Washington and Oregon Wines in London

There is a special tasting of Washington and Oregon wines in London today, held at the Institute of Contemporary Arts at 12 Carlton House Terrace. More than 190 wines from 40 Pacific Northwest wineries are being sampled. Marty Clubb of L'Ecole 41 in Walla Walla is leading an educational seminar about the Washington wines and Howard Rossback of Firesteed is doing the same for the Oregon products. The event is funded in part by a $200,000 federal trade grant. I believe it is the largest organized effort (so far) by Northwest winemakers to break into the European markets. It will be interesting to see if this seedling can grow to bear fruit.

Washington and Oregon are important winemaking regions, of course, but their reputations and sales are concentrated in the United States. Although Oregon Pinot Noirs are always included in the discussion when people anywhere talk or write about new world Pinots, the fact is that not much of it is sold abroad. Oregon wine sales in the UK and France were just over 2000 cases in 2006, for example, out of total production of 1.6 million cases. The word may be out around the world about Oregon wines, but wine distribution and sales haven't followed -- yet.

I don't have figures for Washington wines, but I suspect that the situation is more or less the same. Washington makes excellent wines (better than Oregon wines, if you judge by the Wine Spectator and Wine Advocate ratings, where several Washington wines receive 95+ points), but so far Washington doesn't seem to have that one distinctive wine that could establish an international reputation. The state is too varied, I think, in terms of climate and geography for that to happen. Washington is Riesling country, judging by volume of production, but it hasn't yet established an international reputation with this wine (although it is trying to do so with the Riesling Rendezvous conference). A variety of reds do well here, including both the Bordeaux and Rhone varietals, but no signature style of wine has emerged as the champion. Marty Clubb is telling the people in London that Washington has the ideal climate for wine (that's the official Washington wine theme), which may be true but doesn't really define the product for confused international buyers.

Washington does have one advantage over Oregon in the export market: distribution muscle. The Washington wine industry features a few very large players that have the financial clout to potentially open up foreign distribution channels. Money is necessary; it isn't easy to establish a brand abroad in this crowded market and margins on exports are necessarily lower than for domestic sales, at least at the beginning. I have read that export sales by small scale winemakers are "vanity" projects and there may be some truth to this. That doesn't mean it's not worth doing, however.

The Chateau Ste Michelle family of wines have penetrated some European markets. I was surprised to discover a large display of CSM wines in an upscale supermarket next to the train station in Riga, Latvia, for example. I haven't been able to find out how the wines got there yet -- my guess is that CSM's deal to distribute Antinori wines in the U.S. may be reciprocated by Antinori in Europe but I don't really know. Other Washington wines including Columbia, Covey Run and Hogue are part of the Constellation Brands portfolio, which may aid in their international distribution, too.

The London tasting isn't the first effort to get Northwest wines attention in the UK. I remember being in London in about 1990 and walking into Fortnum and Mason only to be shanghaied by an excited clerk who was directing anyone she could to a lonely wine tasting display where they were sampling wines from Hogue Cellars of Yakima. Needless to say, no one had any idea where Yakima was located, but they were amazed that such a unlikely place could produce good wine. Today's London event is a much larger project than that Fortnum display, but the goal is much the same, to make friends, establish relationships, and get our foot in the door.

I hope the London tasting goes well. Many of the wineries are apparently looking for UK distribution, which makes sense. The UK is the most important wine market in the world. It is a good market to sell wine and to establish a worldwide reputation. A disproportionate number of the world's leading wine writers and experts are based in London, including Jancis Robinson, Oz Clark, Michael Broadbent and Steven Spurrier. A good word by any of these celebrity wine critics would encourage wine enthusiasts in the UK and around the world to give Northwest wines a try. But the real prize would be a distribution deal with Tesco or Sainsbury's, which dominate supermarket sales, or one of the big high street wine store chains, since you can't try wines you can't buy.

One reason this is a good time to try to break into the UK and European markets is that the exchange rates favor U.S. exports. The dollar fell dramatically in 2007 against both the Pound and the Euro, making U.S. wines relatively less expensive. This will help, but it will still be difficult to get British wine drinkers to think beyond Gallo and one end of the market and Napa Valley at the other.

