Category:Wine news

Did the Mafia take over one of Italy’s best cheap wine producers?

mafiaItalian anti-Mafia police raid Sicily’s Feudo Arancio in corruption probe

Feudo Arancia, whose wines have appeared on the blog more than once, may have been taken over by the Mafia. So say Italian police officials, whose financial police seized more than €70m (US$76 million) in assets from the Sicilian winery last week.

Details are still unclear, and it has been difficult to get anyone to talk about what has happened. I’ll update the post if I find out more.

Here’s what we know: The financial police, acting on a request from an anti-Mafia prosecutor in Trentino, seized 900 hectares of vineyards (about 2,200 acres) and several buildings at Feudo Arancio. Police say a Mafia group in Sicily was using Arancio to launder money; four people are reportedly being investigated.

Feudo Arancio is owned Trentino’s Groupo Mezzacorona, one of Italy’s biggest producers and whose $8 pinot grigio is ubiquitous in the U.S.. Mezzacorona executives have “strongly rejected the allegations.”

Feudo Arancio’s wines aren’t as consistently good as Falesco, but they’re worth the $10 they cost more often than not. I’ve reviewed three of them over the years, and the whites seem to be more interesting.

This Italian news report (use Google translate to make sense of it) reads like a pulp novel, complete with references to “men of honor,” the Cosa Nostra, “fugitive bosses,” and “a classic of fixing.”

The charges, if true, seem quite odd. A winery doesn’t appear to be the best place to launder money. It’s not a cash business, like a casino; cash flow, again, is limited; and there are extensive legal reporting requirements because alcohol is involved. But, given the success Italian police have had over the past couple of decades in combating the Mafia, this might have been the best the Mafia could do (assuming the charges are true).

Winebits 638: Michael Broadbent, drinking alone, expensive wine value

Michael Broadbent

Michael and Bartholomew Broadbent

This week’s wine news: Michael Broadbent, a leading English wine writer and critic, has died at 92. Plus, is it OK to drink alone and does expensive wine offer value?

Michael Broadbent: Broadbent, to quote his obituary on thedrinksbusiness trade site, “was a towering and influential figure in the wine trade.” He was a master of wine, wrote two books about wine that were considered standard texts, and was a wine columnist for Decanter magazine for almost 50 years. And that was after he pioneered fine wine auctions for Christie’s. The family business, Broadbent Selections, which is run by son Bartholomew, is one of the finest small importers in the U.S.

Drinking alone? The New York Times’ Eric Asimov asks: “But what if social distancing means you are actually by yourself? Is it all right to open that bottle?” His answer? “If you do have a problem with alcohol or issues with depression, drinking alone is not the responsible choice. But otherwise, why shouldn’t we enjoy the beauty of wine, especially if it is augmenting a meal? If we are going to take the loving step of cooking for ourselves, I believe we should absolutely make the experience even better by enjoying a glass or two of wine as well.” I couldn’t have said it better myself.

Value for money? David Morrison at the Wine Gourd blog looks at the Wine Spectator’s annual top 100 list, which has few inexpensive wines, to find out if it offers value for money. The result? Mostly, though his analysis does rely on points: “yes, good value-for-money can be found in this Top 100 list — go for the highest-scoring wine at $20, or the cheapest wine at your favorite score.” The finding that most interests me is that the best price for value is around $20, since those are among the least expensive wines on the Spectator list. And, as Morrison notes, there is “some very poor value-for-money, but in those cases you are getting vinous excitement, instead.” I’ll settle for the value, thank you.

Winebits 637: Plastic wine bottles, Coronavirus wine humor, Utah liquor laws

plastic wine bottles

Yes, plastic wine bottles exist.

This week’s wine news: Is the plastic PET bottle the future of wine? Plus, Coronavirus wine humor and Utah may let residents bring wine into the state legally

Is plastic the future? One analyst, noting that most wine produced today is made in bulk and to drink immediately, says recycled PET is “a realistic alternative” to glass bottles. Emilie Steckenborn, writing for the Beverage Daily website, says the plastic bottles are much better than the traditional glass bottle – lighter, more cost effective to ship and store, and infinitely more environmentally friendly. In this, the piece is surprisingly frank about the inefficiencies of the traditional bottle, and she sounds more like a certain curmudgeon than a member of the Winestream Media.

