No, 100% tariffs on European wines won't be good for California wineries

This morning, I submitted comments to the Office of the US Trade Representative, in opposition to the threatened 100% tariffs on European wines that could be imposed as soon as February of 2020. While I believe in an open market and am (like most of the people I know who work for domestic wineries) a lover of wines from around the world, it wasn't for that point. I am convinced that these tariffs would have severely disruptive effects on the whole system that has been legislated to provide a pathway between wine producers, like us, and the consumers who eventually want to buy the wines.

Patelin Rose pallet behind bars
I'll share my comment, and then add some additional thoughts at the end of the blog.

December 23, 2019

I am writing to you to argue against the proposed 100% tariffs on European wines. As a partner in and General Manager at a California winery that just celebrated its 30th anniversary, it might seem surprising that I would opposed these tariffs. But I believe that the net effect that they would have on California wineries would be negative.

We sell about half our production direct, and half through a network of state-licensed wholesalers. This distribution system is mandated by law and known as the “3-tier system.” A producer like us cannot sell directly to restaurants and retailers in other states, and our ability to sell directly to consumers, while growing, is still restricted. So, our success is dependent upon the health of this distribution network. None of the 50+ distributors that we work with represents exclusively domestic wines; all have a diverse portfolio including wines that will be impacted by the proposed tariffs. Many get the majority of their business from European wines. For those distributors, the proposed tariffs amount to a death sentence. Sales will fall, in most cases dramatically, impacting their ability to represent our wines. In my experience, distributors react to the loss of a major supplier (a similar impact to these tariffs) by attempting to source new wines for their portfolio, rather than by selling more wine from their existing suppliers, many of whom are unable to increase production in the short term. If they do look for wines from other parts of the world, they will inevitably be distracted by the massive task of finding these new producers, integrating them into their portfolio, and educating their sales team on their new items. That will mean less focus for us, not more.

What’s more, the rising number of “franchise” laws, currently affecting wine sales in about 20 states, means that we don’t even have the freedom to leave a distributor who isn’t performing well (or isn’t able to maintain their sales team and delivery schedule because of a market disruption) to find another who could do a better job. In nearly half the country, if the work of our legally-mandated representatives is impacted by these tariffs, we have no recourse. Beyond the impact on wineries and distributors, other related businesses will be caught in the crossfire. Restaurants are famously low-margin businesses anyway. Increasing the costs of their wine programs will push some out of business, further reducing outlets for our wines. Wine retailers, too, including both independent and chain outlets, will be forced to source different wines (which comes with its own costs) or double the costs of their inventories. And American consumers will be faced with higher costs and fewer choices for products that they would like to buy, leaving less disposable income in their wine budgets.

Why wouldn’t the wine community just switch its sources to other, non-tariff countries? Wine is not a commodity, where a customer can simply swap in a wine, even one made from the same grape, from one part of the world for another and expect them to be comparable. Wines are products inextricably tied to the place in which they are produced. And the disruption of 100% tariffs on wines from the world’s oldest wine regions would have cascading impacts that would reach deep into a whole network of American businesses, investors, and consumers.

Even those of us who make wine in California.

Respectfully,
Jason Haas
Partner & General Manager
Tablas Creek Vineyard
Paso Robles, California

I'm not sure that most consumers realize how little option wineries have to get their wines to markets around the country. In most cases, it is neither practical nor legal for us to sell to restaurants and retailers directly. So, we have relationships with distributors in each state. These distributors are licensed by their state to purchase wine from suppliers (domestic wineries like us, and importers of wines from other countries) and to then in turn sell those wines to restaurants and retailers. Restaurants and retailers are licensed to sell the wines to customers. While a string of court decisions and state law liberalizations have allowed us to ship wine directly to consumers in many states, nearly a third of what we sell to consumers for home consumption, and essentially 100% of what we sell to restaurants, passes through these various distributors. 

Every one of the 50+ distributors who sells our wine also sells wine from countries around the world. Every one. There is no such thing, in my experience, as a domestic-only distributor. And for many of these distributors, a majority of their sales comes from European wines. These distributors would be devastated by tariffs that would slow that segment of their business to a trickle. Distributor salespeople, who are paid by commission, would see an immediate decline in their standard of living. Distributors would likely result by cutting sales staff and increasing the number of accounts each salesperson called on, reducing their ability to interface with accounts and sell the other wines in their portfolio.

But would there be a larger piece of the pie for California wineries? Not much of one, I don't think. At the low end, the likely substitute for European wines would be wines from other New World countries, like Chile, Argentina, and Australia, all of which do better in the under-$15 segment than American wineries. At the high end, there is really no substitute. An Oregon Pinot Noir isn't going to smoothly replace a Grand Cru Burgundy, nor is a California Nebbiolo going to replace a Barolo. High-end wines aren't commodities produced by formula from specific grapes, that could be grown anywhere. The places that they come from are inseparable from the wines' identities. My guess is that at the high end, there would be a period where restaurants and retailers scavenge inventory from warehouses around the country, and then sales would just decline as people wait and hope the tariffs are rescinded. In the middle? I'm not sure. There might be a few additional opportunities for wineries like us, but I doubt that these would amount to a net positive given the disruption in our distribution network.

What's more, I think there's every likelihood that European countries would retaliate with tariffs on American goods, including wines. While export markets aren't a huge piece of our business, they've been growing in recent years, and European countries like Germany, Denmark, Sweden, and France have been leading that growth. I would expect that piece of our market to disappear, as has our Chinese market since that particular trade war began a few years ago.

All of these economic costs are bad enough. The human costs would be worse. While our business would likely be OK, thousands of American jobs at restaurants and distributors would be at risk. The American consumer, who enjoys the world's most dynamic wine market, would see increased costs and decreased selection. And the cost to the European farmers and winemakers, many of whom have been farming their lands for centuries, would be heartbreaking.

What can you do? Submit a comment in opposition to the proposed tariffs:

Will it matter? There's no way to know. But the more voices they hear from, the better the chance.


Can rosé wines age? It depends on the grapes they're made from.