It's tough to break into foreign wine markets. Ernie Hunter famously did the DIY way -- he brought his wines to London and entered them in the Sunday Times wine festival, where they won the people's choice award. Ernie was from New Zealand and his surprise victory paved the road for Marlborough Sauvignon Blanc's dramatic rise in the world of wine. Washington and Oregon are taking a direct and organized approach, with tastings and seminars. Every case is different. My next post will tell an unlikely story of how Washington wines first came to Sweden.

The French Connection

Watching Jonathan Nossiter's film Mondovino gives the viewer the impression that the world of French wine is being overrun with Americans and modern American wine influences. Maybe that's true, but if so it is only half the story. Herewith three stories of French wine and wine-makers in America inspired by recent conversations with former students (thanks to Jeremy, Devin and Patrick for your help).

Story 1: Pinot Noir is a hot wine in the United States -- the Sideways phenomenon continues for now. The best-selling Pinot Noir in American is called Redwood Creek. Have you seen it? Redwood Creek is a popularly priced Gallo brand; the label says that the wines are "inspired by the Frei Bros. 100 Year Old California Winemaking Tradition."

"Inspired" is a good word to use here because, although the brand reflects California tradition, the wine itself is from France. The label says "Product of France" and "Vin de Pays D'Oc." So it doesn't come from California's Central Valley, as you might expect from a Gallo product, but France's equivalent, the vast vineyards of Languedoc.

I expect that many American supermarket shoppers who would never have had the confidence try to pronounce "vin de pays d'oc" much less spend money on some of its wines will be happily opening bottles of Redwood Creek Pinot Noir this Thanksgiving. Moral of the story: American consumers will buy French wine if it is presented in a familiar, understandable way, which in this case means as a branded varietal wine.

Story 2: I gave the faculty toast to our Phi Beta Kappa graduates at a luncheon last May and I was surprised to discover afterwards that the sparkling wine we drank came from New Mexico of all places. It was called Gruet and I was further surprised to find some of it on the neighborhood Metropolitan Market shelves.

Gruet et Fils is a prominent French Champagne house, founded in 1952. Champagne is a good business, but a difficult one, too, for an entrepreneur. The business is highly regulated and expansion opportunities are strictly limited. Vineyard yields and locations are tightly controlled. If you want to make more Champagne to take advantage of market conditions, well basically you can't. But you can make more Champane-like product, Methode Champenoise sparking wine, if you invest in vineyards outside the Champagne region. It won't be Champagne, of course, and won't earn Champagne's price premium, but people will buy it if it's very good.

Members of the Gruet family were therefore vaguely searching for vineyard expansion opportunities when they were passing through the American Southwest in 1983. They ran into some fellow European winemakers who were trying to make a go of it in New Mexico and, inspired by their example, ended up planting vineyards at elevation 4300 feet near the town of Truth or Consequences, about 170 miles south of Albuquerque. The winery equipment was shipped over from France along with members of the Gruet family to make the wine and, in due course, a first vintage (1987) was released.

Today Gruet produces more than 80,000 cases of American sparkling and still wines in New Mexico, which must make them the state's largest producer. Prices run from about $13.50 for the basic sparkler up to nearly $50 for limited release wines -- prices that are significantly lower than for equivalent Champagnes. Moral of the story: Americans will buy French-style wines from unexpected places if they are good, which the Gruet wines are, and a good value.

Final story: Boisset, Vins et Spiriteux is a major French wine and spirits company. Founded in 1961 by Jean-Claude Boisset, it has evolved into a a top-five producer in France, exporting to more than 80 countries with investments in California (DeLoach Vineyards), Italy, Spain, Uruguay, South Africa and Canada. Their French brands include J. Moreau & Fils (Chablis), Bouchard Aine & Fils (Cote de Beaune) and Louis Bernard (Rhone Valley), all of which are sold in the United States.

