Category Archives: Washington wine

Crisis & Change for Washington Wine

November 7, 2023 By in economic crisis, Washington wine, wine, wine markets 2 Comments

Is the Washington State wine industry in a crisis? How you answer this question depends on where in the industry you sit and how you define a crisis. Certainly the news this year, as reported at The Wine Economist and elsewhere, is not good news. About 10,000 acres of the 60,000+ acres under vine appear to be surplus to requirements. Serious adjustments on both the supply and demand sides of the market are necessary. Change is in the wind.

Crisis and change has been a recurring theme to my economic research starting with my 1990 Oxford University Press book Mountains of Debt. Vested interests, structural rigidities, and simple momentum often lock nations, industries, and people into particular paths while the conditions around them evolve. Sometimes the only thing that can break the pattern is a crisis.

So let’s put the Washington situation in context and think about the future. Herewith several brief points to stimulate thinking.

Crisis is a durable feature of global wine.

The history of wine is a history of crises, mostly local or regional but some (think phylloxera) both global and transformational. University of Adelaide wine economist Kym Anderson’s history of the Australian wine industry, for example, is told in terms of five cycles of boom and bust. If he were to revise his history today, Prof. Anderson would have to add a sixth crisis to the list: the collapse of much of the Aussie industry due to the loss of its biggest export market, China.

Prohibition created crisis in the United States and many other countries a century ago and it took decades for the wine industry to really recover. As I wrote in a chapter of my book Wine Wars II, wine consumption actually increased during the Prohibition period in the United States as consumers exploited a loophole in the law that allowed for home production of up to 200 gallons of wine a year for household use. The quality of much of the wine was very low and alcoholic strength was valued above all.

The legal wine market that emerged when Prohibition was lifted leaned toward sweet, high-proof wines; it took years (until the 1960s in many places) for production of conventional table wines to become the norm. This was as true in Washington as elsewhere, where wines like the NAWICO Port shown here were the popular choice.

Washington’s current wine crisis is part of a global problem.

Washington’s wine crisis hasn’t happened in isolation. It is best scen in the context of a global wine glut, which has been the focus of several recent Wine Economist columns. As global wine consumption first stalled and then declined after several decades of steady growth the market shifts mean there is too much wine produced and too many vineyards growing grapes. It happened slowly and then suddenly and it happened almost everywhere. In Washington and California. In Bordeaux and Rioja. A friend reports driving by abandoned vineyards in Tuscany.

Like Tolstoy’s unhappy families, the story of each afflicted wine region is different, but they all happen in the context of global over-supply. Exporting  your way out of a wine surplus is harder when so many others are trying to do the same.

Washington’s Wine Crises: California Wine Bill

Washington is no stranger to wine crisis, as I have written on The Wine Economist, and it is interesting to review two cases in particular: the California Wine Bill of 1969 and the Langguth wine bust of the 1980s. Both situations were damaging at the time, but proved useful in the longer-term evoluations of the industry.

Wine sales became legal with the end of Prohibition but the market in Washington was not completely open. Washington producers gained a measure of protection from out-of-state (that is, California) producers because they could work directly with distributors whereas “foreign” wine had to go through the state liquor agency.

The California Wine Bill of 1969 (I have heard it called the “Gallo Bill”) leveled the playing field and took away the home-state advantage. Washington producers could not compete with the inexpensive wines that flooded in from California and so they were forced to turn up-market for sales. A quality wine indsutry emerged since that was the only kind that made sense.

As The Wine Economist reported, the Washington industry’s long-term decline as a protected industry reversed course and the modern wine sector emerged. The transition was far from painless and some producers disappeared. But Chateau Ste Michelle, Washington’s leading wine producer, can trace its roots back to the NAWICO and Pommerelle wines that the California Wine Bill crisis helped erase from store shelves.

Langguth Boom and Bust

The successful German wine giant F.W. Langguth boasts a brand portfolio that includes the famous Blue Nun brand. Langguth was attracted to Washington state by the success of Chateau Ste Michelle’s Riesling wines (which are still today, I think, one of the most popular on-premise by-the-glass wine selections).  Seeking to ride Riesling’s rising tide, they became the first important international investors in the Washington wine industry when they entered the market in the early 1980s.

Vineyards and a winery were required and soon appeared. The owners of Sagemoor Farms agreed to develop the 221-acre Weinbau vineyard on the previously vine-free Wahluke Slope. A state-of-the-art $5 million winery was constructed near Mattawa, far away form Chateau Ste Michelle’s big facility near Seattle.

Five million dollars doesn’t seem like a lot of money for a winery today, but back then it was big bucks (Ste Michelle’s big complex in Woodinville, built just a few years earlier, cost about $7 million). To build such a big winery out in the middle of nowhere on speculation of future market growth must have seemed crazy.

And, in fact, the project collapsed in just a few years and the Langguth family pullled out of Washington state. The history of the project makes good reading. Opinions vary about what caused the collapse. Maybe the project was ahead of its time (dry Riesling, for example, when sweeter wines were the market sweet spot). Maybe the project was poorly managed, with too much distance between those pulling the strings and those actually doing the work.

In any case, the Langguth label disappeared. The Weinbau Vineyard became a key element of a growing Wahluke Slope vineyard scene. The shiny new production facility was sold to Snoqualmie Vineyards, which was then an important producer and is now a value label in the Ste Michelle portfolio. Mattawa might still be pretty much out in the middle of nowhere, but now there are several shiny facilities producing lots of wine.

Creative Destruction

This brief account of wine industry crises in Washington and around the world has only scratched the surface of the topic. What are the lessons we can learn from this history? The first, which is where this column started, is that crises are a durable feature of the wine industry and once a given crisis is over the best thing to do is to beging preparing for the next one! Some of the crises from a century or more ago (think phylloxera and Prohibition) cast a long shadow that still affects us today in some respects.

But there is another lesson here, which was suggested to me when I talked with Seattle Times writer Erik Lacitis, whose report on Washington wine appeared in the Seattle Times’s Pacific NW Magazine over the weekend. Lacitis didn’t write about wineries closing their doors, although some have done so. Instead, he focused on winery start-ups and the many new folks who enter this business every year.

In fact, as Lacitis makes clear, the industry is remarkably resilient and each painful crisis lays the foundation, in one way or another, for future growth. The California Wine Bill, for example, destroyed part of the Washington industry but set a course for premium wine that was exactly in line with the way the market developed.

The Langguth collapse was painful, too, but left us with those production facilities near Mattawa and the vines that became the Wahluke Slope AVA, one of the state’s most important wine regions.

