Thanksgiving AM in Richmond. And what Kermit said

The temperature here is very warm, the skies are partly cloudy, a strong wind is blowing.  Trouble is coming, rain and thunder later, but for now it's beautiful. 

After Manhattan, it's almost shocking to see how far along the leaves are here.  Back home most of the leaves are still green.  Here, several hundred miles to the south, the leaves have almost all turned brown, red, almost purple in some cases.  There are lots of maples and oaks here, few in Manhattan (I guess they don't do well in so much air pollution).  In any case, it really looks like autumn here, even though it doesn't feel like it at all.

Since we're in Richmond it's important for a wine-mad guy like myself to point out that wine lists are dreadful almost everywhere you eat.  Dreadful.  Distributor lists of the worst kind.  Boring, bad shit at disgraceful prices.  This is when you long for Manhattan.

Which leads me -- smooth eh? -- to a short meditation on wine pricing and imports. 

Yesterday Eric Asimov published an interview with the pioneering importer and, I'd say, transformer of wine tastes in America, Kermit Lynch.  In the piece Lynch echoes something that friends of mine in the wine biz say from time to time, whether they are salesmen for distributors or producers: "There's no real justification for any bottle of wine to sell for more than $10-15 a bottle."  OK, some types of wine that require a lot of hands-on interventions, like real Champagnes, may justify more.  Maybe $20? 

What Lynch actually says in the article is:

“How can anybody say that French wines are all expensive?” he asked. “I’ve never seen the dollar this low, but French wines are still the best values.”

He makes an excellent point.  There are plenty of good, wholesome, even ravishing wines from all parts of France, especially the Southwest, which cost far less than their supposed counterparts from California or Italy.  On many a wine shop's shelves in New York you can find dozens of interesting, flavorful, characterful wines from L'Hexagone.  For under $10 all the way to, say, $30 -- in other words, in the low-to-mid-priced category.  Drop for drop for better values than wines from anywhere else when you consider their quality. 

This upsets me as far as Italian wine goes, since I see so much silly pricing from Italy.  There's a strong aspirational component to it, where some good maker of authentic wine sees a neighbor selling inferior but "international" wine at 12-20 euros ex-cellar.  [Translating to about $35-60 retail in the US.] This guy says to himself, "So-and-so is making shit.  He's got a name now, he's got points attached to his name, but damn it, I should be getting at least 9.50 for my best!"

As usual, there's a parochialism of viewpoint that is not an Italian monopoly -- Californian pricing strikes me as suffering from the same tendency.  Regardless of that, the producer should look at pricing in a broader context, such as:

In a given market, what is the available universe of wines which have roughly the same quality and characteristics?

In the case of a good, "authentic" wine producer from Campania, for example, he should realize that in a world wine marketplace like the US, any wine shop worth its salt will have dozens of similarly priced "Mediterranean" wines from France, Italy, Spain and any number of other "old world" countries.  Delicious, food-friendly wines with perhaps a taste of the macchia (maquis) or the tang of the sea.  Red, white, pink.  Dozens, all competing at the same price points. 

So our mythical producer will sell a hell of a lot more of his stuff at $10-12-13 than $20-25.  Further, unless he's hopelessly inefficient and incompetent, he'll make money on it.  Maybe not get rich and swan about in a new 4matic, but he'll do all right.

By the way, it is also a better long-term marketing strategy to begin humble -- selling good, reliable wine of character at $10-12 -- and then move up market.  This has proven successful again and again in every conceivable category of product.  This is where wine producers need to stop thinking like peasants, grabbing what they can while they can, before Persephone heads underground again, and more like business people.  People who invest.  And "invest" means more than in capital equipment.  It also means the intelligent management of long-term risk through considered decisions in order to reach higher goals for bigger rewards.   This is what successful branding is all about, and it need not be the exclusive possession of multinational wine corporations.

Put simply, build a sound relationship with your consumer base and learn from each other.

Comments

[Jeremy Parzen]

In _Il Barolo come lo sento io_, Martinelli forewarns of _ricariche_ and how they will affect the sale and prices of Italian wines.

Isn't it amazing how Count Marzotto created more awareness of Santa Margherita Pinot Grigio by upping the price (and putting it in a clear Bordelaise bottle)?

Happy thanksgiving... J

[Terry Hughes]

I do believe that a good part of his success was in understanding a lack in the market, and inventing a way to satisfy it.

That and pouring a lot of dough into the Trade...

[Marco]

Good points to chew on, Terry. D. Vino had a recent post on California's chance to produce good wines under $10 at this point in time. I don't think it's going to happen, do you?
You're right on about Languedoc, Roussillon, Minervois, Ventoux et al.

[fredric koeppel]

Every time I open a bottle of a great little Spanish garnacha that sells for $10 or $12 (or $9 on discount), I have to wonder why so few producers in California can't emulate this success. 80 percent of the wines in that price range from the "Golden State" are bland and generic, and I taste a lot of them every week. Australia is getting just as bad.

[Terry Hughes]

I agree. You hear so many bullshit reasons for Cali's inability to bring such nice, tasty little wines to the market. Cost of labor (sure, illegals who get T-shirts for bonuses), what the market wants (ie, what the industrial winery's got to sell), and I think a genuine contempt for the American wine drinker.

I tell you, it's the Detroit situation of a couple of decades ago in a new context. And looks what's happened there with the decline of the SUV (read: oaky fruit bomb)...