Over the weekend, I saw a really nice review of our 2017 Dianthus Rosé on Kerry Winslow’s Grapelive blog. I found it interesting that Kerry, although he loved it, felt like he needed to address it being a 2017, adding the comment that it "is last years wine, but still vibrant and the maturity hasn’t slowed down this fabulous wine". I don't think you'd find a caveat like this for a white wine, and a 2017 would be considered maybe even too young to drink for most reds. But it gets at a common perception of rosés: that they need to be drunk the year that they’re released.

Is it true? There are definitely some, maybe even many, rosés for which I'd say yes. But, and this is important, like reds and whites, the grape(s) that the wine is made with matters. The dominant model for rosés is that of Provence, which is based on Grenache, always an oxidative grape, and they tend to have very pale colors from minimal time in contact with the skins. In the cellar at Tablas Creek, we are careful to keep even red Grenache away from too much oxygen. We ferment it in stainless steel or large wooden tanks, and avoid 60-gallon barriques (what you probably think of as a “normal” wine barrel) for aging. And you'd expect a rosé made from Grenache to have a shorter aging curve. Tannins act as a preservative in wine. So, if you start with Grenache, already an oxidative grape, and pull it early off the skins, which are the source of a wine’s tannins, you're likely to end up with something that’s even less resistant to oxidation. My experience with most Provence rosés (and the American rosés that are modeled off them) bears that out. The wines are at their best the summer after they’re made. The best ones are still good the next summer, but they’ve already started to fade.

But it’s equally important to remember that Provence is not the world’s (or even France’s) only rosé tradition. Bandol, arguably the source of the world’s greatest rosés, uses Mourvèdre as the lead grape. And Mourvèdre is a very different beast from Grenache. In our cellar, we do everything we can to make sure we get Mourvèdre air. We ferment it in open-top fermenters. We age it in oak, and still have to make sure to rack it fairly often so it doesn’t get reductive. Some of that comes from Mourvèdre’s skins, but not all does. And it's worth mentioning that, depending on how your rosé is made, it's going to get at least some of the tannins (and their powers of preservation) from the skins. In the case of our Dianthus, the juice spends between 24 and 36 hours on the skins, giving it a deep pink color and providing a hint of tannic bite that brings counterpoint to the wine's lush fruit.

Two roses for Nov 2019 feature

I remember learning, to my surprise, that as recently as a decade ago many Bandol estates didn’t even release their rosés until the fall after harvest, because they felt that the wines took that much time to really open up and come into their own. I don't think that happens much any more. Producers in the (dominant) Provence model compete to be first into the market in the springtime to lock up the lucrative summer rosé placements, which has created a market and consumer expectation that you want the newest, freshest rosé you can find. That means that for a tradition like Bandol, even if the wine is better in the fall, a producer is likely to make a market-driven calculation that they should release the wine early.

Although the growth of the rosé market has meant that it's more of a year-round item on wine lists, there is still definitely a rosé high season in the spring and summer, and restaurants and retailers all look to feature the newest vintage. So, there are three significant disincentives against fall releases. First, you're releasing a wine into a market that is saturated with earlier releases (many of whom are likely looking to close out any remaining inventory with deep discounts). Second, you're releasing a wine into a category that is going off season. And third, by the time the season opens back up in the springtime, you look like old inventory compared to the new crop of the next year's rosés.

But those market realities don't change the fact that the fall release tradition gets at something important about rosés made from these oxidation-resistant grapes. They improve in bottle, are likely just reaching their peak in the cooler fall and winter seasons, and can be just as good or even better the next summer. Their deeper flavors also make for better matches with the richer foods of chillier seasons.

Dianthus in the snow

That’s why seeing a review like this for this wine makes me happy. It recognizes that these rosés can improve with time in bottle, and can be great winter wines. In our tasting room, we switch in October from showcasing our Patelin Rosé (which we poured for guests in spring and summer) to our Dianthus, which we'll continue to feature through the fall and into the winter, as long as it lasts. It also helps people learn that rosés are not a uniform category, and different base grapes produce different profiles and different life paths, like with reds and whites. For all the growth of the rosé category, the idea that rosés can be diverse is still something that’s not well enough understood.


Making Giving Tuesday Last all December Long

As regular readers of this blog know, we try to be involved in our community in a variety of ways. We give tens of thousands of dollars each year to support a range of local charities and arts organizations. Our people volunteer to coach and we sponsor youth sports, typically several local teams each year. We serve on nonprofit boards and donate our time and resources to support those organizations that can support us. We offer our facilities and our expertise to host events on topics that can help build a better environment and a better wine community, from dry farming to biodynamics to the Ovines in the Vines field day that our Shepherd Nathan Stuart will be helping lead later this week. And, for the last several years, we've donated a dollar from every bottle of wine we sell in December to must! charities. That's why I'm especially proud that we received the "community" California Green Medal from the California Sustainable Winegrowers Alliance a few years back.

If you are unfamiliar with the work that must! charities does, I can't do a better job of explaining it than the nonprofit's founders do:

The organization has made a huge difference in the lives of residents of San Luis Obispo County, especially the kids who live here. Must! has supported dozens of projects over the decade since it was founded, but its power comes from how it doesn't spread itself too thin, instead aggregating donations from the community, choosing a handful of worthy local organizations each year, and providing -- typically through multi-year commitments -- both financial support and organizational expertise so that it can help the organizations improve in lasting ways. This year, must! is supporting four projects: ECHO homeless shelter, with a primary goal of finding permanent housing for homeless families; the new Boys & Girls Club of Shandon, where nearly half the town's 200 elementary and middle school kids are already enrolled; CASA of San Luis Obispo, to help more children in the North County find safe, nurturing, and permanent homes; and the construction of a commercial kitchen at ECHO, providing both job training for its clients and a long-term asset for the organization.

At Tablas Creek, our primary support of must! comes in December, when we pledge to donate a dollar from every bottle we sell direct from the winery, whether in the tasting room, online, or by phone. And yes, gift packs and wine club packs count (one dollar per bottle included in either). So do the wines that we have on feature. And half bottles. Really... any wine we sell. Last year, we were able to donate $8,850. This year, we hope to top that. 

So, on this day that has been dubbed "giving Tuesday" it feels appropriate to share that this month, every day allows us to give a little more. Thank you for making it possible for us to make a difference. 