Is this an overly-optimistic way to think about Washington’s wine problems today? Perhaps. But I note without comments that the Langguth winery near Mattawa is now a custom crush facility, the sort of place where the next generation of Washington wineries get their start.

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Want to dig deeper into Washington wine industry history? I recommend two classic books:

The Wine Project: Washington State’s Winemaking History by Ronald Irvine with Walter L. Clore (1997) and

Washington Wines & Wineries: The Essential Guide 2/e by Paul Gregutt (2010).

Too Much of a Good Thing: Washington’s Wine Woes in Perspective

August 22, 2023 By in Economic impact, Washington wine, wine, wine markets 12 Comments

It has been a little more than a month since executives from Ste Michelle Wine Estates (SMWE) told their Washington winegrowers the bad news. Having already trimmed grape purchases over the past several years, they now planned to cut grape contracts by 40 percent over the next three years, starting with this fall’s harvest. SMWE is by far the largest wine producer in Washington and many of the vineyards that have come into production in the past ten years were planted with sales to “the Chateau” clearly in mind.

The announcement was big news. The wine press here in the U.S. and around the world has covered this situation very well. I am not a SMWE insider, so I don’t have breaking news to report here, but as someone who studies the U.S. and global wine markets (and as a personal consumer of Washington wine products), I want to contribute some perspective to the situation, which I hope Wine Economist readers will find useful.

Washington’s Problem By the Numbers

Washington has about 60,000 acres of producing vineyards today, a number that has grown rapidly in the last decade. SMWE is such a dominant producer in the state that their 40 percent cut in grape purchases will make about 10,000 vineyard acres redundant. Growers are advised to look at the situation strategically and to identify diseased and unproductive vineyards for vine removal. Demand and supply are out of balance. Thoughtfully reducing supply is a necessary short-term action.

This is not only sensible advice, it is also the advice that I hear nearly everywhere in the wine world these days.  Jeff Bitter, the President of Allied Grape Growers in California, has been telling our State of the Industry audience at the Unified Wine & Grape Symposium this very thing for several years. It isn’t just that Washington has too many grapes, it is a California and global problem, too. I know of a few regions around the world where grapes are in short supply, but the list isn’t very long.

So the Washington situation isn’t unique, but its impact gets attention because of SMWE’s size relative to the Washington industry. Where other regions have suffered from grape cuts by dozens or even hundreds of smaller producers, the spotlight is focused clearly on Washington’s big producer. The big cut makes the news more clearly than many smaller cuts even if the net effect may be much the same.

That said, the proportion of vineyards that will be directly affected by cuts in Washington is higher than in California. This is partly the case because Washington was planting new vineyards while many growers in California were pulling them out. That explains a lot of the problem but not all of it.

The Curse of the Signature Wine

The success of Sauvignon Blanc from New Zealand and Malbec from Argentina has made many people believers in the “Signature Wine” phenomenon. You need to have one signature wine to define a wine-growing region, the story goes. I have always seen Signature Wine as both a blessing and a curse. It is a blessing because it makes a region easier to understand and to sell. But it is a curse because, in my experience, the monolithic identity makes it harder to sell other wines from the region.  I have had some great Syrah and Riesling from New Zealand, for example, but these wines don’t get much love because everyone is thinking Sauvignon, Sauvignon, Sauvignon.

Ditto for Argentina, where the Syrah, Cabernet Franc, and Pinot Noir can be wonderful and the Semillion will surprise you. But the market chant is Malbec, Malbec, Malbec. Listen. You can hear it now! And that’s despite the fact that some winemakers think their Cabernet Sauvignon is a better wine.

Students of economics may recognize this as a sort of cockeyed variation on the foreign exchange theory of the “Dutch Disease,” where great success in one industry can backfire in terms of its negative impact on other industries.

I saw the Signature Wine blessing in person when we visited New York City a few years ago. A tour of notable wine shops found lots and lots of wines from Oregon and very few from Washington. Why? Customers who came looking for Oregon wines wanted one thing: Pinot Noir. So the shops made sure to have a large selection. But Washington wine isn’t dominated by one grape variety. There are lots of great wines, but no defining grape variety theme. And so no clear guidelines as to what consumers might expect.

Washington’s Signature Price Point

Actually, that last statement is not quite correct, and maybe this is the important point. Whereas Oregon is Pinot Noir (and Napa is Cabernet Sauvignon), Washington’s Signature Wine isn’t defined by a grape variety so much as a price point. I don’t think it was intentional. Washington has always made lots of different wines from lots of different grape varieties at lots of different price points. But SMWE, the state’s dominant producer, and some other volume producers, too, eventually discovered success by producing large quantities of wines in the $9 to $11 price range at a time when that was the sweet spot of the market. Bulls-eye!

SMWE has many wine brands from Washington state, how did it (and the state) end up being stereotyped to one spot on the wine wall? It is too big a question to be analyzed here. I admit that as a consumer, I sometimes struggled to figure out the relationship between big-volume brands like Chateau Ste. Michelle, Columbia Crest, and 14 Hands. It seems like the power of market growth in that critical price range was like the firm pull of gravity. Hard to resist. But I am sure there was more to it than that.

As premiumization has driven the market sweet spot higher, SMWE’s advantage has melted away enough to create a crisis. That signature price point is still important, but it can’t absorb all the grapes that were planted in anticipation of its continued growth.

Realignment is necessary, but it won’t be as simple as raising price or creating new brands (or designing new labels as I have seen on store shelves). That signature thing will be harder to reset because it is easy to change how you represent your brand, but hard to control how others will perceive it (a variation on a Machiavelli lesson).

Washington is now in a new era, where identity will come from the bottom up through the work of the many successful small- and medium-sized wine producers. It is a big challenge, but the quality is there and so is the determination.

A California Thought Experiment

Here is a little thought experiment that might put the Washington situation in context. What would it mean if California’s largest wine business, Gallo, were to cut grape purchases by 40 percent the way the SMWE did in Washington? I put this question to Natalie Collins, President of the California Association of Wine Grape Growers, and Jeff Bitter, President of Allied Grape Growers. Here is my analysis (all errors are mine, not theirs) based on our conversations.

Gallo buys about one-quarter of California’s wine grapes (a much smaller proportion than SMWE in Washington, although that could be where things end up). That would amount to about 1 million tons of wine grapes in a fairly typical 4 million ton year. A 40 percent cut would mean 400,000 fewer tons of grapes and so, figuring maybe 12 tons per acre, that’s more or less 35 thousand acres of surplus vineyards. If all those vineyards stayed in production, that would be a huge surplus of grapes that would drag down grape prices in some market segments.

