The biggest challenge facing small wineries is that of distribution, especially since mergers have dramatically decreased the number of wholesalers that will bring their wines to retail shops. The surviving wholesalers are more interested in wineries where they can move thousands of cases a week than those that will sell only a few hundred a year. More than half of small California wineries told a 2003 Wine Institute survey that they could not get a wholesaler to carry their brand.
As a result, small wineries have been forced to be more creative in marketing, especially through direct-to-consumer sales that can eliminate both wholesalers and retailers. Purchases by visitors to the winery or through wine clubs that ship bottles to residents in states where that is legal are a high-
profit business since producers can then pocket the 50 to 60 percent of the retail price that is normally split between wholesalers and retailers.
America’s antiquated liquor laws, however, make it difficult to sell wine directly to customers. When Prohibition was repealed in 1933, states were given the power to regulate the alcoholic beverage business. The result is a hodgepodge of legislation under which a state like Pennsylvania runs liquor stores while another like Alabama has dry counties where no alcoholic beverages can be sold. In Arkansas local wine can be sold in grocery stores, while out-of-state wine is sold only in liquor stores. Several states, including New York, New Jersey, and Michigan, outlaw interstate wine shipments but permit them within the state. Twenty-seven states, mostly in the west, have reciprocal agreements that permit their wineries to ship direct, and most California wineries will sell to consumers in those states.
The Internet could open up a huge new market if small wineries were permitted to sell directly to consumers. Some limited Internet sales already exist, but these are usually done through large distributors that are willing to take on the complex and costly legal fight to ship wine around the country. The breakthrough would come if wineries themselves could operate Websites where consumers thousands of miles away could buy their wine. The Federal Trade Commission in a 2003 report called the barriers to e-commerce in wine “anticompetitive.”
GROWTH OF THE U.S. WINE INDUSTRY
SOURCE:WineAmerica, Washington, D.C., 2004
The tide of history, though, is slowly going in the direction of national rules to govern liquor sales. The twenty-seven reciprocal agreements were the first breach in old practices. The second was the May 2005 Supreme Court ruling that the Michigan and New York laws permitting direct wine shipments within those states but outlawing them from other states were unconstitutional. The majority of judges said the laws were discriminatory. Fifteen states still do not permit any direct-to-consumer wine shipments, and the decision does not affect them. But time and trends do not appear to be on their side, and more direct sales to consumers will be a boon to small wineries.
As they look out into the future, California winemakers can be encouraged because they have only begun to tap the huge American market, despite nearly four decades of strong growth. Just 12.5 percent of Americans, 25 million people, classify themselves as core wine drinkers, meaning that they consume wine at least weekly. And those people drink 86 percent of total national consumption. Another 28 million, or 13.9 percent, are marginal wine drinkers who have it less than once a week. A very large segment of the American public still never drinks wine. If U.S. consumption only reached the level of fellow English-speaking countries like Britain and Australia, Americans would be drinking twice as much wine as today.
Wine is also still consumed largely on the East and West Coasts, with California alone taking about one-fifth of the total. Outside of major cities like Chicago, the Midwest remains a little-tapped market for wine. Lou Gomberg, one of the early promoters of California wine, said that for wine really to take off there had to be an active winery in every state in the country. Today that goal has been achieved and wines are even made in the harsh climates of the Dakotas and Alaska. In 2004, there were 3,726 bonded wineries in the U.S., up from 1,817 in 1995. While New York, Oregon, and Washington have more than 200 wineries each, California has nearly 1,700 that produce more than 90 percent of American wine.
It’s not just the United States that offers great growth opportunities for California wines; the world is also becoming a better market for its products. Between 1987 and 2003, annual American wine exports, which are almost all from California, went up ten-fold to $643 million. Britain, in particular, has become a good market for California wines.
On many fronts, the best is yet to come for California wine.
Epilogue
Ten of the eleven California wineries that participated in the 1976 Paris Tasting remain in operation and most are still benefiting from the worldwide publicity they received just from taking part in the event. Only Veedercrest no longer exists, having been forced out of business in 1982 after a fight with a distributor.
