Wine and Climate Change

As someone going in to a career largely motivated by mitigating the effects of global climate change (renewable energy/clean tech), I’ve often wondered during our class what the effects of global warming will be on the global wine industry.  As we’ve discussed in class, some of the best wine grape growing regions in the world are in areas with cool-to-moderate seasons and few extremes (too hot or too cold is generally bad).  What happens when these regions warm and experience more severe weather events?

Fortunately, a few industry professionals have put together some robust academic studies predicting the effects of a warming planet on wine regions.  In particular, the studies I reviewed are by Adelsheim, et al, in the November 2016 Journal of WineEconomics and Mozell and Thach in the December 2014 issue of WineEconomics and Policy.

Adelsheim notes that climate change is likely to result in earlier harvest and periods of water stress (droughts).  For example, in Bordeaux, harvests are typically in October and have moved to September.  They may more earlier in the month or into late August in the future.  As far as droughts, limited water stress is apparently good for the quality of grapes but reduces yield.  If droughts are extreme or prolonged, they can impact the survivability of the vines and result in long-term impacts.

Perhaps more concerning to Adelsheim is the volatility or extreme nature of weather events on a warmer planet.  Historically severe fires, floods, frosts, and hot spells can move entire regions out of balance and change the calculus for which grapes grow best in which areas.  He suggests changing the varietal composition to produce grapes that perform best in warmer areas, and to extend growing areas in regions that are typically on the colder end of the vine growing spectrum.  For example, he notes expanded growing areas in New York’s Finger Lakes and in the Pacific Northwest.

Mozell and Thach have more than a dozen recommendations for vineyards to adjust to a warmer planet.  Tactics such as nighttime harvesting, canopy management, and drip irrigation.  These tactics may run in the face of traditional growing practices (some growers scorn irrigating vines), but may be necessary to protect harvests and yields.

Wines Blogs

Did you like the idea of following a blog to learn more about wine? I wanted to check if there were any interesting wine blogs to follow after this class is over, and realized that there are hundreds of them! Many with similar value propositions (learn more about wine, food and wine recipes and pairings), but also some blogs that I found very creative (for instance, blogs created by photographers that love wine and use photography to communicate different wine experiences). I found this landscape of wine lovers wanting to share their experiences and knowledge around wine very interesting, and at the same time saw how big companies are using this same blogs and its branded blogs as a marketing tool. We talked in class about the use of influencers and social media marketing for wine, which is becoming more and more common as a marketing strategy in several other categories as well, not only in consumer products, but broadly use in consumer products. It’s interesting to see this trend and how marketing has evolved in this categories, how people don’t want to listen to the “big company” talking about its brand, but to a person giving a “recommendation” about a brand, and how important is for brands to recognize this and be strategic about it, in order to create a marketing strategy that truly speaks to its target group.

If you’re interesting in wine blogs, here are a few that I found interesting:

1.VinePair

If you like infographics as much as I do you’ll love this one. Great infographics for a wide variety of topics related to wine.

Link: https://vinepair.com/tag/infographic/

2. Wine Folly

Lots of fun facts and tips about wine, in easy to read posts.

Link: http://winefolly.com/blog/

3. IWA Wine Blog

Here you can learn everything about wine accessories, and buy them if you want.

Link: http://blog.iwawine.com/

4. Social Vignerons

Here you can find infographics, wine and food pairing tips and recipes, interviews and more.

Link: http://socialvignerons.com/

5. Vindulge

Find interesting facts about wines, as well as food and travel lifestyle posts.
Link: http://www.vindulge.com/

What does luxury mean for Duckhorn?

In her presentation on Wednesday, Carol Reber emphasized that part of Duckhorn's strategy is to maintain its luxury focus. She noted that the investment thesis driving TSG's investment in the company was predicated on the consumer shift towards luxury wines, and that the luxury wine industry is ripe for consolidation. This led me to ask myself, what does luxury mean for a winery? Traditional luxury players across a number of categories like Chanel, Hèrmes, Christie's, and Soho House, define luxury as aspirational, and they achieve the element of aspiration through exclusivity. They ensure their products are coveted around the world through prohibitive pricing and limited distribution. While the high price points allow these brands to generate high levels of revenue, the prohibitive pricing often means that their growth rates are slow and steady.

Today, however, there has been an unprecedented dramatic shift in the luxury space. Many traditional luxury players are struggling to attract younger consumers - the millennial generation. This shift, which some attribute to the rise of the sharing economy, has led to the emergence of modern luxury companies. Modern luxury companies, which include the likes of Everlane, Glossier, Harry's, and PUBLIC Hotels to name a few, are built on the premise that luxury should be accessible to all. Their products are priced affordably, but the product quality and experience afforded to the consumer differentiate them from the rest of the pack.

I'm curious to learn more about what luxury means to Duckhorn. What will its strategy to maintain its luxury angle be, and how it will continue to exhibit impressive growth rates while also remaining a luxury brand? The release of Decoy, the $25 entry-level bottle of wine, suggests that Duckhorn values accessibility. Marketing and branding is becoming increasingly important for the younger consumer, and Duckhorn will need to continue to innovate in order to resonate with consumers of all ages and continue to scale.

Survey: Wine Consumer Preferences

I figure this would be interesting fodder for thought. Winebusiness.com conducts an annual survey of wine drinkers on how they buy wine and what their preferences are in making purchasing decisions. The results below are from their 2016 survey, and if they release 2017 results at the same time as they did for their 2016 results, the new data should be revealed in just a few days, on Dec 6th.