But Boisset America's big push at the moment is a wine called French Rabbit. Like Redwood Creek, it is wine from Languedoc. Unlike Redwood Creek, however, it doesn't pretend to be inspired by anyone's tradition, either French or Californian. It is designed to appeal to modern consumers who want to make wine part of an active, informal, sustainable lifestyle. That's why it is packaged as you see it here, in lightweight eco-friendly octogonal-shaped one liter Tetra-Prisma containers (and 250-ml single-serving untis, too).

(The wine on the left, Yellow Jersey (think Tour de France) is another Boisset America brand. It comes in a PET plastic bottle and will fit in your bicycle's water bottle holder.)

Is the world ready for wine that looks like this? A lot of my friends cling to tradition, unwilling even to give up corks for screw caps. Will they accept wine in what appears at first glance to be an orange juice carton? Apparently so -- Boisset America sells more than 100,000 cases of French Rabbit in the United States and Canada and is now introducing the innovative brand into what must be the most traditional possible market, France itself. (Watch for an upcoming post about how French Rabbit and its unorthodox packaging was born).

Moral of the story: French wines can succeed outside of France because of the creativity and entrepreneurship of French winemakers. Who knew?

The Pinot Puzzle

They were serving Pepperwood Grove wines at the reception at The Tacoma Club last night and I was a little bit suprised to see a Pinot Noir there, standing side-by-side with the Chardonnay, Cab and Merlot. The reason for my surprise is that Pinot is in short supply these days, so you don't really expect to find it in a competitively priced line like Pepperwood Grove, which is one of the Don Sebastiani and Sons brands. I saw the wine today at the Metropolitan Market for $5.99.

The Pepperwood Grove Pinot is part of a bigger Pinot Puzzle. People are buying (and wineries are selling) a lot more Pinot Noir in the post Sideways era, but there aren't that many more tons of Pinot Noir grapes available. Where has the extra Pinot Noir come from?

There are several possibilities. Maybe some of the Pinot that had previously been used in blends (such as generic "burgundy") is now instead being bottled on its own as a varietal. I don't know if this is a major factor, however, because I am not sure how much Pinot went into those blends in the first place.

Another possibility is that other wines are being blended with Pinot up to the legal limit to stretch it out. In Oregon a wine labeled Pinot Noir needs to be at least 90% Pinot, but other states have lower limits. I am sure that this takes place and it helps account for the fact that some recent Pinots, while they may taste good, don't always taste like Pinot. But they sell like Pinot, which is the point I guess.

A third possibility is that the wine might not be exactly what you think it is. It is not uncommon for winemakers to import foreign wines (and bottle them under their own labels) when faced with a shortage. This is fine when the label makes the unexpected provenance clear, but dishonest when the real wine source is hidden or obscured, as it is on some so-called "Chinese" wines, I am told, which contain mostly cheap Chilean bulk product blended with a small amount of China juice. More than one winemaker has got in trouble when customers discovered trickery.

The Pepperwood Grove Pinot is an honest wine. Although I associate the brand with California, the label clearly identifies this wine as Chilean. According to the website, Pepperwood Grove sells both a Chilean Pinot (113,000 cases of the most recent release) and a California Pinot (60,000 cases). That solves the Pepperwood Grove Pinot Puzzle: they imported the extra Pinot Noir to meet the demand. But there still are a lot of mysteries out there, hidden in bottles of wine.

Old World meets New World in Oregon

The debate about wine is often framed as Old World (Europe) versus New World (California, Australia, New Zealand, South Africa, South America) but I am suspicious of such simple dichotomies. I suspect that the issues don’t break cleanly along these lines, so I always find it interesting to explore the blurry edges where Old meets New to see what I can learn.

The film Mondovino examined l’affaire Mondavi – Robert Mondavi’s unsuccessful attempt to build a winery in the south of France. That's a pretty easy (is oversimplified) story to tell: Americanization, McDonaldization, Disneyfication. You know what I mean.

I’m interested in the reverse flow, Old World winemakers who invest in the New World, how and why do they do it and what are the results? Sometimes Old World firms enter into partnerships with New World winemakers. Opus One is probably the most famous such venture, a partnership between Robert Mondavi and the Rothschild family of France. Col Solare is another good example, an alliance Ste. Michelle Wine Estates of Washington and the Italian Antinori family.

