Chapter Twenty-Two
The Globalization of Wine
Wine brings to light the hidden secrets of the soul.
—HORACE
The Paris Tasting shattered two foundations of conventional wisdom in the world of wine. First, it demonstrated that outstanding wine can be made in many places beyond the hallowedterroir of France. Sure the French have greatterroir, but maybe there are other places that are equally amenable to growing grapes that can make equally outstanding wine. If the soils of the Napa Valley could produce wines that bested the best of Burgundy and Bordeaux, what could be done in Australia, South Africa, or Chile? Obviously no one can make wine at the North Pole or in the Gobi Desert, but vintners around the world realized after the Paris event that there are many other places besides France where they could make great wine if they used the latest technology and the best practices.
Second, the Paris Tasting showed that winemakers did not need a long heritage of passing the wisdom of the ages down from one generation to the next to master the techniques for producing great wine. Newcomers could cut the discovery time dramatically if they did good research and followed French and now California procedures. Only twenty-three years transpired between the breakthrough developments at James Zellerbach’s Hanzell, the first California winery that set out to make quality wines in the French style, and the Paris Tasting. But Chile in just the decade of the 1990s totally remade its antiquated wine business and brought it up to global standards.
The Californians had demystified wine, and after Spurrier’s event, winemakers in many other countries saw that they could replicate the American experience. They simply had to experiment and find out what they could produce from their land with careful craftsmanship. From Canada to South Africa winemakers began to rethink the way they practiced their art. They convinced themselves that if the Californians could produce wines that would make the world take notice, then they could perhaps do the same thing in Italy, Spain, or even further afield in Australia or Chile.
The result has been a globalization of wine from its European roots to many other parts of the world. Today wine is made in more than fifty countries. As wine critic Robert Parker told me, “The Paris Tasting opened the door for anyone, whether he is in California or Australia or New Zealand, to say, ‘If we forget about any food-processing mentality and cut yields and pick ripe fruit and do everything we should to make a natural wine and achieve the greatest expression of our vineyard, we can make world-class wines that will be recognized as such.’”
An early result of the Paris Tasting was the increase in exchange of information among wineries and winemakers around the world. Vintners who had never strayed far from home, whether they were from France, Italy, Australia, or California, began traveling to see what was happening elsewhere. Many of them journeyed to the Napa Valley, the new happening place. French winemakers sent their children on vacations to northern California, and a few parents even enrolled them in the wine program at the University of California, Davis, or at Fresno State College.
Winemakers, then as now, are generally a very collegial group who welcome people from other countries. After the Paris Tasting, California winemakers were more than anxious to show off their new stainless-steel tanks, explain their techniques, and let visitors taste their wines.
As a result of this exchange of people and information, innovations made in one region quickly migrated to other areas. Oregon’s Scott Henry, an aeronautical engineer, in the 1970s developed a new system for controlling excessive vegetation in vineyards, thereby concentrating growth in the grapes in order to improve the wine’s flavor. He trained four, rather than the normal two, shoots of the plant upward along the trellis in order to increase crop level. Below those he trained four shoots downward to control vigor. The Scott Henry Trellis System, as it is known, is now used in many vineyards worldwide.
The equipment used in wineries has also become internationalized. When I visited Paul Ullinger, the winemaker/director of Redgate, a small winery in western Australia, he proudly showed me his French-made grape crusher, Italian pumps, German presses, and French and American oak barrels. Wineries in the Napa Valley or in Stellenbosch, South Africa, are likely to have the same mélange of international equipment.
After the Paris Tasting, winemakers in many countries also began concentrating on France’s leading grape varietals just as the Californians did during the 1960s and early 1970s. Eight types of grapes now dominate global wine production. Among the reds, they are Cabernet Sauvignon, Merlot, Pinot Noir, Shiraz/Syrah, and Cabernet Franc. For whites, the noble grapes are Chardonnay, Sauvignon Blanc, and Riesling. Wine drinkers today can enjoy and compare Californian, Italian, South African, and Australian Chardonnays with the original Burgundy Chardonnays. With the exception of Riesling, whose roots go back to both France and Germany, all of the great eight have their origins in France.
