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Vol. 2 No. 8,Spain, Portugal and Madeira

Hello friends, TB has been busy preparing for a 3-1/2 week intense wine immersion trip. This is some of the last research for the forthcoming book. Oh, no, not another wine book, but this one is different: no ratings, no promotions, simply about people I have gotten to know…and some new ones who have shown incredible passion for making wine. Some of these people who are chemists who got bitten by the wine bug, some quit their day jobs to pursue excellence in winemaking. They are wonderful people in a business some think of as romantic, some as snobbery, but most I have met in the industry see is as farming – agriculture! The kind of venture where you can do everything right and still have a final product that fell short of a great wine.

Now about the trip. On Monday, we fly to Lisbon, and drive towards Madrid through Salamanca and Segovia to Penafiel near Valledolid, in Ribero del Duero. We have a private tour of Pesquera, a winery that changed the quality of Ribero wines. We will be visiting other wineries in the area for two more days before driving through Santiago de Compostella and after seeing the town and famous cathedral driving to the coast where we will stay at A Coruña for two days.

From there we drive to Vigo in the Rias Baixas region where Albariño is made to visit more wineries. Then across the border to Portugal where the Duero river becomes the Douro and is now making good red wine in addition to Port. We then visit Porto and Graham’s Port Lodge and the next day drive straight through country we have already visited to Lisboa. The next day we fly to Madeira where we will see the vineyards and wineries where that fine wine is made. Returning that night we will stay in Lisboa and re-visit the Port Wine Institute…the greatest place in the world to taste port. Every port is featured in a gentlemen’s club setting complete with leather lounge chairs and cigars.

The next day we board Windstar’s Wind Surf, the largest sailing ship in the world, yet it carries only 300 passengers. We leave for Morocco, then back up the east coast of Spain stopping in various wine regions until we reach Barcelona.

Having been there before, we will head south to Sitges, a resort town, and spend two days meeting with winemakers in Penedés and Priorat, areas where fine red wines are made from incredibly rocky soil.

Then it is back home. TB plans to write along the way so watch for them…not every day but perhaps 3-4 articles.

This should be an amazing trip featuring some amazing wines.

TB

©Copyright 2016 TBOW, all rights reserved.

Vol. 2 No. 7, Wines of Lebanon

I have a great find and it came about in a most circuitous manner. Last November, I was traveling to Southern California by way of San Francisco. My seatmate asked me if I was going to San Francisco and I replied I was just changing planes. She then said, she and her husband were spending two weeks in the wine country and that of course, started a conversation. While we were talking, a voice across the aisle said she couldn’t help but hear we were talking about wine. She is a senior at Stanford and told me her parents had a small winery in Lebanon. I said, “uh huh”, but perked up when she said they only produce 10,000 bottles a year (at first I thought she said cases). As if she had read my mind, she said, “BOTTLES, not cases.” She now had my undivided attention.

Her name is Hannah Boutros. Her mother, Jill and her family are from Faribault, MN. She married a Lebanese man, Naji Boutros, she met while they both were at Notre Dame University. He had left in the 1980’s during the war after the town was destroyed, and after a successful career as an investment banker for Merrill Lynch (TB’s alma mater), he returned to his home town of Bhamdoun where his family had owned and operated the oldest hotel, Belle-Vue, which his grandfather built in the 1860’s. It was built from huge, carved stones but when he returned it had been reduced to rubble and the stones were gone.

Before the war, there were vineyards but mostly producing table grapes, and due to its proximity to Beirut, about 15km’s on a winding road on the slopes of Mount Lebanon, it had the French embassy, 35 hotels, five Christian churches, two mosques and a synagogue. The village housed a tightly-knit community that worked to support one another when someone was in need.

From their first 3,000 vines in 2000, they now have planted 30,000 vines, brought from Bordeaux, consisting of Cabernet Sauvignon, Cabernet Franc, Merlot, Petite Verdot, as well as Syrah, Sauvignon Blanc and Viognier. In 2006, there were 17 wineries, many spawned by the Boutros’ and now there are at least 35. They have invested in several vineyards rather than buy out people who cannot afford to go it alone. This is to keep them here, and restore their pride of place.

