should be educated about what wine is about: when we educate our young people, we should also educate our legislators and other people who think they know about wine better than the professionals. Those countries need a strong wine lobby to protect its interests.

On the other hand, those countries are also producing the most exclusive and expensive wines: the most famous brands are from France and Italy (as well as Spain). Those brands won't have any problem to keep selling but by promoting repressive policies, France and Italy are badly hurting the lesser brands and producers. Whether expensive or cheaper, good wines are the ambassadors of their country of origin. Do our governments really want to destroy part of our history and culture? I bet they don't but they don't really know what they're talking about. Without lessening the dangers of overdrinking, they should consider wine as a beautiful story shared all over the world by millions of amateurs.

The New Appellation system in Europe

Anybody who tried to sell French or other European wines know how difficult it is. There are many reasons for this situation: difficult labels, weird names impossible to pronounce and a system of geographical origins rather difficult to understand for a foreigner.

The European Union is working on a new system with France leading the way. Let's be frank: France has one of the most complex appellation system. France has several levels of quality of wine: the "vin de pays" (coming from a certain area but with no real control on the grapes used or the quality of wine) and the famous Controlled Appellation. France has now several hundreds of them: some of them cover a very small geographical area and it is very difficult to locate this place on a map. Even French people can't master the system.

What is the purpose of the new system? Up to now, European wine producers didn't have the right to put the grape name on the bottle in the Controlled Appellation system. If you like French Cabernet Sauvignon, for instance, you have to memorize the geographical areas producing this grape: Bordeaux in a blend with Merlot or Cabernet Franc, Loire Valley, a little in the South. Do you prefer Pinot Noir or Syrah? For Pinot noir, Burgundy is your area; for Syrah, you have to look at Côtes du Rhône, for instance. What about the blends? That's where things are getting really complex: you can find Cabernet Sauvignon, Pinot noir or Syrah in many blends over several areas.

Writer and wine lover Tim York explained on the Wine Forum of the WineLoversPage.com Discussion Group how the French system will be reformed:

"A three tier system of appellations will be put in place.

The third (bottom) tier will consist of “vins de table” (table wines). With effect from the 2009 vintage, “vins de table” will be allowed to put grape variety and vintage on their labels. Grapes may be blended from any part of France. There will no longer be any constraints on production methods, for example on yields and irrigation, other than those of international wine industry norms (e.g. the banning of flavouring additives, certain chemical stabilisers, etc.). It is hoped that this will permit the appearance of French commercial wine brands to compete with those of the New World. “Vins de Pays” will disappear progressively after 2009.

The second tier will consist of “vins de territoire” (territorial wines). Into this category will fall the more ambitious artisan produced wines which are “vins de pays” at present, existing regional appellations such as “Bordeaux” and “Bourgogne” and regroupings of existing lesser AOCs. An example of the last is the regrouping into “Côtes de Bordeaux” of the appellations Blaye, Castillon, Cadillac and Francs. 50 to 100 appellations are expected to disappear in the next few years. The creation of new appellations will not be allowed.

The first (top) tier will consist of “vins de terroir” (terroir wines) which will reinforce the AOC system at the top level. The intention is to guarantee quality as well as origin. New style tasting committees for accepting or refusing wines will replace local vignerons, too subject to complaisance with poor quality and jealousy of outstanding performers, with more independent persons such as journalists, oenologists, wine merchants, etc. The AOCs will draw up new specifications to replace existing INAO application decrees; it is intended that these should be in place for the 2008 vintage." You can read the exchange - sometimes a little heated - on the Discussion Forum.

It is a fascinating topic when you consider that the so-called New World is now starting to protect their own terroirs and to create Controlled Appellations of their own. The US created the "Center for Wine Origins" because, as it stated, "when it comes to wine, there is no ingredient more important than location". As my friend Robert McIntosh wrote on the OpenWine Consortium blog, the old dichotomy between Old and New World is now fading. Welcome to the Wine 2.0 world!

India, emerging market and wine producing country

Among marketers, India is considered an emerging market more than a producing country. It happens that India is both and we shouldn't neglect the Indian wine, whose quality is getting better and better.

I just read in one of the numerous online newsletters I subscribed to that a Book and Wine festival held in Angers and Saumur, two wine producing areas of the Loire Valley in France, has two guests of honor this year: India and Israel. Why this choice? Both countries are now producing wine and developing wine travel.

India develops a strong wine industry through international partnerships, mostly in the western part of the country. In the Maharashtra state, there are the main two wine producers, Sula and Indage. In the Karnataka state, there is the third important wine producer, Grover. Indage created the first wine resort and spa, Tiger Hills Resort.

Because India is now producing its own wines, the Indian consumer is getting more and more sensitive to the taste of wine and interested in tasting other wines besides Indage and Sula. Education is a very important step for international wine marketers. If we want our wines to be appreciated on those emerging markets, we must organize tastings and events to educate the consumers.

Wine is usually drunk away from home and not with food because Indians kept the British habit of having a strong drink – usually a glass of Scotch whisky – before dinner. They do appreciate a drink before their meals. Why not a glass of wine, the new fashionable drink among young urbans? The most popular wines are the Cabernet Sauvignon, one of the grapes blended in the Bordeaux wines, and the Indian Cabernet Sauvignon and Syrah blend from the Nandi Hills in southern India.

To learn more and avoid the embarrassment of a faux-pas, young executives in international corporations get themselves a wine education through wine tastings and classes. They are educating themselves because they know it is important to impress colleagues and clients when at a corporate dinner.

What would prevent an Indian from drinking good wines? Mostly ignorance, but fortunately wine magazines and workshops are now common in the big cities. There is also the fear of mispronouncing foreign names. A young woman, with a good knowledge of wine, reported that her own wine retailer advised her to buy “kotay dou Ronnie”, meaning “Côtes du Rhône”. Is that so shameful? After all, a South African winemaker, Charles Back, had no scruple about naming his own wine “Goats do roam”, a play on the sound of the words!

Emerging market and producing country, India is now a major player of the wine industry with more and more consumers getting sophisticated and learned.

For more information on wine and India, I would recommend the very good blog: Sommelier India

Wine consumers in the world: lifestyle and pleasure

Wine consumption is dropping in France, one of the historical wine producing countries in Europe but going up in Germany while the US will soon be the world's largest wine consumer.

In Germany, the consumption per habitant was 320,6 liters between August 2006 and July 2007. It's an increase of 0,5 l. per habitant. The total consumption was 16,9 millions, after France (33 millions hl), Italy (28 millions) and the US (24 millions).

How can the US be soon the largest wine consumer? "Wine Market Council President John Gillespie told decanter.com that 'most in the wine trade believe that the US passed Italy in 2007' in terms of overall consumption – and is likely to pass France in total volume of wine consumption by 2010." Even if their per capita consumption is lower than France and Italy, the US may reach the no 1 position in overall consumption as soon as 2008.

These dry figures are telling us that wine is now a lifestyle: instead of drinking beer or spirits, the Americans are turning to wine as part of a sophisticated and elegant lifestyle. Wine is the trendy drink just after work, to relax before a dinner or part of a convivial meal.

Welcome to our American friends to the club!