Wine Wars: Terroir’s Last Stand?

Reading Wine Wars, Mike Veseth’s superb book about the forces shaping the modern wine industry, brought two memories to mind, one of fairly recent vintage, the other decades old.

 I’ll start with the older one, which involves a college night with friends.  For reasons that I’m sure made good sense at the time, we decided it would be fun to buy a bottle or two of the cheapest wines we could find on the shelf at a nearby 7-Eleven.  I don’t remember exactly what we bought or what I drank, but the names Thunderbird, Boone’s Farm, and Blue Nun spring to mind.  I also can’t recall how much we paid for them, but it seems like they must have been a couple of dollars each, in line with the cost of a six-pack of beer in the late 1970s.  And, oh yes, I vaguely recall waking up the next morning with a killer hangover.

 The more recent memory involves a lunch in Madrid a couple of years ago.  On the way to the Prado museum, we stopped at a nearby restaurant for a quick lunch.  I ordered the menu del dia, or menu of the day, a common offering at Spanish restaurants that generally features a soup or salad, an entrée, a desert and a choice of beverages.  When I asked about the choice of beverages, I was offered soda of some kind, water, coffee, tea, or wine.  Naturally, I asked for red wine, pleasantly surprised, but realistic enough to expect nothing more than a glass of something that would be innocuous at best.

 A few minutes later, the waiter brought a bottle to our table, set it down, and said something that I took to mean, “this bottle is all for you.”  When I questioned him, he repeated the phrase.  And I understood.  Yes, it was mine, all mine.  The entire bottle.

 The meal probably cost 8 or 9 Euros, about $11 or $12 at the current exchange rate, at the bottom end of what I would expect to pay in any major U.S. city for a decent lunch at a nice, but inexpensive restaurant.  Two things struck me about that transaction.  First was the recognition that back home, the price of the meal would barely have covered a glass of wine, if that, along with a decent course or two of food.  But what really surprised me was the casual way they threw in the full bottle.  We’re talking wine, after all, not water from the tap.

 I wondered off and on in the intervening years how it could be possible to serve a bottle of wine with a meal as though it was nothing more than a cup of bad coffee.  Wine Wars gave me some answers.

 Mr. Veseth discusses three major trends shaping the world of modern wine: globalization, “the miracle of Two Buck Chuck,” and what he refers to as “the revenge of the terroirists.”  Globalization is a fascinating phenomenon, and far more complex than I can do justice to in this post.  While most wine is made and drunk locally, globalization has made it possible to walk into an American wine store – or a grocery store, for that matter – and find wines from countries as far away as New Zealand and Austrialia, along with bottles from France, Germany, Chile and California, among other places.  What’s interesting, as Mr. Veseth points out, is that globalization’s impact upon the local “wine wall” is largely seen in the high end and low end of the market.

 The high end is obvious.  It includes first growths from Bordeaux, cult wines from California, expensive Burgundies or the best Shiraz from Australia, among other fine wines.  If wine drinkers are willing to shop at fine wine stores and pay hundreds of dollars for a bottle of wine, then producers will certainly ship them.  But the low end is more interesting.  After taking into account the cost of growing the grapes, making and bottling the wine, and shipping it across the ocean or over continents – let alone the cost of land and equipment – how can it be possible that a decent wine can be made available for less than $10 – and, in some cases, for much less?

 Part of the answer is that much inexpensive wine is shipped from overseas in 24,000 liter bladders and bottled in the United States – a much cheaper approach than shipping 32,000 bottles.  But another key is the ability of winemakers to produce good quality wine at low cost, and – much more important – to convince wine buyers that inexpensive wine can be good wine.  And nowhere is that latter concept more evident than in aisles of Trader Joe’s, where Charles Shaw wine is sold for as little as $1.99.

Well, with taxes, sometimes it’s Three-Buck Chuck.

Charles Shaw, or Two Buck Chuck, is the U.S. version of that wine I had for lunch in Madrid.  Not particularly distinguished, but a solid, drinkable wine with no real flaws, made possible by California’s vast wine lake.  Because of the way wine is taxed at the state level, most of us were never able to buy a bottle of Charles Shaw for the $1.99 price tag that gave rise to its nickname.  But even at $3, it was something of a miracle.  A wine that probably cost less than that bottle of cheap wine I purchased in college (even priced in nominal dollars) that is thoroughly enjoyable.

  It’s a measure of just how much winemaking techniques have advanced that such good wine can be sold so cheaply. But as Mr. Veseth points out, that’s not the real miracle of Two Buck Chuck.  The miracle is that in a world where most of us believe that price is an indicator of quality, so many wine buyers are willing to bring home bottles of wine that cost so little.  And without Trader Joe’s, that might never have happened. 

 Trader Joe’s is a value retailer.  It is a subsidiary of Germany’s Aldi chain, which sells drinkable wines at even lower prices than Two Buck Chuck.  In fact, Aldi’s least expensive wines can retail for one Euro per litre (250 ml more than the standard U.S. bottle), which means its cost is about $1 per U.S. bottle, making it, as Mr. Veseth put it, One-Buck Chuck. But Aldi’s customers trust the chain, as does the clientele of Trader Joe’s.  “If you put an equally cheap Two Buck Chuck clone in your typical upscale supermarket, it’s entirely plausible that no one would buy it because they assume low quality based on the low price,” he writes.  “That’s where Trader Joe’s comes in.  Trader Joe’s has a reputation for selling upscale products for a bit less – for providing relative value.”

 Relative value.  That sounds like something an economist would say, and that’s not surprising since Mr. Veseth is an economist.  A wine economist, to be precise.

 Before reading this book, I had no idea there was such a thing as a wine economist, but it turns out there are enough practitioners to have their own professional association – the American Assocation of Wine Economists.  And the book is replete with interesting tidbits about economic theory, including the way that protectionist policies have led to the production of plonk, while free markets have forced producers to raise the quality of the wine they sell.

 These are matters that Mr. Veseth devotes considerable time to, and that he explains in clear and elegant prose.  He is an economist, to be sure, but he is a writer of considerable skill and his book is not just educational, but engaging and entertaining as well.  It’s not just a great book about the wine industry, but a great business book, period.  Mr. Veseth’s blog, The Wine Economist, is a wonderful source of information about the business, and it was the digital incubator that eventually gave birth to his book.

 One final thought about a sub-theme that is evident in Wine Wars.  Those of us who love wine live in both the best and worst of times.  In many ways it is a golden age – never before has so much wine of acceptable, if not good quality been available at such reasonable prices.  And yet, so much of what we drink today might be classified as commodity wine – interchangeable wine that could come as easily from one place as another.  In other words, wine without a sense of place or terroir.

 In a world without terroir, one cabernet sauvignon is not all that different from another, whether the grapes are sourced from Chile or Sonoma.  And that’s a shame, since wine should be all about soil and climate and the intangibles of each vintage, such as weather, plus all the other forces that can make a grape variety grown in one wine region in one year so different from the same one grown in another. 

 And so the last trend in Mr. Veseth’s book is identified as the Revenge of the Terrorists, and it is a broad, complex topic that could probably justify the cost of the book by itself.  But as Mr. Veseth said in an article on his blog, The Wine Economist, “nothing in wine is simple.” 

  I’ll close by saying that a part of me, the romantic part, is rooting for the terroirists, even if my palate has never been able to keep pace with my heart and my idealized views about wine.  And yet, another part of me, the part that enjoys wine regularly, has to admit that there’s something special about a quality wine that can be had for $10 or less – even if I can’t tell where the grapes were grown, much less what year in which they were harvested.  God save us from globalization, just not yet.