The hypothetical Gallo cuts wouldn’t impact all parts of the wine grape market equally, of course. Given recent market trends you might expect vineyards in the interior to be disproportionately affected, although high-quality grapes might find a home in some California blends, replacing more expensive grapes from other regions as the cost squeeze continues to bite.

Bottom line for this thought experiment: a 40 percent cut by the state’s biggest wine grape buyer would have a greater absolute impact in California, as you would expect, but SMWE’s cuts are a larger relative problem in Washington

Something to Think About

Do I expect Gallo to cut grape purchases by 40 percent? No. This is just a hypothetical exercise to stimulate thought.

But Gallo’s huge portfolio is subject to the same general market forces as other producers, so some quantity adjustments are necessary. And Gallo might even become a seller of wine grapes in some market segments if they can’t find a use for all the grapes on the 20,000 acres of vineyards that they control.

Gallo selling grapes? Now that’s really something to think about.

Einstein’s Law & Washington Wine

July 7, 2020 By in Washington wine, wine, wine education 2 Comments

einsteinEinstein said that everything should be made as simple as possible … but not simpler. At some point further simplification loses the essence of whatever is being studied. I am pretty sure that he was talking about physics, not wine, but I think the concept applies here as well.

I was reminded of Einstein’s Law when I learned about what the Auction of Washington Wines is doing to try to spread the word about this region’s dynamic wine scene. Usually the auction is an in-person event and so the impact is limited a bit by attendance constraints. This year, however, they’ve gone virtual, which opens up expanded possibilities. And they’ve partnered with the world-class story-teller, Karen MacNeil, to spread the word, simplify the story, but not too much.

The Signature Grape Syndrome

The temptation to violate Einstein’s law is strong. Wine people look at the success of New Zealand and Argentina,. for example,  and decide that a single signature grape is the answer. I have argued that a signature variety is no silver bullet and, in any case, what grape variety would Washington choose? Riesling makes sense. Chateau Ste Michelle is the world’s largest producer of Riesling wines. Merlot had proponents for a while (pre-Sideways).

Cabernet Sauvignon was the recent favorite, but too much was planted both in Washington and parts of California, and it is not the easy sell it once was.  And there are lots of other contenders including Syrah, Grenache, Cabernet Franc, and rising Tempranillo. No one grape variety rules them all … or should.

waWashington’s wine diversity is a blessing for consumers, but a problem for marketers. No wonder the Washington State Wine Commission went to the other extreme in choosing a new logo. Some of my wine friends admire the austere graphics, but I think it simplifies too far.  What story does it tell? Einstein would not approve, although I am not sure what alternative he’d suggest. He’d probably just pour another glass of great Washington wine and leave it at that.

Happily the new logo is part of a useful package of resources to help wineries tell their (and Washngton’s) story. And I don’t think anyone will mistake WA wine for the logo of Wawa, the Pennsylvania-based gasoline and convenience store chain.

Washington Wine Storybook

Karen MacNeil and the Auction of Washington Wines have to simplify, too, but virtual platforms allow more depth and detail.  They’ve organized a series of on-line interviews and tastings, each with a particular theme.  Wines for each session are available for purchase.

wawine

A webinar on Washington wine “trailblazers” (originally web-cast on June 18  but you can still watch the video) brought together pioneers Allen Shoup, Rick Small, and Marty Clubb. Shoup, Small, and Clubb have seen the Washington industry grow from just a hand full of wineries to over 1000 producers. MacNeil begins the conversation by asking, did you always know this was going to be a success? Good question. Click on the image to hear their answers.

The second webinar, which first appeared on July 2, focuses on the next generation, giving a sense of the dynamic of this young industry. Andrew Januik, Rob Mercer, John Bookwalter, and Caleb Foster are featured.

Next up (on July 16, so you still have time to place your wine order) is a program on women in Washington wine featuring Leah Adint, Lisa Packer, and Jessica Munnell. The status of women in the wine industry is one of Karen MacNeil’s particular concerns, so this session is an opportunity to add this important issue to the mix. Hopefully future programs can explore issues of diversity and inclusion in even greater depth and breadth.

Three Ps: It’s Complicated

Other programs in the series will explore the topics of terroir (Red Mountain) and grape varieties. There’s no way they can tell the whole story of Washington wine any more than the previous sessions could, but they aren’t likely to violate Einstein’s Law, either.

Sometimes complicated things need to be understood in complicated ways, so there is plenty of room for future webinars to examine the great diversity of Washington’s “Three Ps,” the people and their distinctive visions, the places (the varied terroir), and the plants (the grape varieties that thrive here).

What’s Up in Walla Walla? Wine Tourism

October 29, 2019 By in emerging wine regions, Washington wine, wine 1 Comment

downtownwallawallaWalla Walla has become an important wine center and an exciting place to visit, but it wasn’t always that way. When Sue and I first came here years ago you could count the wineries on one hand and Main Street, which really was the main street of the town, was strictly for locals and their everyday needs. If there was a destination address on Main Street it might have been Brights Candies or the historic theater across the street.

Walla Walla’s business was agriculture back them –wheat, peas, and the famous sweet onions — and the banks and suppliers that farmers need to get along.  A state prison and prestigious Whitman College — an unlikely combination — were the urban anchor bookends.

The farms are still there and still very important and so are the prison and the college, but what draws thousands of tourists to Walla Walla today are wineries and vineyards.  Sue and I paid a quick visit to the valley in the middle of the week shortly after Labor Day and here’s what we found.

Urban Wine Village

Although the buildings look the same from the outside, downtown has been transformed by wine tourism. It is possible to spend a few days enjoyably tasting wine just by meandering up and down Main Street and its tributaries, without every getting into a car or walking too far from your hotel.

Winery tasting rooms line the streets along with restaurants, cafes, tourist shops … and Brights Candies.  Strolling on a weekday afternoon watching people sitting at sidewalk tables sharing bottles of wine presents a scene that could not have been imagined twenty years ago.  As the sun went down, lights and music came up and people of all ages appeared — seniors, families with children, college students. Lots of dogs, of course. A nice mix.

With so many tasting rooms in just a few blocks, product differentiation is important. Cayuse, the ultimate local allocation-list cult wine, is famous for having a brightly painted tasting room  … that never seems to be open. How exclusive is that? Other wineries keep their doors open as much as they can because direct-to-consumer sales and wine club commitments are critical to their economic sustainability.

One tasting room featured wine slushies as a way to stand out in the crowd. Kinda like a Slurpee at 7-11, I guess, but with alcohol from the wine base. Didn’t try it but I wouldn’t entirely rule it out on a 90-degree August day. Something for everyone.

