After last week's class I've been fascinated with pricing in wine. Far Niente is able to price at up to $180 per bottle for its cab sav. Furthermore, it's able to price its associated branded wines at a premium price point purely because of the legacy and powerful brand of Far Niente. The Chardonnay at $60 per bottle was excellent but I wonder whether the taste and quality is really >3x Charles Krug's Chardonnay priced at ~$20 per bottle. Peter Modavi mentioned that Charles Krug was a essentially a price taker in the mid market $20-40 segment.
This reminds of two publicly listed wine companies in Australia. One is called Treasury Wine Estates (TWE), owner of Australian's best known premium wine brand "Penfolds" and many others. The other is called Australian Vintage (AVG). For some context, TWE is ~ 10x larger than AVG with AUD2.7 bn in revenue vs AUD 275 million for AVG but trading at almost twice the valuation based on LTM TEV/EBITDA and P/ LTM earnings. A material amount of the difference is likely due to economies of scale e.g., fixed costs spread over greater sales units, and TWE has greater negotiating power over grape suppliers, distributors, and other customers. Another explanation for the value premium is that TWE's gross margins are around 43% vs AVG's of 26%. Some of TWE's brands such as Penfolds play in the ultra premium segment and they have been able to scale this. A lot of TWE's brands will be found at prominent business dinners in China. I doubt you would find many or any of AVG's there.
Thursday, February 28, 2019
What's in a Bottle?
Last week someone asked a question about the wine bottle shape to one of our guests, who revealed that they created their own mold for it, but the specific shape chosen was fairly traditional other otherwise fairly unremarkable.
I’d always wondered about bottle shapes, and did some digging. It turns out that for the most part, the shapes are the result of tradition more than anything else - most wines would taste the same bottled in other bottle shapes, and regional styles have calcified, with wine types that originate from certain places but produced in other ones sometimes adhering to old tradition to send signals about their inherited legacy.
Originally, wine bottles were made to be stored standing up, and were rounder. Later shapes were more cylindrical, allowing them to be stored on their sides, and this change, which coincided with the adoption of the cork closure, led to the development of the regional styles that persist today. Glassblowing techniques were different in various parts of the world, which had significant influence on the styles that emerged. The variety in shapes may have also helped illiterate people better distinguish the wines in the bottles before they opened them.
The most common bottle type, the Bordeaux is commonly used for red wines, and has high shoulders. It is thought, but by no means confirmed, that perhaps those high shoulders also catch sediment from the wine as it ages. Fortified wines like port and madeira are stored in a similar shaped bottle, but port bottles are shorter and squatter, and often have a slight bulge in the neck to trap sediment while pouring.
The Burgundy bottle has sloped shoulders, a wider base, and is often “used worldwide for Burgundian grapes (pinot noir and chardonnay), as well as syrah, grenache, chenin blanc and others.” The Alsace bottle is taller and thinner than most other wine bottles, also with gently sloping shoulders. It’s generally used for Riesling; there’s lots of variety in the bottle’s color, including blue.
If you’ve ever felt that sparkling wine bottles were heavier than the rest, it’s not just in your head. The Champagne bottle style (which is typically quite similar to the Burgundy) must be heavier to handle the pressure inside, which can be as much as 3 times the pressure in the average car tire. They often have a dent in the bottom called a punt. While the punt might make the bottle stronger and may help sediment settle out of the wine, it’s not clear that this is the case. It’s likely just a remnant of the techniques used to produce the bottles when they were still handmade. Notably, the Cristal bottle has a flat bottom.
There are many more specialty bottle shapes that I haven’t gone into here, and some houses get very creative, especially in the premium wine category.
Sources:
“Decode Wine Just By Looking at the Bottle” - Wine Folly
“A Brief Guide to Wine Bottle Design” - PUNCH
“Wine Bottle Shapes: Just The Facts” - NewAir
Wine bottle shapes: why are they so different?” - Winery Lovers
"Cristal Champagne: The Wine of Tsars and Stars" - Wine Folly
I’d always wondered about bottle shapes, and did some digging. It turns out that for the most part, the shapes are the result of tradition more than anything else - most wines would taste the same bottled in other bottle shapes, and regional styles have calcified, with wine types that originate from certain places but produced in other ones sometimes adhering to old tradition to send signals about their inherited legacy.
Originally, wine bottles were made to be stored standing up, and were rounder. Later shapes were more cylindrical, allowing them to be stored on their sides, and this change, which coincided with the adoption of the cork closure, led to the development of the regional styles that persist today. Glassblowing techniques were different in various parts of the world, which had significant influence on the styles that emerged. The variety in shapes may have also helped illiterate people better distinguish the wines in the bottles before they opened them.
 |
| Source: Wine Folly |
The Burgundy bottle has sloped shoulders, a wider base, and is often “used worldwide for Burgundian grapes (pinot noir and chardonnay), as well as syrah, grenache, chenin blanc and others.” The Alsace bottle is taller and thinner than most other wine bottles, also with gently sloping shoulders. It’s generally used for Riesling; there’s lots of variety in the bottle’s color, including blue.
If you’ve ever felt that sparkling wine bottles were heavier than the rest, it’s not just in your head. The Champagne bottle style (which is typically quite similar to the Burgundy) must be heavier to handle the pressure inside, which can be as much as 3 times the pressure in the average car tire. They often have a dent in the bottom called a punt. While the punt might make the bottle stronger and may help sediment settle out of the wine, it’s not clear that this is the case. It’s likely just a remnant of the techniques used to produce the bottles when they were still handmade. Notably, the Cristal bottle has a flat bottom.
There are many more specialty bottle shapes that I haven’t gone into here, and some houses get very creative, especially in the premium wine category.
Sources:
“Decode Wine Just By Looking at the Bottle” - Wine Folly
“A Brief Guide to Wine Bottle Design” - PUNCH
“Wine Bottle Shapes: Just The Facts” - NewAir
Wine bottle shapes: why are they so different?” - Winery Lovers
"Cristal Champagne: The Wine of Tsars and Stars" - Wine Folly
Wednesday, February 27, 2019
Punts - Not just for 4th Down
Most Americans know what punting means in the football context, but I just learned the other day it is what the indent or dimple at the bottom of your wine bottle is called. There's a common myth that the deeper the punt, the higher quality of wine. While empirically I've found that more expensive bottles seem to follow this trend (watch, you'll all be feeling the bottom of your bottles now), many sources via Google state that there is no rhyme or reason for it. The speculation for the purpose of a deeper punt considers effects when pouring, dealing with sediment, balancing the bottle, or dealing with the temperature by increasing surface area.
Maybe one day, some winemaker will get creative and make the punt a feature of their bottle. Until then, we'll just have to keep speculating.
Maybe one day, some winemaker will get creative and make the punt a feature of their bottle. Until then, we'll just have to keep speculating.
Is Wine Good For You?
We have seen articles touting the health benefits of wine, the potential downsides of drinking wine, what it can do for your mental health, and everything in between. I honestly don't even know if the current outlook on wine is positive or negative given all of the conflicting viewpoints on the subject. We are inundated with fad diets and an ever-changing data on what a balanced and healthy diet looks like. Today it is Atkins, tomorrow it is Paleo.
Eggs were good for us, and then bad for us, and now they are good for us again. Dark chocolate is good for you also! Or is it?
Taking a step back, we have been drinking wine for thousands of years as a species, and are still around to tell the tale, so how bad could it be?! Drinking it as your only source of fluids is obviously a bad idea, but a life without it is probably somewhat less enjoyable. As with all things - chocolate, eggs, even gluten - moderation is key.
So while the science keeps flip-flopping, I say drink up and enjoy!
Eggs were good for us, and then bad for us, and now they are good for us again. Dark chocolate is good for you also! Or is it?
Taking a step back, we have been drinking wine for thousands of years as a species, and are still around to tell the tale, so how bad could it be?! Drinking it as your only source of fluids is obviously a bad idea, but a life without it is probably somewhat less enjoyable. As with all things - chocolate, eggs, even gluten - moderation is key.
So while the science keeps flip-flopping, I say drink up and enjoy!
