The case for glassware

As we saw in our first class, over the last decade we have seen a trend towards simplification in home-ware and glassware. The creation of more and more amazing all-purpose glassware, such as the Gabriel Glass, and a consumer trend for simplicity (and limited space) in the home have increasingly become the standard across the world. However, it is still interesting to understand the tradition of tailoring ones glassware to the beverage that is served. This doesn't only apply to wine. Most alcoholic beverage makers who focus on quality, tend to have an opinion on which glass to use to get the best overall olfactory experience.


If we ask the average consumer, they would say there are three different types of wine glasses. The large ones for red wine, smaller ones for white wine, and the narrow long glasses for sparkling wines. And while this is largely true, there's a little more nuance to it.

All traditional wineglasses are designed to have a stem. Not because this really impacts the flavor, but to keep the wine at the right temperature when holding the glass. The shape of the bowl, however, does impact our experience of flavor. The way we hold our head when drinking, the depth of the nose inside the glass, the curvature of the glass as it slopes upwards can all change the way we smell and taste different types of wine.

Let's talk about red wine glasses for example. Traditionally, red wines are served in a glass that has a wider and larger bowl. This because it promotes more oxidation which generally suits red wines better as it brings out the complexities of the wine. Even within the red wine glass category, there are different shapes. Glasses used for Bordeaux are generally designed to direct wine towards the back of the mouth, while glasses used for Burgundy are broader and aim to hit the front of the mouth. As the tongue has different receptors for different types of flavor profiles, the goal is to optimize where the alcohol will hit the mouth.

Other than size and shape, the size of the opening of the glass can also play a factor. A glass that has an opening that is too narrow can hide a lot of the aromas from a wine. Additionally, a sparkling wine glass is shaped the way it is in order to preserve the carbonation in the glass as long as possible, and it's opening is slated inwards for the same purpose.

To give you an overview, the below info-graphic shows a good range of wine glasses.




As an additional example, below you can see the variety of glassware available for beer.







Sources:
https://www.forbes.com/sites/tmullen/2016/08/25/why-the-shape-of-a-glass-shapes-the-taste-of-your-wine/#546fbae26554
https://winefolly.com/tutorial/the-importance-of-a-proper-wine-glass/
https://www.homestratosphere.com/types-of-beer-glasses/

Beyond Grapes - Why Not Jalapeños?

Jalapeños, macadamia nuts, and pineapples - oh my! Turns out, you can create wine out of pretty much anything you can ferment in a barrel. Consider the Cardinal Hollow Winery's 100% jalapeno wine, which pairs well with brie cheese. Or Mill Lane Winery's rhubarb wine, which tastes of peppermint, cedar, and raspberry flavors mixed with a bouquet of Christmas spices and raspberry notes. Exploring these abnormal wine varietals raises the question - why are grapes such a popular choice in winemaking versus other fruits? What forces are at play here?

The short answer is cost-savings. Apparently, grapes and wine are a match made in heaven. Grapes uniquely contain the right balance of sugars, acids, and tannins needed to make a long-lasting and flavorful fermented beverage. Most other fruits simply cannot produce wines that last as long or taste as good without additives - that is, grape wine is cheaper to produce compared to other wines. 

But are fruit wines as inferior to traditional wines as "the market" would have us believe? The EU legislature has ruled - with strong support from major European wine brands - that wine should be legally defined as "a drink made from fermented grape juice". Does this sound at all like the "soy milk can't be called milk" debate raised by dairy incumbents here in the U.S? This is an interesting example of how industry incumbents, particularly in F&D, can raise barriers to entry via the law and labeling squabbles.

The rise of the kiwis

Looking at some wine export data for our paper on Romania, we made this chart showing what percentage of its wine production a few select countries are exporting. We thought the rise of New Zealand in late 90s and throughout the 21st century was pretty remarkable. Pulled ahead by its Suavignon Blancs, New Zealand not only massively grew its production but also exporting almost all of this new production. Helped by its reputation from the historical links to anglosaxon countries, such as the UK, US and Australia, it never struggled to find new demand. At the same time, its citizens own preferences for drinking didn't change and despite massively increasing production, it still imports about a third of its average 20 litres per person per year consumption, a lot more than countries that have a similarly thriving export industry such as Italy or Spain. 

Large fortune to make a small fortune

during my investment banking days, as I zoned out staring at my computer screen and its blinking cursor, I used to dream about an idyllic life owning a small vineyard and making a small wine label.  I never discounted the challenge of learning winemaking from the ground up, but assumed that having a small operation where you could be closely connected to your product and got you more involved with nature would be a nice reprieve from the monotonous hours in a cubicle.

That dream seems untenable these days as I learn more about the Wente and Kingston families and their respective decades-long tribulations in building out a business, and about the growers in the Long Island region.  Even as DTC becomes more prevalent and mitigates some of the onerous requirements from the 21st Amendment, I didn't realize how much investment was required to make half-decent wine, let alone good wine.  I expect that pioneers in new wine regions today have extremely patient timelines, knowing that few will realize a profit or achieve scale sufficient to sustain the business until close to their retirement. 

Who is this Rothschild guy anyway?

One little bit of history that I find interesting (and was thus hoping to find in the Rothschild case from last week) is the story of the Rothschild family.

The case mentioned a bit on the family's history, which led me to read up on them a little bit.  I thought the following two bits of history really stand out and demonstrate how impressive (and diversely skilled) of a family the Rothschilds were and are today.

1) The family dates back to the 18th century, where they initially built a banking empire, establishing banks in nearly every major nation in Western Europe.  Ultimately as the family network grew larger with every generation, the family started to split off their respective fortunes into separate empires.  Obviously certain parts of the family focused on winemaking, but others continued working in banking and Rothschild & Co is a major investment bank today.