Their label is Chateau Belle-Vue, and the main wine is, of course a Bordeaux blend. It is called La Renaissance ($42) and just to see how they were doing they entered it in the Wine & Spirits Competition in London, and were pleasantly surprised when it received a Gold Medal for Best in Class in 2007. Due to planting the Merlot and Cabernet Sauvignon first, the mix thus far has been 60% Merlot and 40% Cab, but while these will remain dominant I suspect smaller amounts of the other Bordeaux blends will be added for complexity.

I have tasted the 2007 vintage and liked it so much that I bought two bottles. Yes, it is distributed in the U.S., Great Britain and other countries t0o with about half of it consumed in Lebanon and half abroad amid growing popularity. What a refreshing experience to taste a Bordeaux-like wine not from Bordeaux where the prices have skyrocketed due to overwhelming Chinese demand especially for the premier cru’s.. Note that their 2007 is not a library wine but the current release outside Lebanon due to a smaller 2008 vintage, so about to be released is the 2009.

The wines are aged in French oak and Naji demands the highest quality, tight-grained barrels which they purchase from famed producer Seguin-Moreau. They use only new oak barrels that are medium/medium plus toasted. The 2007 still has some soft tannin’s and no sign of being ‘over the hill’. I would think it has perhaps another 4-5 years before peaking. If you think Lebanon is too hot to produce wine, you, like TB are thinking of the Becaa Valley. Temperatures in Bhamdoun seldom exceed 85 degrees, although last year it was slightly warmer as it is everywhere with global warming. If you doubt global warming,  I suggest you talk to a winemaker since they keep detailed notes of temperatures. I have yet to find one who doesn’t believe there is global warming.

Besides La Renaissance, they produce a meritage, Le Chateau ($50), which is 55% Syrah and 45% Cab Franc. Production is just 2,500 cases so it has not been exported, but hopefully will be included in this year’s U.S. offerings…please… They also produce a white wine for consumption locally from Chardonnay and Viognier.

By now, I hope you understand why this winery has the components necessary for inclusion in my book project. First, there is passion (I don’t need to say another word on that as it is abundantly clear. Second, quality, from importing French vines and only the fines French Oak barrels. Third, not rushing aging, which shows their demand for quality over profits, and lastly, a woman winemaker from Lebanon, Diana Salameh who studied in Dijon. It seems wherever you go in the world only about 9% of the winemakers are women, BUT they produce a much higher percentage of the finest wines.

That’s all…if you want more you will have to either Google the winery, try their wine, or wait to read the full story in TB’s forthcoming book project. Passion is key…understand what goes into pricing wine: production costs, labor, distribution, all of which are much lower for wineries producing 100,000 cases or more a year. It does not require buying the ‘cult wines’ with their ‘flying winemakers’ and priced at well over $100 a bottle. It is up to you which you want to support, passionate people producing quality wine or a corporation focused on profit. As for ratings, IGNORE them…the only critic that matters is you! You will find much higher quality wines in the $15-25 range or higher but once you get above $50 the difference isn’t usually perceptible…unless you are a collector or a wine ‘snob’?

Try it…you’ll like it!

TB

©Copyright 2016 TBOW, all rights reserved.

Vol. 2 No. 6 Water Into Wine

Oh, great…now TB thinks he’s Jesus! Not quite, but water of course is a key ingredient of wine and the purity of the water supply matters too. In fact, everything that come in contact with the grapes has an effect on the finished profit, be it for the better, or worse.

In some areas, there is enough rainfall that once the vines have taken root, they can go to ‘dry farming’. If possible, it is the best for several reasons. First, the vines learn to fight for the water and push their roots down deeper. During a drought in 1981, famed winemaker Joe Heitz told me that a drought is good because without it, readily available sources of water keep the roots shallow. Hillside vineyards benefit the most  since the water runs off whereas those on the valley floor have much more water and thus are not stressed – the reason the best wines come from hillsides with sandy, loamy, or even rocky soil which keeps the soil from clumping, as clay does.

In areas like California’s Central Coast where the average rainfall is perhaps 7-8 inches a year, irrigation is a must but that problem has largely been mitigated with the use of drip irrigation systems. At a recent wine symposium, even Fred Franzia, producer of Charles Shaw (aka Two Buck Chuck) was stressing the need for this to conserve water. This brings us to the ‘water into wine’ subject.