Tuesday, February 26, 2019
Drink Like a Viking
Two weeks ago I met up with some college friends and one of them was raving about mead. We bought a bottle and I was surprised how good it was. This got me thinking, why isn't mead, otherwise known as honey wine, more popular. It is very drinkable (pretty sweet actually) and has a similar alcohol content as wine.
As its name suggests, mead is a wine-like drink that is made from honey with some water and yeast added. It is typically made with a "wine" yeast and can be flavored with any number of flavors in addition to the honey. Also like wine, mead needs to sit for many moneys after the yeast has worked its magic. For example, home brewers will let their mead sit for two months to over a year before consuming. Here is a super short overview of how to make mead at home if you're interested. https://www.youtube.com/watch?v=_Ld4hO_GeP0
As I've begun to explore the world of mead, I've learned that it reaches far more of the world than I expected. For example, I thought mead was exclusively a northern European drink. It isn't. People have found evidence of mead making in China that is believe to date back to roughly 7,000 BC (Wikipedia). This makes it one of the oldest know alcoholic drinks in the world. Much like traditional wine, there is evidence of historic mead making every corner of the world.
As its name suggests, mead is a wine-like drink that is made from honey with some water and yeast added. It is typically made with a "wine" yeast and can be flavored with any number of flavors in addition to the honey. Also like wine, mead needs to sit for many moneys after the yeast has worked its magic. For example, home brewers will let their mead sit for two months to over a year before consuming. Here is a super short overview of how to make mead at home if you're interested. https://www.youtube.com/watch?v=_Ld4hO_GeP0
As I've begun to explore the world of mead, I've learned that it reaches far more of the world than I expected. For example, I thought mead was exclusively a northern European drink. It isn't. People have found evidence of mead making in China that is believe to date back to roughly 7,000 BC (Wikipedia). This makes it one of the oldest know alcoholic drinks in the world. Much like traditional wine, there is evidence of historic mead making every corner of the world.
Monday, February 25, 2019
Product Dis-Placement
“If anyone orders merlot, I’m leaving. I am not drinking any fucking merlot.”
In 2004, the comedy Sideways raked in five Oscar nominations, and obliterated the Merlot industry.
Following two middle-aged men on a jaunt through the California wine country, the movie was rife with easter eggs for wine nerds, and many a pointed barb aimed at a single, unfortunate varietal.
Nearly overnight, Merlot sales plummeted. Prices of Merlot bottles fell by up to 10%.
The Wine Industry called it the “Sideways effect” - perhaps the most famous example of product dis-placement in film.
How fickle a society do we live in, that a single movie can trigger an appreciable impact on an entire industry?
Sideways is hardly the only example of pop culture triggering radical, immediate changes in consumer demand.
In the 1934 film “It Happened One Night,” Clark Gable takes off his shirt and reveals he wasn’t wearing an undershirt. Sales of undershirts supposedly plummeted by 75%.
Buster Rhyme’s 2001 hit “Pass the Courvoisier” triggered an increase in sales of the cognac of 10-20%.
Kylie Jenner’s 2018 Tweet “Sooo does anyone else not open Snapchat anymore?" wiped $1.3B off Snapchat's market cap.
Since Game of Thrones began airing, there have been over a thousand baby girls named “Khaleesi.”
Whether it’s James Bond’s recent love affair with Heineken or Wendy’s dishing out shade on Twitter, brands are trying their best to have the winds of pop culture blow in their favor. But in an age of authenticity, it’s perhaps the throwaway joke that can make the biggest impact.
Myth or reality: is expensive wine better for your health?
I’ve often heard people saying that you shouldn’t drink cheap wine because it’s bad for your health and even that it gives you more hangover than expensive wine. Apparently this is far from true. As Peter Mondavi said in his visit, the difference on the price of their more premium wine Charles Krug vs. their lower price point wine CK Mondavi is mainly due to difference in the cost of the grapes and the fact that the more premium wine has a higher margin. This has no implications on the health benefits/impact of drinking the two wines.
This article further explains this: https://www.shape.com/lifestyle/mind-and-body/your-two-buck-chuck-habit-hurting-your-health
An interesting quote from the article: “Red wine boasts loads of health benefits—it contains antioxidants like resveratrol and polyphenols, which help fight inflammation; it has been shown to protect against heart disease; and it has been shown to stave off decline in memory as you age. But a fancier merlot is not going to give you a stronger dose of those benefits, says Molly Kimball, R.D. For her, the question of whether expensive wine offers more health benefits is pretty cut and dry. "There's not even a maybe. The price wouldn't matter.”
Burgundy Price Bubble?
This morning on The Economist's daily podcast, there was a discussion of a potential bubble for the price of wine from Burgundy. The piece was a follow-up to publisher's article from early January on how amateur investors have pushed up prices in recent years, aided by increasing liquidity on exchanges such as Liv-ex (privately negotiated transactions only require a transfer of title).
While fine wine has long been seen as an appreciating asset, the high costs associated with storing the product and other friction costs (shipping, handling, taxes, etc.) have made it a highly illiquid asset. However with the rise of electronic exchange platforms, such as Liv-ex, the estimated transaction value of wines traded on the secondary market has risen from $1bn in the early 2000s to $4bn today (of which only ~15% of purchases are done so with the intention of drinking).
Interestingly, Bordeaux, which used to account for ~95% of secondary transactions in 2011, now only accounts for ~60%, due in part to softening demand in the Chinese market (suspected reason is crackdown on guanxi) as well as high price levels. In its place, the value of Burgundy has risen by 50% over that same time, aided by it being a well recognized wine region with iconic names / brands (required to preserve resale value). Its trade share on the Liv-ex exchange has risen from <2% in 2010 to >14% in 2018.
Like other physical assets, the price of fine wine is largely determined by the degree of supply constraint. Burgundy, as a region, produces far less wine than other well-known region; Burgundy's top estates produce up to ~25-30x less their equivalents in Bordeaux. A rapid rise in demand can often result in a speculative bubble in such a market.
In traditional macroeconomic thinking, a yield curve inversion is a strong leading indicator of a market correction and / or recession. In the case of Burgundy wines, there has been anecdotal evidence of younger vintages have started to become more pricey than older ones, suggesting an equivalent to a yield curve inversion (unfortunately I haven't been able to find a good chart showing like-for-like secondary prices by vintage). However, Liv-ex points to the fact that there is decreasing trade count in Burgundy wines, with a simultaneous rise in trade value, which has largely accrued to the Grand and Premier Crus (two highest classifications). In their words: "Fewer trades at ever higher prices points to a narrowing of liquidity. Possibly a speculation bubble."
In case you find this topic interesting, you may consider signing up for (free) periodic News & Insights updates from Liv-ex, which has put together a rich library of market analysis. I'm linking here their deep-dive into the Burgundy wine market from earlier this month.
Sources:
(1) https://www.economist.com/finance-and-economics/2019/01/05/amateur-buyers-of-fine-burgundy-fear-a-speculative-bubble
(2) The Economist's The Intelligence podcast, February 25, 2019
(3) https://www.liv-ex.com/news-insights/
Sangria: My favorite kind of fruit salad
Though I fully believe that sangria is one of the most
perfect drinks for a hot summer day, I have a hard time imagining how someone made the leap from a fabulous, full-bodied Rioja to the sweet,
fruity concoction that I sip poolside. Who do I need to thank for this fabulous
innovation?
Turns out, sangria actually originated as a health
elixir. In the days of the ancient Greeks and Romans, water was bacteria-filled
and unsafe to drink, so people drank wine (a much lower alcohol version than
the wine we drink today) instead. The foodies among them started mixing their mediocre-tasting
wine with sugar and spices, creating a beverage called “hippocras” that was a
precursor of today’s sangria.
Versions of hippocras were drunk throughout the former
Roman empire through the middle ages. Over the years, people realized that the
combination of sweetened wine with spices was actually pretty good. They eventually
started to add fruit along with the spices, and boom – the sangria that we know
and love was born. Reportedly named for the “bloody” hue of the classic red
wine-based drink, sangria remained a mostly European secret until it made its New
World debut at the 1964 World’s Fair in New York.
