Judgment of Paris

by George M. Taber

  Pioneers in the 1960s and early 1970s like Bob Travers at Mayacamas and David Bennion at Ridge made their own wine. The new-money winery owners who came after the Paris Tasting hired one of the hot new consultant winemakers to do the work in the vineyard and cellar while the owners sipped the wines bearing their names. Among the best known of the enologists-for-hire in recent years is Helen Turley, who has made wines for the Bryant Family, Martinelli, and Pahlmeyer wineries.

  Foreigners, including some of France’s biggest names in wine, also flocked to the Napa Valley. Moët & Chandon had been the first, coming in 1973, three years before the Paris event; but after it came many others, most prominently Baron Philippe de Rothschild in 1978. The Moueix family, owners of Château Pétrus, the most famous name in Pomerol, started Dominus Estate, a low-volume, ultrapremium wine that made its first vintage in 1983. Son Christian Moueix, who ran the operation, had studied at UC Davis in 1968 and 1969.

  The Napa Valley unfortunately became another proof of the maxim that nothing succeeds like excess. Million-dollar mansions soon began dotting the countryside when Silicon Valley techies and San Francisco professionals sought homes with a view of a vineyard. Marc Benioff, a multimillionaire who made one fortune at Oracle, the software company, and then a second with Salesforce.com, an Internet firm, bought a Napa Valley hilltop estate for $3.2 million and then spent millions more redoing it. Benioff, though, is more interested in valley views than valley crus. As the number of wineries kept growing, vineyards were planted on more and more precarious locations on Napa’s mountainsides. Every one of the new wineries seemed to have a business plan that called for it to make two levels of wines: $50-a-bottle Napa Valley Cabernet Sauvignon and $100-a-bottle vineyard-specific Cabernet. No one had bothered to ask whether there was that big a market for $100 bottles of wine. In the go-go 1990s, however, there seemed to be no limit to expectations or expenditures. American wine sales in that decade nearly doubled to $19 billion, even though there was only a modest increase in annual per capita consumption. Americans were simply willing to spend a lot more for their wine.

  A good barometer of excess was the skyrocketing price of Napa Valley land. A milestone was passed in 1999, when Gil Nickel, the owner of the Far Niente winery and a collector of antique cars, paid $100,000 an acre for a forty-two-acre vineyard. Only four years later, Francis Ford Coppola put up $300,000 an acre for a vineyard in Rutherford. In 1970 Warren Winiarski had paid just $2,000 per acre for his first Stag’s Leap land, while Jim Barrett in 1972 paid less than $7,000 an acre for the Chateau Montelena property, which included an historic winery.

  The best symbol of the excessive 1990s was the popularity of the so-called trophy wines, which were sold in wine auctions at unbelievable prices and garnered mountains of publicity for both the wineries and the people who bought them. The wineries regularly win very high ratings from Robert Parker. The first was Harlan Estate, which received a perfect 100 rating from Parker in 1994, only its fifth vintage. Others include Screaming Eagle, Behrens & Hitchcock, and Grace Family.

  These trophy wines are all Cabernet Sauvignons and similar in style. Their detractors in the valley call them “fruit bombs.” They are big, showy wines with lots of concentrated fruit flavors. One Napa critic told me with obvious exaggeration, “They are so thick that you have to serve them with a spoon.” Unlike classical French wines, they are not really meant to be quaffed with meals. They are better sipped on their own. The techniques of trophy winemakers are very similar to those of the Frenchgaragistes : severe pruning, late harvests, careful grape selection, heavy use of oak. With their extensive handwork, these are the Ferraris of wine.

  Production is only several hundred cases a year, far less than the most prestigious Bordeaux châteaux, and so the wines never find their way to anyone’s neighborhood wine shop. Screaming Eagle, for example, produces only about five hundred cases annually. The trophy wines are sold mainly by mail order to customers willing to pay $300 a bottle or more. Screaming Eagle buyers are limited to three bottles each and the winery no longer adds names to its waiting list. Aficionados brag about getting onto the allocation list just as they might boast of their daughter getting into Harvard. After being sold by the winery, many bottles find their way to Internet auctions, where the price quickly doubles or triples.

