Toasting the 49ers "Appellation 49"

By Robert Haas

Just after Christmas, Jason and I had the fun and honor to be invited to pour Tablas Creek for guests at the last 49ers game of the season.  The sparkling new Levi's Stadium has built-in wine bars incorporated into their club boxes, and the team invites eight wineries each week to show their wines to the fans sitting in that section. We poured before the game and during the half, and were able to watch the 49ers win from one of the boxes, whose owners we'd met during the pouring.  Yes, it was a down year for the Niners, but still, what a treat!


49ers2014 wall

It is wonderful to see how the 49ers have built their connection to California's wine country, and how they celebrate it at the games.  The program started, in a small way, with an invitation to the owner's box at Candlestick Park on the occasion of their first home game in the fall of 2002.  We were thrilled that, way back then, Tablas Creek was the winery chosen to inaugurate the tradition.  Over the next decade, a different winery was chosen to present its wines at each subsequent game.

49ersOn that first occasion, my wife Barbara and I (right, with team owner Dr. John York) joined Jason and his wife Meghan on the trip.  We watched the game from the York family box and got to join a tour of the field where we watched for a few minutes from the sidelines.  I strongly remember Terrell Owens catching a pass and heading my way with terrifying speed and power.  I stepped way back.  And oh yes, by the way, we met other invitees Senator Diane Feinstein, chef Thomas Keller, Mayor Willie Brown, running back Roger Craig, and baseball Hall of Famer Orlando Cepeda who also dropped by.  Quite a day, and a pleasure to get to spend some time with the 49ers owner, John York.

Family at 49ers Game 2013Last year, the 49ers commemorated Candlestick Park's final season with a "greatest hits" recap of the wineries who'd been invited over the previous decade.  We were again honored to receive an invitation from Dr. York, and I made the trip up with Jason and Meghan, and their son Eli (right) to watch the team defeat the Arizona Cardinals.

Since the team's move to Levi's Stadium this year, the program has been expanded and acquired a name: Appellation 49. With eight wineries showing wines in the atrium at the club level, wineries get to meet several hundred fans at each game, and over the course of the season, owners of the boxes get to taste the wares of 80 different wineries.  If they like something, they can order it from their box. A portion of the proceeds go to the 49ers Foundation, which does great work in the Bay Area community year-round.  Different than before but still great fun, and probably more valuable promotion for us as a winery.

It's clear that this connection with the local wine community is something that the York family values and is looking to build. Any time they ask us to help with this particular bit of bridge-building, we're happy to oblige.

JCH and RZH with John York

Weekly Roundup for November 30th, 2014: Giving Thanks, Giving Back, and Getting Wet (Hopefully)

This Thanksgiving week, some of the things that most intrigued us in the world of wine do had to do with thanks (and giving) but also, as we look forward to a week of potentially signficant rain, at our drought and at a growing movement toward dry-farmed vineyards.  Finally, for our thought piece, I wanted to share a lyrical view of our beautiful Central Coast.  The highlights:

Giving Thanks

Giving Back

On Drought and Dry-Farming

  • At the beginning of November, I went up to San Francisco for an event co-sponsored by the Commonwealth Club and the Community Alliance with Family Farmers (CAFF).  It began with a panel discussion on the feasibility and benefits of dry-farming wine grapes and concluded with a walk-around tasting of dry-farmed wines (you can listen to the panel discussion here). With our current drought, I'm seeing renewed interest in the potential of dry-farming grapevines.  This has to be a good thing, on both quality and sustainability fronts (I've written about our own reasons for dry-farming) and it was great to see the Los Angeles Times write a good piece on this small but growing movement.
  • Also this week, we got some good news from the NOAA, which has updated their forecast for this winter and is now saying "above average rainfall is now predicted". Read more »
  • Finally, on the rain front, we're looking forward to what is forecast to be a very wet week.  It is being awaited with great anticipation by the entire Paso Robles wine community.

Vineyard Ass-ets

Cline donkeys

  • We were excited to learn this week that we're not the only winery with two donkeys on staff! On the Cline Cellars Facebook page we met Fancy (left) and Pudding (right).  If you don't follow fellow California Rhone pioneer Cline (home region: Carneros) on social media, you should; their posts are consistently among the cleverest in the world of wine. And, they have donkeys.

Food for Thought (Beverage for Thought?)

  • We'll conclude this week with a paean to the Central Coast, written by UK Native, Napa resident and Master of Wine student Clare Tooley.  In her piece "Saints, Rogues and Kerouac" she writes of Paso Robles: "Paso is colourful and rogue-ish. Wild still, definitely not tamed. In vogue right now but definitely carving its own path."  The whole piece is worth reading: beautifully written and, I thought, right on.  Read more »

Weekly Roundup November 9, 2014

by: Lauren Cross

We're excited to debut a new "weekly roundup" feature on the blog. As many of you know, we enjoy reading and sharing content on our various platforms: Facebook, Twitter, Instagram and Pinterest.  Each Sunday, we will be compiling our favorites from the last week, focusing on our friends in our community, as well as sometimes a thing or two we've come up with ourselves and posted elsewhere. Here is this week's collection of our favorite wine related media posts.  Cheers to another winederful week from Paso Robles wine country, and please let us know what you think! 


What a clever idea for a coffee table!



Good News

A huge congratulations to the entire Adelaida team for this achievement!



From TCV

We enjoyed the company of the Perrin and Haas families this week for our partner's meeting.  Just love Bob Haas' response in the comments of this post!



A great tool for sharpening your ability to detect corked wine.




 One of the funniest pins on pinterest ever!


From Twitter

We've been enjoying some truly thrilling sunsets here on the central coast this week!


The Enduring Effects of Sideways, 10 Years Later

SidewaysAlmost exactly ten years ago, on September 13th, 2004, the film Sideways debuted at the Toronto International Film Festival.  A month later, it made its US debut on four screens, and by the following spring this black comedy made for around $12 million had grossed an unlikely $71 million in the domestic box office, earned five Oscar nominations (including a "Best Adapted Screenplay" win for writers Alexander Paine and Jim Taylor) and provided a wide audience with their first experience of wine tourism.

In the couple of years after the movie's release, Santa Barbara's wine country was inundated with Sideways-loving tourists.  This customer bonanza was not an unadulterated positive; many of these visitors were less serious wine buyers than the pre-movie average, and some of the pre-movie regulars were sufficiently turned off by the crowds to explore other regions.  We saw many of these refugees in Paso Robles in 2005 and 2006, and were happy to introduce them to our wines.  These effects slowed in the late 2000s, and now the "as seen in Sideways" signs that remain outside a few Santa Ynez wineries seem a little wistful.  