Since then, sangrias have taken off. They can be made
from virtually any base wine – be it red, white, rosé, or sparkling – and have
become the perfect accompaniment to any activity that involves weather over 70
degrees. Recipes vary widely, with combinations of wine, fruit, and spices that
can be shaped to fit individual tastes.
A word to the wise, y’all – spring is coming. It’s time
to start experimenting with your own recipes before picnic season kicks in.
Sources:
Sunday, February 24, 2019
Brand Wars
Prior to this year's Super Bowl, I had no idea that corn syrup was an ingredient in beer. But like most Americans, I was confronted with this fact (over and over) as Bud Light rushed to smear Coors and Miller Lite. Being anything but a fan of Bud Light, I can't say the ads had much of an effect on me. However, I did feel the shot across the bow that Miller and Coors must have felt (and in much greater magnitude). As I read today's WSJ, I learned that Bud Light had not only angered Miller and Coors by this attack because of its surface level implications, but, more importantly, because the major beer brands had actually been working in concert, behind the scenes, to launch a Got Milk? type campaign, to help combat the waning consumption of beer. In fact, while other forms of alcohol have largely been on the rise since the 1960's, beer consumption has only dropped since the 1990's. In order to get ahead of this trend, it appears that the major beer companies wanted to pool their marketing budgets and reaffirm that beer was the right choice for the American alcohol consumer. Bud was now threatening this alliance and showing that it could not play fair.
Much of the discussion in the wine class, particular about the "buzz" wars with cannabis, has obvious parallels. However, since wine has so many more producers and actually thrives on variety, it seems that a similar campaign would actually be much more possible and productive. An alliance of wineries across the US could easily drum up significant financial support and could also raise awareness of the benefits of wine. The campaign could easily be structured around health benefits, paired with regional travel or even push forward environmental awareness based on the practices of viniculture. Without even having to come out and criticize other buzz-generating products (i.e. not taking the Bud Light approach), wine could come out as a step above the other buzz items (which is entirely on brand).
The God of Wine
It strikes me as both fascinating and deeply culturally revealing that the Greeks and Romans had a God of Wine: Dionysus, to the Greeks, and Bacchus, to the Romans.
Definitely very passionate about grapes. Exhibit A, the bunch he wields like the tip of a spear in his left hand.
The long list of things Dionysus was the God of is astounding. Not only did his jurisdiction cover wine, but he also was the God of winemaking, grape cultivation, fertility, ritual madness, theater, and religious ecstasy. I find it incredibly intriguing that through Dionysus, Greeks and Romans associated wine with fertility, madness, theater, and religious ecstasy. Thematically, a sense of loss of agency and exaggeration courses through Dionysus's veins.
As one of the twelve Greek Olympians, Dionysus stood on the helm of celestial power, yet he was inherently an outsider. Dionysus was a demigod: half man, half god. The son of Zeus and a mere mortal woman.
The legend goes that Dionysus was born among mortals in order to be hidden from Hera, Zeus's envious wife. Dionysus cultivated grapes, invented wine, and went through Asia teaching mortals how to make wine. He is known as "the liberator" because his gift to mankind -- wine and joy -- liberated mortals from societal constraints.
The long list of things Dionysus was the God of is astounding. Not only did his jurisdiction cover wine, but he also was the God of winemaking, grape cultivation, fertility, ritual madness, theater, and religious ecstasy. I find it incredibly intriguing that through Dionysus, Greeks and Romans associated wine with fertility, madness, theater, and religious ecstasy. Thematically, a sense of loss of agency and exaggeration courses through Dionysus's veins.
As one of the twelve Greek Olympians, Dionysus stood on the helm of celestial power, yet he was inherently an outsider. Dionysus was a demigod: half man, half god. The son of Zeus and a mere mortal woman.
The legend goes that Dionysus was born among mortals in order to be hidden from Hera, Zeus's envious wife. Dionysus cultivated grapes, invented wine, and went through Asia teaching mortals how to make wine. He is known as "the liberator" because his gift to mankind -- wine and joy -- liberated mortals from societal constraints.
Life's incomplete with reds and whites - meet the blue wine!
About one or two years ago I run into this particular product in the news... a startup was trying to challenge the traditional market of wine with... blue wine!?! It sounds weird and crazy, but wait to see how it looks!
Apparently, the color hear is not meant to change the flavor but to make the visual experience different and interesting when drinking. Indeed, blue wine is still made from wine grapes. (However, the regulation of some countries do not (yet) recognize the wine as wine - how can it not be red or white!?!)
And why Blue? In psychology, the blue colour represents movement, innovation and infinity. It’s also a colour frequently associated with flow and change
For instance Gik is a Spanish wine company whose blue wines are made from a blend of red and white grapes. It is known to be a "chilled white wine with organic pigments (anthocyanin, from the skin of red grapes, and indigotine) and yields a sweet, crisp flavor".
But even if it started in Spain, the trend has arrived to the two other largest and traditional wine markets: Italy and France. Saracini is an Italian wine company that makes a variety of avant-garde and classic wines. Blumond® is their sparkling blue wine. Technically, it’s a Prosecco mixed with blue curaçao. It has a vibrant light blue hue and presents a sweet, peachy flavor.
The curiosity of consumers has made these two brands successful and available all over the world. Gik can be found in more than 30 US states, after having pre-orders of more than 30,000 bottles before the launch of the product in the US. The wine is intended to attract millenials, being sold in the website as "Blue, the instagrammable" and has a price of $16.
If by now you are curious too and want to try it, don't expect to find it in Trader Joe's (yet) but you can find it online easily!
Saturday, February 23, 2019
Chandon's Bet on Asia
I found it very interesting to look into Chandon China and India, marking LVMH's bold bet into emerging wine markets.
Breaking this down from LVMH's overall financials, we see that wines & spirits comprise 12% of LVMH's overall revenue as of 2017:
And within the wines & spirits segment, we see that revenue is over $5B as of 2017:
Zooming into geographic region of delivery within wines & spirits, Asia comprises almost one third of total revenue:
Suggesting that Chandon's investments in China and India have hit the runway with much success. A glance at their promotions is stunning:
Balloons emulating grapes?! What a move. Since 2013, Chandon's bet on premium sparkling wine in China has soared -- they invented the category in China and have set their roots. According to their website:
Located in the north of China, at the heart of the Ningxia Hui Autonomous Region – one of the country’s largest winegrowing areas – Chandon China was founded in 2013.The region’s exceptional climatic, environmental and geological conditions convinced a team of international experts to establish the estate in this protected terroir. The area is ideal for growing chardonnay and pinot noir, two varieties that are essential for creating sparkling wines using the classic “méthode traditionnelle” style.When I go back to China to visit my relatives, I'm not going to forget to ask them about Chandon's sparkling wine.
Friday, February 22, 2019
Publicly traded wine companies
Our discussion of the suitability of the wine industry for IPOs left me wondering: which publicly traded wine companies are on the market today?
I did some research... if you want a slice of the U.S. wine industry, here are the stocks to own. Unfortunately, your dividends don't come with a bottle of wine.
Constellation Brands (STZ, STZ-B): as discussed in class, a major alcohol conglomerate ($37B across the two listings) and the owner of Robert Mondavi Wines. A recent $4B investment in legal marijuana means this stock is a bet on buzz, regardless of which drug produces it!
Vina Concha y Toro (VCO-OLD): de-listed from the NYSE last year, citing the expense of remaining listed. The company had a market cap of $1.5B, but only a small portion of it was listed in the U.S. to begin with. (They remain listed on the Chilean market.)
Truett-Hurst (THST): a wine producer with a market cap of just $10M. Recently completed a stock buyback, and rumored to be considering de-listing or privatizing, so probably not a great case for wine industry IPOs.
Willamette Valley Vineyards (WVVI, WVVIP): another tiny wine producer (market cap: $40M), who required some legal creativity to go public via a crowdfunding-type model (Regulation A public offering) in 1989. The NASDAQ listing followed in 1994. Owners get substantial discounts on wine (in fact, if you buy in sufficient volume, ownership could be a good deal regardless of which way the stock goes).
Crimson Wine Group (CWGL): a Napa-based wine group with a $191M market cap. Owners of Pine Ridge Vineyards, Seven Hills Winery, and others.