Coronavirus wine? Let me apologize for this item first, but I couldn’t resist: A Dallas wine shop says it has “Coronavirus vaccine sold here: bubbly, white, red available.” As the article notes, it’s a refreshing change from the toilet paper hording stories that are dominating the news and even – dare we say – a reason to smile? Also, please note the difference between this and the hucksters and scam artists flooding the market with fake cures and testing kits.

Finally, Utah? Regular visitors here know the WC enjoys poking fun at Utah, whose liquor laws are some of the most restrictive – and silliest – in the country. Well, there may be one less reason to poke fun: the state is about to let the state’s residents join wine clubs and bring wine in from another state without committing a crime. The Salt Lake Tribune reports that the bill just needs the governor’s signature. Fortunately, the new law is very Utah – no home delivery for wine club members, who would have to pick the wine up at a liquor store and pay the state’s 88 percent markup in addition to the cost of the wine.

Winebits 636: Wine tariff updates, icewine

wine tariffThis week’s wine news: U.S. wine tariff update, which may include some good news. Plus, is this the beginning of the end of icewine?

Big tariff losses…: The Robb Report, addressing last fall’s 25 percent wine tariff, says “The resulting price hike has made many bottles simply too expensive for U.S. sellers to import. Now, with an abundance of wine bottles in reserve, French vintners are reportedly slashing prices to stay afloat.” The story doesn’t get much more specific than that, though it does cite the French wine industry’s continuing woes. Still, one of the smartest people in the wine business told me, after the tariffs went into effect, that this was possible. Wine can’t be stored like steel, to be sold when demand picks up. It needs to be sold every vintage, and if vintages start backing up, the only way to sell them is to cut prices. We shall see.

…but hope on the horizon? The Financial Times, the authoritative British business newspaper, says one possible Trump Administration response to the coronavirus might be slashing tariffs. The paper’s reasoning? That if the disease slows the world economy, it makes sense to remove the tariffs to cut prices to increase demand. The article speaks specifically about Chinese tariffs, but if it’s good enough for pork and soybeans, why not wine?

Too warm for icewine: Icewine is one of the wine world’s great treats – rare, expensive, and incredible to drink. Now, thanks to warmer winters in Germany, it may be going away. That’s because icewine is made by harvest frozen grapes on the coldest of winter mornings, and there haven’t been enough of those mornings this winter. The German wine trade group says there will be icewine vintage for 2019, and only one producer will make a tiny amount.

Winebits 635: Beard award semifinalists and some wine legal doings

Beard awardThis week’s wine news: Beard award semifinalists feature drink local, while three-tier wins a court victory and wine clubs lose

Beard award semifinalists: Seven wineries, including four regional producers, are among the semifinalists for the 2020 James Beard Award for outstanding beer, wine, or spirits producer. The three are some of the top Drink Local winemakers in the country: Texas’ Kim McPherson of McPherson Cellars; Vermont’s Deirdre Heekin of La Garagista Farm + Winery; New York’s Nancy Irelan and Mike Schnelle of Red Tail Ridge Winery; and Virginia’s Rutger de Vink, of RdV Vineyards. The Beard Awards are the restaurant business’ version of the Oscars, so this is a big deal. In addition, given the way the final voting often turns out, earning semifinalist honors is the equivalent of winning for someone not on the East Coast or in a major media market. The finalists will be announced March 25.

Score another for three-tier: A Mississippi court has ruled that out-of-state retailers can’t sell wine in that state, in a decision that left a couple of legal scholars scratching their heads. The decision itself isn’t surprising, given the way the three-tier system works to prevent an out of state retailer from doing that. What is odd, wrote the Alcohol Law Review, is that “this unanimous decision reverses the trial court’s decision. … This case served as a reminder of first year law school’s Civil Procedure class and examination of when personal jurisdiction kicks in. The opinion does not really address alcohol laws in depth.” But, as the blog’s liquor law expert has said many times, since when does three-tier have anything to do with alcohol law?

Score one for wine drinkers: The blog has written extensively about problems associated with third-party wine clubs – those not run by wineries. Now, a lawsuit has agreed with us.  Two national wine clubs have settled lawsuits alleging they broke California law by not notifying customers that their memberships would be renewed automatically. Direct Wines and Wine Awesomeness did not admit wrongdoing, but agreed to change their policy and pay $350,000 and $15,000, respectively, in penalties and costs. From now on, each will have tell a customer when their membership is being renewed, and can’t hide the policy in fine print or on an Internet link.

