Today, June 21st, Vinexpo opened its doors. Thinking naively it would be a very quiet day, I took the tram and the shuttle to the Exhibition Park and… started feeling sorry for myself! In spite of the early hours, a lot of people were walking on the footbridge on the lake linking the Congress Center to the Park. In Hall 1 thousands of people were already tasting, talking, walking and being busy.

Anyway I had my first look at what a lot of experts thought would be a poor Vinexpo. In fact all the booths were filled up, new exhibitors were present, like the Chinese Dynasty and a lot of wine countries from easter Europe are represented: Romania, Poland, Russia, etc. In the press room I already met several journalists I know and a lot of foreign correspondents were getting their badge at the same time as I did.

A bad year for Vinexpo? I don’t think so but I’ll let you know more as tomorrow I’ll spend a full day working and talking to people. My first impression is good.

On June 18, 2009, the Bordeaux Chamber of Commerce organizes an international video conference on wine and new technologies between Bordeaux and San Francisco, CA. This is the yearly Bordeaux conference, called Numeriglobe, on new technologies. This year, two themes are singled out: healthcare and wine. Of course, I’ll be speaking about wine with the French and American representatives from Crushpad, Bottlenotes.com and vinobilia.com. The French ones will be in the room with us while their American counterparts will be in San Francsico.

The purpose of this manifestation is to show the links between two important wine worlds: Bordeaux and California. In both countries, new technologies are developed to promote their local wines or wine in general. My loyal readers now know everything there is to know about Crushpad in San Francisco and Bordeaux while bottlenotes.com and vinobilia.com are newer to this blog.

I heard about Vinobilia a few months ago and met with Thierry Lay, one of the co-founder. Vinobilia is an international endeavour as I like them: the main partners are American and European. Dan Browne, who was the guest of the Internet radio show The New Wine Consumer, is American while Thierry Lay is French with a strong international background. Vinobilia is a real international wine community: the site is available in French, English, Polish, Russian and Chinese.

But the most innovative feature of the site is the vinogram. How does it work? Everyone has some preferences in the wines one drinks – wehether it’s red, white or rose. Take the test and enter your favorite aromas and flavors in wine. The site will create the profile of your red, white or pink wines. Looking for a wine that fits your preferences? Either you’ll find it on the site or on a shelf. How so? Vinobilia is now working with some one line and brick and mortar wine stores to have them create a vinogram for the wines they sell!

The idea is really bright and I have a few questions to the founders of the vinogram. Of course I’ll save them for our June 18 Conference but will give you more details on vinobilia.com.

A short study conducted by Gfk among wine consumers of 9 European countries (Germany, France, UK, Italy, Netherlands, Austria, Spain, Russia, Poland) brought good news to wine brands: European consumers are loyal to their favorite brands.

Asked if they would consider switching to a similar but cheaper brand, an average of 67% said they would stick to their favorite: 53.5% in Germany, 75% in France, 74.9% in Spain and in Poland, 51.4% in Austria, 70.2% in Italy, 77.1% in Netherlands, 74% in UK and 62.2% in Russia.

However, for other goods such as food or electronic devices, consumers admitted they would change brand for a cheaper one. It means that wine has still a special status in the consumers’ mind. It is not (yet) a commodity good. Cheers!

A few years ago, I was in a wine store in Charlotte, N.C. when a young woman walked in, looked around and grabbed with obvious delight a bottle of a red wine adorned with a stylish J on the bottle: no mention of the varietal or the vintage on the front part of the bottle. I never heard of the winery and was intrigued by this mystery wine. It happened to be a bottle of Pinot Noir from the J vineyards in Russian Valley. While I was looking at the bottle and trying to figure out what it was, the young woman bought a case of it as well as a case of their sparkling wine. Waoooo! This wine must be good! I asked the woman why she was buying so much from one single producer. Her answer almost knocked me down: “My name is Johnson and since it’s our anniversary tonight, I thought it would be so cute to serve a wine with our initial on the label.” “But do you know the wine? is it good?”, did I ask her. “Oh no”, said she, “I never heard of it and it doesn’t matter anyway: I just want the “J” on the bottle!”.

Why am I telling you this story? Because J vineyards just announced they’re changing their label for their new vintage releases. Since then I did my homework and now know that J vineyards produce nice wines, deserving better than being bought for a “cute” label! Does this story tell you something?

When the Western world is in financial trouble, eyes turn to other markets: India, China, Russia carry the hope of our sick economies for recovery. The wine business is no exception. Wine consumption is on the rise in India but it’s still very marginal compared to spirits and beer consumption. The yearly annual wine consumption is estimated at 10 millions liters – compared to 3,000 millions liters of spirits and 1,000 million liters of beer! The potential for the wine business is huge as long as the wine industry can convince the Indian consumer to trade beer and spirits for wine.