Must charities photo 2019 2


A lighter wine bottle revisited, 10 years and 1,370,000 pounds of glass later

Almost exactly nine years ago, I posted a blog called Introducing a Greener Wine Bottle, in which I shared our decision to move our flagship wines from a heavier bottle to a lighter one. Today, we're bottling our 2017 Esprit de Tablas in a (slightly updated) version of this very same bottle. If you add up the impacts of this change over the ten years that we've used this lighter bottle, the numbers start to get really big. I'll throw a few out there.

A decade ago, we were using two bottles. Our flagship wines were in this beautiful but massive bottle that weighed 31.5 ounces empty. Our other wines (this was pre-Patelin, so that was our Cotes de Tablas and our varietal wines) were in a more classic Burgundy bottle that weighed about 19 ounces. Fast forward to 2019. Our current bottle, which we use for all our 750ml wines, weighs 16.5 ounces empty. For the roughly 8,000 cases of wine a year we switched over from the heavy bottle, that 15 ounces per bottle adds up to 90,000 pounds of extra glass weight, or about 11 pounds per case. Add in the roughly 25,000 cases of wine that on average we would have put each year in the 19-ounce bottle, saving just under two pounds per case, and you save another 47,000 pounds of glass weight. So, in ten years we have saved roughly 1,370,000 pounds of glass weight, or 685 tons.

That extra weight came with costs at every stage. We had to pay more to have it manufactured, shipped to us, and then either trucked away for wholesale sales or sent via UPS or FedEx to our direct customers. We needed larger wine racks to fit the wines in our library, which means we could store fewer bottles per square foot of space. Our trucking company can fit three more pallets of our flagship wines (22 pallets vs. 19) in the new package before reaching their legal weight limit, which means that for the roughly 40% of this wine that we sell via wholesale, we've had to run roughly one fewer full truck of cases of wine each year up to the Vineyard Brands warehouse in American Canyon, CA. And those are just the hard costs. The invisible environmental cost savings are massive as well, with less weight having to be driven or flown around in every stage between manufacture and consumption. 

There was a nice article by Dave McIntyre earlier this month in the Washington Post about Jackson Family Wines' moving their production of two of their major brands into glass about two ounces lighter per bottle. Esther Mobley, of the San Francisco Chronicle, picked this up and added her approval on Twitter. I responded with our own story, and this started a couple of conversations I found fascinating. The beginning:

You might find my "and people mostly hate them" comment about the larger bottles surprising. But before we made our bottle change, we reached out to our fans on Facebook, Twitter, and this blog asking for what they looked for in a wine bottle. I was expecting a mix of people in favor of the solidity and feel of the heavier bottles and those who wanted the greener environmental footprint of the lighter bottles. And there were a few of each of those. But the overwhelming majority of the responses focused on utility: people wanted bottles that they could lift and store comfortably, and larger bottles don't fit in many pre-made wine racks. The hostility toward the larger bottles was eye-opening. From one representative comment on our blog:

I don't care what the bottle looks like, I care what's inside it. I don't want to pay for heavier glass and increased transportation costs. I don't want bottles that won't fit in my wine rack unless I put them in the Champagne section.

I've never refused to buy a wine because I thought the bottle looked cheap, but I've stopped buying several because they had larger, heavier, too tall or silly shaped bottles.

And another:

When a case of wine from one of my favorite California producers (such as Tablas Creek) arrives via UPS at my office, and I can barely pick up the damn box to take it home because the producer used those stupid two-pound wine bottles, you better believe I notice. 

Once we wrapped our heads around this as primarily a question of utility, the choice was easy, and we made the switch. The next year, we were able to work out an agreement with our glass company to make a new mold based on this lightweight bottle, but with an embossed version of our logo on the neck, and we haven't looked back. To us, the bottles look great, feel great, and we can feel good about the positive impacts that making this change has made on both our bottom line and our environmental footprint.

Esprit 2017 on Bottling Line

So, given that lighter bottles cost less and people seem to like them more, why are there still wineries using the heavy bottles? That's complicated. You can get a sense of some of it if you click through Esther's twitter thread and look at the responses. There is definitely a perception in the market that a heavier bottle signifies a more serious wine. And I'm sure that this is true, to some extent, although I think it's important to mention that most of the great wines from Burgundy and Bordeaux, not to mention California icons like Ridge and Calera, have stayed with classic bottle shapes and weights. But I feel like these larger bottles now have more detractors than they ever did before, both because of the sense of environmental tone-deafness that they convey (I had one consumer recently compare it to driving around in a Hummer) but mostly because consumers have to deal with the difficulties and higher costs of transport and storage.

It’s also worth noting that we realized that only a small percentage of our bottles ever appear on a retail shelf, where the bottle has the potential to play into a purchasing decision. Half our production we sell direct. More than half of the rest we sell in restaurants, where all that customers see is a name and maybe description on a wine list. And of that remaining ~20% a significant chunk is sold online, where bottle heft isn’t a factor.

So, I'm hoping that the trend I'm seeing will continue, and more California wineries will make similar decisions to move to lighter bottles, and focus on differentiating their marketing in other ways.  After all, bottles are only a part of the perception. Between labels and capsules, wineries have plenty of opportunity to distinguish themselves, and marketing is, of course, so much more than package design anyway.

Hummers went the way of the dinosaur a few years ago. Here's hoping that wineries feel comfortable ushering the Hummers of the wine bottle world offstage too.


Is there a future for half-bottles?

It was pretty early on in my time out selling Tablas Creek, before, I think, I'd even moved out to Paso Robles. I went to a terrific restaurant in Washington, DC, and got into a conversation with the owner and wine buyer. We were talking about what her favorite bottles were to recommend on her list, and she said that if people were open to it, her favorite bottle wasn't a single bottle... it was two different half-bottles, one of which (I remember) was the Coudoulet de Beaucastel. This, she said, gave her guests the chance to pair different wines with first and main courses, and offered more diversity and value than wines by the glass. I've always remembered that conversation, and we've bottled our Esprit de Tablas and Esprit de Tablas Blanc in half-bottles since before they were called Esprit de Beaucastel and Esprit de Beaucastel Blanc.