Diageo PLC (DEO): primarily a beer and spirits company, but with some wine business lines, including an investment in Moët Hennessy. Their $93B market cap makes them a behemoth compared to most stocks on this list... but of course very little of that is in wine.
Brown-Forman Corp. (BF.A, BF.B): best known for Jack Daniels, but also the owner of wine brands like Korbel Champagne and Sonoma-Cutrer. A market cap of $23B.
That's about all I could find, so your options are fairly limited. They do span a wide range of company sizes. Performance, however, has varied dramatically. I charted the main listing of each company against the S&P 500 over the past five years, and I'm not feeling super exciting about putting my money into wine stocks.
I did some research... if you want a slice of the U.S. wine industry, here are the stocks to own. Unfortunately, your dividends don't come with a bottle of wine.
Constellation Brands (STZ, STZ-B): as discussed in class, a major alcohol conglomerate ($37B across the two listings) and the owner of Robert Mondavi Wines. A recent $4B investment in legal marijuana means this stock is a bet on buzz, regardless of which drug produces it!
Truett-Hurst (THST): a wine producer with a market cap of just $10M. Recently completed a stock buyback, and rumored to be considering de-listing or privatizing, so probably not a great case for wine industry IPOs.
Willamette Valley Vineyards (WVVI, WVVIP): another tiny wine producer (market cap: $40M), who required some legal creativity to go public via a crowdfunding-type model (Regulation A public offering) in 1989. The NASDAQ listing followed in 1994. Owners get substantial discounts on wine (in fact, if you buy in sufficient volume, ownership could be a good deal regardless of which way the stock goes).
Crimson Wine Group (CWGL): a Napa-based wine group with a $191M market cap. Owners of Pine Ridge Vineyards, Seven Hills Winery, and others.
Diageo PLC (DEO): primarily a beer and spirits company, but with some wine business lines, including an investment in Moët Hennessy. Their $93B market cap makes them a behemoth compared to most stocks on this list... but of course very little of that is in wine.
Brown-Forman Corp. (BF.A, BF.B): best known for Jack Daniels, but also the owner of wine brands like Korbel Champagne and Sonoma-Cutrer. A market cap of $23B.
That's about all I could find, so your options are fairly limited. They do span a wide range of company sizes. Performance, however, has varied dramatically. I charted the main listing of each company against the S&P 500 over the past five years, and I'm not feeling super exciting about putting my money into wine stocks.
Sources:
- http://investsnips.com/list-of-publicly-traded-wine-and-liquor-companies/
- https://www.investopedia.com/investing/wine-stocks/
- https://www.thestreet.com/story/12844252/1/six-alcohol-industry-stocks-to-consider-for-your-stock-portfolio.html
- https://seekingalpha.com/article/4186051-recent-portfolio-sale-vina-concha-y-toro
- https://www.equities.com/news/happy-shareholders-drinking-great-wine-wvvi
- http://www.crimsonwinegroup.com/
Social Lubricant
Last week, Jessica Kogan, from Vintage Wine Estates, lamented on why there isn't more press about the benefits of wine.
This got me thinking about an article in the FT that I read this summer, titled "Why drink is the secret to humanity’s success."
A summary of key points:
This got me thinking about an article in the FT that I read this summer, titled "Why drink is the secret to humanity’s success."
A summary of key points:
- The best predictor of happiness and longevity is the number of close relationships in a person's life. People with a good number of relationships are likely to be moderate drinkers; they're the type of people who will meet friends for a pint after work.
- Alcohol encourages us to open up and release endorphins "It isn’t just because alcohol causes people to lose their social inhibitions and become over-friendly with our drinking chums. Rather, the alcohol itself triggers the brain mechanism that is intimately involved in building and maintaining friendships in monkeys, apes and humans. This mechanism is the endorphin system."
- A study at the University of Oxford found that people who were regulars at a local pub were happier, more satisfied, and had more friends than both those who never drank and those who did not have a frequently visited local bar.
The article does not argue that alcohol itself is inherently beneficial. Drinking a glass of merlot alone in front of the TV, while perfectly enjoyable, won't bring you a lifetime of happiness. Instead, alcohol is a mechanism through which we forge meaningful relationships, and those are what make us happy in the long run.
So, on that note, who wants to meet up for a glass?
Expensive Wine Tastes Better.... Kind of
Yesterday's class got me thinking about how wine is priced. More specifically, one of us asked the question (I'm sorry that I forget who it was), "How does Far Niente decide where to price its wines. Some are hundreds of dollars and some are ~$50?" As I recall, the response to the question was about consumer WTP that is associated with a brand as powerful as Far Niente.
While I didn't expect Far Niente's $500 wine to be 10 times better than its $50 wine, I was a bit surprised to hear that the quality of the wine is all but a non-factor in the consideration of price for over $50 wine. So, I started reading online about how wine is priced and what correlation the price has to quality or consumer preference. I found this video to be a good summary (please watch till the end, rather than throwing tomatoes in the middle): http://www.openculture.com/2017/11/expensive-wine-is-for-dupes-scientific-study-finds-no-strong-correlation-between-quality-price.html
There are a couple major takeaways from the video:
1. The distribution of wine awards is highly inconsistent.
2. The average consumer frequently prefers cheaper wine over expensive wine.
3. #2 is true, unless the person knows the price of the wine, then they like the most expensive wine the best.
It's amazing to me that knowing the price of the wine actually causes a noticeable change in the enjoyment/preference of the consumer. If I tell you that you are drinking a $100 bottle, you will like it more. I suppose this is obvious if you think of nice wine as a luxury good, but if you think about it was a beverage, it's nuts.
While I didn't expect Far Niente's $500 wine to be 10 times better than its $50 wine, I was a bit surprised to hear that the quality of the wine is all but a non-factor in the consideration of price for over $50 wine. So, I started reading online about how wine is priced and what correlation the price has to quality or consumer preference. I found this video to be a good summary (please watch till the end, rather than throwing tomatoes in the middle): http://www.openculture.com/2017/11/expensive-wine-is-for-dupes-scientific-study-finds-no-strong-correlation-between-quality-price.html
There are a couple major takeaways from the video:
1. The distribution of wine awards is highly inconsistent.
2. The average consumer frequently prefers cheaper wine over expensive wine.
3. #2 is true, unless the person knows the price of the wine, then they like the most expensive wine the best.
It's amazing to me that knowing the price of the wine actually causes a noticeable change in the enjoyment/preference of the consumer. If I tell you that you are drinking a $100 bottle, you will like it more. I suppose this is obvious if you think of nice wine as a luxury good, but if you think about it was a beverage, it's nuts.
Thursday, February 21, 2019
A case for luxury retail brand / wine partnerships in China
Thinking back to last week's case on Wine in China, I was reflecting on how French wine was described as "the ultimate status symbol among China's wine consumers." The consumer perception that Bordeaux and Burgundy wines are by default more high-end than wines from anywhere else in the word gives wine producers and exporters from these regions a huge competitive advantage. Given the preference in China for luxury, brand name products, I think that wines from other regions seeking to make a similar status-play in the Chinese market should consider a marketing partnership with one of the top international retail brands.
This is not to say that they have to go the LVMH route and actually get into both the luxury apparel and wine markets (though that has certainly been a winning strategy for LVMH). How about a Mumm Napa / Tiffany & Co partnership, for example? To be fair, when I first pictured this, I was considering partnerships with the most popular luxury brands in China (Chanel/Cartier/Gucci etc.) but I doubt these European-based companies would be too eager to align themselves with wines from the US. Perhaps this luxury brand affiliation strategy is not best for Napa wines then? Italy, on the other hand, could definitely move the market with a well-executed Versace or Gucci partnership. And just think how gorgeous the ads would be! The wines in question could even take a page out of Lafite Rothschild's book and use packaging tactics like placing the Chinese character for the lucky number 8 on their bottles. And why not on the luxury clothes as well? An exclusive line marketed directly at Chinese consumers that involves both exclusive wine partnerships and includes nods to important elements of Chinese culture could ignite demand and create status symbolism around many deserving regions beyond just Bordeaux and Burgundy.