Clones, the genetic raw material used to plant a new vineyard, generally come from the best plants that have been developed by researchers at the University of California, Davis, or at the University of Bordeaux. It should not be surprising that,terroir aside, a good South African Cabernet Sauvignon tastes much like a good Bordeaux, since the wine is probably made with grapes that come from Cabernet Sauvignon clones originating in Bordeaux.
Some traditionalists lament globalization, claiming that wines were more interesting when consumers could discover wines made from unusual grapes like Aligoté, Burgundy’s other white wine, or Chasselas, which is grown in Switzerland. In truth, such wines are more appealing for their eccentricity than for their quality. Burgundians in the 1960s came up with a way to save the thin-flavored Aligoté wine by adding a littlecrème de cassis to it and calling the drink a Kir after a local prelate who was also mayor of Dijon. Fendant, a wine made from Chasselas grapes, may be romantic when it accompanies a hot pot of fondue on a skiing trip to Zer-matt, but it’s hardly an exciting wine. The international grapes have become popular around the world because they make outstanding wine, and consumers enjoy them. And traditionalists need not fear, unusual wines will continue to be made. In fact, global competition has become so intense that many small winemakers are now trying to find their niche in the market by making special wines. They are often very expensive and since production is small they are usually hard to find, but there will always be a market for out-of-the-way wines and there will always be vintners making them.
Other symbols of internationalization are the viticulturists and winemakers roaming the world as consultants, bringing along with them techniques developed in France, California, Australia, and elsewhere, improving the quality of wine wherever they work. France’s Michel Rolland is perhaps the best known of the flying winemakers, as the footloose experts are called. He has consulted, among many others, for South Africa’s Rupert & Rothschild, which not surprisingly produces a French-style Cabernet Sauvignon, and for Chile’s Casa Lapostolle. Australian Richard Smart has consulted with more than 200 wineries worldwide. American Paul Hobbs, who started out working at the Robert Mondavi Winery and Stag’s Leap Wine Cellars in California, now has his own winery in Sonoma County and also consults regularly with wineries in Chile and Argentina. Daniel Schuster, a viticulturist who is also the owner of a winery in Canterbury, New Zealand, was trained in France but has also made wine in South Africa as well as Australia and has long consulted for Stag’s Leap Wine Cellars in California.
Go into a winery anywhere in the world today at harvest time, and you’re likely to find workers from several countries. It’s very common for young winemakers to work at various places around the globe, and many take advantage of the seasonal differences to do two harvests a year, working in the Southern Hemisphere in March and April and then in the Northern Hemisphere in September and October. Some university wine programs even require students to spend an internship in a foreign country. It is not uncommon to meet a winemaker in New Zealand or South Africa who has spent a couple of harvests in France, one in Italy, and s
till another in California. When the peripatetic wine scholars return home and run into a problem, they are not shy about telephoning the winemaker where they worked for the last harvest to ask for help.
The technological breakthrough of drip irrigation played a major role in spreading grape growing to new areas. This is the water-saving system of installing polyethylene tubing in farm fields to bring precise amounts of water and nutrients right to the base of the plant, rather than spraying them inefficiently across a whole field. As a result, there is less water runoff and very little evaporation from leaves and soil. The Israelis led the development of the technology starting in the 1950s and made their deserts bloom. Vineyards have been planted during the past two decades in arid parts of Australia, Chile, and the U.S. that would never have seen a grape without drip irrigation.
As a result of all these developments, cosmic change has taken place in the world of wine. Global wine production and consumption during the past quarter century has been modestly declining, but behind those overall numbers is an historic shift between the Old World and the New World.
For most of human history the wine trade was very stable. From 5500 BC, when wine began migrating along with trade from Iran and Egypt to areas of the northern Mediterranean, to relatively recent times, almost all wine was made in Europe, especially after the Prophet Mohammed outlawed it in the Muslim world in the seventh century. Countries like France, Italy, Spain, and Portugal consumed more than 90 percent of their own production, while the remaining 10 percent, usually high-quality wine, was exported to European countries such as Britain and Holland that made little or no wine. A small amount was also sold to more distant countries like the U.S. or Australia, which produced little wine and even that was of poor quality. As recently as the late 1980s, European exports accounted for 96 percent of wine sold around the world.