What could help the average Indian consumer to change habits? India produces wines from international grapes, such as Cabernet Sauvignon, Pinot Noir, Merlot, Shiraz and Zinfandel in red and Chardonnay, Chenin, Sauvignon, Clairette and Ugni in white. Chateau Indage, Sula, Grover, Vinsura and Vintage are the five top producers. Indage produced 3,600,000 l (40%); Sula, 2,700,000 25%); Grover, 1,250,000 15%); Vinsura, 250,000 and Vintage, 100,000. This shows Indians are familiar with our traditional grapes and wine styles.

On the other end, their wine and food traditions don’t play in favor of wine consumption. Indians drink tea with their meals. Wine is more the before dinner drink during the long pre-dinner meetings with friends and family. An other obstacle is the legal drinking age of 25. Last but not least, only the upper middle class can afford to drink wine because of its still high price for the average income. The middle class is estimated at 300 million individuals, but the upper middle class at a mere 30 million potential consumers. They are mostly located in three states: Maharastra, Kamataka and Delhi.

Imports are a very small part of the Indian market because of the high taxes and the little number of importers. Getting an import license costs the equivalent of about 8000 euros, which is a very high price for a local merchant. What are the market shares of the various importing countries?

- France: 40,5% (81,500 cases)
- Australia: 22,4% (45,000 cases)
- USA: 14,9% (30,000 cases)
- Italy: 8,2% (16,500 cases)
- Chili: 5,8% (11 750 cases)
- South Africa: 4,1% (8,250 cases)
- Germany and Argentina: 2,7% each (5,500 cases)
- Spain: 2% (4,000 cases)

What is the best strategy to approach the Indian market? First of all, there is no Indian market: each state is different and requires a specific approach. Second, there are two main doors: Mumbai, capital of the Maharashtra with a booming economy in spite of the terrorist threats and attacks and a good wine knowledge because the region includes 90% of the Indian vineyards and Bangalore, capital of the Karnataka, the Indian “Silicon Valley”, head quarters of the Grover Vineyards and full of young graduates back from Europe or the US with a thirst for Western lifestyle.

India is indeed one of the most promising market for imported wines but the “candidate” to this Eldorado has to be aware of the numerous traps: a family oriented type of business, very strong local cultures, a complex and subject to change system of distribution and high costs of imports in taxes. But the Indian consumers are curious of our wines and open to the adventure!

My friend Robert MacIntosh, who founded the European Group on OWC to overcome the traditional distinction between Old World and New World in wine, should be pleased by this piece of news: Old World and New World are old news. Now one talks about World Wines.

How did I get this critical information? On Thursday I went to an international tasting organized by my friend Catherine Mell at the Crillon Hotel in Paris. Such an event is very rare in France: wine consumers are not fond of foreign wines, not even vaguely interested. This event met an incredible success – over 500 people showed up and tasted many of the wines offered. Importers and winemakers poured wines from the US, Australia, Austria, New Zealand, Russia, Greece, Hungary, Cyprus and many other countries.

My information on world wines came from a very interesting character, Laurent Metge-Toppin, who was for 10 years the winemaker of Siam Winery in Thailand and is now their rep in Europe. Metge-Toppin is an enologist trained in France but who was living in London when he met Chalerm Yoovidhya, an industrial making a “wine cooler”, kind of a refreshing drink based on wine. Metge-Tappin moved to Thailand and started working on the wine cooler. Quite by accident, he figured out he could make a decent wine with the local grapes. In 1998, Monsoon Valley was born: in the buddhist calendarthis 1998 vintage is the 2541 vintage! Metge-Toppin is now selling his wine to restaurants and wine consumers. He hired Sakom Series, enologist trained in Bordeaux and former employee of Château Pape-Clément, to create a great wine. His definition of Thai wines? “A different wine, not New World, not Old World. A world wine unique by its taste and characteristics…”

I tasted some of the Monsoon Valley wines: the Rosé Shiraz 2008 (Malaga Blanc, Colombard and Shiraz), the Colombard 2008 and the Blended Red 2008 (Pokdum and Shiraz) – they’re unusual, unique and totally different. I’ll be very happy to taste them with thai food. Should we meet in a thai restaurant soon?

In his fascinating book, Futurewise, Patrick Dixon explores the world around six letters – the letters of the word “F.U.T.U.R.E” : F as Fast, U as Urban, T as Tribal, U as Universal, R as Radical and E as Ethical. It is the definition of the new consumer. Let’s see what the “fast consumer” is about in the wine business.

The international consumer lives in a fast world : fast-changing technologies, fast-changing products, fast-changing world, fast food, fast travels. “The developed world, is cash-rich, time-poor and intensely impatient”, Dr. Dixon sums up in a striking sentence.