First, TB did some research and found that to produce a one liter bottle of  water requires 1.39 liters of water…and that does not include the water required to make the bottle! Shockingly, 50 BILLION bottles of water are drunk and either recycled or simply thrown away each year! That means 69.5 billion liters of water – when many if not most of us could be drinking it from the tap and unless contaminated, be getting minerals with the H2O. This and the other figures cited here are from a report by the International Bottled Water Association

How about a liter bottle of soda? 2.02 liters and it is anybodies guess how many bottles of those are drunk each year. A liter of wine requires 4.74 liters…so the 1 billion 750ml bottles of Two Buck Chuck alone required 6.32 billion liters of water….much of it from the San Joaquin Aquifer, the second largest in the country…in volume, but since the drought (longest in 600 years!), it has been largely depleted and an increase in arsenic and other levels and with land sinking.

Beer is lower…4 liters…but look what happens with grain alcohol:34.55 liters!!!

Now add in packaging (plastic bottles, etc.) and it can be 6-7 time the amounts shown above. Especially when you include cleaning the equipment which requires a lot of water.

I was talking to a friend who bought a place down at Palm Springs and asked if he was concerned about all those golf courses sapping the water supply and turning it back into a desert? He said that they are using wastewater recovery systems which wineries are also shifting towards. Consider that Franzia’s Bronco Wines owns 40,000 acres of vineyards in California making them far and away the largest, and thus, largest consumer of water. Wine Economist – Sustainability describes one of the wastewater recapture systems that is reportedly removes 99% of the contaminants.

All of the above is shocking to TB…off to grab a glass of wine!

TB

©Copyright 2016 TBOW, all rights reserved.

 

 

 

Vol.2 No. 5…Bordeaux wine and wine in a box

Seems like an unlikely pair doesn’t it? Well, the connection is sketchy but the unthinkable is happening. Perhaps not so unthinkable when fraud abounds (in Padova, Italy, 9,000 bottles of fake Moet & Chandon champagne were uncovered in a shed where they were being produced…I kid you not!

In Vol. 2 No.1, TB wrote on some books he had been reading. One of them, Vino Business, by Isabella Saporta, showed just how greedy  Chateaux owners, thanks to the Chinese were among other things, forcing out smaller owners by changing regulations that were expensive to conform to…how about having a large parking lot??? But the main thing is the number of them that are owned by global conglomerates who will do anything to increase production especially now that they can bypass the chain and sell directly to the Chinese…who needs England and America…after all, they won’t pay the obscene prices for cru wines.

Not only that but they, who have claimed the exceptional ‘terroir’ of the Bordeaux appellations found a way to increase production by merely acquiring ‘adjacent’ properties – wait…isn’t that inferior wine? Not if you blend it…called assemblage. If the harvest is done in August or September, and the first tasting by the ‘eggspurts’ are in March (Parker is always the first and alone followed the next week by the rest of the critics. But wait: the wine is still in barrels awaiting the final blend. Parker loves his wines powerful…tannic, monster wines, while the Europeans prefer more balanced structured wines…a problem: simply take the samples from new barrels for Parker and the more mellow wines from used or neutral barrels…problem solved! Whatever it takes to get a 90+ score! Now do you see why TB says, never buy a wine on rating…especially a Bordeaux!

The above is simply a matter of preference. What is more significant is that not only are they forcing their less affluent owners out…by placing their men in charge of the INAO and the appellations, they are maximizing by over-spraying of pesticides and herbicides which is done by helicopter or mindless men driving tractors to the very edge of the property. Despite complaints by residents it persists. A local lab examined bottles of wine from every classified cru and guess what? They ALL contained chemicals, including some on the banned list! …and you, dear consumer are paying for that in your wine. A trade-off of either health benefits or health hazards, but in Bordeaux you can have both! Note that also, as mentioned in Saporta’s book, this extends to Champagne…quel horror! Pesticide Black List

Now, in closing, the mundane: we have all heard how great ‘wine in a box’ is  and how it saves money (bottles and shipping), resulting in lower prices to the consumer. Sadly, there is no way of knowing if you are actually saving money or getting lesser quality mass-produced wine. But that is a small point when you figure if you open a bottle of wine, even with a Vac-u-Vin, it keeps for two days at most. But next time you buy it notice the expiration date…yes, an expiration date on wine! Be sure to buy well ahead of it and due to the plastic liners which ‘could’ contain BPA or other chemicals that could contaminate the wine. So IF you choose to buy wine in a box, make sure you are well within the expiration date (and if the retailer is putting the expiring stuff to the front buy elsewhere, and remember that BIG box which is cheaper per liter may not be the best value since you can’t drink it all within a week…unless you are with friends…and do you really want to serve them box wine? Note this is not an issue of oxidation as the bag creates a vacuum, just a health safety issue…possibly. Not trying to create a scare like the one on arsenic levels in wine, just make you aware.