2) Yes, Lafite Rothschild is one of the best known Bordeaux wines in the world.  Care to know the name of the winery that they are neighbors with?  Mouton Rothschild!  Yes, Lafite Rothschild and Mouton Rothschild are two separate wine labels originally founded by different members of the Rothschild family, both of which produce wines among the best (and most expensive) in the world.  A few years ago I had the opportunity to visit the Mouton Rothschild chateau, and I got to learn a bit about that side of the family.  Not only did we get to walk through the winemaking rooms (we were there in November, so slightly after harvest), we also got to walk through the museum (yes, there is a museum there) and see both an extremely odd art collection and an interesting exhibit on the history of their labels.  Mouton Rothschild is (I believe) unique in that they produce a different label for their wine each year, and commission a world-class artist to produce the work for that year's label.  Past artists include David Hockney, Jeff Koons, Salvador Dali and Pablo Picasso.  This is not surprisingly something they are quite proud of and have tons of information on all the labels on their website: https://www.chateau-mouton-rothschild.com/label-art/discover-the-artwork


Here are a few pictures I could dig up from my visit there:

 .  .  .  . 

https://en.wikipedia.org/wiki/Rothschild_family

Port Tasting in Porto

This past summer I traveled to meet some friends in France and Portugal. While in Portugal I acquired a taste for Port, and who wouldn't! It is deliciously sweet and alcoholic. A fortified wine, Port was actually originally invented by British merchants in the early 1700's, during a time of war with France. The British turned elsewhere for their wine, but found that to make the wine last during the trip back to Britain they had to fortify it, and thus Port was born! The Port houses, which line one of the banks of the Duoro river in the city of Porto, are subsequently almost exclusively British-named brands that were really just exporters at one point, such as Dow, Graham, Sandeman, Cockburn, Taylor, and many more. The Port houses in Porto have also figured out the commercial side of tastings. Lined up next to the river, these producers/shippers provide tours of their facilities, education on the making of Port, and of course, tastings. They make it easy to try the main categories, Ruby, Reserve, Rose, Tawny, and White port. Though they do quite a good business with tastings and bottles you can buy in their facilities, the Port industry has a relatively robust export side as well. In 2018 almost 10 million barrels of Port were shipped abroad for a value of EUR 450 million (annualized figures based on  https://www.ivdp.pt/en/docs/StatVendas/Porto/Table%201_2018.pdf figures). Sweet, very alcoholic, and relatively affordable, Port has become a favorite of mine, if only as a special treat.

Jews and Wine

I come from a giant Jewish family. Something that's always been interesting to me is what I've called the "wine conundrum" in our culture. Wine is an integral piece of the Jewish story - we drink it every Friday for Shabbat, you're instructed to have at least 4 glasses on Passover (and you literally put wine on your prayer book during this holiday), and for Purim, according to the Talmudic tractate Megillah, "a person is obligated to drink on Purim until he does not know the difference between 'cursed be Haman' and 'blessed be Mordechai.' "

So why, then, am I one of three cousins (out of a total of 20+, the other two being my full-blood siblings) that can have more than a glass of wine without getting sick and/or falling asleep? And did you know that Israel has one of the lowest incidences of alcoholism in the world?

It's likely because of a genetic mutation called ADH2*2, which increases the levels of acetaldehyde in your blood stream. Acetaldehyde is a toxic chemical produced when your body metabolizes alcohol - and it causes some pretty nasty effects like headaches, nausea, and flushing ("glow"). Though not exclusive to the Jewish population, about 20% of Jews have this mutation, and the effects are strongest for Ashkenazi Jews (aka my family). 

This mutation is very rare among those with white European descent. Fortunately for my wine-drinking habits, my father is 100% not Jewish, with a Certified Eastern European Liver (pretty sure that's the official scientific term for someone as far away from the ADH2*2 mutation as possible). I confirmed with the 23andMe test that I do not have this mutation, and process alcohol normally.

Thank goodness, and l'chaim!

The juice was worth the press

In 1985 - Kip Forbes, of the Forbes Magazine family, purchased a bottle of wine at auction. Seemingly, this wouldn't be noteworthy as bottles of wine are purchased all the time, however at the time this was the most expensive bottle of wine ever purchased at auction - it sold for £105,000!! Adjusting for inflation, that is ~$367,000 in 2018 US dollars. So why on earth would a bottle be worth so much?

My dad worked for Forbes magazine for essentially his whole career, and working in the finance department was the man responsible for signing the check for this historic purchase. The way he told it, he was 'along for the ride' as Kip was insistent on buying this wine. The thing that made it so special was the inscription "Th.J" on the bottle - oh and that it was also a Lafite! It was a 1787 Lafite allegedly from the estate of President Thomas Jefferson himself. My dad said he had to close his eyes as Kip bid the price higher and higher until he finally purchased the wine. Upon leaving the auction house, my dad called Malcolm (head of the family and Forbes magazine) and told him the price they paid for the wine. Forbes was a huge collector of artifacts, but this seemed to be inexplicable. So, tails between their legs, Kip and my dad boarded their plane to head back to New York from London.

By the time they landed, however, the free press that the family (and magazine) had gained from this absurd purchase had paid for the cost of the wine many times over! Kip and my dad were praised by Malcolm for their genius marketing strategy. The wine, to this day, has not been opened but some controversy has grown around it. There are allegations that the wine is a fraud and not related to Thomas Jefferson whatsoever.

Is WineDirect here to stay?

After reading the WineDirect case and for several days after I couldn’t get the following quote out of my mind. “By now, I thought we would have a $200 to $400 million business. I was wrong about the growth rate. We’re in the business of enabling but these are premium and ultra-premium wineries. We’re in the luxury business, which is a smaller business and a smaller market,” Waechter said. Based on what we discussed in class and what we read about New Vine Logistics I found it hard to believe that even being a $200mm-$400mm business was a goal, as opposed to something much bigger.

Upon looking into the details of the 2019 Direct to Consumer Wine Shipping Report, I found that consumers spent $3bn on DTC wine shipments in 2018, up from $2.69bn in 2018 and that wineries shipped over 6 million cases of wine in 2018, up 9% from the prior year. What I’m trying to get at is that I’m generally surprised that WineDirect isn’t the Amazon of wine, expanding distribution facilities and enabling consumers to legally order most wines on demand. While it will be interesting to see if Amazon decides to make a push into the market, which at the moment seems somewhat unlikely, it would be a great story to see WineDirect continue to grow into a large business, especially with the colored past the original company experienced.

Claret or Port?

Our DBR case stirred memories of my studies in England. After formal dinners, if I was lucky enough to be invited into the Senior Combination Room (where the college fellows retreated to drink and chat), I would be offered my choice of Port or claret. I didn't know much about either at the time, but they were clearly very different in appearance and taste!