Below are some of the highlights:

Merry Christmas from Duckhorn Vineyards!

I snapped this photo this evening while shopping at the nearby Safeway on El Camino, and as I did, I took some time to reflect on the effectiveness of this prominent display. Not only was it massive, it was also located right by the checkout aisle, rather than in the wine section. 

Our speaker mentioned that the strategy here is to create a "one stop shop" of sorts for all the customer's wine needs. Duckhorn wants to become the trusted brand from which I buy my Merlots, Cab Savs, and Chardonnays, with their most well known varietals providing a halo effect that leads me to try their other bottles. 

While I think there is some logic to this strategy, the effect on me is actually quite the opposite. Whereas I want some consistency of branding across, say, my makeup choices, I don't necessarily want that among my wine selections. With my makeup, I'm buying solely for functionality. I want it to look good, and if I think Revlon has great eye liner, I'll probably try their blush because I also think it will be great. However, with wine, I'm not just buying for good taste. At least at my current level of wine knowledge and budget, I find I like most red wines I try (I've had less success with whites). Therefore, I don't just want quality in my wine, but also some "character". That might be in the form of choosing a wine from a unique place, or a new varietal, or yes, I'll admit it, even wine with a clever label (I bought this wine exclusively because I'm a science dork). If that's what I am going for, that my wine have some deeper "story",  then picking all of the wine I buy from a single display is dissatisfying. It feels too cookie cutter. Thus to capture my dollars, it may be better for Duckhorn to spread their wines throughout the wine section, rather than to emphasize the fact that they're all under one parent company. (In the same way that I was happier buying Blue Moon before I knew its now owned by MillerCoors.)

I'm sure that Duckhorn has data to back up the fact that this display setup is a very effective sales tool, but for what its worth, here's the opinion of one consumer who didn't like it. I left the store without buying any wine, although that was probably more because my cart was already packed with Christmas cookies, lights, and a small tree! 

Starting a Winery with $0

In the early 2000s, Ryan Carr, an ASU alum who studied graphic design and had no money and no wine experience decided he wanted to learn how to make wine and start a company. He started by working with wine makers in the Santa Barbara area and began to learn the trade well enough to begin making his own wines in his garage. He made enough to sell 10 cases to friends who immediately took to the wines and wanted more. Fueled by the success of his first go attempt, Ryan began to scale up his production, trading his time working for anther winery for the space and equipment to produce his own commercial wine. Eventually, he continued to scale to the point of owning his own wine tasting room in downtown Santa Barbara and starting his own vineyard management company.

Here’s the success: Ryan owns hundreds of barrels worth of wine all housed in his own tasting room and has received some of the highest honors and best commercial success for his pinots in the Santa Barbara area.

Here’s what makes this even more incredible: he started from nothing and still doesn’t own any vineyards.

What?! I thought you had to have a fortune to start a winery?

This summer I had the opportunity to visit Carr Winery’s tasting room in downtown Santa Barbara and learned about Ryan from his wife (who runs the tasting room). Ryan’s story fascinated me because it runs so antithetical to the oft cited story of the multi millionaire who wanted an outlet to spend all his/her money and so started a winery.

Ryan’s winery has been profitable from the start and he’s grown more or less just on the back of his compounding business success in wine making. I love this story because it’s a great example of how hard work, determination to learn, and resourcefulness enabled an entrepreneur to buck the traditional model of winemaking (buying and owning a vineyard before making wine) and found success along the way.

Maybe this could be a new case for this class?

Biodynamics and one woman

When I was in cooking school in Ireland, I attended a dinner hosted in honor of Anne-Claude Leflaive, named in 2006 as the best white wine maker in the world. Leflaive is a legend in the wine world. Her family estate is in Puligny-Montrachet, Burgundy, and her land has a Grand Cru appellation, meaning that it is some on the most coveted terroir in the world. She also pioneered biodynamic practices in Burgundy when no one else in the old guard understood its value.

In Ireland, there's a great tradition of folk music after dinner, and that's exactly what we did. We all clustered into the drawing room to hear old songs about the emerald isle, or the Irish bandit whose lover betrayed him. My brother, though American with no Irish heritage, had to play a folk song for the group - that's just the kind of guy he is. But Anne-Claude became enamored of him on the spot. Suddenly, we had plans to dine with her the next night.

When we sat down for dinner, all of us nervous to impress her, the sommelier handed the wine list to my dad. I've never seen him so panicked. I mean, how do you pick wine for the best winemaker in the world?? He settled on an Albarino.

Throughout the course of that conversation, Anne-Claude told us about the meaning of her biodynamic practices. Yes, she believed that the practices improved the quality of her wine. She believed that they concentrated the flavor of her wines. But, to focus purely on quality misses the point of her life's work. She viewed herself as a steward on the land. A temporary inhabitant of a long line of Leflaives whose responsibility it was to make her land more resilient. Her practices were driven by a respect for nature and for the environment. I feel compelled to buy biodynamic wines because I want to support that stewardship.

At the end of dinner, I asked if I could come to her vineyard for the harvest. I'll never forget her response. She said, "yes, of course, but be aware that you'll be shitting in a bucket. We'll use your waste to compost."

I never ended up going, and it's one of my biggest regrets. Anne-Claude passed away a few years ago. The world lost one of the best winemakers, and one of the few top women winemakers.