Half bottles

At the same time, half-bottles aren't easy. I had a Twitter exchange last week with Amber LeBeau, whose SpitBucket Blog is becoming a must-read piece of the conversation on wine, at least for me. She was suggesting that half-bottles should be well positioned to take advantage of the consumer's growing interest in moderation, and wondered how much more it cost wineries to make them.  Click on through to Twitter to see the whole thread:

I feel like 280 characters (OK, times two) was enough to lay out the main challenges for us with half-bottles. They are expensive, because the bottle, capsule, cork, and label cost just as much as a full bottle would, and the consumer (with reason) doesn't want to pay more than half as much for half the wine in a full bottle. In the cellar, you have to stop and recalibrate your bottling line, which slows you down, and you have to source smaller lots of everything, which is expensive.  And like any alternate-size formats -- we see the same issue with magnums and kegs -- there's always the challenge of moving on to the next vintage at the right time. It's a nuisance to everyone to have sold out of your 750ml bottles but still have a few orphaned cases of half-bottles in distributor stock, because the reps are unlikely to want to sample a vintage of a wine that's only available in half-bottles, while purchasing managers won't usually bring in the new vintage of half-bottles until the old one is gone. 

Still, we keep on making half-bottles for two reasons. I do feel that it's an incredibly customer-friendly way to offer wine, particularly if you subsidize the price, as we do, so it ends up at more or less half the price of full bottles. And second, I have always felt that because there are many fewer half-bottles made than there are full bottles, the half-bottle list is a place where we can stand out. Even on big wine lists with hundreds of bottles, the half-bottle selection is likely a single page of maybe a dozen options.  I've always liked our odds in that short list.

But with the growth of by-the-glass programs, and particularly the high-end glass pours enabled by the widespread use of the Coravin, I wonder if the days of the half-bottle are numbered. I know that we've revised downward the number of cases of half-bottles that we've bottled steadily over the last decade, to keep them in balance with the demand we've seen. At our apex in the late 2000's we were bottling 450 cases each of our Esprit and Esprit Blanc in half-bottles. By the early 2010's we were down to 250 cases of each. Then 200, then 150. Last year we bottled just 125 cases of each. This year, it will be only 75. Sure, we can bring back the unsold stock at the end of the release and make a special price for our club members, but ultimately, if people aren't that interested in buying wine in the half-bottle format, we'd be silly to continue to make it.

So, a question to you all. Do you like wine in half-bottles? Do you buy it? If so, where? For home consumption, or out at restaurants? And are there specific kinds of wines you order in half-bottles? I'm curious. Because if you're a lover of these smaller formats, as I am, it seems like our days of being able to find them may be numbered.

Half Bottle Array


30 Years of Tablas Creek: 10 Things We Got Right (and Wrong)

I find it hard to wrap my head around this fact, but this year marks 30 years since my dad, along with Jean-Pierre and Francois Perrin, bought this property and began the process of launching what would become Tablas Creek Vineyard. To celebrate, they stopped at Kentucky Fried Chicken (this was before it became KFC) and took their purchases as a picnic lunch onto the section of the vineyard we now call Scruffy Hill to talk about what would come next. Amazingly, last year we turned up a photo of that lunch:

KFC Lunch on Scruffy Hill in 1989 with Jean-Pierre Perrin  Robert Haas  Charlie Falk  and M Portet

1989 was a different time, and not just because not-yet-called-KFC was the best option in town for lunch. Paso Robles itself had just 16 bonded wineries. None of them were producing Rhone varieties. The entire California Rhone movement had only about a dozen members. And yet the founding partners had enough confidence in their decision to embark on the long, slow, expensive process of importing grapevines, launching a grapevine nursery, planting an estate vineyard from scratch, building a winery, and creating a business plan to turn this into something self-sustaining.

I was thinking recently about how much of a leap into the unknown this was, and decided to look back on which of those early assumptions turned out to be right, and which we had to change or scrap. I'll take them in turn.

Wrong #1: Paso Robles is hot and dry, and therefore red wine country
This is a misconception that persists to this day among plenty of consumers, and (if it's not sacrilegious to say) an even higher percentage of sommeliers and the wine trade. But it's hard to be too critical of them when we made the same mistake. Our original plan was to focus on a model like Beaucastel's. There, the Perrins make about 90% red wines, and many Chateauneuf du Pape estates don't make any white at all. And yes, Paso Robles is hot and dry, during the day, in the summer.  But it's cold at night, with an exceptionally high diurnal shift, and winters are cold and quite wet. The net result is that our average temperature is lower than Beaucastel's, and the first major change to our vineyard plans was to plant 20 more acres of white grapes. Now, our mix is about 50% red, 35% white, and 15% rosé. 

Right #1: Obscure grapes can be great here
In our initial planting decisions, we decided to bring in the grapes you would have expected (think Mourvedre, Grenache, Syrah, or Viognier) but also some that had never before been used in America, like Grenache Blanc and Counoise. We thought that they would provide nice complexity, and our goal was to begin with the Beaucastel model (in which both of these grapes appear) and then adjust as our experiences dictated. It turns out that we liked them enough that not only are they important players in the blends that we make, but we even bottle them solo many years. This meant a relatively quick decision to bring in Picpoul Blanc in 2000, and to eventually import the full collection of Chateauneuf du Pape grapes in 2003. If you've been enjoying new grapes like Picardan, or Terret Noir, or Clairette Blanche, you have this early decision to thank.

Wrong #2: We're going to make just one red wine and one white wine
This is a decision we realized we needed to revisit pretty quickly. As early as 1999, we decided that in order to make the best wine we could from a vintage, we needed to be able to declassify lots into a second wine (which at that point we called "Petite Cuvee"). Having this declassified wine also gave us some cool opportunities in restaurants, which could pour this "second" wine by the glass, exposing us to new customers. And the wine, which we soon rechristened "Cotes de Tablas", proved to be more than just a place to put our second-best lots. Many of the characteristics that caused us to declassify a particular lot (pretty but not as intense, less structured and perhaps less ageworthy, good fruit but maybe less tannin) make a wine that's perfect to enjoy in its relative youth. Although we've been surprised by the ability of these wines to age, having something that people could open and appreciate while our more tannic flagship wines were aging in the cellar proved invaluable.