  The trophy wines are also still too young for anyone to know whether they will age to true greatness with time. Tasting them, though, is not what they are really all about: these wines are meant to be placed on a mantel and admired. They are symbols of the owner’s extraordinary success and are bought mainly to impress friends and guests.

  One Napa Valley winery owner told me that the trophy wines also serve another role: they provide a price ceiling that makes it easier for him and others to charge more. When Screaming Eagle is selling for $300 or more a bottle untasted, any top-ranked winery can justify asking $100 for its Cabernet Sauvignon.

  The apex of valley flamboyance took place at the 2000 Napa Valley Wine Auction. The event was started in 1981 by Robert Mondavi and a few other pillars of the wine establishment to be a local version of the famed Hospice de Beaune charity fund-raiser in Burgundy. The Napa Valley auction, which was recently renamed Auction Napa Valley, originally raised money for the St. Helena Hospital, but it became so successful that the proceeds were spread around to several other charities. Over the years, the auction became a place for the newly wealthy to show off their money. At the 2000 event, which raised $9.5 million, a level yet to be matched, a six-liter bottle of 1992 Screaming Eagle Cabernet Sauvignon was sold for $500,000. That works out to $22,944 per four-ounce glass. A trophy indeed.

  The buyer was Chase Bailey, a dot-com multimillionaire who had made his fortune at Cisco, the company that sells the equipment that forms the backbone of the Internet. Even Heidi Barrett, the Screaming Eagle winemaker and wife of Bo Barrett, the winemaker at Chateau Montelena, found it hard to believe that any bottle of wine could be worth that much. Afterward she was quoted as saying, “It’s wild. You drink it, and it’s gone. My brain doesn’t get it.”

  The bursting of the stock market and Internet bubbles in 2000 did not kill the trophy wines, although it reduced some of the ardor for them. The level of their oversubscription declined, but the supply of the wines is so limited that there will probably always be more buyers than sellers for the prestige products. Now instead of five buyers for each bottle there are perhaps two, and the prices show no sign of declining.

  People had come to the Napa Valley since the 1850s because it was what Eden must have looked like. But as the last patches of pasture were turned into vineyards and the traffic jams grew longer on Route 29, a backlash against new development gathered force. Many people wanted to halt all growth. They argued that the very qualities that brought them to the valley in the first place and made wine production possible were being destroyed, especially by building vineyards and McMansions on steep mountainsides, which in a thunderstorm could go sliding down the hill. As a result, issues like the protection of streams and the Napa River became the subject of hot debates and bitter political struggles. Environmentalists also argued that concentrating all of the valley’s resources into one crop—grapes—was destroying the ecological balance that the agricultural area had enjoyed for more than a century. The trouble in the late 1990s of insects like the glassy-winged sharpshooter that attacked vineyards seemed to support their case.

  The opposition to more development was also directed at the new wealth that had transformed a once simple farming valley into Rodeo Drive North, a place where people spent their time and money trying to outdo their neighbors. Long-term residents resented the weekend winery owners who were driving up local real estate prices and making it impossible for the children of old-timers to afford a home. And as so often happens, people who had moved to the area before it boomed wanted to close the valley to newcomers. Some of these were not even fans of wine, the foundation for the region’s economy. Peter Mennen, an heir to the Mennen toil
etries fortune, was one of the many people who had moved to the Napa Valley to get out of the fast lane. For years, he lived the simpler life as the postmaster of St. Helena, but in a letter to the editor of the local paper he called wine a “bottle of arrogance.”

  Winery owners at first were generally divided on development issues. In the back of the minds of many loomed the specter of what had happened in Santa Clara County to the south, which had been a quality wine region in the 1950s and early 1960s when Martin Ray was turning out great wines there. But when the area became high-technology’s Silicon Valley, land that might have become prime vineyards was turned into housing developments and office complexes. No one wanted that to be repeated in the Napa Valley. At the same time, winery owners have always been rugged individualists who want to do things on their land their way. They resent anyone coming in and telling them what to do, and many formed groups to wage war with the environmentalists.

