October 29, 2008

A Response on South Africa

My recent column entitled, "South Africa:  Fragile Flower of the Wine World" prompted an unusually high volume of reader response, and I've promised to post a few of the more interesting messages this week (with permission from the senders). In case you didn't catch the original column, published here on WRO on September 30, that would be the place to start:

http://www.winereviewonline.com/Michael_Franz_on_South_Africa_Situation.cfm
 
Most of the mail I received sought to corroborate my observations and analysis, but two important responses took issue with the column.  The first of those came from Su Birch, CEO of Wines of South Africa, which was published in the WRO Wine Blog on October 13.  If you wish to view my exchange with her, just click on "More Wro Wine Blog" at the bottom of this entry and scroll down to the posting from Oct. 13.

The following message from Dave Jefferson also takes issue with my column.  Mr. Jefferson describes his experience and background in connection with South Africa in the body of his message, so I will not recount these here.

A lightly edited version of Mr. Jefferson's comments appears below, followed by my very brief response:

~~~~~~~~~~~~~~~

Michael,

I was pleasantly surprised to receive Friday your recent treatise on South African wine from one of my partners in our vineyard development in the Western Cape. You may recall our meeting at the dinner at Groot Constantia where I recognized your name and indicated I had enjoyed some of your reviews on wine from time to time….

Returning to your article, I appreciated your insightful writing and sense of social responsibility.  The open question which you first pose is will US consumers be sufficiently conscientious enough to buy more South African wine, in part to assist a place in peril?  To date, they have not.  So why not, especially since 'we all know' most US wine drinkers are do-good, kind hearted liberals.

I tender three possible reasons:
• The wine has not yet been sufficiently competitive.
• The US market presence of RSA wine is so small as to be marginalized/trivialized, and virtually unknown.
• The (out of contextual understanding) factual statement that the RSA wine industry is still 99% owned by Caucasians… and therefore implicitly immoral
• Of course, the usual, final multiple choice response, all of the above.

Before expanding upon the above, I would like to submit my qualifications for entering this discussion.  Commencing in April 1994, the week before the General Elections, I made my first trip of 24 trips to the Western Cape (and elsewhere in South and East Africa).  During 1997 I was the Pied Piper leading Beringer Wine Estates through the Cape on five more trips, negotiating two prospective wine deals before they left us all at the altar.  (They probably made the correct corporate decision from an ROI standpoint, but some of us smiled when their subsequent plan to back up the boat to the wine co-ops in the South of France failed miserably.)  In February 2000, I formed a company with a local VinPro consultant and with old Stanford fraternity brothers we purchased a mountain vineyard needing replanting and expansion.  We are now 99% planted and probably will harvest 94% of our maximum expected crop levels next year; the quality is superb, equal to Stellenbosch but we are still 'landowners,' not yet 'brandowners.'  The question of building a 50,000 case winery for about 50% of our ultimate production remains open. After a two year process, the final government permit may issue next month but capitalization and marketing will remain open issues for some time.  The total vineyard investment, by the way, is about $3,000,000, mainly equity but some modest debt as well.

Clearly my partners and I have shouldered the inherent risk that South Africa could go the Zimbabwe route at some point in time, confiscating and wrecking everything a la Beirut.  And still we trek on.  Rest assured 'country risk' has always been at the top of the list of concerns and risk factors: in my partnership I have both left wing liberals and right wing conservatives, and from every one of them that invested (and everyone who chose not to invest), the first or second question has always been: 'what do you think of the government?'  After 35 years in the grape growing business in CA, I can evaluate vineyards but I cannot evaluate governments.  But judging by the last 14 peaceful years under the ANC and their recent disposing of President Mbeki, without bloody riots in the streets, perhaps their one party form of government is no worse that our wild two party democracy (now and in the future).  Yet I am sure you are correct in asserting: 'The specter of instability--or, in the worst case, "land reform"--is also inhibiting foreign direct investment in South Africa, and one sees far fewer foreign-owned or joint venture wine enterprises there than in Argentina.'

What I do know for sure, however, is that without a substantial and continuing investment in vineyards and wineries in RSA, wine at most relevant US price points (say $9.99 to $29.99) will not be sufficiently good to be deemed competitive.  So somebody has to take the risk, and fortunately most of those 'somebodies' are South Africans, with an increasing number of vacationing Germans and the like from the UK/EU, and a sprinkling of 'black diamonds,' dabbling in the Cape as do many 'rico Americanos' in Napa.  I agree with your overall assessment: 'Potential excellence that hasn't quite resulted in actual excellence' but having attended every CapeWine show since 2002, the cellars of the Cape are making huge strides, based largely on capital investment, faith, and energy.