And we didn't stop there. We realized within another few years that there were lots that were either too dominant to be great in a blend, or so varietally characteristic that it was a shame to blend them away. Opening a tasting room and starting a wine club in 2002 (more on this below) meant that we had recurring educational opportunities where having, say, a varietal Mourvedre, was really valuable. At the time, many fans of Rhone grapes had never tasted even the main ones (outside of Syrah) on their own. Having a rotating collection of varietal bottlings beginning in 2002 not only gave us great options for our wine club shipments, but I think helped an entire generation of Rhone lovers wrap their heads around this diverse and heterogeneous category.

Right #2: Importing new vine material would be worth the costs
Nearly the first decision we had to make was whether we would work with the existing Rhone varieties that were already in California or whether we would bring in our own. And it's not as though this decision was without consequence. Importing grapevines through the USDA's mandated 3-year quarantine set us back (after propagation) five years, and cost hundreds of thousands of dollars. But it also came with some potentially huge benefits: the opportunity to select our clones for high quality, the chance to work with the full complement of Rhone grapes, and eventually the privilege of supplying other wineries with high quality clones. I remain convinced that for all the different impacts Tablas Creek has had, it is this proliferation of clonal material that will go down as our most important.

Wrong #3: Vineyard and winery experience is enough to run a nursery
With fifteen years' distance blunting the anxiety, it's easy to forget just how steep the learning curve was for us in the nursery business. But I know that when I moved out here in 2002, it was the perennially money-losing nursery that was the source of most of our headaches. The nursery business is difficult for three reasons, particularly for a startup. First, it's technically tricky. Expertise in grapegrowing is only tangentially relevant to things like grafting and rooting, or dealing with nursery pests. This is made more challenging by the fact that the same things that make this place good for quality wine grapes (that it forces vines to struggle) made all the nursery challenges worse. Second, it's subject to supply shocks that are largely outside of your control. If you get a spring frost, or a summer drought, you'll produce smaller vine material, get a lower percentage of successful grafts, and produce fewer vines. I know that in our first few years we often had to go back to our customers and cut back their orders because of production challenges. And third, on the demand side, it's incredibly cyclical and prone to boom and bust. Because it takes three to four years for a new vine to get into into production, you tend to have cycles of sky-high demand for scarce grapes followed by periods where everyone has the same new varieties in production, which causes demand for new vines to collapse. We lost quite a lot of money overall on our nursery operations before realizing the right response was to outsource. Our partnership since 2004 with NovaVine has been such an improvement, in so many ways.

Right #3: Organic viticulture works
The Perrins have been innovators in organic viticulture since Jacques Perrin implemented it in the 1960s. By the time we were starting Tablas Creek, it was taken as a given that we'd farm the same way, partly out of a desire to avoid exposing ourselves, our colleagues, and our neighbors to toxins, but more because we felt that this was a fundamental precondition for producing wines that expressed their place. At the time, there wasn't a single vineyard in Paso Robles being farmed organically, and the studied opinion of the major California viticulture universities was that doing so was pointless and difficult. It has been wonderful to see a higher and higher percentage of our local grapegrowers come around to our perspective, and to see the excitement locally and around California as we push past organics into the more holistic approach of Biodynamics. But that idea -- that organic farming is key to producing wines with a sense of place -- is as fundamental to our process today as it was in the beginning.  

Wrong #4: Tasting Room? Wine Club? Who needs 'em!
At the beginning, our idea was that we would be in the production business, not the marketing and sales business.  Our contact with the market would be once a year, when we would call up Vineyard Brands and let them know that the new vintage was ready. They would buy it all, take care of the nitty gritty of selling it, and our next contact with the market would be a year later, when we would call them up again and let them know they could pick up the next vintage. This proved to be a lot more difficult than we'd initially imagined. We were making wines without an established category, from grapes that most customers didn't know and couldn't pronounce, in a place they hadn't heard of, and blending them into wines with French names that didn't mean anything to them. By 2002, inventory had started to build up and we had to radically rethink our marketing program. The two new key pieces were starting a wine club (first shipment: August 2002, to about 75 members) and opening our tasting room on Labor Day weekend that same fall.

The opportunities provided by both these outlets have fundamentally transformed the business of Tablas Creek, giving us direct contact with our customers, an audience for small-production experimental lots, a higher-margin sales channel through which we can offer our members good discounts and still do better than we would selling wholesale, and (most importantly, in my opinion) a growing army of advocates out in the marketplace who have visited here, gotten to see, smell, and touch the place, and take home a memory of our story and our wines. I don't think it's a coincidence that our wholesale sales grew dramatically over the first five years that our tasting room was open, or that each time a new state opens to direct shipping our wholesale sales improve there. Still, we would never have predicted at the outset that nearly 60% of the bottles that we'd sell in our 30th year would go directly from us to the customer who would ultimately cellar and (or) drink it.

Right #4: Building (and keeping) the right team is key
Long tenure was a feature of his hires throughout my dad's career. I still see people at Vineyard Brands sales meetings who remember me coming home from little league games in uniform, 35 years ago. And I'm really proud of how long the key members of the Tablas Creek team have been here. That includes David Maduena, our Vineyard Manager, who is on year 28 here at Tablas Creek. Denise Chouinard, our Controller, worked for my dad at Vineyard Brands and moved out here to take over our back office 23 years ago. Neil Collins will oversee his 22nd vintage as Winemaker here this year. Nicole Getty has overseen our wine club, hospitality, and events for 15 years, while and Eileen Harms has run our accounting desk for the same duration. This will be 14 years at Tablas Creek for Senior Assistant Winemaker Chelsea Franchi and 13 for Tasting Room Manager John Morris. 

I say all this not because longevity on its own is the point, but because of what it means to keep talented and ambitious people on your team. It means that they feel they're a part of something meaningful. That they're given the opportunity and resources to innovate and keep growing. And that you don't have to reinvent the wheel every few years. 

Wrong #5: People will buy it because Beaucastel 
Much of our challenge in the early years was self-inflicted: we hadn't done the work to create a consumer base for Tablas Creek, so when the wines got onto shelves or wine lists, they tended to gather dust. We assumed that if we made great wines, somehow the news would get out to the people who always clamored for Beaucastel (coming off a Wine Spectator #1 Wine of the Year honor in 1991), and the sales would take care of themselves. That turned out to be wildly optimistic. While our association with Beaucastel helped get the wines onto the shelves and lists, the boost it provided in sales wasn't enough to overcome the wines' unfamiliar names and lack of category, and the winery's own nonexistent track record. In the end we had to do the hard work of brand building: telling the story to one person at a time in our tasting room, to ambassadors in the trade, and to the masses (such as it was) through press coverage.