Ten years after the film's release, we in the wine industry take many of the film's impacts on the American wine market for granted.  You don't hear many people talk about the "Sideways effect".  But I wanted to take a moment to look back at how dramatic and lasting the effects of Sideways have been -- even for those of us who were not at the movie's epicenter.  These include:

  • Steeper increases in American wine consumption.  In 2003, the American per capita consumption of wine (2.20 gallons per year) was essentially unchanged from what it had been two decades earlier.  Per capita consumption declined through the late 1980s and early 1990s before beginning a slow climb.  Between 1994 and 2004, per capita wine consumption in the United States increased an average of 2.7% per year.  In 2005, the year Sideways saw American theaters, it grew 3.5%: 30% larger than the average annual increase over the previous decade.  And that growth has continued essentially uninterrupted since then, through recession and recovery, to its 2012 total of 2.73 gallons per resident.
  • Increases in prices of California wine.  In 2004, the average case of American wine sold for $68.30, a figure nearly itentical over the previous five years.  In 2005, that average price jumped 8% to $73.60.  It jumped another 6.5% (to $78.38) the next year, and today sits at $89.44, despite sales volumes 22% higher today than 2003.  Put another way, over the last decade, the quantity of California wine sold in the United States has increased 22% and the price per case has increased 31%.  Taken together, the value of California wine sold domestically has increased some 60% in the last decade.
  • Rapid development of California's (and America's) tasting room culture.  Sideways, despite the misanthropic tendencies of its male leads, made it cool to go out and visit wineries.  This was not happening in a vacuum, and was part of a longer trend, but I do think it played an important additional role.  Industry-wide data about tasting room visits is spotty and unreliable.  But at Tablas Creek, we saw a staggering increase in our traffic in 2005, which increased by more than 6000 visitors over the 9200 we saw in 2004 (an increase of 70%).  Yes, we were in a period of explosive growth at Tablas Creek and in Paso Robles, but the next year, by comparison, with all the same factors in place, we saw an increase of 4500 (an increase of 29%).  That 6000 customer increase is our largest in absolute numbers in our history: larger even than the increase in 2003, our first full year with our tasting room open.  And this increase in traffic led to increased sales, which set us up for our first-ever profitable year in 2006.  Would our traffic have increased in 2005 had Sideways not come out?  Of course.  Would it have increased by 6000?  It seems unlikely. 
  • Explosive growth in small wineries.  In the decade since 2003, California has seen the number of bonded wineries grow 119%, from 1870 to 4100.  Most of these wineries are small; wine production in America has grown over the same period by just 22%, which means that the average California winery now is half the size it was in 2003.  These small wineries nearly all subsist on direct sales through their tasting rooms rather than the three-tier system.  So, in that way, it is in part thanks to Sideways that many of these wineries have been able to thrive.  But I would submit that in its romantic depictions of California wine culture and its focus on the beauty of California's wine country, the idea of becoming a part of this wine community gained appeal.
  • Expansion of national recognition of Central Coast.  Paso Robles had only a cameo in Sideways, which was set in Santa Barbara's wine country.  But nevertheless, the fact that the movie was set in the Central Coast rather than in the better-known Napa and Sonoma valleys played a significant role in helping the American wine consuming public understand that there was elite wine being made here.  I remember, in the early 2000's, going out to sell Tablas Creek and having to explain with some frequency that it wasn't in Napa, but was instead in the Central Coast, and then what and where the Central Coast was.  When Sideways came out, these conversations were nearly all simplified into "oh, that's Sideways country ... no, not quite, the next region north ... oh, OK". And in the last five years, I've barely had to have this conversation.  Of course, Sideways was not the only source of exposure for the Central Coast in the mid-2000s; the area received loads of attention from the wine press, most notably Robert Parker.  But voices like Parker's, influential though they are, reach some tens of thousands of readers, mostly already wine-savvy.  Sideways reached millions.
  • The rise of Pinot Noir and the fall of Merlot.  In one of the movie's most famous scenes, Miles uses Merlot as a proxy for an uneducated drinker's red wine of choice.  This line sent American sales of Merlot into a tailspin from which they still haven't recovered: I had a wine buyer ask me just last week when I thought Merlot would recover from its Sideways-inflicted wounds.  At the same time, Pinot Noir, which Sideways exalts as the intelligent wine lover's drink of choice, saw its fortunes skyrocket.  An academic study by researchers at Sonoma State University and published in 2009 in the Journal of Wine Economics demonstrates the power of these effects, although it concludes that "the positive impact on Pinot Noir appears greater than the negative impact on Merlot", especially higher-end Merlot, which is in keeping with the general increased interest in higher-end wines after the movie's release.

It doesn't seem to me like any of these trends (except maybe the antipathy toward Merlot, given America's love for an underdog) are likely to regress any time soon.  America has become the largest wine-consuming country in the world, and our relatively slight per capita consumption (compared to countries like France and Italy, at least) gives us room to grow.  What's more, the fact that much of the growth California's wine community seen has come in the high-end, winery-direct segment suggests that future growth will support the development of many more smaller, higher-end wineries.

Would this have happened without Sideways?  Perhaps.  But I think all of us involved in making, selling, or drinking California wine should plan on raising a glass this Saturday to the success of this quirky movie.  And if you're feeling subversive, go ahead and make it a Merlot.

Are direct-to-consumer sales really failing to lift the wine industry?

Last month I was surprised to read a headline on the industry portal Wine Industry Network titled Direct to Consumer Sales Fails to Lift the Wine Industry.  As a winery whose business model works only because of direct sales, I was curious to learn more about what the author Brian Rosen, consultant and former proprietor of Sam's Wine & Spirits, meant by the headline.  I posted my thoughts on Twitter:

Direct sales tweets 1

After which, he and I shot a few tweets back and forth, elaborating our positions:

Direct sales tweets 2

Brian's article was particularly interesting to me because it plays against the dominant narrative right now, that direct sales are on an inexorable rise, and that wineries should do everything that they can to make sure they're well positioned in this channel. What's more, that dominant narrative certainly jibes with our own experience here at Tablas Creek.  When we started, we believed that we would sell all our production through the wholesale channel.  Between the reputation of Beaucastel and the marketing muscle of Vineyard Brands, we thought that we could focus on grapegrowing and winemaking and the rest would take care of itself.

Five years of experience taught us that our initial expectations were unrealistic, and we made the decision in 2002 to take a much more active role in our marketing and sales.  We opened our tasting room, started our wine club, began participating in a wider array of events, worked harder and more closely with our distributor partners, and started participating more consistently in the promotional efforts of the regional and varietal organizations to which we belonged.  Little by little, we clawed our way out of what was a dangerous period when we were bleeding cash each year and became profitable.