Direct investment is another strategy – Old World wineries buy land, plant vineyards, build wineries, bring in their winemakers, and make wine. What kind of wine? Old World wine in the New World? New World wine? That’s a question worth exploring.

Some examples of Old World winery investment in the New World include the Domaine Chandon in California (owned by the French Champagne house), Barboursville winery in Virginia (owned by the Italian Zonin family), the St. Supery winery in Napa Valley (owned by the French Skalli family) and Domaine Drouhin Oregon (DDO), which is owned by the French Joseph Drouhin firm. I visited DDO recently, accompanied by my wife Sue (photo right) and our friends Michael and Nancy Morrell (photo left below), who are sailors (they have circumnavigated the globe in their Norseman 447) and aspiring wine research assistants. Here’s what we learned.

Maison Joseph Drouhin is a famous Burgundian winemaking firm. They began as negociants in the 1880s, aging, blending and marketing wine made by others and eventually acquired some exceptional vineyards of their own. Oregon appeared on their radar nearly 30 years ago when Robert Drouhin presided over a blind tasting of Old and New World Pinot Noirs in 1979, which was won, to everyone’s great surprise, by an Oregon wine from Eyrie Vineyards. What followed is a long story that involved many visits to Oregon. Robert’s daughter Véronique, who was studying winemaking at Dijon, interned at several Oregon wineries. Having learned all they could, the Drouhins took the big step, bought land, planted vines, built a winery, and began making wine. The first vintage, 1988, was made in a rented facility using purchased grapes. The gravity-flow winery (the first such in Oregon) was built in 1989. Today they have 90 acres of densely-planted vines (one meter by one meter by the look of them) on a 225 acre estate. Véronique is the winemaker and her brother Philippe manages the vineyards here as well as those in France. The wines? The classic Burgundian varieties, Pinot Noir and a little Chardonnay.

Mark Bosko, the DDO tasting room manager pictured here, spent almost two hours with us, showing us the vineyards and production facility and answering all manner of questions. The tour ended with a comparative tasting of Drouhin’s French and Oregon wines. To be specific, we compared the 2005 Maison Joseph Drouhin (MJD) Chablis Premier Cru ($27) with the 2006 DDO Chardonnay Arthur ($30) and a 2004 MJD Beaune Premier Cru ($28) with the 2005 DDO Pinot Noir Willamette Valley ($45). We are not professional tasters, but we did have opinions. The group seemed to favor the Oregon Chardonnay over the French Chablis. I suspect that this is because we are more familiar with the oaked Oregon style than the more mineral classic Chablis flavor. It would be interesting to taste these two wines with consumers from France -- I am sure they would make the opposite choice! It was easy to tell Old World from New World here.

We liked the French Pinot Noir better, although I am not sure if it was a completely fair comparison. I think the French wine benefited from its additional year of aging. I would like to taste the DDO again in a year to see how it has matured.

So what kind of wines are the Drouhins making in Oregon? I would say that they have some of the style of the French wines that we tasted (a family resemblance, as Mark suggested?), but they are still quite different – and this is not a surprise. Although the grape varieties are the same as are the barrels and the vineyard manager, almost everything else is different, especially the climate and the soil. If terroir matters, the wines should not be same. And the market is different, too, which makes a difference.

How do other Oregon winemakers view DDO? On one hand, I think that DDO’s investment here has given Oregon Pinot Noir credibility that would otherwise be difficult to achieve and so it has benefited the entire industry here. I think that some of the pioneer winemakers probably worked pretty hard to encourage Robert Drouhin make this investment for exactly this reason. On the other hand, of course, DDO is big-bucks, deep pocket competition for the many smaller winemakers in the valley, so you can imagine that there is some envy and even resentment of their success. But this isn’t an attitude unique to wine when it comes to direct foreign investment.

Can Small Winemakers Survive?