As to the squalor of the barrios (usually called 'squatter camps' in the RSA) surrounding the airport, that was also my first impression in 1994.  However, on that trip there was also no electricity to the shacks and there still were steel guard towers on metal stilts on the perimeters.  (Fortunately, that had changed by 1996 when I first returned.) Interestingly, there are squatter camps outside almost every town or city in South Africa, reportedly the result of an extensive ANC busing program that distributed the burden of the historically disadvantaged around the country in the early 1990's.  If your figure of 50 murders a day in RSA is correct, I question what percentage of those fatalities are in the Cape Flats?  I understand most of the violence is in Gauteng (the Jo'berg province) where the continual in-migration of the desperately poor from some 11 Black nations to the north confronts those just marginally better off in other Bombay-like slums.  A tragedy for all, but fomented by the far worse conditions of the 'perpetually disadvantaged' countries further north.

But let us return to the hope of the BEE (Black Economic Empowerment) initiative in South Africa. I understand that over 25% of all wineries presently have BEE programs in place and the percentage is anticipated to well exceed 50% within another 18 months or so.  This really is imperative, because according to my very liberal-leaning local attorney, of all BEE owned farms and vineyards where the 'previously disadvantaged' have obtained control and ownership, 100% have become financial disasters.  It is very clear that it will take generations for solely owned and managed Brown or Black companies to become self-sufficient.  And this is despite foreign governments and NGOs also trying to assist: for example, the Netherlands government has an agency whose mission is to contribute to development by assisting companies to become more competitive, and to facilitate their market entry to the EU.  The programme is open to: 1) black owned businesses, 2) wineries with BEE projects, and 3) wineries that have a significant social impact (e.g. are significant employers in an economically underdeveloped region) or have a strong social responsibility program.  The Dutch run a free coaching program and come to the Western Cape to put it on.

In my opinion, a BEE initiative with a far higher probability of success would be for most of the larger of the 576 wineries to establish and subsidize wine marketing companies with Brown and Black participants that would travel to the EU/UK and North America to sell the country's products.  This requires, however, a careful selection of people of color, perhaps now in the food and beverage businesses, with significant wine knowledge and high English proficiency; unfortunately most of these young people do not presently live in the squatter camps or on farms, where education levels are low and where English is seldom spoken.  Assuming they carry competitive RSA wines, when such sales cadres are trained and deployed, one would think that market penetration in the US and elsewhere will rise: the sales reps will clearly be Africans.

So given all the above, must I take issue at all with your recent article?  Yes, on two key and closing points: first, I do not know the source of your contention 'that the wine industry employs 100,000 members of "historically disadvantaged groups," which is well over one-third of the 257,000 total employees.'  However, when the 'historically disadvantaged' are assumed to include the Browns (the most current and politically acceptable collective noun for the 'Cape Coloureds') as well as the Blacks, including some very hard working Sotho seasonal workers, I would be flabbergasted if the true figure is not well  in excess of 200,000, well over 80%!  (Note that there are, per page 52 the 2008 Platter Guide, only 4,185 grape growers, and 576 wineries, of which 49% crush fewer than 100 tons.  So there are less than 5,000 White owners and winemakers.  Throw in their families, office workers, flying winemakers and tasting room staff, and I don't see how to get to 57,000 pale faces.)  So if one third participation by people of color is a 'promising factor,' then would an 80% participation be a highly encouraging factor?

But much more importantly, the quote "…effective black involvement in the industry remains minuscule, with less than 1% of the land under wine grapes under black ownership, management or control" (not your language but your selection) is highly political and inherently misleading.  (By the way, what percentage of the US wine industry is owned or controlled by our undocumented Hispanic farm workers?)  If BEE participation is already over 25% of all wineries, and headed soon to exceed 50%, worker participation without meaningful (if any) investment is zooming upward.  Naturally, nobody wants to speak about the 100% BEE failure rate in farming, due in parts to any assumed debt, inexperience management, and incompetent group decision making.  We have just built a state of the art vineyard with almost all equity, and even with top quality grapes at nearly full production, and entrepreneurial management, we are barely breaking even.  So even the 6th generation Boer farming families, with free land and a lifetime of experience, are not making much money from farming.  Frankly, nobody save the government has the capital to improve the housing conditions of the Xhosas living in the Cape Flats, and they are building soccer stadiums for the 2010 World Cup.

Michael, I understand where your heart is as a political scientist and humanitarian, and, of course, you are a superb and insightful wine writer. I am also pleased you took the time to prepare the treatise; I just wish you had not bought into the Wine Industry Council's propaganda as it does not fairly reflect what is going on.  And the assertion that the Western Cape is a risky place to invest makes it that much harder for those who have the guts to invest on little more than faith alone, because it can become a self-fulfilling prophecy.

Thanks for taking the time to hear me out. I would be happy to discuss these and related issues with you anytime.

Dave Jefferson
President, Burdell Properties
2175 E. Francisco Blvd., Ste. A-3
San Rafael, CA 94901

