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Thursday, December 3, 2020

Wine's Struggle between Price and Reputation - Wine-Searcher

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Is a top wine from a middling region better than a middling wine from a top region?

Donald Trump blames widespread postal fraud for his election defeat; my father blames my aunt for ruining his birthday with a burnt soufflé; certain wineries in Spain, South Africa and Chile blame a cabal of supermarkets and bargain-basement brands for jeopardizing their chances of selling expensive wine.

But remember the old adage: "Before you point fingers, make sure your hands are clean."

How clean are the hands of winemakers with aspirations to higher prices? Their argument is well-worn; if the epithets "cheap" or "good value" are attached to a style or appellation – reinforced by major brands distributed across multiples – then you'll struggle to cut through the noise and attract higher-spending punters. This reductive reasoning is accepted by the majority of the trade; I've heard the terms "bloody supermarkets" and "bastard corporations" a lot since I got involved in this world.

That said, the central thesis isn't a complete load of hogwash. How fortunate is the lazy Pomerol producer, able to quite easily sell its turgid and overpriced wine under a banner of universal respectability. The same cannot be said of growers in Spain's Penedes. "When this old argument is trotted out, I do have sympathy in certain cases," says wine buyer Peter Mitchell MW.

"There are regions/styles where the balance between quality and mass market is skewed towards cheap brands. This becomes the overwhelming connotation, so much so that most consumers of premium wine aren't even prepared to give the better examples the time of day."

The answer for some has been to abandon their appellation frameworks and start from scratch; many of Spain's top fizz producers have decided to market their wines outside of the Cava framework. I accept that certain labels engender lower expectations in some consumers – I'd just argue that there are far more shades of grey in this matter than is often discussed.

Covering all bases

European wine regions rarely cater exclusively to bulging wallets; Chablis has a surfeit of labels sold at less than $10, while Dauvissat's Les Clos Grand Cru fetches more than $200 per bottle. Same part of France, same reference to Chablis on the label. Are we talking about a fine wine region then, or the cynical purveyor of enough acidic dross to fill a warehouse?

Technically, Petrus and Mouton Cadet come from the same place. "Like typhoid and swans," as Hannibal Lecter observed in The Silence of the Lambs. Thankfully, Bordeaux had the sense to stratify and delineate its châteaux and regions. So too has Burgundy proven that hierarchical classification – in this case stratification of terroir - has its upsides.  Perhaps the term "fine wine region" is a fallacy – is it just a case of individual brands and successful marketing?

Would it make any difference to Lafite if the chateau was marketed as generic Bordeaux? I doubt it. Take away its First Growth status and little would change.

Yet arbitrary references to the ignominy of belonging to certain regional banners remain commonplace. I read recently that Rioja "lacks gravitas" in the eyes of many buyers and has struggled to join the gilded spires of fine wine status. Such remarks aren't helpful and add fuel to the self-fulfilling prophecy fire. Lacks gravitas according to whom? The Campo Viejo aficionado or acolytes of Las Beatas and Aurus – both wines command prices in excess of many Second Growth Bordeaux châateaux.

Contador, Torre Muga, Roda's Cirsion and Remirez de Ganuza's Trasnocho aren't exactly cheap either. As far as I'm aware, these wines aren't collecting dust in moldy Riojan cellars. Can we quantify who does, and who doesn't, take the region seriously as a source of fine wine?

Even if we accept that the tone of a region is set by a critical mass of producers, one can always discover the more open-minded drinker, the less reactionary buyer. Cava producers, it is widely believed, face a constant uphill struggle. And yet, certain brands are able to sell higher-priced wines in key markets by using the right distribution channels.

Despite South Africa's reputation for low prices, wines like DeMorgenzon's Divas can sell for more than $100.
© DeMorgenzon | Despite South Africa's reputation for low prices, wines like DeMorgenzon's Divas can sell for more than $100.