The rise of the Internet is certainly one of the most significant changes in the way consumers can access new products, new information and new people. News now travels almost instantaneously, as the phenomenon of “breaking news” on the American news channel CNN shows. Consumers are used to zapping from one TV channel to another, and apply the zapping technique to brands. They are not loyal to a brand anymore and keep changing, depending on the ad, the novelty or the appeal.

Because the technology is changing, the market is changing. The consumer requests diversity and quality, as well as immediate access to the product he wants to buy, taste or try. The answer is e-commerce or the sale of the goods on line.

Yesterday, Europeans were drinking their father’s cellars and building cellars for their children. The Americans were recovering from the Repeal of Prohibition and were building their wine industry. The Japanese were recovering from World War II and getting acquainted with Europe. Today, the French, Americans and Japanese are “zapping” from one wine to another, experimenting with new tastes, new countries and new styles. Yesterday the French were drinking 80 liters a year; today they are drinking 55 liters a year. Americans were drinking beer, cocktails and whiskey; they are now drinking 8 liters of wine a year. Japanese were drinking sake and tea; now they are drinking French classified growths and other European fine wines. Yesterday, wine was served everyday at lunch and dinner in Europe. Today, the French, the Americans and the Japanese are eating sandwiches in front of their computers, reaching for the bottle of water and the cup of coffee. Dinner time is very often some frozen food reheated in the microwave by an overworked parent, or some pizza ordered by phone. Yesterday, before the family meal, Mr. Dupont went into his cellar, chose his bottle carefully and put it on the table to complement the nice dinner home-cooked by Mrs. Dupont. Today, Mrs. Dupont chooses the wine and gets in her car to buy it at the nearest supermarket. Yesterday, Mr. Smith was drinking beer and Mrs. Smith milk. Today, they are all drinking sodas, beers or wine. Yesterday, regional branding was an important element to help wine enthusiasts develop an understanding of the global wine world. Today, the New World favors varietals, while the Old World is switching strategy.

Today, all of them – Japanese, Europeans, Americans, Indians, Chinese, Russians – are connected by phone and through the Internet, and to the Internet through their phone. The M Generation of Patrick Dixon could also be called the “Mobile Generation”, because their mobile phone connects them to the world through the Internet. The M Generation can buy on line by phone after they have got the information they were looking for on the Internet. Because it is connected to the world by phone 24 hours a day, 7 days a week if it want to be, the M generation is also a giant online community. Ben and Linda Smith, two young Americans interested in wine, are connected to the Internet. Their counterparts in Europe are Pierre and Sylvie Dupont, in India Chandra Singh and in China Yin Li. All those people are going to surf the Net to find information on wine, exchange ideas and tips or share their tasting notes on their favourite wines or addresses of good wine and e-commerce sites.

What do those people living in different cultures and speaking different languages have in common? Mostly they share the same interest in wine, food and a quality lifestyle, speak English or have a decent knowledge of English and have access to the Internet. Sooner or later they will cross paths on a forum, on a blog or on an informational site on wine. They will be part of community-building projects, such as wine encyclopedias, wikis, blogs or forums. “The spirit of the online community,” explains Patrick Dixon, “will continue to be a passionate belief that information should whenever possible be given away for the benefit of humankind as a whole. This ethic will have a profound effect on many businesses […].” Dr. Dixon can now switch to the present tense. Almost everyday a new site is born to sustain the international online community of wine consumers. Wine forums, wine blogs and even wikis are now so popular that their numbers have exploded.

Tomorrow we’ll talk on emerging markets for the wine industry. I happen to find a rather interesting article by one of my colleagues, Uché Okwonko, author of Luxury Fashion Branding on luxury and emerging markets.

On her website, Uché created an online magazine on luxury. Her latest article, “Separating the Facts from the Fiction of the Emerging Luxury Markets”, is related to emerging markets and I do think that a lot of her ideas are quite pertinent for the wine market:

“Before looking at the main features of each of the emerging markets, it is important to note that the emerging markets have unique characteristics that make it unrealistic for them to act as benchmarks for one another. For example, the socio-cultural attributes of China and Russia are so starkly different that it would be impossible to use the same parameters in their measurement. One thing the emerging markets have in common however is their current robust economies and the future promises this holds for luxury companies.”

After she presented the main differences between the four emerging markets (Brazil, Russia, India and China), she concludes:

“The emerging luxury markets collectively hold promising futures for the luxury business but entry and successful business in each of these markets remains challenging as it ought to be approached through a sound set of strategies developed following an evaluation of the market’s specificities.”