This is not to say that they have to go the LVMH route and actually get into both the luxury apparel and wine markets (though that has certainly been a winning strategy for LVMH). How about a Mumm Napa / Tiffany & Co partnership, for example? To be fair, when I first pictured this, I was considering partnerships with the most popular luxury brands in China (Chanel/Cartier/Gucci etc.) but I doubt these European-based companies would be too eager to align themselves with wines from the US. Perhaps this luxury brand affiliation strategy is not best for Napa wines then? Italy, on the other hand, could definitely move the market with a well-executed Versace or Gucci partnership. And just think how gorgeous the ads would be! The wines in question could even take a page out of Lafite Rothschild's book and use packaging tactics like placing the Chinese character for the lucky number 8 on their bottles. And why not on the luxury clothes as well? An exclusive line marketed directly at Chinese consumers that involves both exclusive wine partnerships and includes nods to important elements of Chinese culture could ignite demand and create status symbolism around many deserving regions beyond just Bordeaux and Burgundy.
What to learn from Mondavi in China
If you go to China's top supermarkets, you will see Mondavi dominating the wine section. This article highlights three key lessons to learn from Mondavi's launch in China in retail and online:
1. Content matters: creating stories, videos that bring the whole cultural experience online
2. Localization: including changing the tasting notes, replacing gooseberry which is not common in China, and adding lychee
3. Use big data to understand customers including age, gender, and other social and demographics characteristics for better targeting
More here:
https://www.alizila.com/three-things-mondavi-selling-wine-china/
1. Content matters: creating stories, videos that bring the whole cultural experience online
2. Localization: including changing the tasting notes, replacing gooseberry which is not common in China, and adding lychee
3. Use big data to understand customers including age, gender, and other social and demographics characteristics for better targeting
More here:
https://www.alizila.com/three-things-mondavi-selling-wine-china/
Own your own AVA?
I came across an interesting SF Chronicle article yesterday about a small AVA being up for sale for $3.3 million. Looking at the map in the article, this plot of land looked significantly above where Napa and Sonoma are. With our final projects, I began thinking how I might use a "large fortune to make a small fortune". What we haven't discussed yet in class is the water consumption and how strategic of an asset it is (or whether the real estate agent is simply trying to drive a higher price).
With the major droughts in California over the past decade, at first glance this winery seems to have attractive traits to succeed. What gives me pause is the latest owners selling after just three years. Are there more challenges here than meets the eye?
With the major droughts in California over the past decade, at first glance this winery seems to have attractive traits to succeed. What gives me pause is the latest owners selling after just three years. Are there more challenges here than meets the eye?
Boozy Brotherly Angst
Reading the Mondavi Winery case, my jaw actually dropped when I read that in fighting over moving toward a new way of making wine, Peter accused Robert of stealing money from the company, and after being denied the apology he sought, Robert struck his brother and was barred from the business.
It immediately reminded me of an article I had read about a pair of twin brothers who both brewed beers and could not stand each other.
Their story is an interesting one - they grew up in Denmark, and until 2010 they worked together, not always harmoniously. Jeppe Jarnit-Bjergso, on the left, started a beer club and in 2005, opened a speciality beer store called Olbutikken. Mikkel Borg Bjergso, on the right, was the tinkerer who started creating craft beers, founding Mikkeller and becoming the marquee beer at his brother's store. It all fell apart when Mikkel opened his own bar in 2010, not far from the bottle shop, and began competing. Jeppe then decided to create his own brewery; he first decamped to Brooklyn, then cheekily named it Evil Twin. Legend has it they've hardly spoken since.
Evil Twin is all over the New York beer scene; Covenhoven, my local and wonderfully loved beer bar in Brooklyn, used to stock it all the time, and I've had a number of their generously high abv imperial stouts. Jeppe and his wife also operate a Danish restaurant and bar called Tørst that pairs their foods with his beers. I never saw Mikkeller beers as often in New York, but it turns out the Danish brand has physical presence on the west coast, with beer bars in both LA and San Francisco.
Until last year, both brothers were "gypsy" or phantom brewers - they borrowed space from other brewers to make their beers, rather than owning breweries of their own. As if to add another chapter to their rivalry, they both decided to expand operations at the same time, opening breweries and taprooms in 2018, and both doing so in Queens. Coincidence?
I find it striking (and disappointing on this side of the country) that they both plan to lean into making some New York themed beers that are only available in the state. How much of that has to do with developing a local brand and mystique, and how much of it is due to issues with distribution for a niche beer in the 3 tier system? I had never really thought about how beers make themselves available around the country before this quarter, and I'm looking forward to figuring out the answers to that question.
It immediately reminded me of an article I had read about a pair of twin brothers who both brewed beers and could not stand each other.
Their story is an interesting one - they grew up in Denmark, and until 2010 they worked together, not always harmoniously. Jeppe Jarnit-Bjergso, on the left, started a beer club and in 2005, opened a speciality beer store called Olbutikken. Mikkel Borg Bjergso, on the right, was the tinkerer who started creating craft beers, founding Mikkeller and becoming the marquee beer at his brother's store. It all fell apart when Mikkel opened his own bar in 2010, not far from the bottle shop, and began competing. Jeppe then decided to create his own brewery; he first decamped to Brooklyn, then cheekily named it Evil Twin. Legend has it they've hardly spoken since.
Evil Twin is all over the New York beer scene; Covenhoven, my local and wonderfully loved beer bar in Brooklyn, used to stock it all the time, and I've had a number of their generously high abv imperial stouts. Jeppe and his wife also operate a Danish restaurant and bar called Tørst that pairs their foods with his beers. I never saw Mikkeller beers as often in New York, but it turns out the Danish brand has physical presence on the west coast, with beer bars in both LA and San Francisco.
Until last year, both brothers were "gypsy" or phantom brewers - they borrowed space from other brewers to make their beers, rather than owning breweries of their own. As if to add another chapter to their rivalry, they both decided to expand operations at the same time, opening breweries and taprooms in 2018, and both doing so in Queens. Coincidence?
I find it striking (and disappointing on this side of the country) that they both plan to lean into making some New York themed beers that are only available in the state. How much of that has to do with developing a local brand and mystique, and how much of it is due to issues with distribution for a niche beer in the 3 tier system? I had never really thought about how beers make themselves available around the country before this quarter, and I'm looking forward to figuring out the answers to that question.
Wednesday, February 20, 2019
Let's Hear it for the Pinot
With good reason, Northern California wines are best known for their Bordeaux-varietal based reds. As we all know and remember from lecture, these grapes are Cabernet Sauvignon, Cabernet France, Merlot, Malbec and Petit Verdot. Since California, and specifically Napa and Sonoma, produce such high caliber wines of these varieties, it is known globally as one of the best producers of Bordeaux-varietals, often winning awards over similar wines produced in Bordeaux itself.
While that's all well and good for California Cabs and whatnot, I'd like to give some credit to a less celebrated California varietal that I believe is also producing amazing wines, just without receiving the same praise. I've been fortunate enough to taste a few different Pinot Noirs produced in California in the last year, and am always surprised at how great of a quality I'm getting for the price I'm paying (and am thus surprised by the quality I'm getting for the lack of label notoriety).
Two specific wines that come to mind here are Rhys Vineyards (https://rhysvineyards.com/), which grows its grapes in the Santa Cruz Mountains, and Williams-Selyem (https://www.williamsselyem.com/), based in Healdsburg. I had the chance to try a glass of Pinot from each of these labels (can't remember the vintage, sorry!) at family dinners over the holidays and was blown away by the flavor profiles of each. This led me to do a bit of research on the two labels, since I hadn't really heard of either of them.
