Selling the Cellar

Not surprisingly, all the wine industry's trade publications conveniently omitted the negative news in the report. The wine trade pubs have created an information vacuum that favors only those interests who benefit financially from keeping others in the dark.

Those who benefit are the same pump-and-dump artists who benefited from telling everyone that there was no glut ... right before the tsunami of wine washed over them.

From Forbes Magazine
Heads Up
Selling the Cellar
Dirk Smillie 06.02.08

Jeffrey Hopmayer is prowling California's wine country. This spring he plied six winery owners with good wine over dinner, then bid for each of their properties. Hopmayer, chief executive of privately held Sapphire Brands of Nashville, Tenn., says he expects to make ten such acquisitions over the next five years.

This is a good time to buy, since the overbuilt Napa and Sonoma valleys could soon be in the midst of a wine bust. That's the conclusion of a January 2008 report by Silicon Valley Bank in Santa Rosa, Calif. Its survey of vineyard owners found that 51% of family-controlled wineries in California, Oregon and Washington will shift ownership in the next ten years. The study predicts that 1,020 wineries industrywide may change hands over this period, bringing new owners to 20% of all U.S. wineries, which total 5,000.

The expected selloff is driven by aging vineyard owners bedeviled by how drastically difficult it is to make a buck in the new landscape of winemaking. "The wine business today is a funnel," says Robert Nicholson, head of International Wine Associates, a Healdsburg, Calif. corporate finance outfit specializing in vineyard buyouts. At the top are those 5,000 wineries, which produce 7,000 brands. These labels compete with one another, plus foreign imports, at the bottom of the funnel, where they must fit through a bottleneck of 450 distributors who decide which brands get shelf space. In the past decade the number of brands has nearly doubled, while the number of distributors has been cut in half. Result: Family-owned microbrands have seen their pricing power and ability to demand shelf space trickle away.

That's why Hopmayer says he needs a production level of at least 1 million cases a year to command leverage with distributors (his current wine properties yield 500,000 cases a year). Bigger buyers like Constellation (fiscal 2008 sales: $3.8 billion) and Brown-Forman ($2.2 billion) will also be looking for scale. In the coming selloff only wineries that offer a full portfolio of varietals--from pinot noir to cabernet franc--in quantities of at least 100,000 cases annually will be attractive acquisitions (see table).

Robert McMillan, author of the bank's report, points to another reason family-owned vineyards may be induced to sell: escalating land values. When a Napa Valley acre went for $25,000 fifteen years ago, you had to sell wine at $25 to make a good return. Now, with land worth $250,000, how many wineries can produce stuff good enough to sell at $50 a bottle?

Still, there's hope for the little guy. Squeezed out of mass distribution, boutique producers are relying on wine clubs, tasting rooms and direct-to-consumer sales. Bypassing wholesalers has problems, too. A winery shipping a single case to each state that allows direct sales (there are now 37) would have to submit 725 forms to conform with sales, excise and state income taxes. That could drive anybody to drink.

WTF! Dumb Calif Bureaucrats Turn Amateur Winemakers into Criminals

Yes, I know that "dumb bureaucrat" is redundant. But, just in the nick of time the California state government has arrived and they're here to save us from ourselves. Again.

By declaring that competitions among home winemakers are illegal.

This story from The Santa Rosa Press-Democrat (the only real newspaper in Sonoma County) says it all.

Read it.

Weep.

Then let's ALL have a tasting of homemade wines at our homes. We need to set a date and then notify the bureaucrats. Let them come after ALL of us. Would make for some great YouTube Vids.

Home wine ruling a shock
Organizers and others stunned that state ABC would say events like Harvest Fair are against the law

By KEVIN MCCALLUM
THE PRESS DEMOCRAT

Home winemaking competitions abound in California.

From the Sonoma County Harvest Fair in the heart of Wine Country to the massive California Exposition & State Fair in Sacramento, fairs around the state recognize the skills of thousands of amateur vintners.