Claret, as it turns out, is what the British call red Bordeaux. (And that means you should pronounce it with the "t" at the end, because the British refuse to pronounce French correctly.) The word dates back to the 1100s (!) and originally referred to light red wines. (It comes from the French word "clairet," used for the same purpose.) At the time, those light red wines came from Bordeaux, thanks to a cozy England-Bordeaux relationship established when Henry II married Eleanor of Aquitaine (1151). The term stuck even though many reds from Bordeaux are no longer light.

Of course, the British and the French didn't stay great friends forever. By the late 17th century, things weren't looking good between the world's super-powers. British wine merchants went searching for alternatives to French wines. Port -- a deliciously smooth, sweet wine fortified with grape spirits, from the Douro Valley in Portugal -- was their best find. (It didn't hurt that it was cheap to import, thanks to a 1703 treaty between Portugal and England, and more stable on sea voyages than unfortified wine.) Port, in its many delicious and varied styles, remained a popular beverage even after trade between Britain and France re-opened.

So that's why there were two delicious after-dinner wine options at college! Claret, as far as I know, is a safe choice with no arcane traditions surrounding its consumption. But if you ever drink Port in a traditional setting in England, there are a few etiquette rules you should be aware of: (1) the Port is passed around the table to left, and it should never stop being passed until the decanter or bottle is empty; (2) if someone forgets to pass the Port, the correct way to remind them is to ask, "Do you know the Bishop of Norwich?" They will probably take the hint, but if they give you a blank look, you may add, "Terribly nice fellow, but he always forgot to pass the Port!"

Sources:
Karen MacNeil, The Wine Bible, p. 146 and pp. 511-527
www.decanter.com/learn/advice/what-is-claret-wine-ask-decanter-378401

Mile High (Wine) Club

United CEO Oscar Munoz was sitting in his office on the on the top floor of 77 West Wacker Drive in Chicago (probably) when he heard the worst news a CEO can hear: “We’re running out of wine.”

United had recently introduced “Polaris,” its new wildly-overhyped  ambitious Business Class product. Included was the opportunity for front-of-the-plane travelers to enjoy a “wine flight” - a set-piece sampling of three different wines at the same time.

Perhaps unsurprisingly, serving 3x the amount wine at the same time led to approximately 3x greater demand for wine than the airline expected - causing global shortages in wine stock across United’s fleet.

United, along with the rest of the airline industry, takes wine seriously. Doug Frost is one of the sommeliers retained by United to craft their wine selection - and is one of only four people in the world who is both a master sommelier and master of wine.

Airlines are massive players in the global wine market. The OneWorld alliance of airlines served 30 million bottles of wine and 2.5 million bottles of Champagne in 2017. Emirates has one of the most acclaimed wine offerings in the skies - and has spent over $780 million on wine since 2006, with over 3.8 million bottles in its cellars, and regularly serving famous French wines like Chateau Lafite on its A380’s. They often buy classic French wines directly from producers through the “en primeur” system, even buying out entire vintages and holding them to pour years or even decades later.

National airlines can play a critical role in their country’s wine industry. Quantas invests over $25 million per year in the Australian wine market, with all of the wines on its wine list coming from the Land Down Under. Airlines can also “king-make” certain wine brands by choosing to showcase them onboard - BA’s choice of Bolney Blanc de Blancs as its first white English sparkling wine in 2016 rocketed the small British winery to stardom.

Unfortunately, these fancy expensive wines go to the folks in Business and First class, and we don’t all get to sit up front. But that shouldn’t leave your lowly economy passenger high and dry. Here’s a quick guide to pairing more generic wine with the standard fare we get served in the cheap seats:

Peanuts - the classic roasted peanut, as at-home in 33B of your 737 as in row B seat 33 of Yankee stadium. Did you know not one but two of our 45 presidents were peanut farmers? The saltiness and meatiness demand something rich and full-bodied - I’d recommend going even off-dry, perhaps a nice port. Picture it like an adult peanut-butter-and-jelly.

Pretzels - since peanut allergies exist, some of the more humane airlines that aren’t trying to cause immense suffering on their planes (which seems like few of them these days) are switching to pretzels as your in-flight sustenance. Though inferior to peanuts in every way, pretzels can still pack some interesting notes - sorta-yeasty-sweet, sorta-salty, sorta-sour. So have no fear if your plane lacks legumes - pair your pretzel with an off-dry riesling. The Bavarians know what they’re doing.

KIND bar - you’re smart. A forward-thinker. Never caught unprepared. You carry a dark-chocolate-cherry-cashew KIND bar that you paid $3 at a Starbucks for once with you at all times. Well you’re in for a treat. Snag a glass of Zinfandel. The black-pepper spiciness and alcohol and leather and cherry will absolutely stand up to your bar. Also goes great with a smug sense of superiority.

Crying baby - to be clear, the implication is not that you’re eating the crying baby, just that you're trying to pair something to improve the experience. Wine has no power here. Mini-bottle of Jack Daniels.

State of the Industry

I got my hands on a wine consultant's takeaways from a recent "state of the industry" presented by Silicon Valley Bank, and thought I'd share. I was interested in how different the recent trends are vs. the broader secular story of growth in the United States, particularly the aspects I've put in bold:

"The wine industry is at a tipping point: Volume has flattened. Over the past 4 years:

·         GenX demand has grown

·         Boomers are flat

·         Millennials are showing no growth

Millennials are likely suffering from inability to afford luxury products (indulgence gap).

Profiles of target consumers:

·         Millennials are debt strapped (student debt, many are working jobs below their education level)

·         GenX are gainfully employed (biggest current earners)

·         Boomers are retiring; change in lifestyle, income, diet

Is this permanent?

Millennials creed: Live large but carry little.

Experience-based services are the fastest growing product category of all

Does premiumization have a future? Prices can’t rise when volumes are flat or falling.

Millennials in on-premise outlets are focused on activities, not alcohol. (e.g. ping pong, bowling, axe throwing, darts). Large supply of fancy drinks are more appealing and interesting than wine, utilizing dry ice, smoke, sparkle, flame. What’s the equivalent for wine?

Cannabis is likely not materially affecting wine at this time. Only 13% of the millennials have used cannabis as a regular part of their recreation. Much smaller % for the other two major demographic groups.