Do wine critics matter any more?

wine critics

“It’s good to know someone is still reading my stuff.”

Go figure: Some one-quarter of wine drinkers still say wine critics’ scores and reviews are highly influential

The wine world has Instagram influencers, Facebook groups, Twitter raves, and who knows what else. So where does a traditional wine critic fit into all of this in the second decade of the 21st century?

Almost where we did the last time I wrote about this, according to one recent survey. We’re not quite as important as store employees or friends and family, but we still matter, according to a January survey by Wine Opinions (with analysis by Lew Perdue at Wine Industry Insight). One quarter of wine drinkers say a 90-plus score from a “respected” critic is highly influential in wine purchase, while about one in five say a review on-line or in print is highly influential in making a purchase.

That compares to 42 percent for friends and family and 31 percent for store employees. Interestingly, tasting wine in the store ranked highest, at 60 percent, and second highest was “wine is from country or region I like,” at 45 percent. What makes those interesting? Talk to people who do store tastings, and they’ll tell you they often don’t sell that much wine. And that we buy wine from regions we know isn’t surprising; in fact, it’s one of wine’s great problems, that people won’t buy out of their comfort zones.

The other surprise? Price didn’t matter, coming in as only the seventh most influential. The question was phrased oddly, which may account for the result: “The wine is on sale for 10 percent off or more,”

And where did those Instagram influencers rank? The survey didn’t address them specifically, but this result speaks volumes for that approach to wine marketing. “Recommendation through an app” was just 8 percent, second lowest.

The survey results, not surprisingly, skewed significantly with age. Older men cared more about scores (which is why the preferences for scores didn’t bother me all that much). Meanwhile, younger wine drinkers cared more about recommendations from friends and family.

Update: Wine prices 2020

wine prices 2020Ignore the headlines — wine prices 2020 probably aren’t going anywhere

How can we have have excess supply and declining demand, and yet still see steady wine prices? Because this is the post-modern wine business.

Somehow, we’re at a point where the laws of economics don’t matter. Too many grapes and less consumer demand, as well as an uncertain economy thanks to trade wars, the U.S. election, and the coronavirus, should mean lower wine prices. We should see $15 wines cut to $12, $12 wines cut to $10, and so forth.

But not in this version of the wine business, no matter what the headlines say.

“Most people in the business haven’t a clue about very basic economic principles, such as supply and demand,” one mid-size California producer emailed me recently. “The $15 to $20 ‘sweet spot’ is not so sweet anymore.”

So what is going on here? Why is the wine business defying supply and demand?

First, thanks to consolidation, we have oligopoly pricing. That is, the producers, retailers, and wholesalers control such a large part of the market that they can afford to hold the line on prices. Prices may change, but they never change all that much or for all that long. One wine may be discounted, but then it’s replaced by another one, which is then replaced by another one. Case in point was a Dallas Kroger this week, when almost nothing was priced differently than normal — even previous vintage roses.

Second, we’re seeing the after-effect of premiumization combined with untenable cost structures. So many producers spent so much money establishing their brands at $15 or $20 or $25 that they can’t “afford” to lower prices. If they do, they will “ruin” their brands. In addition, production costs are so high for so many of these producers that lowering prices means they will sell at a loss, and then their bank won’t be happy.

So what will we see instead of consistently lower prices?

Lots of dumping and heavy discounting. Some of this has been going on for months, and it was one reason why Treasury Wine Estate’s stock tanked at the beginning of February. The company either threw the wine out or sold it at deep discounts, often through non-wine outlets. One Dallas dollar store was selling $8 and $10 Beringer supermarket wines for $2.99 and $3.99 at the beginning of the year. That’s the picture at the top of the post.

Also, new, less expensive one-off wines. This happened quite a bit during the recession, and it’s one way for a producer to protect a $25 brand. They’ll sell their wine to someone else, who bottles it under a different name for $10 or $12 or $15. I’ve seen this already, too. My local Aldi is selling a “reserve” pinot noir for $10. It’s almost certainly more expensive wine that has been relabeled.

So, in the end, don’t expect your local retailer to lower prices. That would make too much sense in a business that is not much connected to reality any more.