Wherefore art thou, California?
California’s stunning absence from the under $10 category of quality wines—and why that may become even more important to consumers.
“Muscleman put in charge of world’s fifth largest economy” read a recent headline about Governor Schwarzenegger in The Onion. Sadly, the satirical newspaper found truth funnier than its usual fictitious headlines that week. For bargain wine lovers, the news coming out of California has a similar tragi-comic tone. Nothing, it seems, can prod California producers into making good, interesting and affordable wines. And the worst part is that as the clouds seem to be lifting, not only have the lessons of the recent storm have not been learned but regulatory changes stand to reduce the quality of wines on retailers’ shelves even more.
While many California wines are excellent, they are not good values. My value wine recommendations display a stunning lack of wine picks from California. Spanish and French producers make much more exciting wines at lower price points. And fortunately there are plenty of those around.
But you don’t have to take it from a pseudo-critic like me: Robert Parker, the world’s foremost wine critic, has a similar conclusion. In the June 2003 issue of his newsletter, he recommended 153 value wines (for this hedonist, value means $20 and under). Of these, 79 were French, 25 from each the US and Australia and 21 from Spain. (For those keeping count, the other three were from Portugal.) Handfuls of these selections from France and Spain are under $10. From California, there is only one.
The California producers are obstinate in their unwillingness to produce good cheap wines. Land is expensive in the north coast, but grapes are cheap. Labor may be more expensive than Argentina, but the workers are not exactly overpaid. The crises of the past three years should have sent them a message. But apparently they have not.
To recap what has happened over the recent past in California is a sad tale. Three consecutive booming harvests have driven wine grape prices to their lowest levels since the mid-1990s (see data). This has led many growers to let the grapes rot on the vine rather than harvest or even to uproot vines and replant other fruits. The abundant supply has also led to bankruptcies in the quality growing areas (De Loach, Liparita Cellars, Sonoma Creek Winery and Buchanan Cellars are a few from the north coast). Some merger and acquisition activity has also occurred as a leading industry analyst reckons 5% of the state’s 1300 wineries are economically “distressed.”
But with so much bulk “juice” sloshing around, the biggest impact of the glut for consumers has probably been “two-buck Chuck.” Charles Shaw, as the wine from the bulk producer Franzia is officially known, retails for $2 a bottle at Trader Joe’s grocery stores in California (and $3 at TJ’s outside of California thanks to mandatory distributor intervention). Two-buck Chuck comes in a few different styles that are perhaps best described as “flavors”: Cabernet Sauvignon, Chardonnay, etc. And it is forecast to sell over 5 million cases this year. If Darrell Issa was really intent on starting a recall of something for being bad, starting with Two Buck Chuck would have been a better use of his money than Gray Davis.
Other factors beyond the control of the California producers have contributed to the storm clouds over the industry. The slow economy that coincided with the three big harvests has meant decreased business travel and entertainment, a big component of high-end wines from California (and elsewhere). And beyond the flood of “juice,” a pest has threatened the vineyards, although the glassy winged sharpshooter would have helped reduce the oversupply.
Imports represent, of course, another big factor. Those lush, cheap shiraz and chardonnay imports from Australia have now made Australia then second largest provider of imported wines behind Italy. Yellow Tail is Australia’s answer to Two-Buck Chuck. Complete with kangaroo on the label, it sells for $5 a bottle and is forecast to sell 5 million cases this year, a staggering figure given its launch just two years ago. The producers have now added a “reserve” wine for $9.
But the storm clouds are lifting over California. The economy appears to be turning around, which should bring increased travel and entertaining. The 2003 vintage will be smaller, thanks to pruning and freakish weather at harvest time, which should lead to higher grape prices. Indeed, the profits of Robert Mondavi, the largest publicly traded winery from California rose in the most recent quarter and the share price has rallied as investors anticipate brighter days lie ahead.
And will this new period bring better, cheaper wines? No, sadly, it will bring fudging and protectionism. Fudging will occur as producers seek to dilute the vintage claims on the label and have the right to include 15% of wine not from the stated vintage (LA Times 9/29/03). As consumers become more knowledgeable about wine, what consumers need on the labels is more precision, not less.
And protectionism appears to take place under the guise of bio-terrorism. Not satisfied with the weak dollar already protecting domestic producers from cheap imports, the Food and Drug Administration now threatens to hold up wine imports, particularly from Europe, with stacks of bureaucratic filings. Effective 12 December 2003, the 2002 Bioterrorism Act requires any food or wine exporter to the US to register with the FDA, adding even more intermediate steps between producer and consumer. We can but hope that many small (European) producers will not be scared away from the US market, otherwise it would be “good-bye wine values.” (Hello, gray market?) See the stunning details of the regulations for yourself.
Bolstering an already oligopolistic structure of production with protectionism and fudging is not the blend for reducing prices and raising quality that consumers need.
Since beating California producers over the head with a plank of oak (better than using it in their chardonnays) seems not to work, the question remains whether the distributors and big retailers ride to the aid of value-oriented consumers? Slim hope. The distributors, for one, are trying to line their pockets with a $234 million tax break currently before Congress. (NYT 10/30/03)
The big wine retailers are too restrained in using their market muscle to push for quality bargains from producers. Trader Joe’s does probably the best job at seeking out value wine from around the world (to wit, their Argentine La Boca wines at $3 are better than Charles Shaw). Given the success and poor quality of Charles Shaw, just imagine how well an innovative wine at $7 would sell? And a Costco Cuvee? Not to be found. Sam’s Wine in Chicago has arranged some custom cuvees to roll out soon but they hover around the $30 mark, so not exactly a good fit for weeknight dinners.
California, a trend-setter in so many ways, needs to follow the worldwide trend of making good wines at low prices. Terminate the oaky chardonnays—or we’ll have to put Arnie on to you!