In the steepest period of this climb, where we went from selling just under 4000 cases of wine in 2001 (all in wholesale) to nearly 20,000 cases of wine in 2007 (split between wholesale and direct) we saw significant growth in all our channels.  Our wholesale sales increased more than 250% over that period, to some 11,000 cases.  Our direct sales grew from nothing to some 9,000 cases.  But each year, as we looked at our financial reports, it became clear that our growing wholesale sales, far from driving our profitability, were only about a 50/50 bet to cover the cost of selling our wine in this channel.  As a company, all the profit that hit our bottom line came from the direct sales.

The greater profitability of direct sales should be intuitive, but it's likely even more important to wineries than you think.  Most wineries aim to achieve the same price out in the wholesale market and in their direct sales.  For product destined for the wholesale market, wineries back out the expected wholesaler and retailer markups, leading to a wholesale sell price half of full retail price.  Given that the cost of producing a wine is likely half or more of the wholesale sell price, the profit of selling a case direct isn't double that of selling it in the wholesale market; it is several times greater.  It is this disparity that means that a winery can offer good discounts to its wine club members and still come out far ahead. 

Further increasing the relative attractiveness of direct sales is that most wineries find, as we have, that the mix they sell direct skews toward their higher-end wines, while the mix that sells in wholesale skews toward wines that are less expensive, both because the wholesale market is naturally more price-competitive and because of the practical limit on wholesale price for wines that restaurants can pour by the glass.  When we did the math we realized that 75% of our revenue was coming from the 45% of our wine we sold direct, while just 25% of our revenue came from the 55% of the wine sold through the wholesale channel.  In simpler terms, we sold our average direct case for three and a half times what we sold our average wholesale case for.

OK, that was a lot of background.  But it gives you what you need to understand why I took objection when I read in Brian's piece, "I can tell you with 100% certainty that the DTC movement is not what you think it is and will not provide the added revenue that wineries around the globe are seeking."

The crucial question, and one that Brian himself addresses later in the article, is which wineries will benefit from direct-to-consumer sales, and which won't.  A winery's direct sales is limited naturally by its cachet, its tasting room traffic, and its perception of scarcity.  Even with high traffic, high cachet, and the perception of scarcity, there are only a handful of wineries selling more than 25,000 cases direct.  And most wineries' direct customers are far fewer than that; even established wineries I speak to around Paso Robles typically count a few thousand wine club members.  So,  imagine the challenge that faces a winery making a million cases a year, trying to have direct sales matter on the bottom line.  Even if they are able to build up to 25,000 direct cases per year (likely difficult given the challenge of creating the perception of scarcity) and able to sell those direct cases for 3.5 times what they sold their wholesale cases for, the direct sales channel would account for just 8.2% of the company's revenue.

Yet direct-to-consumer wine sales have grown to a $1.58 billion dollar industry: nearly the size of the total of wine sales to restaurants (some $1.8 billion last year).  It's still dwarfed by the $7.34 billion in retail wine sales, but it's growing.  So, is DTC important to wineries, or not?  It depends on your size.  Most wineries are small; by the Wine institute's estimate, 90% of wineries produce fewer than 50,000 cases, with three-quarters producing fewer than 5,000 cases.  Every one of those wineries should be looking to consumer-direct sales to make their business viable.  But most of the wine produced in America is produced by large wineries; estimates are that the three largest wine conglomerates produce half the wine sold in America each year.  And the twenty largest firms account for 90% of the market. For them, as the math showed above, direct sales are not going to make a significant difference in profitability.

If you're the average bottle of American wine, produced by one of the big companies in lots of tens or hundreds of thousands of cases, you're not likely looking at a future that involves transport via UPS or FedEx.  But if you're an average winery, producing a few thousand cases of wine a year, you should be focusing on selling a high percentage of however many bottles you produce directly.

Three final notes.  First, why, if they'll never notice it on their bottom lines, do the big wine companies still have tasting rooms and wine clubs?  I think (and based on the effort put into their direct sales by many of these large wineries, they agree) that it's valuable marketing: each direct relationship that a winery maintains is going to have a positive ripple effect as that customer communicates his or her enthusiasm to friends, and will support the work of distribution in a way similar to -- yet more profitable than -- advertising.

Second, you may be wondering why a relatively small winery like us bothers with wholesale sales at all.  Like a large winery with its direct sales, we think of it as powerful marketing, for which we get some revenue to offset the costs.  Having wine in great restaurants and wine shops means that customers don't have to come to us to discover us, and we have literally thousands of wine-savvy professionals around the country telling our story.  If we can get all this at something close to break-even, it's a big asset.

And third, if 90%+ of wineries rely on consumer-direct sales for their livelihood, why did Brian say that it won't provide the revenue wineries are seeking?  I think that there are two reasons.  First, Brian comes from a retail perspective.  The regulatory environment still makes it much more difficult for retailers to ship around the country than it does wineries.  And retailers are all competing to sell wines their competitors can buy at more or less the same price they can.  This level playing field, the regulatory patchwork, and the high cost of expedited shipping on a perishable, heavy item like a bottle of wine all combine to shield smaller local retailers from competition.  Will this equilibrium last forever?  Probably not. Given that Amazon is on their third foray into trying to sell wine, the e-commerce giants must see some potential here.  And here is an important area that I agree with Brian: whether you're a retailer or a supplier, Amazon and its ilk are likely to be neither savior nor apocalypse in the near term.

But all that's beside the point to a small or medium-size winery.  If that's who you are, you likely already know that direct-to-consumer sales isn't just your future.  It's your present, too.

Game Theory, the Prisoner's Dilemma and... Winery Membership Organizations, Part 2: Measuring the Value of Membership

Last month, I wrote a blog piece about how game theory, and specifically the classic example of the prisoner's dilemma, relates to participation in winery membership organizations.  If you haven't read part 1, this post will make more sense if you do so now.

OK, welcome back.

In this piece I'm going to tackle the first of two questions part 1 left unanswered: how to measure the value created by being a member of a winery organization, and whether it's worth the (often considerable) expense.  I'll tackle the second question (how game theory suggests an organization or a community respond to wineries who opt out of the communal marketing) in part 3.

Membership in a winery organization is typically not cheap.  The membership page on the Paso Robles Wine Country Alliance (PRWCA, for short) Web site lists membership prices from $675 (for wineries producing fewer than 250 cases) to $17,500 (for wineries producing over 40,000 cases) with a range of gradations in between.  In many cases, this membership is the single largest annual marketing expense for a winery member.  Is it worth it?