WORLD WINE PRODUCTION
WORLD WINE EXPORTS
SOURCE:The Global Wine Statistical Compendium, 1961–2003by Kym Anderson, David Norman and Glyn Wittwer, University of Adelaide et al
In the last decade, however, that historic pattern of wine production and trade has changed substantially. Wine consumption in the old major producing countries has dramatically declined. In France, Italy, Spain, and Portugal people are drinking only about half as much wine annually as their parents or grandparents did. French consumption dropped by nearly 20 percent during the decade of the 1990s and that trend continued into the new century. Similar declines took place in Italy, Spain, and Portugal.
The fall-off has been concentrated in the lower-end table wines, the mainstay of the business and the product that paid the bills for millions of peasant producers. At the same time, though, Europeans are now drinking better wines. If there’s a bottle on the table, it’s likely to be anappellation -quality wine. That, however, cannot save the millions of producers whose families have been making low-quality table wines that have been consumed with meals in Latin countries for centuries.
The worldwide area given to grape cultivation declined by 10 percent in the 1990s, but that drop-off was almost exclusively in Europe. Thousands of acres of poor quality vines were pulled up on the Continent over the past two decades, with the land often turned over to vacation homes. Total grapevine area fell in France nearly 10 percent in the 1990s, and Italy saw a 20 percent decline.
As a result of lower domestic consumption, European producers have become more dependent on exports to new wine consuming countries like the U.S. and Australia. In 1990 France exported only 20 percent of its production, but by 2003 it was exporting 33 percent. In Italy the numbers jumped from 22 percent to 32 percent during the same period.
A great deal of those exports comes from the demand for French and Italian trophy wines that sell for $100 or more a bottle and are usually produced in small quantities. Those sales are likely to remain high because there are now so many more wealthy consumers around the world willing to pay high prices for superpremium wines. Trophy wines, however, make up less than 5 percent of wine consumption by volume, even though the profit margin on them is large.
The dynamic part of the world wine business today is not in Europe, but in the New World—Argentina, Australia, Chile, New Zealand, South Africa, and the United States. Winemakers there have been planting new vineyards almost as fast as Europeans are pulling out old ones. U.S. grapevine area rose from 292,000 acres in 1990 to 954,000 acres in 2003, and Australian vineyards increased during that same period from 146,000 acres to 356,000 acres.
Chile has been increasing the size of vineyards even though its domestic wine consumption has been declining following the European pattern. Its vineyard area went from 161,500 acres to 415,000 acres between 1990 and 2003. Moreover, those overall numbers hide the fact that Chilean winemakers have been pulling out thousands of acres of low-quality grapes and replacing them with such international grapes as Chardonnay and Cabernet Sauvignon.
Wine consumption has also been growing in the New World countries, albeit from a much lower base. In the U.S. annual per capita consumption rose sharply in the 1960s and 1970s, but fell off in the early 1990s and has been coming back strongly in recent years. Nonetheless, the world’s winemakers continue to look at the U.S. with enthusiasm because the market is so large and because wine consumption is still relatively low compared with the rest of the world at only 2.4 gallons per capita in 2003. In the 1990s, many Australians turned from beer to wine and annual per capita consumption reached 5.5 gallons in 2003. In New Zealand it rose 30 percent between 1990 and 2003 to 5.1 gallons.
New World wine producers increased their share of world wine exports from 3.8 percent in 1990 to 21 percent in 2003, and that trend is likely to continue, as they grab market share from European producers. France’s percentage of world exports dropped in value terms from 51.9 percent in 1990 to 38.8 percent in 2003, while Australia’s share rose in that period from 1.5 percent to 9.1 percent, and Chile’s part of world exports increased from 0.6 percent to 4.3 percent.