~~~~~~~~~~~~~~~

Michael Franz:  The only point that I would make in response to Mr. Jefferson concerns his remark that my "assertion that the Western Cape is a risky place to invest makes it that much harder for those who have the guts to invest on little more than faith alone, because it can become a self-fulfilling prophecy." 

I find this comment rather surprising, since Mr. Jefferson notes that, for himself and his partners, 'country risk' has always been at the top of the list of concerns and risk factors."  My column simply publicizes a factor that he implicitly acknowledges.  Whether or not publicizing this factor will inhibit investment cannot be my concern as a journalist.  My responsibility is to report what I see, whether we're addressing the barrios or investment risks, and to resist any temptation to look the other way when encountering a troubling reality.

October 27, 2008

Winemaker Daniel Baron on '04 Silver Oak

Since its inception in 1972, the Napa Valley's Silver Oak Cellars has challenged the conventions. First in its embrace of American Oak cooperage to age its wines, when most other vintners prefer French. Second in its decision to hold  its wines nearly five years prior to release, making them more drinkable when young.

Thus it has become a huge celebration of Silver Oak fans each year as the winery unveils the new vintage, just about a year behind everyone else. So now, as we see most of the 2005 Napa Cabs hitting the market, Silver Oak is showing its 2004.

I tasted both the 2004 Alexander Valley and 2004 Napa Valley on a recent visit, and video recorded winemaker Daniel Baron's thoughts and comments on each.

On a personal level, I found both wines superb. The Alexander Valley Cab is soft and voluptuous, and a whiff of mint on the nose that is very inviting. The Napa Valley Cab is more darkly fruited and structured, but each wine possesses the signature supple tannin of Silver Oak.

Most appealing, however, is the balance of both wines. Despite modest alcohol levels (both wines have a stated alcohol of less than 14 percent) there is no dearth of ripe fruit or layered complexity. Both express freshness and elegance throughout.

These are lovely wines that will deliver immediate satisfaction -- but no doubt improve with age. Expressions of the Alexander and Napa Valleys at their very best.

October 23, 2008

Castello Banfi Brunello Cleared in Investigation

The vindication for Cristina Mariani-May was sweet.

Shortly after Italian authorities exonerated Castello Banfi this week of fraud in the investigation into the authenticity of Brunello wines from the 2003 vintage, Mariani-May told Decanter: "Our Brunello has been liberated!"

The American-owned company may now get on with the business of importing and selling the 2003 Brunello that had been confiscated by the Magistrate of Siena at the start of the probe, which also ensnared renowned Italian wine producers Antinori and Frescobaldi.

At the heart of the ongoing investigation is an accusation that a number of producers of Brunello di Montalcino may have used prohibited grape varieties to make their 2003 vintage, which had been a short crop due to excessive heat during the growing season. The rules of production for Brunello require the wine to be made of 100 percent Sangiovese from classified vineyards in the Montalcino zone, which is located approximately 60 miles southwest of Florence.

The probe has widened to include as many as 90 producers, and ignited heated debate within the Consorzio di Brunello di Montalcino over the discussion of relaxing the rules.