There are many ways to look at the benefits of membership, some of which will be applicable to some brands and not others, and some of which are more easily measurable than others.  I'll focus on a few principal tangible benefits in this piece, but want briefly to address some of the benefits of membership that I think are valuable but hard to quantify.  They include:

  • Participating in the branding and market awareness of your region.  This is the central goal of most marketing organizations, and yet it is both hard to quantify the value of success and impossible to limit this value-add to members.  If a campaign is successful, each bottle of wine you produce is a little easier to sell, as there is a larger pool of people out there potentially interested in purchasing your product.  But do they discriminate between wineries who are members of the organization and those who are not?  Unlikely.  Yet most wineries and growers would list this as the single most important goal of a membership organization.
  • Having representation at the many intersections of the wine community and state and local government.  Whether it's building, tasting room, or event permits; water rights; labor supply; or regulation, one role of a membership organization is to represent its members in front of local government.  Elected representatives are much more likely to hear the aggregated voice of an organization that represents hundreds of businesses and thousands of voters than they are to listen to any one individual, and it takes an organization to have the resources to attend meetings and stay informed.  A winery may go years without having a regulatory issue threaten its business, but when one does, its impact can be enormous, and having a say in the outcome invaluable.
  • Being a part of a community of ideas. There is significant value in rubbing shoulders with your peers as they navigate the same challenges that you face.  You share (and borrow) ideas both directly from other members and through the educational events organized by the membership organization, and it only takes a few good ideas to make a measurable difference in your bottom line.  The PRWCA has monthly meetings for tasting room managers as well as regular seminars for growers and winemakers.  Could you replicate these by paying for the ones that you want, or by spending lots of time with your neighbors?  To a significant extent, yes.  But that process is a lot easier when you're a part of a group with the mission to facilitate this exchange.

All of the above are valuable, but I don't actually think you need to get value out of the intangibles in order to justify the cost of membership.  In fact, let's just look at one benefit: the value of the additional people that membership brings into a tasting room. 

Wineries should know what an average customer who walks through their doors is worth to them. This will vary from winery to winery and depend on the winery’s average sale (AS), the percentage of walk-in customers who sign up for a wine club (CP), the average purchase per year of a wine club member (AP), the average duration in years of a wine club membership (LM) and the winery's profit margin (PM). The calculation goes:

Average Value = (AS + (CP * AP * LM)) * PM

For us, that figure is about $130. We’re one of the larger wineries in our area, so we pay a relatively high total in dues, but even at our size, we end up ahead if membership brings at least another 125 customers per year into our tasting room. That's 11 customers per month.

Once I went to the trouble of calculating the value of each additional customer visit, the calculus of whether or not membership paid for itself got a lot simpler.  Do we get 11 extra customer per month because of our membership?  I'd say yes, many times over.  Here's how: 

Bringing customers into the area. 
The ongoing marketing and advertising campaign, the organization-sponsored events, and the media outreach that the group does are all undertaken with the goal of bringing people into the area each year.  Once the people have booked their trip, they may or may not further consult the PRWCA for guidance on where to go.  So, the visits that these customers make in the area will be distributed among the various wineries, members and not.

How many extra people does the work of a group like the PRWCA bring into the area?  It's a tricky question, as customers typically have multiple reasons that they make any particular buying or travel decision.  But I would suspect that it's at a minimum in the tens of thousands per year (the festivals alone attract over 10,000) and likely in six figures.  (For why I think it's that high, see the "But does it work?" section below.)

If we assume that each wine tourist would visit an average of 5 tasting rooms per Paso Robles trip, even the minimum figure indicates 50,000 tasting room visits created by the PRWCA's outreach.  Divide this up among 200 local tasting rooms, and you get a figure of 250 visits per year per winery.  That's already double the number that we would need to justify the membership outlay.  If, as I suspect, the visit total is significantly higher than 10,000, the extra is just gravy.

Now, does a winery need to be a member to reap these benefits?  No.  But it's not just a community-minded thing to do.  As as the prisoner's dilemma example in part 1 showed, the individual wineries in the region benefit more from pooling their resources in a combined marketing campaign than they would from spending their same money individually.  

Directing the customers that they bring (and others) into the tasting rooms of members.
There is also a direct result on traffic due to a member's inclusion on the map (below, or available in PDF here) prepared by the PRWCA, printed by the hundreds of thousands each year, and also distributed electronically to the 50,000 monthly visitors to the site.  That's a lot of potential customers who see you if you're a member, and don't see you if you aren't. How many of our customers have to find us through one of the PRWCA touring tools to make it worth the investment? Less than 1%.


Remember that we need 11 extra customers per month to pay for our membership.  We average 2500 visitors per month, so 11 is four tenths of one percent of our traffic. It seems impossible that being on the map and on the Web site where hundreds of thousands of customers are starting their research isn't going to bring us that tiny marginal increase in our customer base; one or two groups per week is enough.  For a smaller winery -- say one at the 3,000 case level who's paying about $3,000 in annual dues -- 24 additional customers per year does the trick.  That's one couple a month.

But does it work?
I can almost hear the reader question hovering in the background: "but how do you measure if the outreach really does drive traffic?"  I'm happy you asked.

Last year, the PRWCA started an online campaign, which ran from August through October and included targeted advertising on such high-traffic sites as Pandora, Centro, Snooth, Eater, Facebook, Twitter, Youtube and Google.  These various ad buys (coordinated by an expert digital advertising agency) produced nearly 40,000,000 impressions, and big increases in the traffic on and the PRWCA's various social media sites.  I'd been aware that our tasting room traffic had also spiked last fall, but hadn't particularly tied the two things together.  As a baseline for comparison, between January 2013 and July 2013 our tasting room traffic was up 2.7%.  During the August-October PRWCA ad campaign, our traffic was up 13.2%.  After the campaign ended, it was down 0.6%.  Now, this is not conclusive.  There could have been a number of other reasons that our traffic was up then (including that we had a run of good press, and that the tasting room was doing, I thought, a particularly good job).  Or it could have been a statistical blip.  But, it encouraged me to pay attention to the difference in 2014 between our traffic when the PRWCA was advertising, and when it wasn't.  So far this year, the results have been similarly suggestive. 

In 2014, the PRWCA has made two advertising pushes (around March's Vintage Paso/Zinfandel event and May's Paso Robles Wine Festival) that were separated by so little time that it seems likely that their impact would have run together.  Looking at the period before that advertising started (1/1/14-2/17/14) our traffic was down 2%.  Between the beginning of the first campaign and the end of the second (2/18/14-5/26/14) our traffic was up 8.2%.  And since the campaign ended (granted, it's only been five weeks) our traffic has been down 3%.  That's starting to be a useful number of data points.1 

The roughly 10% increase in our traffic that we've seen in the periods where the PRWCA has been advertising amounts to an extra 200 customers per month. That's 18 times the number of extra monthly customers we need to break even on membership.

Does a winery who is not a member get many of these benefits in traffic?  Of course.  That's the free-rider challenge.  But if they lose even a tenth of that extra traffic because they're not on the map, or not on the Web site where the customers are doing their research, they're coming out behind. 