Can small winemakers compete in a wine market that is increasingly dominated by large producers and experiencing rapid consolidation? This is one of the questions I was asking in my recent trip to Oregon, where I visited several wineries in the Willamette Valley. Here’s what I found out.

Economies of scale in distribution do matter and so the consolidation trend is real, even in Oregon. The Erath winery, one of Oregon’s real pioneers dating back to 1972, was purchased last year by St. Michelle Wine Estates, the Washington wine giant that produces Chateau St. Michelle and Columbia Crest and that also now owns boutique Spring Valley vineyard in Walla Walla.

On the other hand, Oregon is still benefiting from the Sideways phenomenon, which has created a surge in demand for Pinot Noir, its signature wine. Some small high quality pinot-noir specialists sell out through their wine clubs or at the cellar door and are thus immune, for the time being, from distribution woes. The Pinot fad, if that's what it is, benefits Oregon wineries and has allowed them to expand production and raise price at the same time that other winemaking areas have been in retreat. I saw many new blocks being planted in Oregon to take advantage of high demand and rising prices. It will be interesting to see what happens in a few years, when all of these vineyards begin producing. Will demand remain high? Will the supply be too great? All bets are off for small winemakers (at least those without very deep pockets – and there are some of these in Oregon) if a Pinot glut should appear.

How can small wineries compete? Wine cooperatives are one solution, although not necessarily a good one. Wine cooperatives are big business in Europe, especially France and Italy. A number of smaller vineyard owners jointly own a winemaking facility, delivering their grapes to be blended together. I have tasted some wonderful cooperative-made wine in Alto-Adige (Northern Italy), but I think this was the exception. Cooperative wines are suspect because the members are paid on the quantity of grapes they deliver to the winery rather than the quality of fruit they produce. No one has an incentive to sacrifice quantity to improve quality and the resulting wines can be hard to drink and harder to sell. They form much of the “wine lake” that the European Union is trying to eliminate.

In economic terms, the idea of sharing expensive fixed-cost facilities is sound, but the cooperative institutional structure is problematic. The Carlton Winemakers Studio (CWS) in Carlton, Oregon (in the new Yamhill-Carlton District AVA) is an attempt to get the benefits of cooperation without the negative incentive effects. I visited CWS recently and met with Jeff Lumpkin, the general manager, who is pictured here.

CWS is a 20,000 case facility that provides services to 11 individual tenant wineries (including Lazy River, Jeff’s own label). The costs of the expensive structures and equipment are shared, but each winemaker is independent and has complete control of wine production, so each has an incentive to make excellent wine. Quality rules. You can taste all of the wines in CWS’s attractive tasting room.

We were fortunate to be able to attend a wine dinner at CWS to celebrate the release of the new J.Daan Syrah (made with Columbia Valley grapes). It is a good example of what is possible at CWS. Winemaker Justin Van Zanten (pictured here with his wife Megan) makes about 600 cases of J.Daan a year at CWS, mostly Pinot Noir. His “day job” is assistant winemaker for Andrew Rich, which is also a CWS tenant. The CWS facility has helped him get a foothold in the industry and to gain some attention for his wines (Wine Advocate rated his 2003 Pinot Noir a 90). I bought the 2005 Pinot Noir for $27, a bargain price for Oregon wine of this quality.

The CWS formula clearly has benefits for small winemakers and has been successful, as far as I could tell, in achieving its goals. Jeff Lumpkin was nice enough to guide us through a tasting of a half dozen CWS-client wines and the quality is certainly there.

Is CWS a success story? Yes, I think so. But the future of this facility and the institutional model it represents is still uncertain. For one thing, it seems to be straining and the seams to accommodate the rising production of its client winemakers – will there still be a place for the small winemakers? – and I don’t think anyone knows for sure what the market for Oregon wines will look like in five years. Will bust follow boom?

And then there is the incentive problem. Although a fee-based private property rights operation like CWS avoids the negative incentive structure of the French cooperatives, there is still a natural incentive for winemakers to try to free-ride on services and facilities if they can. With luck, market conditions and private incentives will align themselves so that CWS’s excellent winemakers will continue to prosper.