Slowly then Suddenly: Critical Mass

A successful wine tourism sector requires a critical mass of visitors, tasting rooms, accommodations, food, and drink, which have all slowly and then suddenly come together on Main Street. Or at least that’s how it feels to us, and this is backed up by a 2019 economic impact study (pdf here).

Although many of the visitors surveyed indicated that they first came to Walla Walla ten or more years ago like us, nearly a quarter only made their initial visit in the last two years  (see table II-11). And they returned because there is so much to do, see, and taste. Impressive.

Even the prison gets some love. We stopped to taste at The Walls, which is named for the prison walls that are just a short distance from the winery.  The wines were powerful but elegant — a difficult balancing act — even the “Concrete Mama” Syrah (another reference to prison walls). Sue was especially fond of a Tempranillo from The Rocks district called “Wonderful Nightmare.”

Rioja to Walla Walla

The newest wine tourism destination is south of town near the Oregon border — Valdemar Estates.  The winery facility opened just a few months ago, but it is already getting hundreds of visitors each day. The winery is the project of Jesus Martinez Bujanda Mora, the fifth generation of his Spanish winemaking family, who has planted a flag here in Walla Walla.

The winery and tasting room are stunning, with stylish contemporary Spanish flair, but I think visitors come for a unique experience. They can taste Valdemar’s Walla Walla and Red Mountain Syrahs — with additional wine offerings in the pipeline. But there’s more because Valdemar’s Spanish wines are also available. And you can taste them, comparing old world and new, in the best possible way, gazing out over vineyards with plates of tasty fresh-made tapas to pair with the wines.

Delicious tapas and fine wines — no wonder that visitors are attracted to Valdemar Estates. And the winery seems committed to becoming part of the community, advancing the region and not just their own wines and business.

Love Me Like the Rocks

It will be interesting to see how this project develops, especially as a new center of gravity develops in Walla Walla.  Wineries and tasting rooms are just about everywhere in this area — Main Street, out at the airport, near the Blue Mountains, in the vineyards south and west of town, too.  But there’s one area that hasn’t seen much development … yet.

Some  great wine comes from the rocky vineyards across the state line in Milton-Freewater, Oregon, including iconic Reynvaan and Cayuse, but not many visitors head this way. Is this the next frontier for Walla Walla wine tourism? Come back next week for our closer look at the future of The Rocks.

What’s Ahead for 2019? Wine Economist World Tour Update

January 8, 2019 By in Chile, Chilean wines, climate change, Shameless Self-Promotion, Washington wine, wine, wine markets, wine research 1 Comment

51ppzy7bwzl-_sx332_bo1204203200_The Wine Economist World tour continues in 2019 and I thought you might  be interested in the who/what/when/where because I think my speaking schedule reflects some important issues and concerns in the  global wine business. Here’s an annotated itinerary.

Unified Wine and Grape Symposium

The Unified Wine & Grape Symposium is the Big Show, the largest wine industry gathering in the hemisphere. About 14,000 people will come to Sacramento for the sessions, trade show, and networking opportunities. The Wednesday morning State of the Industry session draws a huge standing-room-only audience that will be anxious to hear about this year’s special challenges: slowing economy, plateauing demand, surplus stocks, and useful strategies to deal with these problems.

I will moderate the session and present, too, along with Jeff Bitter, Allied Grape Growers, Danny Brager, The Nielsen Company, Marissa Lange, LangeTwins Family Winery and Vineyards, and Glenn Proctor, Ciatti Company. This is a fantastic lineup of speakers with much to say about the industry today and in the future. Not to be missed.

I will be busy again on Thursday morning as co-moderator with L. Federico Casassa, California Polytechnic State University, of “Technology Thursday: From Drones to Chatbots; How the Wine Industry is Embracing Digitalization.”  The speakers will examine digital technology in the vineyard, cellar, and beyond, revealing what’s already available, what is coming soon, and what the  distant future holds. The distant future, by the way, is only ten years away — the pace of technological change is that fast.

There is much to discuss, so there will be about a dozen speakers including Bob Coleman, Treasury Wine Estates, Nick Dokoozlian, E. & J. Gallo Winery, David S. Ebert, Purdue University, Nick Goldschmidt, Goldschmidt Vineyards, Liz Mercer, WISE Academy,  Miguel Pedroza, California State University, Fresno. and Will Thomas, Ridge Vineyards, California. . Each speaker will have just ten “Ted Talk” minutes, so hold onto your hats!

Washington Winegrowers Convention

I will be a busy guy at the Washington Winegrowers Convention & Trade Show in Kennewick, Washington, February 11-14, 2019. I’ll begin early on the morning of the 12th moderating and presenting at the State of the Industry session, which will deal with some of the economic challenges facing the region’s wine businesses today.

Joining me will be Wade Wolfe, Thurston Wolfe Winery, Chris Bitter, Vintage Economics, Steve Fredricks, Turrentine Brokerage, and Jim Mortensen, President & CEO,  Ste. Michelle Wine Estates.

In the afternoon I will be part of a session on “Intentional Rosé.”Rosé is the hottest category in wine and so it is no surprise that it gets a full session here and also at the Unified.

I will talk about the global market dynamic and be joined by Megan Hughes, Barnard Griffin winery, Rob Griffin, founder of Barnard Griffin winery, Lacey Lybeck , Vineyard Manager at Sagemoor Vineyards, and Vincent Garge, Maison Henri Garde, Bordeaux. Fred Dex with lead a tasting of Rosé from around the world.

Porto Climate Change and Wine Conference

Sue and I are looking forward to the discussion at Climate Change: Solutions for the Wine Industry in Porto on March 6-7. The focus will be on action, not just talk, which is much appreciated. Al Gore is giving the closing address and a host of wine industry leaders will speak on their concrete efforts to address the challenge of climate change. Climate change is such an obvious risk to the wine industry. It is great to see so many rise to meet the challenge.

I will be moderating and presenting at a session called “Efficiency & Economics: Call to Action,” which I assure you will be more interesting than it sounds. Joining me on the panel are Stephen Rannekleiv, Executive Director, Food & Agribusiness Research at Rabobank, and Malcom Preston, Global Head of Sustainability Services at PricewaterhouseCoopers.

Chile’s National Wine Fair

Sue and I are looking forward to being at Viña Viñamar, Chile on May 15-16 for the Feira Nacional Vitivinicola.  I will be speaking about Chilean wine on the global stage, which is appropriate given that Chile is such an important wine exporting nation. Chile is hosting the Asia Pacific Economic Cooperation (APEC) meetings in 2019 and I expect that the National Wine Fair will take full advantage of this opportunity. The U.K. and U.S. have long been Chile’s top export markets, but China became #1 in 2017.

