International Riesling Foundation
I have had an inkling over the past decade to make an orange Gewürztraminer. In case you missed the past few episodes, orange wine is not a fine product from Florida but rather a white wine. If fermented to dryness on the skin, the wine will often take some orange hue. During the wine process, red wines are macerated on the skin at high temperatures to extract color and tannins (“polyphenols” in sexy wine lingo), while whites are fermented after pressing out the juice thus separating the skin and seeds from the liquid. In the past two decades, a group of Italian and Slovenian winemakers have brought back the old idea of fermenting whites like reds, sometimes in oak barrels or clay jars (we suggest you try a wine from Josko Gravner in Friuli).
Orange wines are hip (check this article in mainstream Bon Appetit), expensive (did we mention that Gravner’s orange wine was $120 a bottle?), sometimes oxidized or flawed, clunky and often more of a modern art statement than a great bottle of wine. Despite all the criticism one might have (here is a great rant from Jon Bonne in the San Francisco Chronicle) about the organoleptic qualities of orange wines, one cannot deny the creativity and the added diversity that this type of wine brings to the overly traditional wine business table. I suppose like many others, I find orange wine unpleasant but I am attracted to this iconoclastic winemaking. The trouble is that most orange wine makers try to be very hands off in their winemaking – OK too hands off for some. To quote an old Enology teacher: “Grape juice left alone turns into vinegar.”
Back to Gewürztraminer, always a mouthful despite the fact that it is not an Icelandic word but a good Germanic one. Gewurzt, for short, has interested me as a base for an orange wine; in fact, we’ve always had some skin contact with this grape. After all, those characteristic spicy, lychee flavors are located in the skin of this varietal. We usually let the skin sit with the juice overnight in the press, let’s call it 12 hours of skin contact.
Last year, I thought it was time to try a true orange wine. We went ahead and fermented a good amount of Gewürztraminer to dryness, on the skin with a few pump overs at relatively low temperatures (my idea was that aromas are not extracted as much with temperature but rather with contact time). The finished wine was very colored, deadly aromatic, slightly phenolic since the wine stopped fermenting at about 1% residual sugar, and quite interesting. That is, interesting to wine freaks like me! With winemaking (which is also true in many disciplines) this is where reality meets art – great, interesting wine should generate conversations but commercially, it is a disaster waiting to happen. So since we’re a disciplined winemaking team, we decided to blend away the lot into our Gewürztraminer blend. Sadly, we did not store a single bottle of the pure orange Gewurzt. Before you label us as wimps, consider that our 2012 vintage is 50% orange wine – that is fairly gutsy! This 2012 vintage is definitely more complex, the most complex we’ve made and perhaps one of the most complex Gewürztraminers around (note: shockingly, ours is available for only $10 bottle!).
Perhaps we did push it a bit hard (the wine is pretty geeky I think – would love for many to try it after reading the blog and comment about it) but we’ve learned that for us, orange winemaking can be a great tool and it is here to stay for our Gewürztraminer (not at 50% mind you – perhaps more like 20%).
Current reviews for the 2012 Pacific Rim Gewürztraminer:
90 Points & Best Buy! “Soft and quite floral, this is textbook Gewürztraminer. The spice of the grape hits you like a warm breeze, bringing pretty lychee, melon and more floral flavors with it. Charming and rather deeply colored, this is pure Gewürztraminer but one half of the blend was done in the style of an orange wine.” – Wine Enthusiast
Gold Medal – San Francisco Chronicle Wine Competition
Gold Medal – Tri-Cities Wine Festival
The wisdom of an investment can often come from the investor’s prospective making it necessary to deﬁne what a “wise investment” is. Since the “wine industry” reaches many disciplines, only businesses that “touch” the production of wine will be entertained. Wine enterprises that are specialized in a specific sector of the wine industry have been successful and can illustrate the worthiness of the industry as an investment. Examples of successful wine companies will support that under the right circumstances – which as any other business venture involves being at the right place, at the right time with the right plan – the wine industry can indeed be a wise investment.