Our next live radio show will be on the emerging markets in the wine business. From a European stand point of view, the emerging countries are: China, India and Russia. We already went over some issues related to China and India. Russia is a far more difficult market to reach and understand.

In spite of a reputation for hard drinking, Russians are way behind French, Irish and Czechs in alcohol consumption, with only 9.3 liters a year per capita. Russian traditions in wine and food explain this bad reputation, and the current situation. “Russian cuisine,” explains the author of the Wikipedia article on “Russian cuisine”, derives its rich and varied character from the vast and multicultural expanse of Russia. Its foundations were laid by the peasant food of the rural population in an often harsh climate, with a combination of plentiful fish, poultry, game, mushrooms, berries, and honey. Crops of rye, wheat, barley, and millet provided the ingredients for a plethora of breads, pancakes, cereals, kvass, beer, and vodka. Flavorful soups and stews centered on seasonal or storable produce, fish, and meats. This wholly native food remained the staples for the vast majority of Russians well into the 20th century. Lying on the northern reaches of the ancient Silk Road, as well as Russia’s close proximity to the Caucasus, Persia, and the Ottoman Empire has provided an inescapable Eastern character to its cooking methods (not so much in European Russia but distinguishable in the North Caucasus).”

Later on, from the 16^th to the 18^th century, Russians imported smoked meats and fish, pastry cooking, salads and green vegetables, chocolate, ice cream, wines, and liquor. This created, for the rich and mighty aristocrats, the various sources of refined and elegant dishes. This trend was confirmed and extended in the 19^th century, when the Russian court and aristocracy imported not only the ingredients but also the French and Austrian personnel able to cook the new dishes. That is why, concludes our anonymous author of the Wikipedia article, “Many of the foods that are considered in the West to be traditionally Russian actually come from the Franco-Russian cuisine of the 18th and 19th centuries, and include such widespread dishes as Veal Orloff, Beef Stroganoff, and Sharlotka (Charlotte Russe).”

It was customary for the traditional Russian to drink mostly vodka with his meals. 30 years ago, Russians were drinking 17 liters of wine per capita a year. The rest of their alcoholic consumption was dedicated to beer and vodka. By the mid 1990s, their wine consumption had plummeted to 2.5 liters, but went back up to 5.1 liters in 1998. The main core of their consumption is still vodka and beer.

This difficult history between wine, spirits and food in Russia does not influence so much the newRussia wine consumer whose profile is rather similar to the Indian or Chinese wine consumer. Drinking wine is a sign of status and social success. There are now a few hundred millionaires in Russia: their fortune is estimated at around $3.4 billion dollars. The richest of all those successful businessmen is Roman Abramovich, whose fortune is estimated at $19.2 billion. The income of the average citizen has also increased. The average income of the middle class is now $7,000 (around 4.800 euros) a year, while the national average is around $2,610 (about 1.800 euros) a year. 20 million people are now above the poverty level.

In this relatively prosperous economy, more and more people have a little disposable income. Wine is a good way to spend some money; it is new and trendy as well as a sign of success. Russians drink mostly red wine (70%); white wine accounts for about 25% and rosé wines for the rest. Russians – a little like their American counterparts – have a sweet tooth. They love off-dry and semi-sweet flavors, even in red wines.

Dry wines reflect mostly the more sophisticated drinking habits of the wealthy consumers. Young entrepreneurs and high executives of international corporations are the main clients of the fine wine business. The wealthier wine consumers thrive on First Growth Bordeaux and cult wines from the New World.

The average wine drinker will mostly buy imported wines from Moldova (before the ban), Bulgaria, Georgia and France, with Italy now getting into the picture. The price of a bottle will be in the 3 euros range, but the situation is different in the major cities, like Moscow, St. Petersburg or Kiev. In those cities drinkers have a much higher disposable income and spend more on premium wines.

More traveled, highly educated, with a high income, these new wine drinkers have the time and the will to learn more about wine. They want to have access to the status symbols of the Western world. Wine, like luxury products, is highly desirable for these new consumers.

News from various sources confirms the rise of consumption and production of wine in China. I wrote several pages on the new Chinese consumer in Wine Brands but the phenomenon seems to be increasing. Here is the update on the subject, from the newsletter of Meininger’s Wine Business International:

“Chinese wine consumption is predicted to increase by 70% by 2011, with China being the eighth biggest consumer of wine in the world by 2012, surpassing Russia. According to the China Wines Information Site, the Chinese wine industry developed at a rapid clip through 2006, with production up 14.1% to 495.1 thousand kilolitres in volume over the previous year. Sales were also up by slightly more than 25%, to total 12.952b yuan ($1.8b/€1.18b). In the first three months of 2007, profits were up 33% over the same period the year before, with the China Wines Information Site (wines-info.com) predicting that output and consumption of Chinese wine will remain high.”