Numerous private winemaking clubs also hold regular contests so their members can see how their vintages stack up.

But they all have one thing in common: They're all illegal.

That's what state Department of Alcoholic Beverage Control officials have told an Illinois man who wants to hold a home winemaking competition in Santa Rosa this summer.

"We told them it's illegal," said Matthew Seck, chief of the trade enforcement division of the ABC.

State law creates an exemption from California's alcohol licensing laws for home winemakers who produce up to 200 gallons a year -- but only if they are making it for their own consumption.

The exemption was essentially California's way, after regulation of alcohol fell to the states following the repeal of Prohibition, of continuing the federal exemption for home winemaking.

The problem is that the exemption is a very narrow one that does not allow people to share the wine they produce with others or remove it from the place where it was produced, Seck said.

Word of the state's position spread quickly though the ranks of the passionate home winemaking community, particularly in California, where hobbyists have access to some of the best grapes in the world and craft wines in garages, basements and barns.

"It doesn't make sense to most people, but that's what the law is," Seck said.

Seck declined to say what type of enforcement the agency might take against an amateur wine judging event. He said he was unaware such events take place at county and state fairs, and had never received a complaint against one.

But when the ABC receives a complaint or becomes aware that laws are being broken, it has an obligation to act, he said.

Threat of prosecution

In an e-mail to the Santa Rosa event's organizer, Joel Sommer, ABC investigator David Wright was clear there could be consequences.

"If you decide to hold your event please be advised that it will be without Department consent or authorization and could result in criminal prosecution," Wright wrote.

That got Sommer's attention.

The resident of St. Libory, Ill., and a self-described "Web entrepreneur" operates a winemaking Web site called WinePress. He was shocked by the response and baffled given the proliferation of other such events across the state, including the state's own fair.

"I was just trying to do everything legally," he said.

Sommer has held home winemaking competitions in Denver, Baltimore and St. Louis in recent years, and was looking forward to holding his first event in California. But the legal opinion threw his whole plan into question.

Many visitors to Sommer's Web site rallied to his defense, digging up legal research and offering support and strategic suggestions. Many suggested the ABC official was off base or overstepping his authority.

"This guy is drunk on power," wrote one poster.

The ABC's stance flies in the face of reality and years of history and tradition, said Nancy Vineyard, co-owner of The Beverage People, a home brewing and winemaking supply company in Santa Rosa.

"If that's the case, then just about every county fair and club across the state is breaking the law," she said.

"I've never heard anything like it," said Bob Bennett, an avid home winemaker from Healdsburg and head of the Garage Enologists of North County. "I can't think of why he's any different than the other (competitions)."

Such competitions are crucial for home winemakers to get feedback on their wines from experts in the field, said Fred Millar, president of the Sacramento Home Winemakers. He noted that many of the best professional winemakers started out as hobbyists.

"I'm really concerned. I think this could have a chilling effect on the whole industry," he said.

Others suggested Sommer just ignore the ABC and hold his event as planned.

"It's silly and it's a technicality and nobody really cares," said Andy Coradeschi, former president of Cellarmasters Home Wine Club of Los Angeles, which has held a competition for 34 years and last year judged about 220 wines.

Help from legislators

Seck declined to say whether county fairs or the upcoming California Exposition & State Fair's Home Wine competition would violate the law. He said he was unaware they held home winemaking events.

But legislators are moving quickly to make sure the flap doesn't interfere with the summer fair season. After receiving calls from home winemakers across California, state Sen. Pat Wiggins, D-Santa Rosa, is proposing urgency legislation to fix the problem.

"I think there is a concern that some of these events may have to cease without this kind of bill," Wiggins spokesman David Miller said.

Next week, Wiggins will introduce a bill, SB 607, that would add home winemakers to a section of the law giving greater latitude to home brewers. Current law for beer allows "personal or family use" and lets home brewers remove their brews "from the premises where manufactured for use in competition at organized affairs, exhibitions or competitions."