Each investor has different levels of appetite for asset ownership, time horizon or rate of returns. Despite the fact that there are no two identical investors, it is fair to say that they would deﬁne a wise investment as a venture providing a fair return given a certain ﬁnancial risk. Unwise investments made by wine wannabes that rely on exuberant tax haven to offset their eye popping income will not be discussed – only for-proﬁt ventures with signiﬁcant business motivations rather than emotional ones will be of interest to demonstrate the wisdom of a wine investment. It is fair to add that the wine industry has been growing well in the New World over the past 30 years while it has been under many challenges in the Old World. This is why ﬁnancial wine success stories tend to be concentrated in the New World.
The breadth of the wine industry from suppliers (equipment, packaging, public relations to name a few) to grape growers to winemakers to sales and marketing companies is too large to be discussed all at once. Only businesses that are involved in the production of wine will be covered for the purpose of this conversation. Three segments of the wine industry will be discussed: The grape growing business, the winemaking business, and the sales and marketing business. Finally we will have a look at fully integrated models from grapes to sales.
The grape business can provide tremendous return over the long run as it not only generates cash ﬂow from selling the crop but it is also a real estate investment. This business is long term oriented and slower pace than any other segment in the wine sector. Large farmers have been known to enter the business as a diversiﬁcation strategy for their estate; this has been the case for many Washington State growers for example. The land investment alone can be sufﬁcient to validate a project – consider the case of the Mariani family that bought 7,100 acres of land in Montalcino in the 1970’s when this region was undiscovered; ﬂash forward 45 years later and now this region is one of the most prestigious in Italy with skyrocketing land prices – a very wise investment indeed.
The winemaking business is a medium term business and often requires technical people and a great deal of business acumen – the critical skills here are to turn grapes into wine at the right cost and produce the desired quality. In its simplest incarnation, one can think of a custom crush facility such as Courtyard Cellars in Paso Robles (that sold at a good premium to Gallo two years ago) or perhaps a large European Cooperative. The Cave Cooperative du Luberon is a great example of a very successful winemaking operation using its winemaking expertise to attract growers. This allowed it to expand its control to 80% of the appellation and is now seen as one of the largest players in the south of France for Rosé wines.
The sales and marketing business is the fastest pace business by far. It requires little capital, just wits and a knack to spot trends ahead – or sometimes to create them. In the United States, a company like Cameron Hughes does this well. They successfully sell wines in lot series by quickly adapting to the marketplace and taking advantage of excellent wine lots unsalable by other wineries – Consider this 10-year-old modern negoçiant sells about 3 million bottles. Of course this idea has been used for many years by Burgundy negoçiants and other wine brokers (Bordeaux for example) whom add value by understanding the market well and connecting buyers with the right wines.
Vertically integrated businesses are the toughest enterprises to run as a viable venture. Those businesses grow grapes, they transform them into wine, and they package and sell the resulting wine. It is a difﬁcult business model requiring simultaneous long and short term thinking. The difﬁculty is exacerbated for small wineries as they usually lack expertise in one area of the wine sector. Consider the Clos Saint Vincent in the Bellet AOC near Nice in France. Sergio, the owner, produces 20,000 bottles a year and his enterprise is made of him, his spouse and one part time vineyard worker. Sergio, like all small business owners, has to wear many hats – he is the viticulturist, the winemaker and the sales and marketing director – Sergio cannot be good at every role. But luckily he is in a region where local wines are consumed avidly allowing him to be a successful one man band. Put this in contrast with the giant Chilean Concha y Toro, which is also fully integrated, but has expertise from many employees all along the wine food chain. In other words, either grow bigger to hire all those required skill set or be in a market niche that can absorb your inevitable lack of expertise.
In conclusion there are many successful wine investments all over the world today. Many of the best investment are from companies that specialize in a speciﬁc segment of the wine sector, grape growing, winemaking and sales and marketing. A few vertically integrated businesses are proﬁtable either because of a dominant position in the market combined with a large knowledgeable pool of workers (think Gallo or Concha y Toro) or because they have found a niche they can survive in undisturbed despite their inherent inefficiencies (think small local producers as well as many estate luxury segment wineries). Even though the underlying growth trends of the wine industry are better in the New World than the Old World, opportunities are everywhere for the right focused business plan and indeed many ﬁnd the wine business to be a very wise investment.