The three wineries that most benefited from the Paris Tasting were Chateau Montelena and Stag’s Leap Wine Cellars, which placed first in their respective parts of the event, and Grgich Hills, which was started as a direct result of Chateau Montelena’s victory. Today all are leading California producers, and they reinforce their market position by reminding wine buyers about their connection to the Paris Tasting. And while Steven Spurrier first thrust them into the forefront of American wine, they have all remained there by continuing to produce outstanding vintages year after year.
Jim Barrett at Chateau Montelena has stuck faithfully to his original business plan to model his winery after Bordeaux’s Château Lafite. Chateau Montelena remains a small, family-owned business specializing in Cabernet Sauvignon. After winemaker Mike Grgich left to start his own winery, Barrett hired Jerry Luper, the former winemaker at Freemark Abbey, to be his vintner. Luper stayed through the 1981 vintage and then moved to another California winery. When Luper left, he urged Jim Barrett to hire his son Bo Barrett as winemaker. Bo, who had received his formal wine training at Fresno State, had only recently left the company after his father told him he didn’t believe in nepotism and so he didn’t have much of a future there. At Luper’s suggestion, Jim Barrett changed his mind and Bo has been the winemaker at Chateau Montelena since 1982.
Chateau Montelena today produces some 35,000 cases a year. About one-third of that is its top-of-the-line Estate Cabernet Sauvignon, selling for about $100 a bottle. It still does a steady business with a Burgundy-style Chardonnay, the wine that won at Paris, and also sells less expensive Cabernet Sauvignon, Zinfandel, and Riesling. In November 1999,Wine Spectator magazine did a vertical tasting of twenty years of Chateau Montelena Estate Cabernet Sauvignon wines, going back to the first vintage in 1978. The title of the article: “Greatness by Design.” Author James Laube wrote, “When it comes to California Cabernet, Chateau Montelena not only runs with the best of the pack, it often leads.”
Stag’s Leap is today the largest of the three Paris Tasting wineries, selling some 150,000 cases annually under two labels—Stag’s Leap Wine Cellars and Hawk Crest. Its premium Stag’s Leap line has white wines—Chardonnay, Sauvignon Blanc, and Riesling—as well as reds—Cabernet Sauvignon and Merlot. Warren Winiarski has named one of his Cabernets after the classical concept of the Golden Rectangle. The top-of-the-line Stag’s Leap wine is Cask 23, a premium Cabernet that sells for some $150 and is made only in particular years when everything comes together to make an exceptional vintage.
Hawk Crest is a popularly priced line of Cabernet Sauvignon, Merlot, and Chardonnay that retails for about $14 a bottle. Winiarski started the second label in 1974, when he took advantage of one of the periodic gluts of grapes to buy fruit in Mendocino County. Hawk Crest sells about 80,000 cases annually.
Warren Winiarski steadily picked up more vineyard acreage over the years. The most important purchase was the one hundred acres of Nathan Fay’s property that had been the original inspiration for him to buy the nearby Heid Ranch. Wines from the original vineyard are marketed under the label Stag’s Leap
SLV, while those from the Fay property carry the Stag’s Leap Fay brand. The winery annually produces about 5,000 cases of Fay and 3,000 cases of SLV, plus 1,500 cases of Cask 23 in the years in which it is made.
Doubtless many wine drinkers in the past quarter century have bought a wine from Stags’ Leap Winery erroneously thinking it was from Stag’s Leap Wine Cellars, the winery that triumphed in Paris. In 1971, Carl Doumani, a sometime restaurant owner and sometime real estate speculator, bought the four-hundred-acre Stags’ Leap ranch, which had once included a winery. The following year, and thus before the Paris Tasting, Doumani started making Petite Sirah, marketing it under the name Stags’ Leap Winery. Winiarski and Doumani later sued each other for the use of the name, with each spending more than $100,000 on his case. But finally in July 1985, and after nearly twelve years of litigation, the two men agreed to disagree and settled their fight with each continuing to use its slightly different name. Stags’ Leap Winery is now owned by Australia’s Foster’s Group. The nominal confusion, though, continues.
Winiarski, the college lecturer-turned-winemaker, has never totally left his intellectual pursuits. For more than a decade he taught a course in the summer at St. John’s College in Santa Fe, New Mexico. The subject matter included Aristotle and Shakespeare as well as Machiavelli and Tocqueville. In 2003, when he was naming a new Cabernet Sauvignon after the Greek goddess Artemis, Winiarski got back into academic research, delving into Greek mythology in the works of Robert Graves.