The country setting the pace in world wine today is Australia, a producer unlike any the world has ever seen. Australia is the first major wine country that has focused on exports rather than on its domestic market. French, American, and Italian winemakers primarily serve their local markets, and exports are only an added plus. Australia, with a national market of only 18 million, depends vitally on sales abroad. In 1990 Australia exported just 11.8 percent of its production; it now exports nearly half of its much larger output. Total Australian exports worldwide went from $126 million in 1990 to $1.5 billion in 2003.
Old World wine producers such as France, who are seeing their domestic market decline and their dependence upon exports increasing, watch this Australian wine juggernaut with concern because it has already started taking over important markets. Just three countries—Germany, the United States, and Britain—import half of the entire world’s wines, with much of that coming from Old World producers. In 2000, Australia became the biggest supplier of wines to Britain, replacing France, which had held that honor since the Middle Ages. France’s loss of its number one position was all the more painful because of the sharp increase in British wine consumption. The British drank just 2 gallons of wine per capita in 1982 but now consume 5.8 gallons annually. Much of that growth, though, has been in Australian wines. France’s share of the British wine market dropped from 37 percent in 1994 to 23 percent in 2003.
A similar story transpired in the American market. Australia passed France in 2002 to become the second-largest exporter behind Italy. It seems only a matter of time before Australian wines top U.S. wine imports.
Australia has been making wine since the late eighteenth century, but until the 1980s most of it was of poor quality and rarely left the country. Big producers such as Penfolds and Rosemont long dominated the business there, and mergers in recent years have put even more power in the hands of a few companies that offer wines in a broad range of style, price, and quality.
This consolidation and strong bra
nds made it easier in the mid-1980s for major Australian producers, in conjunction with the government and with the support of the country’s wine-research institutes, to begin going after the international market in an aggressive and systematic way. With a hearty disregard for the established way of doing things, in particular for the French concept ofterroir, Australia’s wineries now turn out consistently competitively priced, easy-to-consume wines that fit the tastes of younger, less experienced oenophiles.
The international wine business has never had brands that could compare with other alcohol products such as Budweiser beer, Johnnie Walker scotch, or Smirnoff vodka. Australian producers, though, are in the process of changing that, thanks to intensive branding and marketing campaigns. These please both consumers, who are often confused by the numbing number of choices in any wine outlet, as well as retailers, which in many countries are grocery stores mainly interested in moving merchandise.
Australia’s Yellow Tail, which sells several different varietals specifically blended to American tastes, is the quintessential example of this Australian approach to the world market. Yellow Tail wines are not even widely sold in Australia. They are made by Casella Wines, a company started in 1969 by Italian immigrants Filippo and Maria Casella who began exporting Yellow Tail to the U.S. in June 2001. Only two years later it sold 4 million cases, replacing Chile’s Concha y Toro as the largest imported brand. Yellow Tail sold some 7 million cases in 2004. It has even gone upmarket with more expensive reserve wines.
The increasing importance of brands has led to a series of international mergers in recent years that have involved all the major wine-producing countries. In 1989 France’s Pernod Ricard bought Orlando Wines, maker of Jacob’s Creek, a major Australian producer and the leading wine brand in Britain. In 2001 Britain’s Allied Domecq bought Montana, New Zealand’s largest wine company. The following year Foster’s, a leading Australian beer company, took over Napa Valley’s Beringer Wine Estates. In 2003 Constellation, an American wine company, bought BRL Hardy, one of Australia’s leading wine producers. The following year Constellation also gobbled up the giant Robert Mondavi empire in California. Diageo, a British company, has been buying up wineries around the world, including California’s Beaulieu Vineyard and Sterling Vineyards as well as France’s Barton & Guestier. In early 2005, Diageo outbid an international group lead by France’s Domaines Barons de Rothschild to capture California’s Chalone Wine Group. In the summer of 2005, France’s Pernod Ricard took over Allied Domecq to form the world’s second largest spirits company after Diageo, which resulted in more wine business consolidation. At nearly the same time, Foster’s bought Australia’s Southcorp, owner of Penfolds and that country’s largest wine producer.
Judgment of Paris Page 30