While Antinori and Frescobaldi were cleared quickly in the investigation, Banfi was left to twist in the wind for several months, and news reports in September indicated laboratory analysis had turned up evidence that Banfi Brunello had been found to have other grape varieties.

Mariani-May strongly disputed those reports and defended the authenticity of Banfi Brunello, which is one of the leading Brunellos sold in the United States. Turns out she was right.

What remains of the investigation is unclear, but the debate rages on. Franco Biondi-Santi and Francesco Marone Cinzano, two prominent producers, have rallied support to leave the rules as they are, sending a letter to the Consorzio -- signed by about 60 percent of the region's producers -- asking that the requirement of 100 percent Sangiovese be left unchanged.

Both men argue that the 100 percent requirement makes Brunello unique.

October 22, 2008

The Dirty Little Secret

When the controversy over elevated levels of alcohol in wine erupted recently -- following a stinging rebuke from Napa Valley winemaker Randy Dunn -- I was unaware of the depth of emotion wine enthusiasts harbored on the issue.

Readers of my nationally syndicated "Wine Talk" column bombarded me with so much mail that I devoted two subsequent columns to letters on the issue. Readers were overwhelmingly appalled (by about 20-1) at the stampede of winemakers toward more concentrated, jammier, high-alcohol wines, particularly from California.

There are a number of theories about why this has been so. Global warming. Healthier vines. New rootstocks that have turbo-charged sugar production. Then there is The Wine Spectator, the national wine magazine that retailers across the land quote liberally in an attempt to sell you a highly rated wine.

That is the subject of my Creators Syndicate column this week. Click here to read the whole thing.

What some of you probably don't know is that consultants within the wine industry have profiled the palate preferences of powerful critics such as Robert Parker and the Spectator's James Laube.

It's no secret that Califorina wineries -- indeed, most any winery that hopes to successfully market its products in the United States -- covet a big score in the "WS" ratings.

Rightly or wrongly, many winemakers believe they must produce a concentrated fruit bomb, with the attendant high level of alcohol, to please the palate of Mr. Laube. Most will deny this when confronted, but it's just about the worst-kept secret in the wine biz.

This was brought home to me again last week when I was contacted by a Rodney Strong Vineyards spokesperson about sampling a Cabernet Sauvignon from its new 'winery within a winery.' When informed this hot new Cabernet was "well balanced" despite an alcohol level of 15.4 percent, I declined.

But not before I opined that it was my sense the winery within a winery had been created for one purpose -- a high score in The Wine Spectator. Honestly, there's nothing wrong with that. You own a winery, you do what you have to do to sell the wines you make.

With that in mind, I visited the truly new winery at Silver Oak Cellars, where they've rebuilt since a devastating 2006 fire. Alcohol levels, balance and elegance were much on my mind when I sat down to taste the new releases from Silver Oak, the 2004 Alexander Valley and 2004 Napa Valley Cabernet Sauvignons.

I could hardly believe my eyes when I saw the stats. The Alexander Valley, 13 percent alc. The Napa, 13.9. Bingo!

No matter what you may think of the Silver Oak wines -- and I happen to think they are exceptional -- you have to admire the determination of owner Ray Duncan and winemaker Daniel Baron to be true to the winery's vision of elegance and finesse, articulated by founding winemaker Justin Meyer more than 30 years ago.

After all, blackberry jam is for toast.

October 20, 2008

Twomey Pinot Noir, the Winemaker's View

One of the most pleasant surprises of my recent visit to the Napa Valley was an early look at the soon-to-be-released 2007 vintage of Pinot Noir from Twomey Cellars.

Twomey is an offshoot of Silver Oak Cellars, created in 1999 after the  purchase of the Soda Canyon Ranch at the southeastern tip of the Napa Valley. This had been a source of Cabernet grapes for the Silver Oak wines, but the vineyard also possessed exceptional Merlot vines that stirred the juices of winemaker Daniel Baron, who fondly remembers learning at the feet of the Merlot masters in Pomerol and Saint-Emilion in the 1980s.

So Twomey was created to produce Merlot, for Silver Oak's founding winemaker, Justin Meyer, insisted Silver Oak remain true to its mission -- a winery dedicated solely to world class Cabernet Sauvignon.