Other Direct Benefits: Trade and Media Outreach
Of course, wineries do not live by tasting room traffic alone, and a region's or winery's reputation can be built faster with help from the trade and media.  Outreach to these groups is another function of a membership organization.  Let's look at media outreach first.  I'm always skeptical of documents that point to "ad equivalency value" of editorial pieces, but anyone who has investigated the cost of an advertising campaign knows it's staggering: placing a one-page ad in any of the big food and wine magazines is more expensive than annual membership in the PRWCA for our largest wineries.  And the value of advertising is in repetition and duration, which puts it out of reach for any but the largest wineries.  This leaves smaller wineries to work to get editorial coverage, an effort made much easier with exposure to the dozens of writers that a group like the PRWCA brings into town each year.  Is this something that every winery will get equally?  Of course not.  The writers don't write stories spoon-fed to them, and most come to town with agendas of their own.  But it only takes one success to reach an ad equivalency of equal to or greater value than the membership cost.

There are similar equations to calculate in the trade outreach that a marketing group does, in trade education, in buyers tours -- where the trade is brought to the region -- and in road shows, where the region brings itself to major markets and invites trade to see what's new.  What is the value of a by-the-glass placement at a high-profile restaurant in Indianapolis (one concrete result for Tablas Creek from last year's buyer's tour)?  Or an agreement with a new distributor to represent your wines in a market you're looking to break into?  Or a feature in the newsletter of a retailer?  These, too, are occasional but powerful additions to a winery's business.  Of course, these benefits aren't of much value if a winery is only selling out of their cellar door, but if that's the case, they probably get all the benefit they need from the additions to their tasting room traffic.  In fact, it's the added work that an organization has to do to reach the trade, and the disproportionate impact that has on larger wineries, that is the best justification in my opinion for the sliding scale of winery dues.

Both trade and media outreach are benefits that are only available to members, as non-members aren't included in visit itineraries or group events.

In a comment in a recent piece on the Hoot N Annie blog, Gary Eberle says that membership in the PRWCA is "the cheapest investment a winery can make in direct to consumer sales".  And I agree... whatever your size, if you have a tasting room, being a member of the organization pays for itself many times over. 

When I moved out to Paso Robles, I thought that membership in the PRWCA was something of a civic duty: an investment a winery did for the long-term growth of the area.  I still think that's true.  But I think it's equally true that membership brings direct returns to the winery many times greater than the investment.  Good for the region, and for our bottom line?  Why yes, please sign me up.

How do we get back the handful of wineries that drop out each year?  And how do we minimize the number that we lose?  Stick around for part 3.

1For the stats geeks out there, I had my wife dust off her graduate statistics work and run a t-test on the changes in our weekly traffic data since the beginning of last year.  Of the 76 weekly data points, there were 30 weeks where the PRWCA's ad campaign was going on and 46 weeks where it wasn't.  With that few data points, I would have been surprised had the data come out as statistically significant. It didn't, but the p-value (the measure of significance) was .189, indicating that there was a less than 20% probability that the difference between the result sets was due to chance.

Why we haven't offered red-only and white-only options for wine club members... and why we're doing it now

We're not big on change.  OK, maybe that's me.  I'm not big on change.  So the fact that we're making what amounts to our first major change to our VINsider Wine Club since we introduced it in 2002 is significant.  After several years of internal debate, we've decided to offer VINsider members not only our classic mixed shipment of wines, but also red-only and white-only options starting this fall.

I know; it shouldn't be this big a deal.  Most wineries have offered these options for years.  But I've always been reluctant, for a couple of reasons. 

  • A "show of confidence" in our whites. I think that we, more than most wineries, focus equally on our reds and whites, and that offering only a mixed-color shipments is in effect a vote of confidence in the breadth of our options, particularly the whites.
  • A reluctance to give up control.  Growing grapes in an environment like Paso Robles, with its regular cycles of drought and its frequent spring frosts, means that our own production can vary widely from vintage to vintage, and it's been great knowing that we're able to -- using a real-world example -- offer an extra red from 2010 in our fall 2012 and spring 2013 shipments shipment because our whites from 2011 were short. 
  • We already have our VINdependent Wine Club, which should fill this need. Our VINdependent Wine Club allows members total flexibility to buy whatever they want, with a minimum 6-bottle annual commitment (albeit at a somewhat lower discount). And it's been very successful.  Last year, we signed up nearly 1000 members to this club, and have roughly 2000 active members.
  • I was worried about breadth. I'm always concerned that we have a compelling selection of wines for our club members, and it's already a challenge making 11 different wines a year in 500-case quantities (11 rather than 12 because we include 2 bottles of the newest vintage of Esprit red each fall).  For red-only and white-only clubs, doubling the quantity of a shipment with 3 reds is an option (as you see below) but what do you do for a white-only shipment when your standard shipment has 4 reds and 2 whites, as we will this fall?  Including 3 bottles of each of just 2 wines didn't seem to me like a particularly exciting thing to do.

So why are we doing it now?  A couple of reasons. 

  • Listening to our customers.  Every few years we survey the VINsiders who have canceled their membership, trying to probe on how we can do better.  In general, the survey responses are gratifying; nearly all cancel because of external circumstances: they moved to a non-shipping state, or they had a personal or professional setback that required them to cut back on their discretionary purchases, or they had health issues that required a change in lifestyle.  Most of these say they look forward to rejoining when they are able, and our data supports that: of the roughly 1600 new registrations we received last year for our VINsider Wine Club, nearly 10% (137) were previous members.  But there is a consistent minority in these surveys who say that they just don't drink either whites or reds, and it was a burden for them to have to pay for the color of wines they don't enjoy.  And I get that.  I happen to love both reds and whites, and probably drink both colors more or less equally, depending on what I'm eating at the time, but I know not everyone is the same.
  • We have more variety to offer now.  We made a conscious choice in the last vintage to make a little less of our core blends, particularly the Cotes de Tablas, and a little more of our estate varietal and small-production wines, so as to have more -- and more interesting -- selections to send to our club members and to show to the visitors who come out to our tasting room.  This change gives us options we didn't have before.
  • We realized that the VINdependent Wine Club was (compared to the VINsider Club) a lot of work.  This club, which we created about 5 years ago to satisfy customers who were excited about Tablas Creek but who didn't fit, for whatever reason, into the VINsider Club, is to my knowledge the only one of its kind in California.  As long as VINdependent members buy 6 bottles at any point in the calendar year, they satisfy their annual commitment and don't receive a prepackaged shipment.  They can choose those 6 bottles however they want... some (probably the largest segment, around one-third) only buy reds, or whites.  Others just buy our flagship wines.  Others want a smaller commitment, or live in a non-shipping state but visit Paso Robles once a year, or just don't want anyone else to choose their selection.  But, as the end of the year approaches, because we don't make automatic shipments, there is always a portion (typically around 30%) of our roughly 2000 VINdependents who haven't made their annual purchase yet, and in some cases may not have purchased since early the previous year.  A lot can happen in 18 months, and we spend much of December emailing and calling them to ascertain what they'd like.  Some we're never able to get ahold of, which has made the annual cancellation rate among our VINdependents about 50% higher than that of our VINsider Club.  If we can take that red-only and white-only customers -- most of whom only signed up for the VINdependent club because we didn't have another red-only or white-only club when they visited -- and bring them into our VINsider Club, that seems compelling.  Everyone wins: members get a better discount and more convenience, while we sell a little more wine, more predictably, and retain our members at a higher rate.