TB

©Copyright 2016 TBOW, all rights reserved.

 

 

Vol. 2 No. 4 It’s all about distribution

…and Prohibition! How so? When Prohibition was repealed the Feds wanted to ‘get the corruption’ out of the beer, wine, and spirits business. Interesting, as who ended up controlling it in those days? That is not to say it is the same today.

But what is the same today is the archaic laws on the books that enrich the distributors (the 2nd tier in the system, preceded by producers, and followed by retailers.). This in the name of protecting the buyers. B.S.!

Let’s go through the system in order and see how it works (I will base this on California law as that is what I am most familiar with).

Producers:

They have to file reports with the state showing the retail price of the wine. Then it is sold to distributors at a 30% discount, who in turn mark it up for restaurants and retail shops. That is the reason you can’t buy wine cheaper at the winery! The only exception to this is if they have a close-out on wines then they can reduce the price accordingly.

If you have a small winery, why should you pay someone 30% off the top if there is good demand for your wines direct from consumers? Most don’t or do a combination of selling to distributors and on-line wine sales.

Ah, but shipping out of state is full of complex, differing regulations. More than a decade ago, some self-righteous prosecutor in New York set up a sting, order wines from some of the best known wineries. Then, when the shipments arrived the state filed charges against them as it was illegal to sell wine from out of state except through a distributor. Get the picture? This has nothing to do with protecting the purchaser, merely protecting in-state wineries and of course, and even more importantly, overpaid distributors.

New York and many other states have since amended their laws. Some allow a resident to purchase up to a certain amount of wine direct from another state. Washington State allowed only wines from in-state wineries to buy direct. All others had to be purchased through the state-owned liquor stores which are a joke and lack a good selection.

The burden for knowing all of these laws rests with the winery and for that reason some have transferred that responsibility to a shipper, such as Aero Packing, in Napa Valley.

Distributors:

Mark up the wine and sell to retail shops. Some do an excellent job. Some are frankly lazy which begs the question: why should a retailer tell THEM about a wine that they don’t distribute so they can mark it up and sell it to the retailer who told them about it? As mentioned above the ’boutique’ wineries won’t even sell to them unless they have to.

Then there is a Georgia law that once a distributor has a contract with the producer who then sees they are not showing his wine, cancels the agreement, cannot sell any wine in Georgia until the distributor has sold his inventory of it. Guess what? They hold back ONE case, hurting the producer and more significantly purchaser in Georgia?

This is a basic right and a law that prevents a resident of that state from getting what he wants, in order to ‘punish’ the producer who cancelled the contract because they weren’t doing their job!

Retailers:

Personally, if at all possible I avoid big liquor stores who carry wine and sometimes put it on sale but when you look you see it is a 2010 Sauvignon Blanc that has been standing upright on the shelf since they brought it in. Do they have knowledgeable help? That brings us to the Big Box stores like Beverages and More in California and the fast-growing Total Wines which is opening 50,000 square foot stores in a narrow radius in Minnesota. We have municipal liquor stores here and that and one big retail chain appear to be their target. First, I don’t believe municipalities should be in competition with privately owned businesses. For one reason, some will not allow a private retailer in their city! That said, it is the way it has always been, but what if they had the competition, got out of the liquor business and collected big sales taxes, wouldn’t that be better for the city and definitely for the state.

There is a Big Box store here called Liquor Boy, they offer a wide selection and fair pricing. It is owned by someone who owns no other liquor stores, TB has no quarrel with that store. They play fair and beat the competition on price. I was a fan of BevMo when I lived in California but I also supported three locally owned wine specialty shops. Most of my buying was done with them.