Tasting Rooms

·         WA, Napa, Sonoma traffic is down

·         OR, VA are up

·         NY is mixed

Millennials don’t like conspicuous consumption or wealth.

Most successful TR’s are activity based, by creating an “engaging” environment, (e.g., picnic tables, corn hole type games, walks through the vineyard/cellar.) Sitting or belly up to the bar is not attractive to this group.

...

there is about a five-year window to address this issue of no growth."

Lafite in China

It appears that 1) Lafite in China did not release in 2015 as expected in the case. Up till 2018, the wine still was not released, signaling the difficulty and challenges of producing wine in a region with relatively unknown land, operations, and government relations.

Additionally, the local investment partner that Lafite had CITIC exited the investment in January 2018, before the wine was released. This also shows concerns about the wines to be released, as well as the future of Lafite China.

Source: https://www.thedrinksbusiness.com/2018/01/lafite-and-citic-officially-part-ways-in-china/

Funky Wine, Funky Cheese

On Wednesday night, I had the pleasure of joining a group of fellow Wine Circle members for a wine and cheese tasting event led by none other than our very own TA, Sarah Hoffman. We tasted a variety of whites and reds from the New World and the Old, and enjoyed a delicious sampling of cheeses from Bellwether Farms.

Out of all the pairings, one in particular really stood out to me. I was surprised to find the wine that I initially liked the least ultimately became my favorite, and all because of the amazing flavor marriage between it and the cheese. It was the third pairing Sarah led us through, a combination of a Domaine Des Carlines La Vouivre Chardonnay 2016 from Savagnin, France and a slice of 'Bellwether San Andreas', a raw sheep milk cheese inspired by the aged sheep milk cheeses of Tuscany. 

On the nose, as a fellow Wine Circler noted, this wine had some serious "stank." It was hard to put my finger on just what the smell was, but it was undoubtedly funky. It also had a cloudy appearance in the glass, which,  combined with the smell, definitely made me consider passing up on that particular round of tasting. But the wine definitely wasn't corked or turned. Was this perhaps that "barnyard-y" brettanomyces smell I had read about in our readings? Whatever it was, I assumed it was probably due to a more traditional production process than my relatively New World palate was used to. (Research after the fact did indeed confirm that the La Vouivre is naturally fermented, and goes through neither filtration nor clarification. ) So, I told myself, soldier on! 

Taking my first sip, initially all I could taste was a lingering quaff of that same rather off-putting funkiness. Eventually, though, it gave way to some really pleasing notes of pear, green apple and a bright minerality. I asked myself if this juice was worth the squeeze. Was this complex Chardonnay worth the stinkiness tradeoff ? And, even if I could get over it, was this a wine I could ever feel comfortable serving to guests at a dinner? Maybe, I thought, but this was probably not a wine that would be a repeat buy for a more casual wine consumer.

All this changed after a bite of the Bellwether cheese. The creamy mustiness of the aged sheep cheese complimented the funkiness of the wine in a way I could have never imagined. Suddenly, both wine and cheese were gone far too soon, leaving me wishing for second helpings all around. I've enjoyed many a pairing in the past, but this really illuminated how powerful a pairing can be. It truly was greater than the sum of its parts. Days later, I am still brought back to that magical marriage, and not just from a taste perspective. I think there is a significant marketing lesson to be learned here. For those "stanky" wines in need of broader distribution to a less funk-loving segment of customers, I think there is huge opportunity for them to be sold alongside complementary and similarly funky cheeses. The right pairing could be transformational for both the consumer's wine drinking experience and the producer's bottom line.

1st Amendment

We discussed briefly in class the apparent contradiction of the 1st Amendment and the intricacies of the Tied House laws related to the 21st Amendment. On the surface, prohibiting tweets that appear to serve as advertisements seems absurd. However, even when there's no conflict between two separate sections of the Constitution, restrictions on certain forms of speech seem to be both reasonable and within the bounds of the law. One of the most common examples of this is yelling "fire" in a crowded building (that is not on fire) with the intent to mislead people into a state of panic that could cause injuries. Another example is verbal assault / hate speech, although in my view restrictions on this form of speech should be limited to inherently injurious speech rather than focusing on the subjective interpretation of the speech by the listener (due to the dangers of allowing a "heckler's veto" in public discourse).

Neither of these examples seems like a truly analogous comparison to the limitation of the 1st Amendment that we discussed in class. However, I have been trying to think of other more relevant examples, and I wonder if a comparison can be made to insider trading. If I receive some MNPI from a friend at a public company then trade on that info and post the info here so that you all could get in on the action too, it would be ludicrous to defend my actions as an exercise of free speech. I would be using speech as a way to circumvent the law for my own economic gain. Similarly, it seems plausible to argue that the tweets in question in the Tied House cases are not protected speech after-all - the companies are just using speech as a way to circumvent the law for their own economic gain.

P.S. Even if the Tied House laws are "legal," personally I don't think they (and all the other convoluted policies stemming from the 21st Amendment) are good policy.

P.P.S I have no legal training, so please excuse any glaring legal naivete you notice above.

When A Wine's Mountain's Are Blue

I grew up in a Coors Light family. As long as I can remember, any significant family event, sports game or holiday has always been accompanied by Silver Bullets. Therefore, alcohol in a can is a no brainer for me. This is especially true if the design on the can changes color when it's cold.

Last quarter I received an email about a startup garage duo, our very own Sarah and Kendra, conducting product testing/customer feedback on canned wine. I had never heard of canned wine, but my lineage of canned alcohol consumption led me to sign up for the product feedback session. Here are a couple of the major takeaways I had from that event.

1. There is way more canned wine on the market than I thought. The night of the tasting Sarah and Kendra had at least 12 different canned types. Many of the wines were what I would call "beach wines," like sparkling wines or roses, the type of wine you might want on the beach. Others were of the much more traditional varieties cabs, chardonnays, etc. The wines were from more than a handful of companies that were experimenting with different sized cans and packaging types.  

2. The variety of canned wine packaging made it clear that different canned wine producers are going after different parts of the market. Going into the night, I assumed that canned wine was going to targeted towards young people who are doing some kind of activity that prevents them from having a class bottle of wine (hiking, swimming, pic-nicing, etc.). However, there were several canned wines whose intricate labels/packaging led me to believe that they are going after a more affluent customer, who is drinking the canned wine instead of a bottled wine for non-logistical reasons.