Shaking off the past

Your neighbors may set the tone, however, being stuck in "good value" hell is rarely a fait accompli. Much depends on the level of risk an individual brand is willing to take.

"We have to ask for higher prices, and have the guts to stay there," remarked DeMorgenzon's chief executive Carl van der Merwe. Growers in South Africa often wring their hands about escaping from a bargain-basement image, cruelly reinforced by cheap labels and supermarkets. Others decide "to hell with it", and take their chances. DeMorgenzon's top Chenin Blanc label, The Divas, comes in at over $95. And it's awesome.

"From a UK market perspective, I think we do have the quality and we need more wines like The Divas," says Paul Cluver's winemaker Andries Burger. "You only need one or two wines at that price point to start to change consumer perception."

Some in the trade agree with him. "An unprecedented price from a brand would attract its own attention, and buyers would at least be curious. If you're going to go for it, then go for it. See Angelo Gaja," says  US-based writer Terry Theise. "Complaining about your neighbor's lack of ambition can sometimes just be unproductive bitching."

Of course, he recognizes that Champagne has a massive head start over Cava – and Pauillac owns a considerable advantage over Stellenbosch. The heritage and longstanding reputation of a region does matter; Champagne and Barolo didn't enter at the bottom and have had far longer to work on their act. Even the oceans of lackluster supermarket labels cannot sully the reputation of Bollinger. But there are no free passes either: Champagne shipments have been declining to the UK market for several years now, as Brits seek out cheaper alternatives.

Let's refer back to the experts. According to fine wine exchange platform Liv-ex, brands that lack Bordeaux's cachet are gobbling up impressive market share.

"When we compare the regional trade shares, by value, between 2019 and 2020 on Liv-ex, there is a significant shift in the wines trading," explains Liv-ex director Justin Gibbs.

"For example, Bordeaux and Burgundy's shares of trade have dropped from 55 percent and 21 percent to 42.1 percent and 15.6 percent, respectively. On the other hand, regions like Tuscany, the Rhône, the USA and the 'others' category have all benefited. The variety of wines traded on Liv-ex today is broader than ever before."

Theise is, curiously, more pessimistic. He argues that attempting to escape an ignoble legacy is futile. That your caste is predetermined.

"If an appellation or region starts out with a prestigious reputation, then even its quotidian wines shine in the reflected light. But the prestige has to be firmly established. It has never worked the opposite way."

The problem with that analysis is the south of France. The best wines of the Languedoc and Provence are sometimes more expensive than Cru Classé Bordeaux – and they sell, despite a lack of historical pedigree.

"Twenty years ago, no one would have dreamed of Provence rosé selling for over £50 [$67] and now several do," observes Mitchell. No one doubts that reputations and price ceilings are stubborn creatures. But they are not intransigent. The Languedoc is living proof of that.

Higher prices, though, are only the half of it. Growers like Pepe Raventos covet respect as much as financial success. He told me that when Raventos I Blanc left the Cava DO in 2012, he expected that his firm might take a painful commercial hit. "I wanted to leave my children a different legacy than the one associated with Cava," said Raventos. "I wanted people to understand that high-quality, artisan wines are made in this part of Spain."

If you ask certain producers in Stellenbosh and Penedes for a solution to their problems, they sometimes (only half- jokingly) suggest a massive cull of their volume-led compatriots. They claim that recognition and higher prices will only come if a critical mass of regional wineries pull in the same direction. That seems very unlikely – radically different priorities will always be with us.

But there is hope. The trophy buyer who demands cultural capital from their wine choices is no extinct creature. Their bandwidth remains as narrow as 40 years ago. Yet I increasingly meet high-spending enthusiasts who are both open-minded and not seeking validation from their wine choices. This firmament are in the market for pricey Rioja and The Divas.

It is the strongest brands, rather than long-established reputations, which gain entry into their wallets.




December 04, 2020 at 05:04AM
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Wine's Struggle between Price and Reputation - Wine-Searcher

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