British Columbia Winegrape Council Conference

I’ve been invited to speak about the economics of sustainable winegrowing at the BC Winegrape Council Enology & Viticulture Conference and Tradeshow in Penticton, British Columbia in July  Sustainability is on everyone’s lips (see climate change conference above), but the transition from theory to practice or talk to action is a challenge. Looking forward to discussing this issue with my BC friends and colleagues.

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Change is the common feature of all these programs. Changing economic conditions, changing market focus (who would have guessed that everyone would be talking about Rosé?), climate change and sustainable practices, and technological change, too. Change is always disruptive and always interesting, too. Hope to see you somewhere along the wine road in 2019.

Wine Economist Top 5 of 2018

December 20, 2018 By in Charles Shaw, Shameless Self-Promotion, Trader Joe's, Washington wine, wine, wine markets, wine price 1 Comment

251626This week’s Wine Economist looks back at the five columns first published in 2018 that captured the most interest among the wine industry audience that frequents this page.

Sometimes it is difficult to find a common thread among the top columns, but not this year. Readers were concerned about U.S. wine sales and they focused on analysis that they hoped might give them insights into the changing market place and especially how to deal with the changing wine consumer base. Take a look at the Top 5 and see if you agree.

#5 U.S. Wine Sales: Five Surprising Facts

Concerns about wine sales were obviously on readers’ minds when this September 2018 column appeared. The premise of the piece was simple: we are all pretty familiar with the conventional wisdom about the wine market but the conventional wisdom doesn’t always hold in a changing world. Sometimes you need to look more closely at the data (Nielsen data in this case) to see what’s actually going on.

There were plenty of surprises to be found (five of them, as the title indicates), including Zinfandel’s high average price (higher than Pinot or Cab), Cabernet’s move past Chardonnay in total sales, the resurgence of French wine (think pink), Australia’s real sales challenge (price, not quantity), and Washington wine’s unexpected prominence when you shift the frame of reference a bit.

#4 Beyond Boom & Bust: Taking a Closer Look at the SVB Report

The Silicon Valley Bank‘s annual wine industry report always gets a lot of attention and with good reason. Timely analysis + innovative thinking + clear presentation = required reading.  But the complexity of the study is sometimes lost in the rush to report the headline conclusions. So I decided to take a deeper dive and shine a light on some of the aspects that weren’t getting the attention they deserved, especially with respect to the generational transition in the wine market.

This also gave me an opportunity to make a point of my own: sometimes the differences within generational cohorts are as important as the difference between them.

#3 Shaw Organic: Is This the Next Miracle from Bronco Wine & Trader Joe’s?

shaw1Organic food has moved from a niche to an important market segment. A lot of us have been waiting for wine to catch up. Bronco Wine, the makers of Charles Shaw (a.k.a. Two Buck Chuck), apparently got tired of waiting and, working with Trader Joe’s stores, introduced Shaw Organic, a line of affordable wines made with organic grapes.

Bronco is the largest vineyard owner in the U.S. (40,000 acres at last count) and has quietly become the largest grower of organic grapes as well. Is Shaw Organic the breakout wine — the wine that will create a critical mass of consumers who look for organic wine the same way that Two Buck Chuck democratized the wine market more generally? Too soon to tell, but it is a trend to watch.

#2 The Changing Face of Wine in America: The Cooper’s Hawk Phenomenon

Direct-to-consumer wine sales are on everyone’s mind. With costs rising faster than prices in most cases, those full-margin wine club sales have become a very high priority. Some say that many Napa Valley producers couldn’t keep the lights on without their wine club sales.

So who has the largest wine club? Incredibly, it is an Illinois-based restaurant and winery business called Cooper’s Hawk, which counts about 300,000 wine club members who visit their local restaurants once a month to pick up the latest wine. What makes Cooper’s Hawk so successful (and how can wineries reach the market they’ve developed)? And can the lessons of Cooper’s Hawk be applied more generally? Timely questions. No wonder this is the #2 column of the year.

#1 Outlaw Wine: 19 Crimes Succeeds by Breaking All the Wine Marketing Rules.

Millennials. They are the wine market of the future and the future is now. But what do they want and how do you get their attention? This May 2018 column, which is top of the list, looks at an incredibly successful Treasury Wine Estates product that was specifically developed to appeal to millennial men.

It is called 19 Crimes, which is kind of a strange name for a wine, and while I am not a big fan of the wine itself (it wasn’t crafted to appeal to me), I am very impressed with the way it has succeeded beyond all reasonable expectations by breaking all the wine marketing rules.

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This is the final Wine Economist column of 2018. See you next year!

Wine Tourism Challenge: Giving City Visitors a Taste of the Wine Country

January 30, 2018 By in Washington wine, wine, wine tourism 5 Comments

The most famous explanation of international trade is David Ricardo’s Theory of Comparative Advantage. England can make both cloth and wine and so can Portugal, but they will both gain if England specializes in cloth and trades it for Portuguese wines on the basis of each country’s relative efficiency of production.

Divine Will?

There are other trade theories if you aren’t satisfied with Comparative Advantage. One of my favorites is what you might call the Divine Will theory of trade, which holds that God distributed people and the stuff they want and need much differently so that they would be forced to trade or else do without. And trade, the theory holds, brings people together peacefully as Divine Will intends.

I hesitate to invoke Divine Will, but it certainly is true that the wine trade throughout history has been driven in part by the fact that population centers where wine is consumed and vineyard regions where wine is produced do not always coincide.

Getting the wine to consumers is a technical (and, because of taxes and other regulations, legal) problem that has been solved for better or worse over the centuries. The vast wine wall at your local upscale supermarket may not prove Divine Will but it certainly is an impressive achievement.

The growing industry of wine tourism, however, turns the problem on its head. Now the issue is how to get people to the sometimes far distant vineyards so that they can enjoy the experience. Back when wine tourism was just about cellar door sales this was a relatively modest problem, but today wine tourism is an important industry with economic multiplier effects that extend beyond the tasting room.

How do you give consumers a taste of the wine country experience if they are unable to get to wine country itself?

Real and Virtual Reality at Brancott Estate

I discovered one possible solution in an interesting article on the VeeR VR Blog. Marlborough’s Brancott Estate, which is part of the Pernod Ricard wine empire, partnered with Found Studio to create an experience of the “Red Shed,” named for the estate’s famous big red building that is the program’s home base (see video above).

Virtual visitors don VR headsets and can explore the vineyards and the shed and — in a rather remarkable innovation that I have not yet tried — actually sense something of the wines through scents that the headset releases at key moments. This prepares participants for the “real” reality experience of tasting the wines that follows the VR exploration.