Now we come to a store that offers good values on some wines (high end where on some they make as little as once cent in MN because state law requires they be sold for a profit to promote competition. Total Wine, they act as a ‘faux’ distributor by making deals with wineries to be a large number of cases on the condition the winery doesn’t sell it in any state that they operate in. The markups on these wines can be as high as 33% – and a knowledgeable associate (yes, they are well trained), will kindly direct you to those stunning values.

Let’s talk about Trader Joe’s, owned by the German company Aldi. It started out in Los Angeles as Pronto Markets and the one in Pasadena came up with the name Trader Joe’s. Both Pronto and Trader Joe’s had a reputation for quality albeit with little selection but they used to (at least), have panels to taste, say mustards, and the winner was the one they would carry. This saves the store money and insures faster turnover of inventory

Finally, there is the wine specialty shop. Some may also carry beer and some liquor but the emphasis is clearly on wine. They may charge a bit more but for one or two bottles what does it matter. They frequently have tastings and sometimes classes, plus they don’t have bottles that have been on the shelve for five years! It is fine for wine to stand upright, but not for long periods of time where the cork can dry out.

What is the fastest growing segment of the wine market? Starting last year it shifted up to the $15-20 range, with no growth in high end and the low end stable. It is Millennials who are casting off their parents habits (especially Two-Buck Chuck – think how little of the price is actual grapes and labor…plus bottle, cork, label, shipping…is that what you consider value?) and finding their own ‘likes’. This is a repeat of the 1970’s when it was the Baby Boomers who branched out but for the most part stuck with the most well-known wines, and in came Robert Parker with his 100 point system which started as a good thing but has gotten way out of hand with probably a dozen different critics (most of whom you have no idea what they look for in a wine and which is very important since all that matters is what you like).

Yesterday, there were two articles on legislative efforts to change wine laws. One in Arizona, which lists several varietals that cannot be shipped including Champagne, or any other foreign wine. Here is the link…must have been written by the distributors!http://wineindustryinsight.com/jump.php?utm_source=newsfetch&utm_medium=email&utm_campaign=nf&url=http%3A%2F%2Fnawr.org%2Fpress-releases%2Farizona-wine-bill%2F

The other in Michigan would have allowed out of state shipments up to 13,500 cases per winery and 1,500 cases at any one time was supported by the National Association of WIne Wine Retailers was killed in Committee. Not the sponsor, Rep. Yonker (R) could not get it through even with a GOP controlled House. It hurts the retailers while the wholesalers benefit…as they always do.

Frankly, it should be legal to ship wine from a winery to any adult individual in any state. Period.

In conclusion, let’s give the producers and retailers a break, and stop this abomination against what the people want.

TB

©Copyright 2016 TBOW, all rights reserved.

 

 

 

 

 

Vol. 2 No.3 Bigger is better in Wine

…or is it? Got you there because you thought TB had caved to the big guys. Bigger is decidedly not better. For instance, who is the largest wine company in the world? Who owns the most vineyard land in California? Will China (biggest country) become the biggest wine consumer and/or producer? What is the fastest growing price segment of American wines?

Most definitely, TB does not have the answer to these questions or many others but he can shed a little light.

Who (i.e. which corporation) is the largest wine company in the world?

If you said Gallo, you would be wrong but they are in second place. Also, they are not just the producers of Hearty Burgundy and other inexpensive but good quality for the price) American wine but have diversified into premium wines. Years ago they were the largest in California and had the largest intra-state trucking company (to move the wine of course!). But they are number two to Constellation Brands.

However, there are big changes going on in the wine industry, just as in brewing. In 2014, the U.S. became the biggest wine consuming nation overtaking France. Late last year, AmBev which owns Budweiser and is the largest brewing company in the world, began an acquisition of number two SABMiller for $108 BILLION. How could the U.S. and EU allow this to happen? All TB knows is that if the deal didn’t go through – for any reason – there was a breakup clause of $5 BILLION. Now ask this: would anyone in their right mind risk $5 billion when there are huge anti-trust questions? To TB, the answer is NO! The gears must have been greased with the EU…but what about the U.S.? It appears that the only concession that must be made is that they can’t sell BOTH Miller and Bud in the same bars. Big deal! Not sure if that applies to their super premium brand, Stella Artois.