Grgich Hills has expanded to a winery that now grows all its own grapes on four hundred acres of prime Napa Valley vineyards. It currently produces about 80,000 cases a year, and Mike Grgich says he will never go over 100,000 cases out of fear that it would be too big for him to make quality wines. Grgich Hills produces six wines, although its flagship Chardonnay makes up about half of total sales. The Grgich Hills Cabernet Sauvignon, which made its way into the French book100 Vins de Légende (100 Legendary Wines), is about one-quarter of production. The other Grgich Hills wines are Zinfandel, Merlot, Fumé Blanc, and a late-harvest blend of Sauvignon Blanc, Riesling, and Chardonnay.
While Grgich still oversees production of his beloved Chardonnay, he has set in place the succession for the winery he still owns with his original partners, Austin Hills and Hills’s sister Mary Lee Strebl. Grgich’s nephew, Ivo Jeramaz, whom Grgich brought to California from Croatia in 1986 and trained at Grgich Hills, will take over as winemaker, while Grgich’s daughter Violet has already been named general manager and sales manager. The two will one day lead Grgich Hills.
In 1995, and after the fall of Communism, Grgich traveled back to his native Croatia with plans to make wine there as well. He bought a stone building in the village of Trstenik for his winery and equipped it with the latest technology, including Californian fermentation tanks and French oak barrels for aging. Grgi Vina, the name of the new venture, is located about 75 miles from Desne, where Grgich grew up. It now produces some 3,300 cases annually of the white wine Posip and the red wine Plavac Mali, which sell for premium prices. The wine press that made the winning Chateau Montelena Chardonnay at Paris is now in service at Grgi Vina.
Mike Grgich, the immigrant winemaker who arrived in the Napa Valley with so little, takes justifiable pride in his accomplishments, saying, “We now own all our own land plus our winery. Everything is paid off. I feel safe going into an era where we do not need to buy another vineyard or pay off another loan. The ship has been built, and now we just need to navigate it.”
Patricia Gallagher, the person who first suggested the tasting of California wines in Paris, has continued to be a member of the French wine world. She remained director of the Académie du Vin until 1989 and then became a wine writer and editor. Since 1996, she has been academic director and wine department director at the Cordon Bleu cooking school in Paris.
Steven Spurrier, the man who brought California wines to the world’s attention on May 24, 1976, has become a leading member of the international wine scene. After the Paris Tasting, his small shop and wine school grew even more popular with English-speaking visitors, and his business interests expanded to include a restaurant and wine bar also located in the Cité Berryer and a bistro in the Défense section just outside Paris. Spurrier moved to New York City in 1981 to launch an Académie du Vin there, but the venture soon failed. The following year he relocated to London so that his two children could attend British schools. His Paris businesses ran into financial problems and he finally sold them in 1989 to turn his interests to being a wine consultant, lecturer, author, and journalist. He has since written several books and become a consulting editor ofDecanter, Britain’s leading wine magazine. Although he stays firmly away from making wine, preferring to be a critic rather than a producer, Spurrier has invested in a vineyard in the Entre-Deux-Mers region of Bordeaux. The French wine establishment finally got over its anger at him for staging the Paris Tasting, and in 1999 Spurrier received the Prix Louis Marinier for his writing about Bordeaux wines. Looking back on a lifetime spent around wine, Spurrier says, “I am still totally, 100 percent in love with wine, the wine trade, and the people in it. I have been very fortunate indeed, and wine has brought me more than I could ever have imagined.”