3. Canned wine isn't so bad. Keep in mind that this is coming from someone who knows they don't have a good palate, but I actually liked many of the wines. The cans are much easier to hold, open, transport and the wine tastes pretty good. I certainly felt less classy drinking wine from a can than from a bottle, but that's OK with me..... almost anything is a step up in class from Coors Light. :)

With All the Best Intentions

I find the ludicrous effect of the 21st amendment on the sale and distribution of alcohol in the United States fascinating.

When I went to look up the exact working of the 21st amendment, I was surprised by how short it was. Initially frustrated, I thought I was dealing with websites getting cute and truncating the notorious second section, but this is all there is: 

The transportation or importation into any State, Territory, or Possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.

State control is a funny thing. I remember being shocked the first time I visited California and saw bottles of wine and liquor in a convenience store. It never occurred to me that the laws that prevented such an occurrence in New York were local ones. For those of you who don’t know, hard liquor and most can only be bought in liquor stores or wine shops. Grocery and convenience stores can carry beer and very bad “wine” that usually isn’t more than 5 or 6% ABV. I’m still slightly caught off-guard when I see the piles of wine bottles at my local CVS.

I’m struck by the parallels the 21st amendment has to the 13th, and how a succinct collection of words creates a strange legacy for the modern world. Section one of the 13th reads:

Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.

The consequence of this is modern day slavery. Prisoners can be compelled to labor without the protections that other workers have, and for little to no compensation. While the crafters of this amendment lived in a time when they may have thought this was a justifiable punishment for crime, a much smaller proportion of the nation was arrested and convicted then. And if we remember that some percentage of incarcerated people did not commit the crimes for which they were imprisoned, we must contend with the fact that there are innocent people who are legally enslaved in 21st century America. 

Given the difficulty of changing the constitution, should enforcement mechanisms and loopholes really live there rather than in laws?

Let Our Vino Go!

The showdown over a $5.7B construction project that has brought the world's most (arguably) influential government to a standstill has found a way to hit us where it really hurts - in our glasses.

Along with the National Parks Service, the Department of Homeland Security, and many other government agencies that are being held hostage in the ongoing budget standoff, the Alcohol and Tobacco Tax and Trade Bureau (TTB) has shut its doors, meaning that rosé deliveries might be a little late this year. 

The Bureau is responsible for approving new alcoholic beverages and labels. Until its employees can come back to work, its Certificate of Label Approval (COLA) process that normally takes ~36 days could drag on for months. 

This poses a problem for domestic and international wineries that have barrels full of new blends just waiting to be bottled. Do they hold off while the TTB works through its backlog of COLAs post-shutdown, putting their entire bottling and shipping process months behind schedule, or go ahead with bottling and labeling, risking that the wine might ultimately be rejected? 

Beyond wineries, importers and distributors are seeing trouble brewing (well, fermenting), as well. While producers wait for COLAs and for USDA approval of international wines, wine critics can't receive samples that will let them shape what consumers want to drink this year, and the players responsible for getting those wines to retailers and restauranteurs are unable to decide what to stock next season. Particularly for international wines, that adds even more time between making perfectly crisp rosé and getting it into consumers' glasses.

So what will become of us this summer season? Will the poolsides of the Hamptons see ice buckets filled with blush-colored Côtes de Provence? Or will the captive bottles not be freed until long after poolside patrons have put away their white jeans (which, for the love of champagne, must be immediately after Labor Day)?

President Trump and Speaker Pelosi, we're begging you - let our vino go!

Government-Induced Stress

As Sri noted, the government shut down is causing a big headache for wineries looking for COLA (Certificates of Label Approval). This impacts new wineries like mine (Birdhorse) even more than established small wineries. When the news of the government shutdown hit, we sprang into action, figuring we could at least get our labels submitted into the queue in order to be near the top of the list once they started processing. Unfortunately, this is when we learned that someone needs to manually approve first-time registrants for access to the COLA online system! And since the government is shut down, there's no one to do even that. Therefore, the queue is building and we are basically up the creek.

Once the government reopens, we will have to go through the COLA registration process. This historically took about 6 days. Only after we've been granted an online account (despite having been permitted and registered with the TTB for months), then we enter the COLA queue. Historically, it took about 36 days for a wine label to be approved. Unfortunately, the TTB stopped processing COLA accounts as of 12/20 and wine labels as of 12/18. So, we'll have at least a month's backlog on top of the normal processing times. I just hope it's not worse.

This causes real operational problems for us. We have decided not to print and to wait for the COLA, because we can't afford a reprinting should the TTB have edits. The downside here is that we need to bottle in March. Typically, bottling and labeling can occur together in a nice, mostly automated fashion. In the increasingly likely event where we don't have approved printed labels in sync with our bottling time, we will have to bottle and then later manually affix our labels.

The government shutdown has not yet caused a top-line issue for us, but that is the next worry should it continue further into record territory.



https://www.ttb.gov/labeling/processing-times.shtml
https://www.ttb.gov/formulation/registrations-processing-times.shtml
https://www.ttb.gov/labeling/colas.shtml

Is the Sommelier Exam A Pour Decision?

When I told my dad that I was planning to sign up for the Introductory Sommelier Exam, his response was: “Great! Then you can get a job pouring wine in someone else’s restaurant.”

Point taken.

But it did get me thinking more seriously about the exam itself. Who takes it? Is it worth it if you’re not in the food & beverage industry? What’s the ROI if you are in the food and beverage industry?

Here’s what I found out:

About the Exam

There are several levels: introductory, certified, advanced, and master. Each level will cost you hundreds of dollars just to take the course and sit through the exam itself.

The first level is definitely not anything like what you saw in the movie Somm. It’s a 2-day course with master sommeliers, followed by a multiple choice exam about the different wine regions. There is a “low failure rate,” and you passing it gets you a lapel pin and certificate. Beer and sake are also included on this introductory exam!

It seems like over 90% of those who take the exam do have experience in the food and beverage industry, and are taking it to further their careers. However, there is a margin, like me, who wants to take the exam simply because we appreciate wine and want to learn from the masters.