This is obviously a pretty complicated way to bring wine country to the city or anywhere else and at this stage it probably risks becoming as much or more about the technology as the wine itself. But it also has the potential to surprise and delight in magical ways. Is this the wine tourism of the 4-D future? Probably one aspect of it and a glimpse of what the future might hold. Stay tuned — this could be pretty interesting.

Woodinville Wine Cluster

We found a second very interesting approach in Woodinville, Washington, which is located a short drive from Seattle and is a major wine tourism destination. There are precious few vineyards here (a few demonstration vines in front of Chateau Ste Michelle and a small Pinot Noir and Chardonnay vineyard at Hollywood Hills Vineyards). But there are more than 100 wineries and tasting rooms, forming a rather impressive wine industry cluster and wine tourism opportunity.

The wineries, following the production model set by Chateau Ste Michelle in the 1970s, truck grapes or grape juice over the Cascade Mountains from the Eastern Washington vineyards and make and package the wine close the market rather than close to the farms. Fast, efficient, refrigerated transport helps assure high quality raw materials and excellent final product. Some of the wineries are showcases like Chateau Ste Michelle while others are working spaces in the warehouse district. Taken together they made a successful industrial cluster.

Tasting rooms began to spring up alongside the wineries when, a few years ago, Washington law was changed to allow wineries to have off-site sales rooms in addition to their traditional cellar door facilities. Wineries based in the Yakima Valley, Red Mountain, the Walla Walla Valley, and elsewhere rushed to open tasting rooms in Woodinville, creating the wine tourism destination you see now.

Sue and I were accompanied by our friend Hermes Navarro del Valle, who is an expert on the global tourism industry with a special interest in wine tourism. It was interesting to see Woodinville through his eyes. We began our visit at Chateau Ste Michelle, which has recently opened a new visitor center that I will talk about next week.

Then we moved on to two of the several small wine tourism clusters, each of which features cafes or restaurants as well as a selection of tasting rooms. We stopped for lunch, for example, at The Bistro at the Hollywood Schoolhouse, a casual, friendly place with good food and a nice wine list.  Then we walked a few steps to visit one of the half-dozen or so nearby tasting rooms. I wanted Hermes to taste the wines of Amavi and Pepperbridge from Walla Walla. especially and Amavi Syrah and the Pepperbridge Trine, which is one of the “Around the World in Eighty Wines” selections.

Hermes was excited by the possibilities he saw.  If a tourist could get from Seattle to Woodinville, there were lots of eating and tasting options — easy to spend a day here learning about the wines. But he quickly focused on the problem of local transportation — getting around between and among the different winery and tasting room clusters was going to be problem. There needed to be some sort of shuttle that would circulate around the wine routes, he said. A good public-private investment for the local government, Hermes thought.

We glimpsed how that might develop when we moved on to a nearby cluster for our next visit. This space is anchored by a popular wine-themed restaurant called Purple and featured eight or nine tasting rooms with more just across the road.. We started at Fidelitas, which is one of our favorite. The tasting room manager turned out to be Will Hoppes, son of winemaker Charlie Hoppes, so we felt very much at home. Fidelitas is located on Red Mountain and we enjoyed sampling wines from the estate vineyard as well as Quintessence and Champoux vineyards.

As we settled into tasting we started chatting with another visitor, Mark Pembrooke, who is CEO of W3 Tours and may be the solution to the local transportation bottleneck that Hermes diagnosed. W3 Tours provides a variety of winery shuttle services in the Walla Walla Valley and Mark was in Woodinville working on a project to expand his shuttle services here.

If the shuttle service is successful it will take cars off the roads, easing the congestion that we have seen on peak weekends, and help tourists get the most out of their time. Mark said that he was grateful for the support of several wineries who benefit from his service in Walla Walla and have supported the expansion to Woodinville. Hermes was impressed with the entrepreneurship and suggested the next step: discount coupon books to encourage visitors to spend more time and money in the tasting rooms.252494_172be_feb17_3740

We had time for two more tasting room visits and I selected Brian Carter Cellars and DeLille Cellars, which were conveniently located on the other side of the compact parking lot from Fidelitas and next door to each other. They represent very different ideas of Washington wine, which is what I wanted Hermes to see and taste.

Cabernet Sauvignon and Bordeaux blends like the poplar D2 and elegant Four Flags Cab are what DeLille is known for while Brian Carter likes to source a diverse range of grape varieties s to make blends that often pay tribute other regions.

Hermes was particularly taken with a Brian Carter wine called Corrida (Spanish for bullfight), a blend of Tempranillo, Graciano, and Garnacha from the Columbia Valley. The wine was balanced and had great character. A fine way to end our tour.

Wine Tourism Cluster Advantages

We were able to experience something of the variety that Washington wine offers both in terms of terroir and varietal character in just a short span of time and space. And there were about 100 other opportunities available for our  next visit.

All four of the tasting rooms we visited were warm and friendly and staffed by people who knew their stuff and could answer questions confidently. We appreciate their time and generous hospitality.  The individual wineries and tasting rooms are working hard to build their markets and establish a successful wine tourism industry here.

Problems remain, of course. Traffic congestion on peak weekends can remind a visitor of Napa Valley, for example, and there is room for more hospitality infrastructure, too. And it might be possible that Woodinville has exceeded critical mass and there are now too many tasting rooms competing for the same customers for all of them to be successful. I will be interested to see if a new cluster appears in Seattle’s historic Pioneer Square neighborhood where Browne Family Vineyards is opening a tasting room nearby to The Estates Wine Room.

But you could see Hermes thinking that this might be a useful model for other parts of the world — Mendoza comes to mind — where the wineries and vineyards are far from town and distance limits the growth of the wine tourism industry.

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As I noted above, our visit to Woodinville began with a tour of Chateau Ste Michelle’s new visitor center. Come back next week for details.

Video credit: Brancott Estate – ‘The Red Shed’ VR Experience from Found Studio on Vimeo.

The Genius of Charles Smith and the Land versus Brand Wine Wars

August 22, 2017 By in Washington wine, wine, wine brands 4 Comments

What do you know about Charles Smith? He’s a marketing genius! Where does he get his ideas? Do you know what he is going to do next?1029780x

We were in a restaurant in Yountville, the heart of the Napa Valley, talking with one of the valley’s best winemakers. There was a lot to discuss, but our friend was pretty focused. He was fascinated by Charles Smith.

And that’s not really a surprise. Charles Smith has a reputation as a premier brand builder, a marketing genius. That’s not the whole Charles Smith story, but it is how some people think of what he is and does, especially after the 2016 sale of his Charles Smith Wine (CSW) brand lineup to Constellation Brands for a cool $120 million.