Twomey has been a roaring success, and in 2006 the winery made its first Pinot Noir from Russian River Valley grapes. The Pinot program really got rolling in 2007 with wines from four appellations: Sonoma Coast, Russian River Valley, Anderson Valley and Santa Barbara County.

I tasted these wines with Baron last week and came away impressed. Much like the Silver Oak Cabs, the Twomey Pinots are uniformly well balanced. They have found that sweet spot between wines that are light and thin and wines that are overripe, jammy and high in alcohol.

The finesse of the Twomey Pinots is most evident in the quality of the tannins. There's none of the bitter, green stemmy quality found far too often in Pinot from the cooler coastal regions. The silky tannins, fragrant aromatics, generous flesh and palate weight combine to produce elegant Pinot Noir that offers excellent cellar potential as well as immediate appeal.

I sat down with Baron, flipped the video switch and had him walk me through these lovely wines, rendering his unique insight into each. Enjoy!

October 17, 2008

The New Silver Oak Cellars Offers More Than a Sip

Visiting a winery should involve more than slugging down the current releases and moving on to the next notch in the tasting tour belt. You should at least buy a t-shirt, or a hat!

Only kidding. But I'm serious about getting more out of the experience of visiting a winery, and was pleased to witness a wonderful opportunity for wine education when I visited the new Silver Oak Cellars earlier this week.

Silver Oak has been completely rebuilt since it was destroyed by fire in 2006. This iconic Napa Valley winery has been a prime destination for tourists ever since it opened its doors in 1972. Wine enthusiasts came to taste the Silver Oak Cabernets, of course, for Silver Oak specialized in Cabernet and had embraced since its inception the unique practice of holding each vintage for close to five years before release.

Founders Justin Meyer and Ray Duncan believed a Napa Cab should be ready to drink upon release, so they aged their Cabernets at the winery before allowing the public to have at them.

The other prime tourist attraction at Silver Oak was the huge, opulent, tasting goblet, the first of its kind used at a California winery. They became so popular they were sold separately in six-packs.

The new Silver Oak has added another wrinkle, hiring Chef Dominic Orsini for special events and public food/wine pairings (reservations required). Of course, the food and wine pairings will no doubt be immensely popular. But they serve another purpose in the sense that visitors will take away an idea of what the winemakers and winery staff think are good matches with the Silver Oak Cabernets and Twomey Pinot Noirs and Merlots that are offered for tasting during a winery visit.

Everyone, including me, is hungry for this type of information. And it reminds us that wine's primary function is to complement a meal. Not that we don't occasionally enjoy a glass of wine on its own!

October 16, 2008

Wine for Hard Economic Times

I have no idea what has happened in the marketplace of wine since the recent crash of the stock market, but I suspect the subject of value wine is on the tip of the tongue in most wine shops across the land.

This is the subject of my Creators Syndicate column this week. Click here to read Hard Times Call for 'Value' Wines.

I've put together a highly personal list of producers/brands that consistently deliver exceptional quality at modest prices. It doesn't really even scratch the surface, but it's a start. I recommend brands from Chile, Argentina, Italy, Spain, California and Australia.

These are wines I go to for everyday wine pleasure even in the best of times. Salud!

October 13, 2008

An Exchange on the Situation in South Africa

I've received a lot of reader reactions to my column, 'South Africa:  Fragile Flower of the Wine World,' published on Wine Review Online two weeks ago.  All of the emails I've received have been supportive in tone except one, and since WRO isn't a mutual admiration society, I want to publish (with permission of the author) the one reply that takes issue with a few aspects of the column.  If you haven't seen the original article, that would be the place to start:

http://www.winereviewonline.com/Michael_Franz_on_South_Africa_Situation.cfm

Then, please have a look at the following comments from Su Birch, CEO of Wines of South Africa.  My reply to Ms. Birch also appears below, along with a link to an article published (by coincidence) on the day of this exchange.

* * *

Dear Michael,

I have read with great interest your 'Fragile Flower' piece, and I am sorry that I did not manage to spend time with you at Cape Wine, as I am sure we could have had some interesting debates.