One caveat: a key piece of this turnaround was our decision in 2000 to bestow the name "Esprit de Beaucastel" on our top white and red blend. Unlike the names "Rouge", "Blanc", "Reserve Cuvee", and "Clos Blanc", having Beaucastel on the front label instead of in the back story was one of the early keys in reminding consumers who might have some vague awareness that the Perrins were involved in a California project that this, Tablas Creek, was that project. So, the Beaucastel name did matter... but people needed a more explicit reminder.

Right #5: Fundamentally, this place is great for these grapes
Ultimately, we got right the most important question, and Paso Robles has turned out to be a terrific place in which to have founded a Rhone project. The evidence for this is everywhere you look in Paso. It has become the epicenter of California's Rhone movement, with more than 80% of wineries here producing at least one Rhone wine. It became the home to Hospice du Rhone, the world's premier Rhone-focused wine festival, for which high profile Rhone producers from France, Australia, Spain, South Africa, Washington, and all over California convene every other spring for three days of seminars, tastings, dinners, and revelry. And the range of Rhone grapes that do well here is exceptionally broad. You can taste some of the state's greatest examples of Syrah, of Grenache, of Mourvedre, of Roussanne, of Viognier, and of Grenache Blanc all here in Paso. In this, it even surpasses the Rhone. You aren't generally going to taste world class Syrah or Viognier from the southern Rhone; it's too warm there. And Grenache, Mourvedre, and Roussanne all struggle to ripen in the northern Rhone. But the cold nights and the calcareous soils found in Paso Robles provide freshness and minerality to balance the lush fruit from our long growing season and 320 days of sun. Rhone producers here have enormous flexibility in how long they leave the grapes on the vines, which allows them to be successful in a wide range of styles.

And I haven't even mentioned yet the happy accident (which I'm pretty sure my dad and the Perrins didn't consider in 1989) that Paso Robles has proven to be an incredibly supportive, collegial community, which has embraced its identity as a Rhone hub and turned enthusiastically to the business of improving its practices, marketing its wares, and becoming a leader in sustainability.

Conclusion: The next 30 Years
Ultimately, what makes me so excited about where we are is that we've had the opportunity to work through our startup issues, and to make the adjustments we thought Paso Robles dictated, without having to compromise on our fundamental ideas. We're still making (mostly) Rhone blends from our organic (and now Biodynamic) estate vineyard, wines that have one foot stylistically in the Old World and one in the New World. And we're doing it all with grapevines that are only now getting to the age where the French would start to really consider them at their peak.

Buckle up, kids. The next 30 years is going to be amazing.

Unnamed


Ian Consoli: The Prodigal Son Returns (to Marketing)

By Linnea Frazier

With this blog I am so happy to introduce Ian Consoli, our new Marketing Assistant. I will be leaving for a cellar position in New Zealand in March, but Ian has already begun transitioning into my marketing role from the tasting room and we couldn't think of a better way to familiarize the face behind the future emails than with a blog! If you've visited our tasting room over the last year, it's likely that you tasted with this man. His knowledge and impish personality will speak for itself. 

Where were you born and raised?

The township of Roblar, 8.6 miles south of Tablas Creek.

What drew you to Central California?

I wanted to come home.

Young Ian

How did you first hear about Tablas Creek?

I used to manage business and marketing objectives for a small non-profit in Los Angeles. We were coming up on a big fundraiser and I was trying to put together a big item package. One of my childhood friends (Jake Miller) worked in the tasting room at Tablas so I asked if he thought he could help. He more than helped by putting the whole package together himself with the first donation being wine and a tour from Tablas Creek.

You've been working in the tasting room until now. What will your new role here at the winery entail?

As the new marketing assistant I will be doing a lot of listening and a fair amount of talking. If you hashtag #tablascreek or tag us on your posts, I will be the voice answering any questions you have or adding context. Same if you comment on our social media content. If we have news to share, or we're coming to your neck of the woods, you'll see my name at the end of the email. I'll be working on blogs like these so you get to know our team better. Less visibly, I'll be working behind the scenes on the digital backend to help more people find Tablas Creek if they come to Paso Robles, and our content when they're searching for topics that we've researched. I'll also be coordinating our participation in events locally and around the country. To that note hopefully you'll see me at an event near you!

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What are you most excited for in your transition from Hospitality into Marketing?

Learning. It’s what hooked me on wine in the first place and marketing, like wine, is always developing. The challenge of keeping at and ahead of trends is an exciting position to be in.

Which are your other favorite wines or wineries locally or around the world?

Tablas is my favorite winery. I think if you drink the same winery’s wines every day for a year and you still love them it’s hard to argue. After that I’m pretty true to my millennial status in my obsession with organic and biodynamic wine. Ambyth in Templeton is awesome, Lo-Fi Wines in Los Alamos is exciting, Solminer in Los Olivos is intriguing. Regionally the Loire Valley has my curiosity at the moment.

If you had to pick one red and one white to drink for the next month which would you choose?

Tablas Grenache 2016

Esprit de Tablas Blanc 2012

What is one of your favorite memories here?

The first time Neil Collins talked to me.

What would people be surprised to know about you?

I sew.

Unique Spring - Ian (002)

How do you like to spend your days off?

I like surfing so if I can I get in the water. I own an aussie named Rasta (after Dave Rastovich) and enjoying every day I can with him is a priority. I really like organizing things so as lame as it sounds I spend a lot of time going to my parent’s house and organizing their garage. I’m also taking wine business classes on the side so I donate a day to that typically. And of course going wine tasting.

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How do you define success?

Success is the measurement of smiles one sees in a lifetime.


Are the gloomy messages about the state of the wine industry warranted? I say not for wineries like us.

I've spent much of the last two weeks at wine industry symposia: first the Direct to Consumer Wine Symposium in Concord, CA, and then the Unified Wine & Grape Symposium another hour north in Sacramento. I spoke on panels at both, at the first on measuring ROI on winery events, and at the second on technical and market challenges and opportunities for rosés. But I also took advantage of being there already -- and the free passes that come with being a speaker -- to sit in on some of the other sessions. Both events began with "state of the industry" reports, with quite different outlooks.