  Attempts to control development are an old topic in the Napa Valley. The first restrictions were established in 1968 by the Agriculture Preserve Zone, which set twenty acres as the minimum size for vineyards. The goal was to stop any growth of small wineries that would turn the area into a rural suburbia. Big vineyards were okay because that would maintain the agricultural nature of the valley, but proponents of the agricultural preserve argued that hundreds of vest-pocket vineyards, each with its own little winery, would destroy the valley. The minimum was later increased to 40 acres and is now 160 acres in the Agricultural Watershed Zone on the hillside surrounding the valley. Such measures, though, generally had the support of winery owners.

  In the 1990s, however, environmentalists became more aggressive in their demands, and winemakers began regarding them as extremists out to destroy their way of life. During my last visit to the valley, some winemakers bitterly complained to me that the environmentalists were using the court system to tie up any new development in costly litigation whose real purpose was simply to stop growth. Campaigns for local elections turned into expensive and emotional confrontations between environmentalists and winery owners.

  The battle between the two groups in the valley is likely to be an ongoing and heated struggle. Compromises are difficult to achieve, and both sides are quick to run to court if they lose a skirmish. The core positions of both camps are valid, although many hold extreme views.

  To a degree, the environmentalists have already won. Just as in France, there is now a much greater awareness among Napa Valley winemakers of the dangers of excessive use of chemical fertilizers, and wineries now brag about being ecofriendly. The Wine Institute, a San Francisco–based lobbying group, and the California Association of Winegrape Growers in 2002 introduced the much-heralded Sustainable Winegrowing Practices program. This teaches vintners and growers how to conserve natural resources and protect the environment. Its nearly five-hundred-page workbook contains chapters on soil management and natural pest control as well as water and energy conservation.

  California’s winemakers in recent years have again discovered that despite its glamour, wine is still basically an agricultural product subject to the maddeningly repetitive agricultural cycle that leads to rising prices followed by falling ones in commodities as diverse as beef and tulip bulbs. Says Vic Motto, a St. Helena–based management consultant to wineries, “There are about 4,500 grape growers in California and no invisible hand tells them what to do.” When wine is in high demand and grapes are in short supply, both growers and winery owners plant more vines, and fields that had been growing perhaps tomatoes are planted with grapes. Eventually there are too many vineyards, so a glut of grapes develops and prices drop. Such market collapses occurred in 1973–74, 1982–83 and 1991–92. The latest grape glut took place at the beginning of the new century after the size of vineyards increased by 33 percent between 1995 and 2001.

  At the Trader Joe’s grocery store in the Bel Aire Plaza shopping center in the city of Napa, the challenge facing valley wine in the early years of the twenty-first century was on full display one warm autumn afternoon in 2003. Business was brisk in the store’s well-stocked wine section. The biggest action was at the stacks of Charles Shaw wines selling for $1.99 a bottle. Its ardent fans call the wine “Two-Buck Chuck.” A matronly woman wearing black pedal pushers and a light green top first put two bottles of the wine into her shopping cart, then added two more and two more until she had eight bottles. A gray-haired man in chinos and a sport shirt looked at individual bottles of four types of Charles Shaw wines—Cabernet Sauvignon, Chardonnay, Merlot, and Sauvignon Blanc—and then put a case of Merlot into his shopping cart. The wine bargains at Trader Joe’s in Napa were not limited to Charles Shaw. In front of a large display of Trader Joe’s Napa Valley Cabernet Sauvignon selling for $4.99 was a handwritten sign reading, “Under the winery’s real label it sells for about $30.”

  Jon Fredrickson of Gomberg, Fredrickson & Associates, California’s leading wine-market watcher and consultant, came up with a new classification for Two-Buck Chuck and its clones, calling them “extreme value varietals.” Fredrickson maintains that they have actually helped the California wine business by attracting new, unsophisticated consumers who will stay around, develop more demanding tastes, and graduate to better-quality—and higher-priced—wines.