Once you’ve passed the introductory level, each subsequent level recommends at least 1-2 years of straight up preparation. There will be blind tastings on each exam after introductory.

Oh, and in case you were wondering – the recommended reading for Level I includes Karen MacNeil’s Wine Bible (check!)

What’s a Master Sommelier?

A master sommelier has passed all four examination levels and guarantees to a potential employer that you are among the most qualified in the industry, with “outstanding tasting and evaluation skills, wine knowledge, and outstanding abilities in service and beverage department management” (MasterSommeliers.org). Only 274 people worldwide have received this title since its establishment in the 1970’s, and there are 182 professionals with this title in the U.S.

Only 29 of those are women.

Master Somms in the U.S. make on average $150K.

The certification is not required of success in this field, and requires an insane amount of time and money. Given that the vast majority of the most knowledgeable wine professionals in the world do not have this certification, do you think it's worth it? 

Ways to make drinking wine (and other alcohol) healthier

Ways to make drinking wine (and other alcohol) healthier

In response to a few conversations I’ve had with individuals in our class about the health effects of alcohol, I’m providing a short write up on a few of the methods I understand to reduce the long term damage done by drinking. This list is not exhaustive – I’ve tried to keep it simple rather than delve into the litany of compounds that show up in an Amazon search for ‘hangover cure’. Instead, this is a few of the best bang for your buck ideas to attenuate the long term effects of an occasional FOAM night.

1)      Get out there and run, lift weights, goat yoga, whatever.

It’s not news to any of you that exercise is important to your health. But did you know that the act of getting your heart rate up changes the way your body processes alcohol? There are a few different ways in which this happens:

·         Converting sugars: we know that a hard workout burns a ton of calories, but what if we don’t have that energy readily available from a recent meal? Our body is smart, it stores extra energy in the muscles and liver as glycogen, a carb storage tank that we often dip into challenging exercise sessions (think Barry’s or a quick Dish run). Wine contains sugar leftover from the fermentation process in varying amounts -- dry wines have less than an ice wine, but they’ve all got some. Drinking after a hard workout will ensure that some of the sugar from alcohol is converted into liver glycogen and thus spends less time hanging around in your body, which is great news.

·         Lowering inflammation to allow wine to be “heart healthy”: whether you believe it or not, we’ve all heard that red wine is “heart healthy”. However, when researchers introduced wine into some individuals lives and tracked their cholesterol, blood glucose, triglycerides, and C-reactive proteins (proxy for inflammation), there was no improvement. However, those who worked out twice a week saw significant benefit to health markers. So what gives? It turns out that exercise sets in motion a whole host of processes in our body that allow us to get the benefit out of wine, whether it’s red or white.

·         Keeping the brain healthy: Individuals who regularly binge drink, defined as 4+ drinks for women or 5+ drinks for men (a foreign concept to many of us) often see cognitive declines when this behavior is repeated over extended periods of time. However, individuals who exercised a few times a week and drank frequently were found to have significantly better brain health markers than those who drank but did not exercise.

2)      Don’t drink bad wine/alcohol (all the time)

Wine is similar to any other consumer product – up to a certain point, you get what you pay for. In order to compete on price, wineries are forced to take shortcuts. These cheaper mass growing ops are expected to make grapes for a few hundred dollars per ton. Some of those shortcuts may be additional spraying, fewer soil /water tests, and adding in flavoring agents. Recently, there was a lawsuit in California, after testing found that a wide variety of cheap wines (think Beringer, Charles Shaw, Franzia, Sutter, etc.) had up to 5 times the level of arsenic allowable in typical drinking water. Before you stress out: unless you’re drinking wine like you drink water, it’s probably not enough to cause serious damage. But it does go to illustrate the quality control tradeoffs that come with producing cheap wine.

3)      When you’re drinking above average amounts, give your body above average nutrients

You probably wouldn’t go into an important interview or test without at least considering your caffeine consumption / meal beforehand. So then why do so many of us go into a night of heavy drinking with no strategy other than maybe an ill supported  plan of ‘carb loading’? Processing alcohol takes nutrients, often ones that we don’t get enough of to begin with…and certainly don’t get at the right time, in the right dose. In order to help your body process alcohol, these nutrients need to be commensurate with consumption levels, and I haven’t seen a ton of folks chasing their tequila shots with green smoothies at the Patio.

No supplement or food will allow you to drink a couple bottles of wine and wake up feeling like sunshine. However, a few things will probably help your health in the long run if you’re a moderate to heavy drinker:

·         B complex vitamins (specifically B1, B12) – these are super important in our brains and bodies for the production of energy, and metabolizing alcohol burns through a ton of them. Consequently, these are best taken alongside alcohol when your body needs them most.

·         Electrolytes – think Pedialyte/coconut water, not Gatorade. Alcohol dehydrates you, and the best way to rehydrate is with a drink that closely mirrors the salt and sugar content that we have in our body. Don’t have any Pedialyte on hand? Eat some fruit and something salty with a few glasses of water before bed after a night out.

·         Healthy diet – I’m not going to tell you to give up that late night snack of choice. However, the healthier your diet is the rest of your week (think leafy greens, antioxidant rich berries, etc.) the better equipped your body will be to deal with and recover from the stresses of alcohol.

Disclaimer: This is intended to be somewhere on the two by two matrix of [informative vs interesting] between a Cosmo article and a research study. None of the above is intended as specific health advice.

Federal Government Shutdown Impact on Wine Industry

As the federal government's partial shutdown reaching its 33rd day (with no end in sight), we've seen the far reaching consequences, including long TSA lines, national park closures, cancelled State of the Union address, etc. In fact, the partial shutdown even affects the wine industry, as federal and state approval for: (1) starting a new business; (2) new or changed labels; and (3) ingredient changes.

Wineries typically submit approval for label changes ahead of their spring releases (a process that takes up to 36 days), and without approval from the Alcohol and Tobacco Tax and Trade Bureau (which is closed), wineries are in limbo. While certain label changes are exempt (i.e. simply changing the vintage for already approved labels), the rollout of new wines will almost certainly be impacted. As a result, wine makers face a dilemma: go ahead with labeling and bottling with the risk that the labels will be later rejected, or delay bottling and release, thereby potentially impacting deals with retailers.