I feel uncomfortable with the idea that conscientious consumers should buy South African wine because they would like to help a place in peril.  We are keen that our wine should be recognized for its competitive quality and value proposition, for its distinctiveness and vibrancy, and because our producers are implementing sustainable practices and taking responsibility for conserving one of the world's most sensitive biodiversity hotspots.  If buyers want to support causes then they should select individual brands (like Fundi), not countries.

Are we a country in peril?  Perhaps but when I look at the rest of the world, we are not alone.  Whether it is banking crises or terrorism, there is always peril. We may have 50 murders a day (and I am not condoning this, or making light of it) but Japan has more suicides than that a day.  Different pathologies.  I have been all over the world and in many hotels, I have had card keys for the lifts and for the floors.

Yes, we are a damaged society, and the sins of our fathers are being visited upon us, but we do not want to be seen as a charity case.

Our slums are horrific, and they are a function not only of poverty, but  also of the unnatural pace of urbanization ,which had been dammed back under apartheid.  There is no way SA can build houses fast enough.  But did you get a chance to visit one of these shacks, and chat to the inhabitants?  They are almost always neat, tidy and often well furnished.  The children are at school.  While the owners desperately want decent housing, you would find hope in their hearts because things are getting better not worse.

The wine industry will be slow to transform, because it is not very profitable.  Wise black businessmen and women , who abound in Johannesburg and other urban centers, do not want to invest in an industry with such poor returns.  Retail and construction are way more profitable.  And if you didn't inherit your farm, it is almost impossible to survive. You can not pay off a farm and earn a living in wine in SA.

These comments are meant in the friendliest way, and I look forward to reading your next pieces.
Kind regards
Su

Su Birch
CEO
Wines of South Africa,

 * * *

 Dear Su,

Thank you for your thoughtful reply.

Here are just a few words in response:

--I did not mean to imply that helping a place in peril was the sole--or even the primary--reason for conscientious consumers to purchase South African wines.  I don't believe that the passage in question reads that way, but I understand your point.  In any case, the follow-up column will furnish readers with a variety of other reasons, based centrally on quality and value.

--Of course you are correct that South Africa is not the only country in peril, though I cannot think of another wine-producing country that seems as imperiled.  Argentina seems imperiled, though to a lesser degree in my judgment.  As for card-operated elevators, I'm having difficulty thinking of another one that I've seen, and my travels are pretty extensive.  I hope that that observation on my part was not unfair as a result of having missed a relatively common object by coincidence.

--As for the townships, I would desperately have liked to visit one.  My recollection is that there was an option for doing that as part of the program at Cape Wine '06, and I remember thinking that that was a very admirable thing to include.  Is my recollection about that correct?  I had a scheduling conflict that prevented me from going on that tour, and this year I didn't see the option.

--I appreciate your observation about the difficulties involved in transforming the wine industry, as I appreciate your comments as a whole.  I do indeed take your comments as friendly ones, and I hope that likewise you will regard my column as a well-intentioned recounting of information and impressions.  I have been a tireless and enthusiastic supporter of South African wines since the mid-1990s, and shall remain one in the future.

All the best,
Michael

* * *

On the day of this exchange, the following article was published in the New York Times.  It may be of interest to those wishing to gain a fuller understanding of the situation in South Africa:

http://www.nytimes.com/2008/10/06/world/africa/06safrica.html?_r=1&ref=world&oref=slogin

October 7, 2008

Bargain Bordeaux

While perusing the offerings in the stylish wine shops of Saint-Emilion recently, I was appalled by the prices. For a mere 2000-plus Euros I could have had a bottle of Le Pin or Petrus!

Who pays those crazy prices? Isn't there a worldwide economic crisis on?

Anyway, that's the bad news. The good news is that bargain Bordeaux does exist and I stumbled across a number of excellent wines in the $25 to $45 price range during my brief stay on the Right Bank of Bordeaux.

That's the subject of my Creators Syndicate column this week. Click here to read the whole thing. What I found was that many chateaux have changed hands in recent years -- Clos des Jacobins and Chateau Pressac, just to name a couple -- and with the new ownership came new energy and a commitment to quality.

Or, in the case of Chateau Mazeris of Canon Fronsac, the wines have been good but are relatively unknown in the United States. Whatever the case, Bordeaux lovers priced out of the market in recent years do have alternatives. And these are not minor wines only made to be consumed young. It's serious Bordeaux and worthy or your cellar -- and mine.