DTC Wine Symposium SessionPhoto courtesy DTC Wine Symposium

The core message I took home from the DTC Symposium was mostly positive: that direct-to-consumer wine sales continue to grow at a healthy rate, with shipping totals topping $3 billion for the first time in 2018, and growth coming broadly across wineries of all sizes.  What's more, the tools that wineries have to capture, analyze, and fulfill these consumer-direct sales have never been better.  The take-home message from Unified was less positive, with worries about declining sales at restaurants and supermarkets, grape market oversupply, demographic challenges for wineries as their prime customer base (mostly Baby Boomers) ages, and challenges connecting with Millennials through traditional wine marketing. These have spawned some much-discussed articles (within the wine community, anyway) containing lots of hand-wringing about what the future might bring to California wine. A couple (click-bait titles notwithstanding) will give you a sense of the worries:

In a second piece, on his own blog (Millennials are talking but the wine industry isn't listening) Blake Gray identifies some of the barriers that may be keeping Millennials from gravitating toward wine, at least at this point in their lives: the industry's resistance to transparency in labeling, its steadfast promotion of just a small handful of grape varieties, and an inability (or unwillingness) on behalf of wineries to engage with the Millennial consumer. I'd add a few others, including the often high price of premium wines and winery experiences, which puts them outside the reach of many cash-strapped Millennials, the marketing of wine as elite (which often crosses the line and comes across as elitist, to an audience that prizes authenticity), and the dominance of shelf space in the wholesale and grocery markets by a handful of large wine companies, when what every study of Millennials indicates they want is 1) a closer relationship with real people behind the products they consume, and 2) confidence that those products are produced in a way that matches their values.

So, which is it? Are wineries in good shape, or are there dark clouds on the horizon? As is usual with complicated questions, it depends on where you're looking, and over what time frame.

Let's look at the negatives first. Some of the largest wine companies (including Bronco, Gallo, and Constellation Brands, all of whose sales skew toward lower-priced wine in chain retail) saw sales decline last year. Many traditional fine dining restaurants have closed or rebranded as consumer trends have shifted toward more casual experiences. Nielsen data showed that overall wine retail sales declined slightly (0.5%) by volume last year, at least in the 70% of retailers that participate in the Nielsen data collection.1 The combination of distributor consolidation and winery proliferation have made it harder for most small-to-medium wineries to sell through the wholesale channel. And tasting room visitation was down in many established regions in 2018, including Napa and Sonoma, even as tourism was up.2 So, if you are a small-to-medium winery who wants to sell their production through wholesale, a large winery whose sales skew toward the lower end of the retail spectrum, or a winery in an established region whose customer acquisition mostly happens in your tasting room, you likely have cause to worry.

On the positive side, winery direct-to-consumer shipped sales grew again in 2018, by about 12%, to more than $3 billion, a figure nearly triple what it was just in 2011.3 Wineries can now ship to 90% of the US population, with the right permits. The average price of a bottle of wine sold increased both in three-tier retail and in direct-to-consumer last year. Although tasting room visits are down in many areas, our experience is that people are spending longer when they do visit, are more interested than ever in learning the story and the practices behind the wines, and are happy to spend more: our average sale per visitor was up 8% last year. The price ranges of wine that saw sales declines were the under-$10 bottles (at which, I think it's fair to say, California does not excel) while all higher price points saw sales growth. And most importantly, total winery sales, when you take direct-to-consumer into account, grew 4% in 2018. That means that the pie continues to grow, and it seems like it's primed to continue to grow in the segments that most impact wineries of our general size (small to medium) and profile (producing wines between $25 and $60, with DTC providing the majority but not the totality of our revenue).

Some of what I see as more equivocal data has been painted in the most negative light. There are some demographic trends that wineries need to plan for. Wine's largest audience, for the last two decades, has been Baby Boomers, and with the average Boomer reaching retirement age -- the time at which, historically, cohorts start spending less on wine -- they will need younger generations to step in. And GenXers, of which I am a proud member, have been doing so. Will Millennials, who are a larger cohort than GenX, step up when it is their turn? It remains to be seen. But I think that the doom and gloom about them is pretty overblown. The median age of a Millennial is 30, but the Millennials at the peak of the demographic bubble are just 24. Were many Baby Boomers drinking wine at age 30, let alone 24? No. How about GenX? Not much. Millennials are drinking more wine than preceding generations were at the same age, which should be a positive enough trend. But I think the news is better than that, at least for wineries like us. They are also much more likely to drink craft beer or craft cocktails, to be interested in the source and making of the foods and drinks they consume, to have grown up in a wine-drinking household, and to be open to trying wines from new grapes and new growing areas.

Are many Millennials hamstrung by the poor job market when they entered the work force and saddled with student debt? Absolutely. But even if they never attain the buying power of earlier generations, it seems to me that the sorts of wines that Millennials are likely to embrace are the sorts of wines that wineries like Tablas Creek would like them to embrace: smaller family run wineries, from organically farmed vineyards, incorporating grapes that may be outside the mainstream but are good fits for their growing locations, and wines that offer value, at whatever price point.

Does that sound like a gloomy future? Not to me.

Footnotes:

  • 1. Note that there are some important retailers whose data is not included, most notably Costco, and that the Nielsen data also does not include winery DTC sales.
  • 2. All these data points are from (and beautifully explained in) the 2019 SVB Wine Report, the industry's gold standard for data collection and analysis. 
  • 3. This data point and the ones that follow come from the 2019 ShipCompliant Direct to Consumer Wine Shipping Report

Releasing Esprit de Tablas and thinking about my dad

This is the time of year when we release the Esprit de Tablas and Esprit de Tablas Blanc.  We've been doing this long enough to have a pretty consistent plan of attack each year.  First, in late summer, we send our most recent vintage of the Esprits out to the club members who ordered futures en primeur the year before. Then, the Esprit wines form the centerpieces of our fall VINsider Wine Club shipments, which go out to members in early October.  We show those wines to members at our VINsider shipment tasting party (which happened this past weekend) and look for a local event at which we can have them make their public debut (this year, it will be at our Harvest Festival dinner with the Cass House Grill in Cayucos).