Smith came to Walla Walla to make terroir-driven wines. His first vintage was 330 cases of the 1999 K Syrah made from grapes grown in The Rocks vineyard area supplied by Cayuse winemaker Christophe Baron. The wine was so good, according to an excellent Wine Spectator profile, that it convinced local bankers to help finance the operation. Bankable wine? Quite an accomplishment.

House Wine to Kung Fu Girl

K Syrah is a clever, memorable wine brand (think “Que Sera Sera”), but the commercial branding story really starts in 2003-2004, when a killing frost hit Walla Walla and winemakers like Smith had to scramble to get grapes or bulk wine from other parts of Washington to give them something to sell to pay the bills.

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Smith seized the moment to launch the Magnificent Wine Company and its House Wine lineup. The popularly-priced negociant wines with the fun labels sold out. Everyone needs a house wine — House Red, House White, and so on. Sales quickly scaled.

Precept Brands invested in House Wine in 2006 and purchased the brand outright in 2011. The current lineup includes House Red, House White, Steak House, Fish House, and other House wines packaged in bottles, boxes, and cans.

Charles Smith Wines came next — continuing the House Wine philosophy of giving people what they want in a simple but stylish way, but a step or two up the wine market ladder. Boom Boom Syrah, Velvet Devil Merlot, Eve Chardonnay, Chateau Smith Cabernet Sauvignon and who can forget Kung Fu Girl Riesling — each wine had its own personality and offered buyers lots of quality per dollar.

These CSW wines have two things in common. First, they have distinctive graphic design elements provided by the talented Rikke Korff, who has handled all the design work for Charles Smith since the beginning. The labels are instantly recognizable and always make me smile. Nothing like the staid chateau drawings or cute critter images that many wines feature.

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The second common feature is that the wines are good and good value. Kung Fu Girl Riesling, the best-selling wine in the line and a frequent recipient of “Top 100” wine awards, sources grapes from the exceptional Evergreen Vineyard. It’s the real deal.

The Modernist Wine Project

There are a lot of ways to think about the CSW wine program, but the winery website likes to call it part of a “modernist” project. The idea seems to be to look at consumers as they really are and then give them a product that satisfies their needs. This means wines that are ready to drink upon release, that are balanced and taste good with food or without it, and that are affordable and carried to market on a relatively simple message relayed through exciting graphical design.

The genius of Charles Smith was to put all of this together — the wines, the message, the design, the marketing — and to get the project rolling in 2006,  just before the Great Recession hit the United States. The CSW wines offered recession-shocked buyers an opportunity to trade over to a more casual idea of wine, not just to trade down to something a bit cheaper. Mix all this with a lot of hard work in the vineyard, cellar and on marketing and it is no wonder the wines were so successful.

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It is well known that I admire this sort of genius. The subtitle of my 2011 book Wine Wars referenced the “Miracle of Two Buck Chuck.” It was indeed a miracle that Fred Franzia and his team at Bronco Wine and the smart folks at Trader Joe’s markets could give millions of Americans the confidence they previously lacked to try and enjoy wine. Charles Smith built upon this foundation with great success and in a particular “modernist” way, first with House Wine and then the CSW brands.

The modernist project continues. Smith will consult with Constellation Brands on the CSW portfolio to help it scale up successfully. And then there is Vino, which was not part of the Constellation Brands deal, a tasty lineup of Washington-grown Italian-varietal wines that are instantly recognizable as a Charles Smith product by their label design and offer an unexpectedly sincere homage to the Italian origins of their grapes.

The Pinot Grigio, for example, has minerality you won’t find in a lot of other wines of this type and the Moscato will remind you a bit of a nice Moscato d’Asti. These wines probably don’t have to be this good to sell at their price points. But they are.

The Battle of Land Versus Brand

It would be easy to typecast Charles Smith as a brand guy in the battle of Land versus Brand. The fact of the Constellation Brands purchase offers some evidence. After all, Constellation is famous these days for paying big bucks for brands that have no vineyards or wineries attached to them.  The Meomi brand was purchased for $315 million and The Prisoner for $285 million, for example.k_syrah_beautiful

Viewed in this perspective, Charles Smith’s experience with House Wine and then the CSW brands seems to typecast him as a very successful brand-spinner — a genius at the game as my Napa Valley winemaker friend pointed out. And what you would expect from Smith is more of the same.

But there is more to Charles Smith than brand-building. The K Vintners wine that started it all back in Walla Walla has evolved into a rather interesting collectiomn of single-vineyard wines (Land not just cool Brand), exploring the possibilities of Syrah and Viognier with side-trips to Sangiovese, Tempranillo and Malbec. An all-Chardonnay line called Sixto offers single-vineyard wines plus a multi-vineyard blend.

Washington’s Randall Grahm?

And so the question must be asked, is Charles Smith Land or Brand? The answer seems to be both, which makes him a complicated person (and maybe more of a genius than my Napa friend realized). Is Charles Smith Washington wine’s answer to California’s Randall Grahm? I dunno. What do you think?

To find out what Charles Smith is up to these days and maybe learn about what comes next we paid a visit a few weeks ago to his Jet City Winery near Boeing Field in Seattle to learn about a particular vision of Land and Brand. Come back next week to see what we discovered.

The Black Prince and the Fifth Element: Walla Walla Wine Renaissance

August 12, 2014 By in Washington wine 2 Comments

This is the last in a series of columns about Walla Walla’s wine industry. I previously proposed that Walla Walla has “come of age” as a leading wine region. How did it happen? No single factor can explain it all. Previous columns have examined two of the five “pillars” of the region’s success, the Land and the People. In this final column I’ll quickly discuss history, culture and what I call “the spark.” 

The Fifth Element

“You Florentines are the fifth element,” Pope Boniface VIII proclaimed in 1300, reflecting a popular view of the unique contributions of Florentine citizens. Earth, air, water, and fire could be combined by all men to produce the simple goods of everyday life. But when the Florentine “fifth element” was added, a new and more creative alchemy was possible.

These lines back appeared in my 1990 book Mountains of Debt, which told the story of financial crisis in Renaissance Florence, Victorian Britain and Postwar America. I repeat them here because it seems to me that a modern day papal visit to Walla Walla might produce a similar sort of comment (although the current pope might include a reference to Malbec since he’s originally from Argentina).

I don’t mean to flippantly compare today’s Walla Wallans to the great artists of the Italian Renaissance, but it is true that Walla Walla wine is having something of its own renaissance and the Fifth Element, which I earlier called “the spark,” is certainly part of the story.