Appendix
Scorecard for The Judgment of Paris
CHARDONNAY
POINTS
Chateau Montelena, 1973 132
Meursault Charmes Roulot, 1973 126.5
Chalone Vineyard, 1974 121
Spring Mountain, 1973 104
Beaune Clos des Mouches Joseph Drophin, 1973 101
Freemark Abbey Winery, 1972 100
Bâtard-Montrachet Ramonet-Prudhon, 1973 94
Puligny-Montrachet Les Pucelles Domaine LeFlaive, 1972 89
Veedercrest Vineyards, 1972 88
David Bruce Winery, 1973 42
CABERNETSAUVIGNON
POINTS
Stag’s Leap Wine Cellars, 1973 127.5
Château Mouton Rothschild, 1970 126
Château Haut-Brion, 1970 125.5
Château Montrose, 1970 122
Ridge Vineyards Monte Bello, 1971 103.5
Château Léoville-Las-Cases, 1971 97
Mayacamas Vineyards, 1971 89.5
Clos Du Val Winery, 1972 87.5
Heitz Cellars Martha’s Vineyard, 1970 84.5
Freemark Abbey Winery, 1969 78
Selected Bibliography
The Regional Oral History Office, The Bancroft Library, University of California, Berkeley, interviews with Maynard Amerine, William Bonetti, Andy Beckstoffer, David Bruce, Charles Carpy, Charles Crawford, Jack Davies and Jamie Peterman Davies, Paul Draper, Miljenko Grgich, Joseph E. Heitz, Maynard A. Joslyn, Zelma R. Long, Louis M. Martini, Peter Mondavi, Robert Mondavi, Rodney D. Strong, Janet Spooner Trefethen and John James Trefethen, André Tchelistcheff, Warren Winiarski, and Albert J. Winkler. The Napa Valley Wine Library interviews with Maynard Amerine and J. Leland Stewart. Wines and Winemakers of the Santa Cruz Mountains Oral History interview with David Bruce and joint interview with Hewitt and Suzanne Crane, Charles and Blanche Rosen, and Frances Bennion.
Adams, Leon D.The Wines of America . New York: McGraw-Hill, 1973.
Bespaloff, Alexis.The New Frank Schoonmaker Encyclopedia of Wine . New York: Morrow, 1988.
Brook, Stephen.A Century of Wine. San Francisco: The Wine Appreciation Guild, 2000.
Casamayor, Pierre, Michel Dovaz, and Jean-François Bazin.L’Or du Vin. Paris: Hachette, 1994.
Chroman, Nathan.The Treasury of American Wines. New York: Rutledge Crown, 1976.
Coates, Clive.Côte D’Or. Berkeley: University of California Press, 1997.
Cooper, Michael.Wine Atlas of New Zealand. Auckland: Hodder Moa Beckett, 2002.
Conaway, James.The Far Side of Eden. New York: Houghton Mifflin, 2002.
———.Napa. New York: Avon, 1990.
Darlington, David.Zin. Cambridge, MA: Da Capo Press, 1991.
Deroudille, Jean-Pierre.Le Vin Face à L
a Mondialisation . Paris: Hachette, 2003.
Deutschman, Alan.A Tale of Two Valleys. New York: Broadway Books, 2003.
Duijker, Hubrecht.The Wines of Chile. Utrecht: Het Spectrum, 1999.
Echikson, William.Noble Rot. New York: W. W. Norton, 2004.
Gabler, James M.Passions. Baltimore: Bacchus Press, 1995.
Gaiter, Dorothy, and John Brecher.Love by the Glass. New York: Villard, 2002.
———.The Wall Street Journal Guide to Wine. New York: Broadway Books, 2002.
Girard-Lagorce, Sylvie.100 Vins de Légende. Paris: Éditions Solar, 1999.
Halliday, James.Classic Wines of Australia and New Zealand. New York: HarperCollins, 1997.
Hands, Phyllis, and Dave Hughes.New World of Wine from the Cape of Good Hope. Somerset West, South Africa: Stephan Phillips, 2001.
Heintz, William F.California’s Napa Valley. San Francisco: Scottwall Associates, 1999.
Jefford, Andrew.The New France. London: Mitchell Beazley, 2002.
Johnson, Hugh.Story of Wine. London: Mitchell Beazley, 1989.
———.Wine. London: Thomas Nelson and Sons, 1966.
———.The World Atlas of Wine. London: Mitchell Beazley, 1971.
Johnson, Hugh, and Jancis Robinson.The World Atlas of Wine. 5th ed. London: Mitchell Beazley, 2000.
Jordan, Ray.Wine. Osborne Park, Western Australia: The West Australian, 2002.
Judd, Kevin.The Colour of Wine. Nelson, New Zealand: Craig Potton, 1999.
Lapsley, James T.Bottled Poetry. Berkeley: University of California Press, 1996.
Lichine, Alexis.Wines of France. New York: Knopf, 1951.
Littlewood, Joan.Baron Philippe. New York: Crown, 1984.
Lukacs, Paul.American Vintage. New York: Houghton Mifflin, 2000.
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