Without further ado, I'm pleased to present to you our inaugural red-only and white-only shipments.  The red-only includes 2 bottles each of 2012 Esprit de Tablas, 2012 En Gobelet, and 2012 Grenache:


For the white-only, we have 2 bottles of the 2012 Esprit de Tablas Blanc, 2 bottles of the 2013 Viognier, 1 bottle of the 2013 Vermentino and 1 bottle of the 2013 Picpoul Blanc:


And, of course, our classic mix, with 2 bottles of the 2012 Esprit de Tablas, and 1 bottle each of the 2012 En Gobelet, 2012 Grenache, 2012 Esprit de Tablas Blanc, and 2013 Vermentino:


We announced this change to our VINsiders via email about two weeks ago, and it has been interesting -- and gratifying, because it suggest that most of our VINsiders are happy with the mix we're offering -- to see that the number who have switched to one of the new options has been relatively low.  In this initial period (granted, only two weeks, but we typically see most of the response to an email within that period) we've seen 83 VINsiders switch, or roughly 1.5% of our membership.  In the tasting room, however, we've seen a higher percentage take advantage of these new options: 50 of the 355 new VINsiders (14%) have elected for red-only or white-only over the initial eight-week period we've offered these options.  This discrepancy is probably not surprising; while some of the new red-only and white-only signups would probably have signed up anyway, most would likely have either opted for our VINdependent Club or not have signed up at all.

As for proportion of red-only and white-only, it's been maybe even a little more lopsided than we would have predicted, with 115 (86%) opting for red-only and 18 (14%) opting for white-only.  I'll be interested to see whether these numbers will balance out at all; my suspicion is that they will, at least slightly, given that so far 18% of the new registrants have opted for white-only, while just 11% of those who switched from our existing members did so.

Finally, a little housekeeping, for anyone reading who wants to make a change. Current VINsider Club members can select red-only or white-only options on the VINsider Update Form, and prospective new members can choose their preferred color mix when they register on the VINsider Sign-Up Form.

Our crazy state alcohol laws: a farce in nine acts

You probably don't need me to tell you our alcohol laws are often crazy. But, well, our alcohol laws are crazy, particularly if you look at the state and local level.  The national level, for what little it has to do with alcohol, tends to be positive, like the Granholm v. Heald decision that helped reduce protectionism and create a more level playing field for American wineries.  State alcohol laws shelter behind the 21st Amendment's protection -- written in the aftermath of prohibition -- that gives them broad leeway to write laws to suit their local mores about alcohol.  Of course, that protection, which was intended to allow states or counties to remain alcohol-free, has allowed powerful constituencies to write protections for themselves into their state's alcohol legislation. The results can be frustrating, infuriating, unexpected and even funny.  Here are a few favorites:

  • Minimum markup laws.  In Ohio, retailers and wholesalers are required by law to mark up wine a minimum amount: 33% at the wholesale level, and either 40% (on cases) or 50% (on individual bottles) at retail.  Written into the law is a remarkable justification: "to prevent abuses caused by the disorderly and unregulated sale of wine ... prevent aggressive sales practices that improperly stimulate purchase and consumption ... discourage intemperate consumption of alcoholic beverages ... eliminate discriminatory sales practices that threaten the survival of wholesale distributors and retail permit holders". The admission at the end is breathtakingly honest: that "the survival of wholesale distributors and retail permit holders" is a goal of the legislation.  Typically, price competition -- the foundation of the capitalist system -- is protected, not labeled a "discriminatory sales practice".
  • Price posting. Many states require that wine wholesalers post the price at which they're offering their products, and then enforce with varying degrees of rigor that no customer is given preferential treatment. In New York, for example, you are required to post the price that any licensee will pay for your wines.  You are allowed (expected) to offer a better price if someone buys 2 or 3 or 5 cases than if they buy just one. In Oregon, wholesalers are required to post prices per bottle, and are not allowed to offer discounts on quantity (or to charge extra to deliver purchases of just a few bottles).  On the other hand, they're also not allowed to extend credit, so they receive payment at the time of delivery.  That helps with the cash flow problems created by all the tiny deliveries!
  • Franchise laws.  In some twenty states (AR, CT, DE, GA, ID, KS, MA, ME, MI, MO, MT, NC, NM, NJ, NV, OH, TN, VA, VT, and WI) once you've chosen a distributor to represent you, you cannot leave that distributor and move to another even if they perform badly, lose their key personnel, or are purchased by another firm. There are in some cases exceptions to these franchise laws -- or review boards to which you can appeal with cause -- but in every case, it tilts the balance of the playing field even further toward the state-licensed distributor.  I wrote about this at length last year in the article the costs of state alcohol franchise laws.
  • The Johnstown Flood Tax.  In Pennsylvania, which sells all its wine and liquor through state-run stores, all alcohol sales are assessed an 18% tax earmarked to pay for repairs from the Johnstown Flood.  Which happened in 1936.
  • Wet, dry and damp counties.  In Texas, like much of the south and midwest, there are counties that are "wet", where alcohol may be sold.  There are counties that are "dry", where it may not be sold.  But there are also quite a few counties where wine may only be sold if it is 14% alcohol or less.  I remember doing a presentation to our sales team there and having many of the reps making notes on which of our wines they could sell, and which they couldn't because those wines were on the wrong side of the 14% law.
  • State control.  In Wyoming, you are not allowed to sell a wine without being with a state-licensed broker.  And by sell, I mean talk about.  You aren't really selling the wine anyway; the state of Wyoming is the only licensed wholesaler.  But their job pretty much stops at warehousing and delivery.  If you want to help convince the local retailers and restaurants that they should ask the state of Wyoming to deliver your wine, you'd better be with someone with a license.  Same thing in a few other states.  Want to pour wine at a festival in Maine?  You'd better get the state license.
  • Direct shipping protectionism.  The arcane barriers to direct shipping, nearly all erected to protect wholesalers but couched in language about encouraging responsible alcohol consumption or ensuring the collection of tax revenue, could fill a post by themselves.  There are still roughly a dozen states that effectively prohibit all wine being shipped in, but (like with dry counties) that's a choice. The ones that get me are the inexplicable ones, like Maine not allowing us to ship half-bottles there (minimum size: 750ml). Or states like Rhode Island, South Dakota, Arizona and Delaware that allow us to ship wine if the customer makes an in-person purchase here, but not if they pick up their phone and call us, or want to order online.  Or those with bizarre or minimal limits per month or year, like South Dakota's limit of 5 bottles per shipment, Texas's limit of 46 bottles per individual per calendar month, or Wyoming's limit of 2 cases per household per year.  Or (and this starts to go from ridiculous to serious) those with capacity caps, the distributor lobby's wedge issue of choice at the moment. Arizona decided that wineries that produce fewer than 20,000 gallons per year -- conveniently, just above the size of Arizona's largest winery -- can ship to consumers, while larger wineries like us can't. These encroachments and others like them will get increasingly onerous unless people stand up. Free the Grapes is a great place to start.
  • Sampling restrictions.  In Vermont, you are not allowed to sample multiple accounts on a single bottle of wine.  In fact, you are not allowed to bring a sample of wine into a licensed establishment.  If you, as a winery or distributor representative, want to show a wine to an account, you have to convince the account to buy the wine from the warehouse, then you have to buy it from the establishment, open it and taste it with the proprietor, and then repeat the same process at each stop in your work day.  You can imagine how well this works.
  • Massachusetts.  Finally, we'll devote a paragraph to the Commonwealth of Massachusetts, which passed a direct shipping law so obviously anticompetitive -- the sponsors explained in the legislature, during the debate about the law that the law's limits were set so as to allow all the in-state wineries to ship to consumers while prohibiting as many out-of-state wineries as possible -- that a federal court declared it unconstitutional. Of course, this declaration was moot, because the law also contained a clause making the common carrier (think UPS or FedEx) liable if they delivered a shipment to a consumer in excess of the 26 cases/household/year aggregate limit.  Think about this.  The carrier is supposed to know whether or not this customer has bought more than the aggregate limit already that year, that could have been delivered by another carrier.  Even before the law was invalidated, both UPS and FedEx announced that they wouldn't accept any shipment bound for the state, and now, four years later, nothing has changed, though there's a glimmer of hope, as the Massachusetts House of Representatives passed a budget that includes reasonable wine shipping provisions.  It's now awaiting action at the state Senate.  If you live there, or know any wine lovers who do, there's a template at Free the Grapes that will help you ask them to move it forward.