It is a property of the fifth element, if we take Florence as a model, that if it exists it is not in one person but everywhere within the culture that supports it and you can see that in Walla Walla today, which is bustling and growing in terms of its wine industry after a few hard Great Recession years.

The group that I call The Pioneers clearly had that fifth element spark — creative, entrepreneurial, determined. They started wineries but they also helped build the industry in many other ways — I think of Myles Anderson’s efforts to breathe life into the Walla Walla Community College Viticulture and Enology program must be recognized, for example. That program provides an affordable way for a surprisingly diverse group of students to prepare for immediate employment in the wine sector. It has helped power the growth of the industry here and throughout the region.

Christophe Baron’s “discovery” of the rocky vineyard sites in Milton-Freewater get a lots of attention — perhaps only a crazy Frenchman (a “bionic frog” according to one of his wine labels) could have built Cayuse into the cult wine that it is. Now that I have walked the vineyards and tasted the wines, I have to admit that the fuss is justified. Christophe must have a bit of the Florentine in him.

All important wine-growing regions must at some point go through a time when many creative people combine to create a new reality and identity and it is easy to see the renaissance in Walla Walla today.

The Black Prince

Walla Walla’s current blossoming has deep roots — deeper than most probably suspect. The first vines were probably planted (and wines made) about 200 years ago by French Canadians who settled in these parts between 1812 and 1821. Walla Walla was an outpost of the Hudson Bay Company empire in those days and, although there is no proof of vines and wines, everything we know about how the French Canadians behaved elsewhere suggests that a permanent settlement would not be wine-free.

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Wild Black Prince vines.

We know for sure that there were wines and vines about 150 years ago because there is evidence that the early settlers in the valley planted vines and even organized grape nurseries using plants imported from Oregon.  Frank Orselli, a native of Luca, Italy, came to Walla Walla in 1859, according to Ronald Irvine’s history of Washington wine, The Wine Project, part of an important Italian influence that can still be seen today. The wine industry thrived along with Walla Walla until the Northern Pacific Railroad construction by-passed the town in 1883, diverting growth elsewhere.

The wine didn’t go away, of course, and we were fortunate to see evidence of those Italian winegrowers when Kevin Pogue took us on a visit to the Rocks vineyard area. There, growing wild on the side of the road, where Cinsault grapes that someone still took the time to tend and harvest. Cinsault — Black Prince grapes they were called. Gary Figgins, whose winery is named Leonetti for the Italian side of his family who farmed and made wine here, is credited with tracking down the Black Prince’s true title. Cinsault is still grown in Walla Walla and wine is made. You will get a big smile from the locals if you ask for it!

A Creative Culture

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Distinctive local culture

Culture is the last of the five “pillars” of Walla Walla’s renaissance and you can see it all around you when you visit, especially downtown where a cluster of tasting rooms have erupted with cafes, restaurants and shops to support them.

We met two people who seem to represent the cultural renaissance in this area. Dan Thiesen is executive director of the culinary arts program at the Wine County Culinary Institute at Walla Walla Community College. Under Dan’s leadership this program has blossomed, creating affordable opportunities for those seeking culinary training and providing skilled professionals for the region’s expanding food scene.

We had two meals prepared by Dan’s talented students and had the opportunity to hear him speak about the world class program that he is building. The sky’s the limit for this program and the food-wine pairings it supports.

We also met with Joan Monteillet of Monteillet Fromagerie  just outside of nearby Dayton, Washington.  Joan and her French husband Pierre-Louis raise sheep and goats to supply their small artisan cheese business.  A visit to the fromagerie is an opportunity to connect with the food’s roots and to sample the cheeses with wines specially created for the purpose by a local producer. It is a very personal experience of the sort that wine people seek out. A perfect part of the cultural renaissance.

The Monteillet Fromagerie has become an unintended test for the local community — does it really want to embrace the renaissance opportunity? Apparently a special use permit is required for the farm’s cheese and wine sales and agri-tourist operations, which exist within a designated farming zone, and there is organized opposition to the Monteillet’s continuing operations. Hopefully community leaders will embrace the logic that has helped the wine industry to advance elsewhere in the valley and keep this part of the local culture alive and allow it to thrive.

Walla Walla’s Next Step: The SeVein Vineyard Project

August 5, 2014 By in Washington wine 3 Comments

 

Previous columns have argued that a critical mass of wine energy has indeed been reached in Walla Walla and it is interesting to watch ways the four groups I identified, Pioneers, Next Generation, Foreign Legion and Millennials, compete, cooperate and collectively build the region’s reputation.

Walla Walla is a farming community at heart, and probably pretty conservative. So newcomers and old timers don’t always get along. And I suspect they haven’t always got along perfectly here, either. But wine and the challenges of growing it, making it and selling it seems to have taught them the need to work together rather than squabble and the results are easy to appreciate.

I’ve been working on tracing out the multiple over-lapping human networks that I’ve observed, but I think I have only scratched the surface. The pattern of interconnections is complex and evolving. It would make a great project for a business student, human geographer or maybe an anthropologist to try to analyze the Walla Walla wine network.

The SeVein Vineyard project partners

Perhaps the biggest single indicator of the continuing dynamic interaction is the SeVeinVineyard project, which is currently being developed at the south end of the Walla Walla AVA. It shows how the different groups I have mentioned above continue to partner and invest even as they compete with each other in the marketplace.

Here is a list of partners in the project taken from the website. You can see the strong hand of the Pioneers here — they continue to shape the region’s growth —  but if you look closely you’ll see that all the elements of the complex human network are represented.

CURRENT SeVein PROPERTY OWNERS DEVELOPING VINEYARDS

When fully planted the SeVein project will increase the vineyard acreage in Walla Walla by an incredible 50 percent! Just imagine what Walla Walla will be able to do with so many more grapes! I foresee a shift to even more Walla Walla designated wines and perhaps less reliance on Columbia Valley fruit.

I suspect that the reputation of the region will grow with production, because this project seems to be about quality not just quantity. Significantly, the L’Ecole Ferguson Vineyard wine that won an International Trophy at the Decanter World Wine Awards came from a vineyard in the SeVein project. There is more good news to come from this ambitious initiative.

Michael Porter’s theory posited that it takes the right combination of rivalry and cooperation to make a regional industry work — that, plus insanely demanding consumers, employers and so on so that competition is a race to the top, not the bottom.  Ideally, I suppose, each new generation should raise the stakes and the expectations, and I think that’s part of the story here, although standards were very high right from the start. Walla Walla is still so young — the AVA is just 30  years old this year — but you can see why it has come so far in such a short time.

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Come back next week for my final column in this series on Walla Walla. I will examine the three remaining “pillars” of the region’s success: history, culture and “the spark.”