Then, we turn our focus to the national market.  I spend a good chunk of my fall getting in front of our distributors in key markets around the country; in the last few months I've made trips to Boston, Pennsylvania, New York, and Washington DC.  I head to Chicago next week.  Tomorrow I'll make the drive up to Santa Rosa and show the 2016 Esprits for the first time to Regal Wine Company, who represents us in California.  In these presentations, I tell the story of Tablas Creek, remind people that the Esprit de Tablas wines are our flagship bottlings, and share the new vintage with the sales team, who will hopefully then take that message out to the right restaurants and retail shops they call on.

Last year, we realized that the story of Esprit de Tablas was really, in many ways, a distillation of the story of Tablas Creek. It seemed to me that the only appropriate voice to tell this story was my dad's.  So, when I was in Vermont last summer, he and I sat down in front of a camera manned by my brother-in-law Tom Hutten, and spent an afternoon talking about how Tablas Creek came about.

Filming the Esprit de Tablas video with RZH

When we were done, we had about two hours of footage, treasure troves of stories from my dad's 60+ year wine career.  The multi-talented Nathan Stuart, whose primary role is to oversee our animal program, took off his shepherd hat and put on his videographer hat, and spent the next couple of weeks editing the relevant pieces of the story into a five-minute video that traces the development of the Esprit de Tablas, from my dad's perspective.  I'll be showing this video tomorrow to our California distributor, and again next week in Chicago.

I didn't realize, when I went to put my presentation together, how much hearing my dad's voice would affect me, but I've been finding that a lot of the times I miss him most are when it sneaks up on me unexpectedly, and I hear him talking about Tablas Creek, and remember how much he loved working on all this.  I will always feel lucky that I got to spend that time working with him, helping him make his dream of what Tablas Creek could be into reality.

Hopefully, the distributor teams I show this to over the next couple of weeks will find it inspiring, too. And hopefully, I'll make it through my presentation (most of which comes after this video) without choking up.


When the 3-tier system works as it's supposed to, it's a beautiful thing.

Every summer, I spend a couple of weeks in Vermont.  I'm from there, and my mom still spends summers in the house I grew up in.  My sister and her family are 50 yards away.  And I get a chance to remind my California kids that there are places where it's green in the summer and water flows.  It's a lovely tradition, and I always find it regenerative.

Up until a few years ago, my dad, who like my mom traveled back east for the summer season, would always schedule a couple of consumer events near their Vermont home, and since his health began to decline a few years ago I've tried to continue the tradition.  I did one of these a couple of weeks back at the small shop Meditrina Wine & Cheese, in my hometown of Chester, VT. Now, this isn't a shop that moves dozens of cases of Tablas Creek each year.  But they consistently have a few of our wines on their shelves, their owner Amy Anderson is knowledgeable and passionate, and she's supported Tablas Creek for years. And, as the only legitimate wine shop in town, it was and is a regular destination for the family when we're in town. Amy I discussed doing a tasting together when I was in town last summer, and worked out the details this spring.

Meditrina Tasting 3

About 40 people attended the Wednesday evening tasting, pretty evenly split between people who heard about it from the email I sent out, people who heard about it from the email that Meditrina sent out, and people who were wandering by and stopped in because they saw the (modest) crowd. In the end, Meditrina sold a couple of cases of wine, a few new people learned about Tablas Creek, our Vermont mailing list members were grateful that we did an event (and let them know about it) on the other side of the country, and we helped solidify some relationships.  It's the kind of event that is a basic building block the world over for marketing a family winery.

I do dozens of events a year around the country, typically a mix of restaurant wine dinners, festivals, and in-store tastings.  Why was this one so gratifying?  Well, everything worked as it should, and no one just took advantage of the efforts to make a little easy money. Those efforts began with the promotion of the event. Both we and the shop did our parts in promoting the tasting; it's been on our Web site since the spring, both we and Meditrina sent out emails to our local mailing list members the week of the tasting, and Meditrina posted about it on their Facebook page. 

Meditrina Tasting 2

The good work continued with the logistics and delivery. When the wines that Amy ordered didn't arrive as they were supposed to on the distributor's delivery truck, it looked like we might not be able to pull off the event. But Anton Vicar, the wine specialist for our VT distributor Baker Distributing, jumped into action. He made a special run to the warehouse so that we had wines to sell at the event, bringing them himself as the event was starting. And he hung out at the event after, socializing, making sure things were running smoothly, and interacting with the guests.

And Amy completed the trifecta by putting together an event that rewarded the people who came. The tasting was free. She invested in a nice platter of local cheeses and meats for some nibbles. And she offered great prices on the wines we were showing that evening, so people could feel good about taking wine home with them that night.

Where could this have gone wrong? 

  • The wine shop could have taken the extra business and not done the outreach to help share the winery's story. Or they could not support the wines year-round. (They did, and do.) Or they could have offered the wines at full markup and just taken advantage of the people we brought in. (They didn't.)
  • The distributor could have just said "sorry", asked that the wine shop take orders, and delivered the wine later in the week. Meditrina would have done so, but it'd have been extra work, and inconvenient for the guests, some of whom drove nearly an hour. (Thank you, Anton.)
  • The guests could have used the free tasting as a chance to try some free wine, not bought anything, and maybe ordered it later. But they didn't. They came with enthusiasm and good questions, and supported the shop that did the work of putting on this nice event.
  • Or we, as a winery, could have not promoted the event, and just taken the extra orders that came of it.  I hear all the time when I do events with accounts that the last winery they "partnered" with didn't do anything to ensure the event's success, and didn't turn out their own customers. (This drives me nuts. We always send out news about the events we do to our mailing list members, who are generally grateful. Why wouldn't you do this?)

In the end, everyone benefits.  The wine shop gets some new customers and some extra sales.  The winery gets some new customers, some extra sales, and the gratitude of some mailing list members.  The distributor gets some extra sales and the gratitude of both an account and a supplier.  And the customers get to try some wines they otherwise wouldn't have tried, and a chance to interact with a winery principal 3000 miles from home.

Meditrina Tasting 1

I know that there are times when I complain about the wholesale market in my blog posts.  And it can be frustrating, for all the reasons I explained above.  But this was a great example of how it can work for everyone, and why wholesale distribution should be a benefit to a winery's direct sales, and vice versa.

PS Thanks to my talented sister Rebecca Haas for taking the photos that evening.