  Having already seen several wine cycles, Fredrickson said this one too would eventually play itself out as farmers took marginal vineyards, which had been planted with grapes only when demand was extremely high, out of production. With a glut of grapes on the market, other agricultural products suddenly look more attractive. Sure enough, in 2003 the Robert Mondavi Winery sold its Sierra Madre Vineyard in the Santa Maria Valley to farmers who pulled out the grapes and planted strawberries. In its early days, Two-Buck Chuck was largely made from high-quality grapes from the Central Coast region, Fredrickson told me, but there were soon less of those for sale and lesser ones from the Central Valley, the center of jug wine, were going into the wine. It is clear how the story ends: when the “extreme value varietals” inevitably go down in quality, they decline in popularity.

  A bigger challenge to Napa Valley winemakers than that posed by Two-Buck Chuck, however, is the tyranny of time. The ambitious young winemakers like Bob Travers and Warren Winiarski, who came to the valley in their thirties during the 1960s and 1970s, are now in their seventies and face the inevitable problem of succession. The change of generation in a family business is never easy, whether the business is a winery or a car dealership.

  The most public transition took place at the famed Robert Mondavi Winery. By the time he was in his 90s, Robert was no longer involved in the day-to-day affairs of the business that bears his name, and his company went adrift. Mondavi took his problems public in late 2002, when he told theSt. Helena Star, a weekly newspaper in the valley, that his sons Michael and Tim were more interested in making money than promoting the family’s wines. Eventually both sons left the company, and for the first time no Mondavis were managing the business. In November 2004, after a tense boardroom struggle, Constellation bought Robert Mondavi Corp. for $1.03 billion plus $325 million in assumed debt. Robert was given the title Brand Ambassador.

  Another bumpy transfer of generations took place at the Louis M. Martini winery. Founder Louis M. Martini’s son Louis P. Martini studied wine at UC Davis and took over the business in 1968. Louis P.’s son Michael Martini in 1977 became the third-generation family winemaker, but the company ran into financial trouble and had to sell off some prime vineyards. Finally in September 2002, Gallo bought Martini. The new owner preserved the brand name but soon introduced a new label and forced other marketing changes that made its products look more up to date.

  Old-timers and newcomers alike in the valley were saddened by the disappearance of both the Robert Mondavi family and the Martinis. The two clans had been founding members of the valley’s winemaking establishment who had helped restore the business after the damage caused by Prohibition.

  There are plenty of buyers
around for family-owned wineries. Major liquor companies are once again anxious to purchase Napa Valley properties. Lexicographer and wit Samuel Johnson noted that a second marriage is the “triumph of hope over experience,” and the liquor companies do not seem to have learned much from the failures of Heublein and others in buying wineries during the 1970s. Big foreign companies such as Australia’s Foster’s Group and Britain’s twin giants, Allied Domecq and Diageo, have all been buying up family wineries in California in recent years.

  American companies are also rolling up smaller brands, hoping to achieve economies of scale and maximize marketing clout. Constellation Brands, a publicly held company based in Fairport, New York, has been the most aggressive and has passed Gallo to become the largest wine company in the world. In addition to owning Australia’s Hardy line of wines, Constellation now also has Napa Valley’s Franciscan Estates and Mount Veeder in addition to Ravenswood and Simi in Sonoma County, and the jug wines Almaden and Inglenook. After acquiring Robert Mondavi, Constellation now sells some 80 million cases annually under a wide range of brands.

  Despite the romance of boutique wineries, wine is big-company business. Only about 25 of the 1,700 wineries in California produce 95 percent of the wine sold. Those wineries each sell several million cases a year, usually of low-cost wine. The flip side is that some 1,675 wineries are fighting for just 5 percent of the market, although most of them are going after the luxury, high-profit business and have actually been taking market share away from the bigger wineries in recent times. About three-quarters of the small wineries each sell less than ten thousand cases a year. Boutique wineries, though, have 70 percent of the rapidly growing market for wines selling at more than $15 a bottle. Says consultant Vic Motto: “Small and mid-size wineries are driving the changes in the market for California wine. They are the market innovators, in part of necessity.”