Just for a sense of the scale of the impact (just focusing on wineries; there are downstream ripple effects for distributors): 

• Per WineAmerica, a trade association representing 600+ wineries, ~70% of respondents in a survey indicated that they are waiting on label approval
• Per Wine-Searcher: In 2018, 192,000 labels made their way through the TTB's system

The impact is expected to be most acute for new / small wineries, who don't have a backlog of older vintages they can dip into. 

Sources: 

• https://www.winespectator.com/webfeature/show/id/Your-Rose-May-Be-Late-this-Year
• https://www.news5cleveland.com/news/state/ohio-wine-and-beer-industry-impacted-by-government-shutdown
• https://www.wine-searcher.com/m/2019/01/us-government-shutdown-hits-wine-hard

"A glass a day keeps the doctor away" - Putting to bed some misconceptions about the health effects of wine

Two sources of inspiration for this post. First, not being a particularly good creative writer myself, my objective with my blog posts is not to entertain, but to inform (while doing some cool research myself). Second, after reading Amanda's illuminating research on sulfites, I was generally curious about the health benefits of drinking wine, and hopefully put to bed some popular misconceptions that I've had. Three of which are as follows:

1. Drinking wine is fine, as long as it's in moderation - TRUE - According to the US Dietary Guidelines 2015-2020, drinking in moderation is defined as one drink per day for women, and two drinks per day for men. What is a "drink" in wine speak? The guidelines define it as 5 fluid ounces, which is just about half of our Gabriel-Glas wine glasses. Note: The guidelines do not specify whether you can carry over your 1-2 drink pass on days that you don't drink. Suffice it to say - not drinking all week and downing 14 glasses of wine at FOAM is likely not drinking in moderation.  
2. White wine has less calories than red wine - FALSE -  Calories in wine is most directly influenced by its ABV (Alcohol by Volume) percentage. A higher ABV by 1 percentage point equates to ~12 more calories per glass. The average glass of wine has about 9-12% ABV, equating roughly to 110-140 calories. While white wine on average has a lower ABV than red wine, there are still high ABV, high sugar white wines that pack in more calories than even some of the heaviest red wines (e.g., US Moscato - 177 to 213 calories per glass)
3. Red wine is good for the heart, prevents cancer, and prevents vision loss - KIND OF TRUE, BUT - Ok, yes, red wine has a compound call resveratrol, which has been proven to prevent bacteria and funghi, and protect against UV radiation. However, this health benefit comes from the skins of red grapes. Therefore, anybody can load up on the benefits of resveratrol by simply eating more grapes, blueberries, cranberries, and even peanuts - not more red wine. That said, if you had to choose amongst alcoholic drinks, red wine might be the best option. 

My takeaway from these findings - yes, there are proven health benefits associated with wine, we've all come across an article or two. But it's important to remember that wine is an alcoholic drink at the end of the day and it is no substitute for a well-balanced, nutritious diet. However, given the choice between your cocktail, wine, or beer ticket at next week's FOAM - there is a clear right answer. Cheers to that!

Sources

https://health.gov/dietaryguidelines/2015/guidelines/appendix-9/
https://www.shape.com/blogs/fit-foodies/best-wines-your-waistline
https://www.medicalnewstoday.com/articles/265635.php

A $230,000 bottle of Wine

This week we read about Lafite, a brand I knew by name, and knew was one of the nicest, priciest bottles you can buy. This got me thinking, what is the most expensive bottle of wine ever sold? It turns out the highest price paid for a trio of bottles (I know, the 3 bottle thing is kind of a cop out) was $690,000, or $230,000 each. A collector bought the three bottles of wine, an 1869 Chateau Lafite, at an auction in Hong Kong in 2010. Originally, the bottles were expected to go for less than $10,000 each, so the result was quite surprising. What would prompt a collector to buy such an expensive bottle? What would the investor do with the bottles? Perhaps its a display of wealth and power? Or maybe the investor planned to drink 2 and save the 3rd? Did s/he really think the bottles would drink well (I can't imagine)? Whatever the motivation, it is an absurd amount of money to spend on a bottle of wine-turned-vinegar. I like wine, but not enough to spend hundred of thousands of dollars on a single bottle!

The 5 most expensive bottles sold at auction are:
5. Chateau Margaux 1787 - $225,000
4. Chateau Lafite 1869 - $230,000 (per bottle)
3. Shipwrecked 1907 Heidseck - $275,000
2. 1947 Cheval-Blanc - $304,375
1. Screaming Eagle Cabernet Sauvignon 1992 - $500,000

Changes to liquor regulations- South Africa

Our discussion in class last week about wine regulations, got me thinking about other regulatory changes that have been made regarding wine in other countries. The country that quickly came to mind for me was South Africa. Having lived in South Africa for the first six years of my life, I was interested in seeing what has changed.

To my quick discovery, a lot has changed and a lot will continue to change. For instance, just this past summer, South Africa proposed a liquor products amendment bill. This bill seeks to amend the Liquor Products Act of 1989 and the Amendment Act of 2008. Under this bill, some of the key decisions were to include beer under the patrol of the Wine & Spirit board. The board will likely change its name to incorporate this. In addition, the bill has reduced the alcohol percentage that will classify the drink as a liquor product. Previously, alcohol content in beverages were allowed to be 1%, but the bill has changed this to be 0.5%. While the bill proposed to change the sell and intake of liquor from people under the age of 18 up to people under the age of 21, this was not passed.

The fact that regulations have recently changed, not only in the US but all over the world regarding wine and liquor in general, highlights the importance of keeping up with this ever evolving regulatory landscape that will impact wine businesses.

Wine´s Glass Ceiling

After the 2 classes, we have had, I reflected on the fact that both of our speakers had been women. As a woman in Business School, it is rare to find a class in which even one-third of the guest speakers are women, so I was happy to welcome what seemed like a change.
That led me to think that possibly this was an industry, were female leaders were more common - so I eagerly did some research. Boy, was I wrong.
A quick Google search on "Women in Wine Industry" led me down a rabbit hole of disheartening articles, denouncing the lack of female representation in this Industry. The irony of it all is that this is an Industry that thrives on marketing their products to women, and where women are one of their main consumers.