Perhaps the most surprising thing from my perspective is the degree to which the restaurants, retailers and consumers in these different states accept the status quo.  Nearly all of these laws enrich some entrenched interest at the expense of the consumer.  Wineries, restaurants and retailers are often collateral damage.  As much fun as this craziness can be, I, for one, would like to order a little sanity.  But I'm not holding my breath.

Game Theory, the Prisoner's Dilemma and... Winery Membership Organizations, Part 1

Game theory describes a branch of science at the intersection of economics, psychology and mathematics which explores models of interaction between rational actors, seeking to explain why and when these actors (be they individuals, companies or even nations) will choose to cooperate or to betray each other.  Many of these games are iterative, a fancy way of saying that they happen again and again, like many actions in life, where the actors can learn from their previous actions and the previous actions of their competitors.

One of the classic examples of game theory is the prisoner's dilemma.  Imagine the situation where two co-conspirators are arrested on light evidence, and each independently offered the opportunity to inform on the other in return for escaping jail time.  If neither chooses to inform, the prosecution doesn't have much of a case and so both get light sentences (say, 1 year).  If both choose to inform, both get moderate sentences (say, 3 years).  If one chooses to inform and the other doesn't, the one who informs gets no jail time, but the one who doesn't, and sees his co-conspirator testify against him, gets 5 years.  You can set up the four possible actions in a grid:

 A TestifiesA Stays Silent
B Testifies A gets 3 years
B gets 3 years
A gets 5 years
B gets 0 years
B Stays Silent A gets 0 years
B gets 5 years
A gets 1 year
B gets 1 year

At first glance, the actions that the actors should take in this game seem pretty clear: whatever one prisoner does, the other comes out better if he testifies, serving no time (vs. 1 year) if the other person stays silent, and 3 years (vs. 5 years) if the other prisoner testifies. And yet the best outcome for the duo happens if both behave irrationally (or perhaps trustingly) while the worst outcome occurs when both behave rationally (or self-interestedly).  Real-world applications of this abound, from arms reduction treaties to curbs on greenhouse gases to the production of individual countries in the OPEC oil cartel.

Graphic courtesy Wikimedia Commons, which has a great interactive Prisoner's Dilemma
example -- from which the screenshot above was taken -- here.

How is this applicable to wine associations?  I'm happy you asked.  I've been spending a lot of my time thinking of this recently thanks to my positions on the board of directors of two organizations: the Paso Robles Wine Country Alliance (PRWCA) and the Rhone Rangers.  In both cases, I believe that the organizations provide a valuable service to their members, but there are significant free-rider problems that discourage membership.  Think about it this way.  If the Rhone Rangers is successful in its marketing and makes Syrah easier to sell, all Syrah producers benefit, not just the ones who are members.  Similarly, if the PRWCA is successful in its promotion and brings more people to area tasting rooms, or raises the profile of Paso Robles so its wines sell better off retail shelves and wine lists, any Paso Robles winery will benefit, whether or not they have paid their membership dues.

And the dues, for the PRWCA at least, are not cheap.  We've had two important local wineries drop out of the alliance this year, each saying that they were going to reallocate their marketing dollars to efforts that more directly benefited their bottom lines.  These decisions shot a significant (though not crippling) hole through the PRWCA marketing budget.  Were the wineries behaving rationally?  Actually, yes, they almost certainly were, though if their behavior was generalized everyone, including them, would be worse off.  It's a prisoner's dilemma-type example!

The main reason that wineries band together is to gain efficiency with the money they spend.  It's generally accepted that an advertising campaign gains efficiency with repetition and with consistency.  So, a single marketing campaign, well targeted and well run, is typically more effective at driving behavior than ten different advertising campaigns each one-tenth the size of the original campaign.  And the PRWCA gains additional efficiency because of its expertise -- unlikely to be found in-house at any individual winery -- both because of the people running it (thank you, Jennifer Porter) and because of the outside consultants it is able to afford.

Let's look at an example that will require a little math. I'll round the numbers to help them make sense, but it doesn't really matter what the numbers are: the conclusion still holds, as long as we agree that wineries are unlikely to be as efficient spending individually as the group would be spending their money in a coordinated campaign. For ease of calculation, I will assume that there is a 50% loss in overall spending efficiency when a winery splits their money from the group's to spend it individually.  And we'll round numbers to 200 wineries, with a contribution of $5000 each (leaving a total budget of $1,000,000).  I'll look only at the power of advertising to drive people to local tasting rooms, and assume that each visitor makes 5 tasting room visits when they're in town, and assume that the PRWCA gets one person to make the decision to come to town for each $5 they spend.