According to Wikipedia, the third largest wine company is the Castel Group, which was started by a wine negotiant in Bordeaux.  They own 17 chateaux – none of which you have probably heard of the best being a Bordeaux Superior. Why haven’t you heard of the names? Because most are sold in…CHINA!!! More interestingly, they own a large 1,400 hectares in Algeria, and 1,600 in Tunisia, and Morocco. Those produced 640 million bottles, most sold, and I presume, bottled in France without disclosing it is not French wine – something that is finally becoming an issue there. Later, they added a distribution network by purchasing Nicolas, a wine merchant you can find all over Paris and other large French cities. TB adds this because they also have 25% share of SABMiller – South Africa that is creating some issues with the SAB/AmBev merger…probably will be worked out amicably…with Castel the winner.

But now lets shift to the fastest growing company that you probably have never heard of: Treasury Wine Estates, an Australian Company that has its U.S. headquarters right in Napa, California. Diageo was a big wine company, one of the largest but sold off their wine division to TWE, an Australian Company. In addition, Pernod Ricard, which went on a buying spree in 2014 purchasing Kendall Jackson, Stags’ Leap Winery (don’t confuse with Stag’s Leap Cellars that won the Judgement of Paris tasting that brought California wines to the fore), and makes one of TB’s favorite wines, Petite Sirah – nothing compares to it.

Other California wineries are Acacia, Blossom Hill, Sterling, Beaulieu,and most notably Beringer Estates, which they purchased from Foster’s who also got out of the wine business to focus on beer. In Australia, and New Zealand they have numerous holdings including Penfold’s, Rosemount, Rawson’s Retreat, and more. They also own Gabbiano of Italy.  https://www.tweglobal.com/brands

Think of the beer,wine and spirits game as a game of Monopoly, because that is what it has become, and in the process created an oligarchy, much the way the tobacco companies created barriers to entry through having multiple brands…same as beer.

The big lever today however is China. China, with its love of Chateau Lafite Rothschild, which even at $1,000 a bottle often mix with tea or coke as they do not like tannins. That however, is changing…rapidly…as wealth rises and just as in the U.S., the newbies want to show their worldliness and thus are shifting to wines. Their two largest wineries, Changyu and Great Wall, produced mediocre wines – at best, but the quality is increasing. Here is where TWE comes in. First, they are known in China and trusted and have found ways around the labyrinth of Chinese regulations, which can change as often as daily…or even hourly. Note their copyright laws do not protect the person who came up with the name, but the one who filed first in China…even if the real company has been doing so for years. Generally it is a Chinese filer so he has an edge immediately, and like the scam lawyers in the U.S. who search for old, obscure patents to extort money from major corporations to avoid being sued for patent infringement.

Just last week, TWE announced that demand and shipments to China are way above projections. This company, which KKR and attempted to takeover, yet the man behind it fought them off and won, has two advantages in China: first, proximity: no wine producer is closer to China which dramatically reduces transportation costs; and ssecond, they are a trusted name in China. So for the first time since buying Mondavi stock, and Chalone Group, while discarding Mario Andretti Winery, TB bought some of the stock on Monday.

First, let TB make this clear…he is in no way recommending the stock…just looked like a good buy to him.  It trades in Australia as TWE, and is only available in the U.S. on the Amex pink sheets, symbol TSRYY. It had gone nowhere but shortly before the announcement of the increased demand from China went from $3 to over $6 then settled back to that number which is where TB bought it. It is HIGHLY speculative, but could be a ‘four bagger’ as Peter Lynch used to say.

Finally, what is happening in the beer, wine, and spirits industry is huge transfers of ownership. It went from accumulation to disgorgement (to borrow a wine term). Look at the recent changes: Bordeaux’s main market has shifted to China, decimating sales to England and the U.S., which had been the main market; U.S. overtaking France in wine consumption; corporations doing what they always do: rush into the next new thing and then when it doesn’t produce the results they want, dumping it, as Coca-Cola did with Sterling (now part of TWE), or when they let New York wine company, Taylor, file for bankruptcy, unwilling to wait for the new vitis vinifera wines they had planted to produce.

That is why TB firmly believes in smaller individually or family owned wineries where passion still exists unfettered by the bottom line and therefore producing the highest quality wines. That’s what TB’s talking about…and all about!