Both Rhys and Williams Selyem appear to be what are known as 'Cult Pinot Noirs,' which are Pinots that have extremely small and selective distribution lists and sell the vast majority of their wines through said distribution lists. Not only does this create a scarcity of supply (and thus drive up price for those who can purchase either on lists or via secondary markets such as auctions), but it also (intentionally or not) perhaps quiets general consumer knowledge of a given wine. While connoisseurs will know about the great cult Pinots regardless, I wonder whether being a cult Pinot can hurt your brands reach to the more average, everyday consumer. And from a more macro perspective, could having some of the top Pinots of California be under this cult strategy ultimately be a major contributing factor to the Bordeaux varietals being far and away the most well known grapes that produces California reds? Hard to say, but given how great these cult Pinots I've tasted are plus the fact that so few people have heard of them, I suspect there might be something that's worth unraveling further!
http://www.princeofpinot.com/article/2048/
While that's all well and good for California Cabs and whatnot, I'd like to give some credit to a less celebrated California varietal that I believe is also producing amazing wines, just without receiving the same praise. I've been fortunate enough to taste a few different Pinot Noirs produced in California in the last year, and am always surprised at how great of a quality I'm getting for the price I'm paying (and am thus surprised by the quality I'm getting for the lack of label notoriety).
Two specific wines that come to mind here are Rhys Vineyards (https://rhysvineyards.com/), which grows its grapes in the Santa Cruz Mountains, and Williams-Selyem (https://www.williamsselyem.com/), based in Healdsburg. I had the chance to try a glass of Pinot from each of these labels (can't remember the vintage, sorry!) at family dinners over the holidays and was blown away by the flavor profiles of each. This led me to do a bit of research on the two labels, since I hadn't really heard of either of them.
Both Rhys and Williams Selyem appear to be what are known as 'Cult Pinot Noirs,' which are Pinots that have extremely small and selective distribution lists and sell the vast majority of their wines through said distribution lists. Not only does this create a scarcity of supply (and thus drive up price for those who can purchase either on lists or via secondary markets such as auctions), but it also (intentionally or not) perhaps quiets general consumer knowledge of a given wine. While connoisseurs will know about the great cult Pinots regardless, I wonder whether being a cult Pinot can hurt your brands reach to the more average, everyday consumer. And from a more macro perspective, could having some of the top Pinots of California be under this cult strategy ultimately be a major contributing factor to the Bordeaux varietals being far and away the most well known grapes that produces California reds? Hard to say, but given how great these cult Pinots I've tasted are plus the fact that so few people have heard of them, I suspect there might be something that's worth unraveling further!
http://www.princeofpinot.com/article/2048/
Setting up shop in China
When I was reading the Wine in China: The Wild West of the
Far East case I was thinking about the rules and regulations that are required
to be in accordance with in order to legally set up an operation in the Chinese
market. This was primarily a thought because a vitamins business that I worked
with before school had to effectively exit the Chinese market because of new
regulations that made it very challenging for foreign health food products to
enter China. Also, having just finished reading Shoe Dog and learning about the
about the difficulties that Phil Knight and Nike faced when setting up operations
in China, it was particularly top of mind.
It didn’t take long to realize that creating a wine business
in China is not an easy task either.
·
Taxes
o
VAT: 17%
o
Custom duty: 14%
o
Excise tax: 10%
·
Steps
o
Signing agreement with Chinese importer
o
Registering company with AQSIQ
o
Registering label
§
Labeling requirements
·
Name/brand of product
·
Ingredients list (Sweeteners, preservatives and
added color – legal in the case of fortified wine only – must be declared)
Exempt for products made of one ingredient.
·
Net volume (ml): This should be marked as ‘net
content xxx Ml (ml)’ for bottle sizes under a liter, or ‘net content x Liters
(l)’ for bottle sizes over a liter. For packages up to (and including 200ml)
the minimum print height is 3mm. From
200ml up to and including 1 liter, the minimum print height is 4mm. For packages greater than 1 liter the minimum
print height is 6mm.
·
Alcohol content (%): The alcohol statement
should be in the ‘Alcoholic strength xx.x% vol’ format.
·
Production date (yy/mm/dd): The date of bottling
is required on Chinese labels.
·
Producer/Distributor/Importer (Name and
address): The name and address of the Chinese agent, importer or distributor
must be shown on the label. The name and address of the producer is not
mandatory, however if included does not need to be translated into Chinese
characters
·
Country of origin: A country of origin statement
is mandatory. Importers will usually request a Certificate of Origin to confirm
this claim.
·
Minimum durability date: Wines with an alcohol
content of 10% or less are required to include a minimum durability date.
·
Product Type: (i.e. Grape Wine, ‘red’, ‘white’,
‘sparkling’, ‘semi-sparkling, ‘fortified’, ‘sweetened fortified’, etc.)
·
Sugar content (g/L)
·
Mandatory Warning Statements: The following and other warnings must be on
the bottle in Chinese: "Excessive drinking is harmful to health" or
"Pregnant women and children shall not drink". For beer in glass bottles also add "Do
not hit; it might cause explosion of the bottle".
·
Required documents
o
Commercial invoice
o
Customs Value Declaration
o
Freight Insurance/documents
o
Packing List
o
Insurance Certificate
o
Certificate of Origin (for distilled spirits and
malt beverages only)
o
Certificate of Health/Sanitation (for distilled
spirits and malt beverages only)
o
Certificate of Authenticity/Free Sale (for
distilled spirits and malt beverages only)
o
Consolidated Wine Export Certificate (for wine
only)
·
Licensing and registration
o
Must submit an application to the Exit-Entry
Inspection and Quarantine Bureau
The Passion Index
We've discussed investing in wine using traditional methods, such as investing in a wine business through the stock market. Yet, there are other methods for investing in wine. Rare coins, luxury cars, and fine art - these are just a few examples of items that make up what some investors call the "passion index". These tangible assets act as direct alternative investments that - like any other investment vehicle - after purchase appreciate (or depreciate) in value over time. Interestingly, wine is a non-trivial category in this space. It even has it's own exchange: the London International Vitners Exchange.
You might ask, what drives the valuation of a bottle of wine? Essentially, supply and demand - that is, the rarity of a bottle relative to other wines and the shifting demand for it as a collector's item. If done right, parking one's assets in expensive wine bottles can actually be a smart move (as high as 50% returns in some cases, with commiserate risks). However, wine is not a fast-turn or cheap investment. One can expect to wait between six and ten years for a bottle to significantly appreciate. Further, getting started in the wine investment space is not cheap - a first investment costs at minimum ~$8000.
Interestingly, startups have been shaking up these traditional barriers to the investment wine space. Cult Wines, for example, essentially acts as an index fund for wine - spreading participants assets across a diversified portfolio, managing portfolios towards risk preferences, and insuring bottles. Indeed, if one is knowledgeable about the space, wine investments are certainly not the worse way to spend your investment dollars.
You might ask, what drives the valuation of a bottle of wine? Essentially, supply and demand - that is, the rarity of a bottle relative to other wines and the shifting demand for it as a collector's item. If done right, parking one's assets in expensive wine bottles can actually be a smart move (as high as 50% returns in some cases, with commiserate risks). However, wine is not a fast-turn or cheap investment. One can expect to wait between six and ten years for a bottle to significantly appreciate. Further, getting started in the wine investment space is not cheap - a first investment costs at minimum ~$8000.
Interestingly, startups have been shaking up these traditional barriers to the investment wine space. Cult Wines, for example, essentially acts as an index fund for wine - spreading participants assets across a diversified portfolio, managing portfolios towards risk preferences, and insuring bottles. Indeed, if one is knowledgeable about the space, wine investments are certainly not the worse way to spend your investment dollars.
Our reds are too warm and our whites are too cold
The day will inevitably come when wine is taking up so much room in your refrigerator that you'll have to decide between whether to store that next bottle, or your quart of milk. When that day comes, it may be time to investigate giving your wine a special home of its own inside a wine fridge.
After a successful trip to several wineries in the Santa Cruz mountains this weekend (including Ridge! A must see/taste!) I returned with too many bottles and decided it was finally time to invest in a wine fridge myself.
Here's what I found out about them:
1. Size matters. The size of your apartment, that is. These things can be pretty bulky - and typically they are quoted as holding between 18 and several hundred bottles. For our standard living arrangements here in Palo Alto, you should probably look at the smaller end fridges, of between 18 - 50 bottles.