One of the quotes that particularly grabbed my attention noted that while the overall total female leadership in the industry is 10% (unsurprisingly low after reading many of the articles) there are ZERO female CEOs in wine companies that produce between 100K to 500K wine cases per year.
This is despite the fact that in many of the Viticulture and Enology courses in US university female students largely outnumber men.

While this trend is, unfortunately, found in multiple other industries, I think it is still an important figure to keep in mind as we read the cases in class and meet the speakers.

In case someone wants to take a look at some of the articles, I´m adding a couple of links below:

"Wine´s Glass Ceiling and the Winery Working to Shatter It": https://www.forbes.com/sites/kristifaulkner/2019/01/23/wines-glass-ceiling-and-the-winery-working-to-shatter-it/#6066f4e7314a

"Women and the Wine Industry" (Written by the author of The Wine Bible): https://winespeed.com/blog/2017/12/women-wine-industry/

Wine <> Four Loko?

While it was touched on a bit in last week's class, I left wondering how the laws of wine production, distribution and sale differ from that of other types of alcohol.  Specifically, I wanted more clarity around what powers the federal government and states have to monitor distribution of other alcoholic beverages and take action when they deem something unsafe or anti-consumer.

After trying to come up with an example of this I've seen in the past, I thought of the well-known (and often mocked) anecdote around the once-popular alcoholic drink Four Loko (and most people who read this post will start laughing and stop reading right about here).  Four Loko is a very sweet, sparkling alcoholic beverage probably best known by younger drinkers and often purchased in convenience stores.  It received quite a bit of press for mixing high quantities of alcohol with caffeine and taurine.  This mixture was so problematic and dangerous that the beverage was banned by the FDA in 2010.  Soon after modifying the recipe to remove caffeine and taurine, Four Lokos were available again but saw their sales numbers diminished greatly.

While a ban of this sort is made out of safety concerns which don't directly compare with the type of free speech or monopoly concerns we discussed last week, the Four Loko history is worth remembering.  While I myself have never had a Four Loko, I can understand why many consumers were angry over the ban of the old recipe.  They argued that this ban was anti-consumer and that they should be allowed to willingly choose what type of alcoholic beverages to enjoy.  Additionally, one could argue that the same effects as the old Four Loko can easily be achieved by drinking the new Four Loko with any energy drink bought at the same convenience stores.  Therefore, there's an argument to be made that the FDA's ban does not necessarily increase general consumer safety but also violates consumers' right to choose.

Obviously Four Loko doesn't compare great with wine, but in light of the conversations we had last week I think that this sort of federal oversight and regulation is an interesting anecdote to keep in mind when surveying the wine industry today.

https://newyork.cbslocal.com/2010/11/16/schumer-feds-may-move-to-ban-alcoholic-energy-drinks/
http://www.cnn.com/2010/HEALTH/11/17/alcohol.caffeine.drinks/index.html?hpt=C1
https://www.chicagotribune.com/news/ct-xpm-2009-08-24-0908230370-story.html

Pisco's True Origin

I have a personal issue with origin appellations since there is a big dispute over the origin of Pisco. If you talk to any Peruvian person (like myself), you will notice pride in our voices when we call Pisco our flagship drink. However, if you ask a Chilean, you might hear them say that Pisco is theirs. After reading the case on Domain Barons de Rothschild, it left me thinking what is the difference between Bordeaux and Pisco, and why there is no doubt about Bordeaux Origin Appellation unlike Peruvian Pisco. After all, we also have a region called Pisco where the grapes to make it grow. 

I still haven't found the answer. I think we were slow in the global scene to claim Pisco as our own - maybe we didn't think we needed to do it. Only in some regions like EU and recently India, Peru has the Origin Appellation for Pisco and Chilean drinks aren't legally allowed to be called with that name. This article details how after a 9 year dispute, we recently got the Origin Appellation in India:  https://elcomercio.pe/economia/peru/chile-podra-denominacion-origen-pisco-india-litigio-peru-noticia-596331 

If you are curious about the topic, here is a more unbiased article that mentions a dispute in Australia about Pisco where we don't have the Origin Appellation:

https://www.abc.net.au/news/2018-08-19/winemaker-in-battle-with-peru-over-use-of-the-name-pisco/10133394

Barriers to Entry

In college, there was a craze known as "Sweet Tea Vodka." Created by a liquor salesman and a part-time vintner in South Carolina, Firefly tasted liked sweet tea - it went down easily.  However, it also had the same alcohol content as its vodka base - it took you down easily. Many people fell prey to the sweet, almost syrupy charm, of this ingenious concoction that was as friendly to your face as its southern roots would imply and as dangerous as a Myrtle Beach firecracker stand on the Fourth of July.
I interned for Firefly. Up until that point, the only industries I had been exposed to had been the law, finance and the travel company my mom worked for. I had never seen the liquor industry. It was much to my surprise (and delight) when my first meeting with my new boss involved the tasting of the new flavors of Firefly. Men dressed in jeans swapped stories about golf and family while tasting the new Raspberry, Peach and Mint flavors. There was little talk of actual business.
On my first tag along sales call, I realized that business talk was still noticeably absent. As I shadowed my boss across the bars of downtown Nashville, we took shots (before noon) with the bartenders on Broadway and swapped more stories about golf and family and drinking.
I did notice a pitch that was subtly delivered, about the same time I noticed that we were the only group authorized to sell Firefly in the region. At the time I didn't grasp how unique it was that the distributor I was working with had no competition in selling a product that they didn't create. They also had very little competition in selling alcohol at all. There were some other groups that they "competed" with, but their hardest sell wasn't convincing the bartenders to place an order for alcohol from them. It was simply to convince them of new products that they were licensed to sell. They were effectively operating in a competition-free market.
As we listened to the problems with regulation of alcohol in class, I remembered my internship and immediately understood why incumbents would be so loathed to open up these regional monopolies. If I'm on the only lemonade stand in town, why would I want to you buy lemonade through the internet, even if it might be more what you want? I also realized why having strong legal representation would be so crucial for this fight, along with having the proper allies in the statehouse.
I believe that disruption will occur, the same way Uber was able to change the paradigm in the taxi monopolies. However, I also understand that it will not be solely on the desirability of the wine being sold, but rather through the clever business plans and aggressively creative legal and political actions of disruptors.