OK, back to specifics.  Let's look at the impact of the PRWCA's spending of $5000 -- one winery's portion of the total budget -- as a part of their master marketing campaign.  This $5000 brings 1000 customers into town.  These customers make 5 visits each, or 5,000 visits total, split among the 200 wineries.  Each winery receives 25 of these tasting room visits. 

Now, let's look at the scenario where Winery X takes the $5000 that they were going to give to the PRWCA and reallocates it to running radio ads in Fresno, Bakersfield and Orange County.  This advertising is only 50% as efficient as the PRWCA's marketing, so the winery might expect to pay $10 per customer (double the PRWCA's cost).  But the people that this advertising drives to Paso Robles will all start at Winery X's tasting room.  So they get 500 visits for their $5000.  Other tasting rooms in the region still benefit, as these visitors make on average 4 more visits to other tasting rooms when they're in town.  But those 500 customers, who make their additional 2,000 total visits to other Paso Robles tasting rooms, account for only about 10 new visits to each of the other 199 wineries -- less than they would have each received had the same money been spent by the PRWCA.  So Winery X ends up 475 customers ahead, whereas every other winery in the area ends up 15 customers behind.  Winery X is behaving rationally, and can even point to the fact that its advertising is helping their neighbors gets customers.

Like in the prisoner's dilemma example, the problem comes in the aggregate.  What seems like a small loss per other winery looks a lot larger when you multiply that loss by all the wineries affected: the region loses 2,985 tasting room visits from the 199 other wineries, and only gains 475 for Winery X.

If every winery were to make the same decision to spend their $5000 individually, with the same results, they too would get 500 customers to start in their tasting room, and would each contribute 2000 other tasting room visits to the region.  Across the 200 wineries, that pool grows to 400,000 visits.  Divided equally, each winery gets 2000 of these, plus the 500 from the advertising they paid for themselves.  That's 2,500 customers total.  If the same $1,000,000 had been spent by the PRWCA, it produces 200,000 customers who make 1,000,000 visits total: or 5,000 visits per winery.  By spending their money rationally (an economist might equally say selfishly) they have cut their total number of customers in half.

Of course, not every winery makes this decision.  And that's the most frustrating thing for those of us who do contribute to the group's spending.  Winery X receives most of the benefits of the marketing that an organization like the PRWCA is doing with the member wineries' money... whether or not they are members.  Sure, there are a few ways that they lose out: they're not on the organization's printed map; they're not included in the group's media outreach; they're not a part of the trade outreach that the organization does; and they lose a modicum of goodwill from their neighbors.  I actually think that these benefits on their own probably pay for the costs of membership.  But if their principal driver of revenue is their tasting room traffic, they still probably come out ahead, at least in the short term.

How does one quantify the benefits that do accrue directly to the members from their membership?  And how does a regional organization best respond to this? Game theory has answers for this, too.  I explore how to quantify the value of membership in part 2 and will delve into game theory's suggestions for how an organization should respond to those who drop out in part 3.

The future of the proprietary blend

This week, I joined much of the rest of the California wine community in Sacramento for the Unified Grape and Wine Symposium.  Unified, as it's called, is part trade show, part educational conference, and part social hall, with nightly reunions of all the significant viticultural universities and lots of the informal socializing that helps keep a community together.

I was up there to speak on a panel titled The Proprietary Wine: Rethinking the Constructs of Blended Wine, a topic near and dear to my heart.  I and the other panelists shared how we thought about, and went about creating, the blends that we each focus on.  I showed the 2012 Patelin de Tablas Blanc and the 2011 Esprit de Tablas, to have an opportunity to discuss how our approach differs for an estate wine and for the Patelin line, which is primarily from a collection of other local vineyards.

Blending components

It became clear that each of us, to one degree or another, agreed that the freedom to blend different grapes, and the liberty to adjust to what each vintage gives you, allows us to make wines that we find more consistent and more interesting.  But more than why we blend and what we hope to gain from it, I thought that the most interesting part of the seminar came in the question-and-answer period at its conclusion, specifically a question as to whether we thought that blends would, in the short or long term, take the mantle of desirability from the varietal wines that now dominate the marketplace.

On one side of the debate stands the success of the other panelists (whose quantities had grown in a shorter time than we've been active well into the tens and hundreds of thousands of cases) as well as brands like Menage a Trois, which came up in discussion several times as one of the top selling wines in the country despite its unconventional composition.  Also on that side is the 15+% growth in both the red and white blend categories reported in Nielsen data from 2012.  Arguing on the other side of the debate was the proprietor of a small winery, who asked me privately after the session whether I had any answer to the questions she gets from wine buyers just where they're supposed to put her blend on their shelves or on their lists.  I hear that less than I did, but it would still certainly be easier to be in a more widely recognized category.

My general feeling is that blends will continue to grow in acceptance, but not because of a paradigm shift.  In fact, I feel that the growth of acceptance of blends is part and parcel of the growing acceptance of unusual grapes and new growing regions.  The American market even a decade ago was dominated by six grapes (Cabernet, Merlot, Pinot Noir, Zinfandel, Chardonnay and Sauvignon Blanc) and maybe eight foreign regions (Bordeaux, Burgundy, the Rhone, Germany (mostly German Riesling), Spain (mostly Rioja), Italy (writ large), Australia, South America (mostly Chile with a little Argentina).  Perhaps you could add in South Africa and New Zealand.  It was these regions that warranted their own sections in even the best stores and wine lists.  If you didn't fit into one of these categories, you tended to get stuck in "other red" or "other white".  I know, because that's where we spent a lot of our history.

Fast forward a decade, and while retail has by and large been slower to change -- some notable exceptions notwithstanding -- wine lists are a great deal more inclusive than they were.  Most large lists are still organized by grape or region, but there are many more grapes and many more regions listed.  And small lists, which are more and more common even in many top restaurants, have more flexibility in their category-less simplicity to include whatever wines their buyer thinks interesting and complementary to their food.  If it's based on Vermentino, or Negrette, it's likely listed that way, without fanfare or apology.

These developments are part of the maturation of the vibrant American wine market.  I don't mean to say that there is a more mature wine consumer, though many Americans are still relatively new to wine, and I think that as wine lovers spend more time with their passion their tastes do tend to become more diverse, but that there are more and more different types of wine consumers in this wonderfully heterogeneous market.  That means you don't need to convert a Chardonnay lover to Picpoul in order to be successful.

And that is a future to be excited about.