2. Dual Zone fridges aren't totally real for small wine fridges. The idea between dual vs. single zone fridges is for the wine lover who wants to store their reds and whites at different temperatures (vs. sometimes only storing one type of wine). But, when it comes down to the smaller fridges (<50 bottles), the temperature is actually really difficult to control in separate compartments. Vinepair.com spot tested several dual zone fridges and found that the temperature was actually consistent throughout. So, if you're looking to save some money, you could go for the smaller single zone fridge until you have bigger space to upgrade. Just set it to 60, a relatively good temp for both reds and whites.
3. Cost? Typically in the low to mid hundreds for the smaller sized fridges. Expect them to last only a few years.
4. System: Thermoelectric vs Compressor. Thermoelectric is the silent one...and tends to be more expensive...but apparently doesn't actually cool the bottles very well. Compressor fridges are louder (they sound like a regular mini fridge) but almost all sites I visited preferred them. I still opted for thermoeletric, but I'm a sucker for silence.
Mine arrives tomorrow, so if your'e in the market you're welcome to come check it out!
After a successful trip to several wineries in the Santa Cruz mountains this weekend (including Ridge! A must see/taste!) I returned with too many bottles and decided it was finally time to invest in a wine fridge myself.
Here's what I found out about them:
1. Size matters. The size of your apartment, that is. These things can be pretty bulky - and typically they are quoted as holding between 18 and several hundred bottles. For our standard living arrangements here in Palo Alto, you should probably look at the smaller end fridges, of between 18 - 50 bottles.
2. Dual Zone fridges aren't totally real for small wine fridges. The idea between dual vs. single zone fridges is for the wine lover who wants to store their reds and whites at different temperatures (vs. sometimes only storing one type of wine). But, when it comes down to the smaller fridges (<50 bottles), the temperature is actually really difficult to control in separate compartments. Vinepair.com spot tested several dual zone fridges and found that the temperature was actually consistent throughout. So, if you're looking to save some money, you could go for the smaller single zone fridge until you have bigger space to upgrade. Just set it to 60, a relatively good temp for both reds and whites.
3. Cost? Typically in the low to mid hundreds for the smaller sized fridges. Expect them to last only a few years.
4. System: Thermoelectric vs Compressor. Thermoelectric is the silent one...and tends to be more expensive...but apparently doesn't actually cool the bottles very well. Compressor fridges are louder (they sound like a regular mini fridge) but almost all sites I visited preferred them. I still opted for thermoeletric, but I'm a sucker for silence.
Mine arrives tomorrow, so if your'e in the market you're welcome to come check it out!
Pull No Punches: A Case for Champagne Cocktails
Crisp, effervescent, and inherently celebratory – sometimes
I wonder why anyone would ever want to add anything to a perfect glass of
bubbly. But then I remember the deliciousness that is a French 75.
Champagne’s history of collaboration in cocktails goes back
hundreds of years. Based on recipes and tasting notes from the time, it seems
that bartenders began adding champagne to their alcoholic punches in the 1700s
to introduce acidity and alcohol to the sweet mixes. These recipes evolved over
the ensuing years to adapt to developments in champagne production and to
changing consumer tastes.
The recipe that we
would today call the “champagne cocktail,” featuring a bitters-soaked sugar
cube and a splash of cognac topped with champagne, came about in the mid-1800s.
Champagnes of the day were far sweeter than the brut styles that are most
popular today, but the classic cocktail has persisted. Bartenders around the
world have since adapted their own variations and punches inspired by the
festive tipple. Here are a few of my favorites.
Aperol spritz: An Italian creation, featuring prosecco +
Aperol + a dash of soda (this one can be re-vamped with the liquor of your
choice)
Bellini: Another Italian version, prosecco + white peach puree
French 75: Champagne + gin + lemon
Kir Royale: Crème de cassis + champagne
Mimosa: Champagne + orange juice (and a splash of triple sec if you’re feeling
adventurous)
Sbagliato: Another credit to the Italians, with prosecco + sweet vermouth +
Campari + a splash of soda
Sources:
A Not So Bubbly Brexit
Yet another reason why Brexit is causing headaches on both
sides of the Channel. With its exit from the single market comes an exit from
the single wine market, too. Brexit will
come with new tariffs on wine imports into the UK, including a likely end to
the 120 liters of wine that UK nationals can currently bring back duty-free
from other EU countries. Given that the UK imported nearly £1 billion worth of
wine from France in pre-Brexit 2015. The Brits had better hope that global warming
makes for prime wine country within their borders, ASAP.
In the meantime, forward-looking businesses and consumers
are trying to at least build runways to help their supplies last. LVMH has
added four months of wine and spirits inventory (including of its Moët &
Chandon champagne and Hennessey Cognac) to its U.K. stockpiles. Particularly
thirsty consumers are making the three hour road trip to Calais, and even the
five hour trek to the Champagne region itself, to stock up on lower-priced vino.
A temporary insurance provider has created a calculator to help these savvy
consumers calculate just how much they can save, based on today’s prices.
A glass of champagne makes everything better. But what will
Brits do when the go-to panacea becomes the very reason for their pain?
Sources:
Coffee & Wine
I was on a recent trip to Hawaii (The Big Island), and paid
a visit to the Kona region to taste and explore a few coffee farms. One of our
visits was Kona Joe, known for its
patented growing technique: trellis-grown coffee. Inspired by winemakers, Joe
spent years developing this unique growing system to grow award winning beans.
As a coffee enthusiast, this got me thinking of the many similarities
of these two beverages:
·
Variety – Just like wine, different types of
coffee beans are suited to different terroirs, affecting aroma and taste of the
brew.
·
Growing patterns – Wine & coffee are both
suited to best grow in specific regions (belts to be specific)
·
Flavor & Tasting – both beverages are tasted
and described in terms of key flavors, aromas and acidity, and “Q Graders” are quality
tasters that reflect the wine industry’s leading sommeliers.
·
Roasting / Winemaking Process – The roasting
process reflects the winemaking process in its role in highlighting flavors and
influencing “boldness” of a brew
However, despite all these similarities, wine has far
outpaced coffee in developing a robust and complex economy, while coffee is primarily
traded as a commodity (the world’s top traded commodity). While the wine
economy has greatly implemented the practice of appellations and protected
designation of origin, coffee has yet to cultivate a formal appellation system.
One reason for this is its long history of primarily being produced in
developing regions, and primarily being sold as a cheap commodity. For most
people, the primary purpose of coffee is fuel. Wine is for enjoyment. However,
we’re seeing a shift as coffee connoisseurship and focus on quality coffee grows.
As for the trellis grown coffee? Fascinating, and tasted very different than what I’m used to. However,
despite my enthusiasm for the beverage, I couldn’t get into it for the additional
price. I’d much rather spend the extra cash on… well, a bottle of wine.
Tuesday, February 19, 2019
Ampelography
Ampelography is the science/art concerned with the identification and classification of grapevines. An art in the pre-World War II era, it became a science thanks to the work of Pierre Galet who systematically assembled unique identification markers for 9,600 vine types back in 1952 in his book "Précis d'ampélographie pratique." Shapes and contours of leaves get you a surprisingly far way, but inputs such as shoots, petioles, cluser shape and color, etc., also assist in the identification process. For example, Cabernet Sauvignon has "a downy growing tip, with a deep rose-colored margin... the leaf looks like it has two eyes and a mouth [when held by its stem]," but Chardonnay has a "shield-shaped leaf, with sawblade-like teeth and... 'naked' veins."
Although an arcane skill, ameplography was once part of the core playbook of viticulturalists since it was essential to confirming that the clippings/roots for replanting and grapes/vine samples were what the grower claimed they were. As you can imagine, DNA technologies (specifically, "DNA fingerprinting") have made grapevines more easily and confidently identifiable with quick and harmless sampling and remote testing. Ampelography, therefore, is dying off.
Despite its decline, ampelography is still incredibly useful especially for wineries that source their grapes (i.e., don't own/know the vineyard intimately). When it's picking day and Gary the Grower, for example, decides to give you a different subplot and asks if it's okay, it's critical to ensure you're getting the grape you ordered and not some other careless planting. I'm glad my co-founders Corinne and Katie paid attention in ampelography class at Davis, because I was helpless in the situation.
Top photo below is our Verdelho leaf and middle is our (replacement) Carignan. Even though we don't produce it, I included a Cabernet Sauvignon at the bottom for reference - you can see how difficult it might be to make a confident identification even vs. the Carignan (not a particularly difficult comparison) especially for a novice on the fly!
Sources: Wikipedia, GuildSomm
Although an arcane skill, ameplography was once part of the core playbook of viticulturalists since it was essential to confirming that the clippings/roots for replanting and grapes/vine samples were what the grower claimed they were. As you can imagine, DNA technologies (specifically, "DNA fingerprinting") have made grapevines more easily and confidently identifiable with quick and harmless sampling and remote testing. Ampelography, therefore, is dying off.
Despite its decline, ampelography is still incredibly useful especially for wineries that source their grapes (i.e., don't own/know the vineyard intimately). When it's picking day and Gary the Grower, for example, decides to give you a different subplot and asks if it's okay, it's critical to ensure you're getting the grape you ordered and not some other careless planting. I'm glad my co-founders Corinne and Katie paid attention in ampelography class at Davis, because I was helpless in the situation.
Top photo below is our Verdelho leaf and middle is our (replacement) Carignan. Even though we don't produce it, I included a Cabernet Sauvignon at the bottom for reference - you can see how difficult it might be to make a confident identification even vs. the Carignan (not a particularly difficult comparison) especially for a novice on the fly!
Sources: Wikipedia, GuildSomm
Monday, February 18, 2019
Why is there no on-demand late night wine delivery?
Pretty much every time I have wanted to get wine (or any other alcohol) delivered, it has always been a last-minute, ASAP-type of guest entertaining need. And almost every time, I have been disappointed.
The reason was always about timing. This would usually occur in situations where I was already in the middle of hosting people at my place and ran out of wine, or in those moments of spontaneous post-event afterparty offerings. Each time, I would half-heartedly reach for my phone to open (insert booze or grocery delivery app here), and each time, I would see the same error message: "Unfortunately there are no stores in your area delivering at this time. Earliest delivery: Tomorrow, 11am."
I checked Drizzly, Instacart, and Saucey, and each of these apps' latest delivery time is 9pm. This is with the exception of Amazon Prime Now, which would deliver up until midnight within a one hour window for a $10 fee. However, I was only offered this late delivery window for the following evening, and was told there were no available delivery times for that same night when checking the app at 10pm.
Could it truly be that there is not enough of a late-night, impulse-buy booze market to make this profitable for these companies? Maybe not on a weeknight, but on the weekends I find it hard to believe that there is not a lot of pent-up demand for convenient and fast alcohol delivery. Eaze, the on-demand cannabis delivery app, has delivery times until 10pm with delivery windows as small as 5 minutes. If weed can do it, wine should certainly be able to do it too.
Especially in California, where alcohol can be sold off-premise until 2am, why are there not late-night wine and liquor store fronts that are operated primarily as late-night delivery outlets? Their drivers could drive around with a streamlined collection just like Eaze drivers do with cannabis. I think there is a huge opportunity in urban markets as well as in suburban areas where grocery and liquor stores close as early as 8 or 9pm. I suppose Amazon is the most likely candidate to get the job done here. Next time I have this issue between 9 and 10pm, I'll give Amazon Prime wine delivery a try, and I'll let you all know if I manage to receive the wine in any sort of reasonable time frame.
The reason was always about timing. This would usually occur in situations where I was already in the middle of hosting people at my place and ran out of wine, or in those moments of spontaneous post-event afterparty offerings. Each time, I would half-heartedly reach for my phone to open (insert booze or grocery delivery app here), and each time, I would see the same error message: "Unfortunately there are no stores in your area delivering at this time. Earliest delivery: Tomorrow, 11am."
I checked Drizzly, Instacart, and Saucey, and each of these apps' latest delivery time is 9pm. This is with the exception of Amazon Prime Now, which would deliver up until midnight within a one hour window for a $10 fee. However, I was only offered this late delivery window for the following evening, and was told there were no available delivery times for that same night when checking the app at 10pm.
Could it truly be that there is not enough of a late-night, impulse-buy booze market to make this profitable for these companies? Maybe not on a weeknight, but on the weekends I find it hard to believe that there is not a lot of pent-up demand for convenient and fast alcohol delivery. Eaze, the on-demand cannabis delivery app, has delivery times until 10pm with delivery windows as small as 5 minutes. If weed can do it, wine should certainly be able to do it too.
Especially in California, where alcohol can be sold off-premise until 2am, why are there not late-night wine and liquor store fronts that are operated primarily as late-night delivery outlets? Their drivers could drive around with a streamlined collection just like Eaze drivers do with cannabis. I think there is a huge opportunity in urban markets as well as in suburban areas where grocery and liquor stores close as early as 8 or 9pm. I suppose Amazon is the most likely candidate to get the job done here. Next time I have this issue between 9 and 10pm, I'll give Amazon Prime wine delivery a try, and I'll let you all know if I manage to receive the wine in any sort of reasonable time frame.
Vine Training 101
During my and Greg’s emerging wine region project on the Canary Islands, one of the most curious facts we learned about was the unique trellising method that is used on the islands. Centuries ago, locals there developed a signature, horizontal grapevine braiding technique called ‘el cordon trenzado,’ or the braided cord. The longest cordon trenzado vine alive today stretches over 80 feet, and some vines in this braid are thicker than a child’s wrist. Since fruit only grow from the ends of these long tresses, this design was useful in the past because the vines could be picked up and moved to make room for planting other crops like potatoes.
I found images of these ancient,
rapunzel-like vines to be enchanting and imagination-provoking. The idea of so
many gnarly, old vines pouring over volcanic cliffs was almost fantastical. I
was not surprised to see images of the cordon trenzados on many a label of the
local wines we perused from the region.
The more I reflected about the cordon
trenzado and how different it was from the vineyard systems I had seen before,
I realized I knew basically nothing about vine training to begin with. Why are
these practices needed? Why are some styles used in some places instead of
others? To help grapes grow, I figured, but I was curious to look further under
the hood to gain a better understanding of this key aspect of the viticultural
process.
So I did some research, and here's
what I learned:
Vine Training 101
Why do we need vine training? Grapes
naturally grow upwards towards the sun, climbing up other plants, trees, or
physical structures. Vine training is a way for humans to control otherwise
far-reaching vines, enabling us to optimize yield and making the grapes easier
to harvest.
A grapevine’s performance is maximized
by balancing the amount of fruit development with the amount of leaf
production. The leafy part of the canopy is the energy-producing part of the
vine. Too much fruit and too few leaves results in an imbalance, in which there
is not enough energy produced in the vines to fully ripen the grapes.
On the flip side, too many leaves is
not good either. Grape vines should be trained in a way that somewhat exposes
the grapes to sun and wind. Too many leaves can create excessive shading, which
inhibits grape ripening, and can trap excessive moisture, which can promote
grape diseases.
When deciding what vine training system
to use, growers will consider which systems can provide their desired yield
control, which is best for the local climate, humidity, and wind, and which can
suit any desired mechanization of tasks like pruning, irrigation, pesticide and
fertilizer application, and harvesting of the grapes.
The terms ‘trellising’, ‘pruning’ and
‘vine training’ are often used incorrectly and interchangeably. ‘Trellises’ are
the actual stakes, posts, wires, or other structures that the grapevine is
attached to. Most ‘vine training’ deals mainly with the ‘cordon’, the woody,
arm-like part of the vine, and the fruit-bearing ‘canes’ that extend from the
cordon. ‘Vine training’ systems are the combination of trellising and pruning
practices that are applied to the grapevine to influence the quality and yield
of that year’s crop. Cordons can be trained in unilateral or bilateral fashion
(one arm or two arms), and are usually trained horizontally along wire
trellises. In winter, pruning determines the number of buds that are allowed to
grow into grape clusters. The exact number of buds is regulated in some wine
regions. For example, in France, the number of buds is controlled by AOC
regulations.
----
That’s far enough down the rabbit hole
of vine training research for today. I hope this is helpful to other classmates
that might be curious about the grape-growing process. I think it’s time to
plan a vineyard trip so we can see some vines through the lens of our newfound
viticultural knowledge!
Sources:
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