Adding wine to this section should resolve the issue, Miller said.

As "urgency" legislation, the bill requires a two-thirds majority to pass, but would take effect immediately upon the governor's signature.

Despite the warnings from the ABC earlier this year, Sommer remained undeterred and continues planning his event. The fact that he has already paid deposits to the Flamingo Conference Resort & Spa has motivated him, too.

He continues to "move full speed ahead" for the event, called WineFest, and hopes to get 150 people to attend.

The threat of prosecution initially made some posters on Sommer's site question whether attending was worth the risk. But most saw the threat as hollow and the risk minimal, he said.

"If they make an example out of me, fine, but at least we get the law changed," he said.

Review: Rosenblum Snow's Lake Zinfandel 2004 [Mac McCarthy]

My rating: 96 out of 100

This is one of the biggest, boldest of Rosenblum's big, bold Zinfandels, and from a relatively new source for the winery. (2004 was the first vintage from Snows Lake for Rosenblum).

Tasted in April 2008, this wine was rated best of 17 Rosenblum wines tasted that evening by 18 members of the SF East Bay California tasting group The Pompous Twits. The 2004 Rockpile Road Zinfandel (Rosenblum's biggest Zin of all) was initially ranked best, but the Snows Lake, it turns out, opened up while we were drinking it; and at the suggestion of member Tom TIlley, we retasted it half an hour later--and it indeed had opened up quite a bit and now edge out the Rockpile.

Compared to the Rockpile, it was as big and jammy and dense and intense, and as high in alcohol (16%+), but it had a subtlety and nuance that put it in front -- I know subtlety and nuance aren't terms commonly used with big-style Zins, which made this a wonderful surprise.

Tilley suggests that this wine still have some aging to do. We have among us 5 bottles, so we will taste a bottle each spring for the next few years to see how it develops!

This wine cost just under $30 when bought by the case as a futures; current vintages list at $35. See www.rosenblumcellars.com.

Rosenblum Rockpile Road Zinfandel 2004--One of the Very Best! [Mac McCarthy]

My Rating: 96 out of 100.

Rosenblum Cellars of Alameda, California is most famous for its big, bold Zinfandels--its pioneering founder, Kent Rosenblum, led a coalition of vintners for twenty years to establish Zinfandel as capable of producing a quality wine--contrary to the sorry memory of the student wine White Zinfandel. There are now more than 300 makers of fine Zinfandel in the United States thanks to his efforts.

Rosenblum's favored style for its Zinfandels (and many of its other red wines) is fruit-forward, even jammy; intense and dense with flavor, otherwise known as "highly extracted," a deep color so dark you could sign the Declaration of Independance with it, and high in alcohol (this one is 16.5%). Kent likes to leave the grapes on the vine as long as possible, picking just days before the fall rains comes -- the result is an intensity of flavor that can be rivalled only by the most aggressive Syrahs made in California.

Of all Rosenblum's Zinfandels, those from the vineyards of Rockpile Road, on the side of a steep hill in the famed Dry Creek Valley area of Northern California, produce the most intense, biggest, and boldest. Only Rosenblum's Snows Lake Zinfandel, or its rare Rosenblum Cullinane Vineyard, can rival it. It regularly sells out in futures, so it's hard to come by. If you ever see a bottle on a retail outlet, snap it up.

I bought this as a case of futures at a discount price of $28. Current releases sell for $45 if available.

Bottom line: This is one of the finest wines made, and if you are a Zin enthusiast, no Zinfandel can surpass it.

If you are more accustomed to light, food-friendly reds, this wine will knock your taste buds sideways; it takes getting used to. (I recommend in that case that you try Rosenblum's Cuvee Zinfandel, which is Zin with trainer wheels--I mean, it's a light, approachable, very tasty but not at all nasty, Zin; even I like it.)

Book review: 'Wine Across America'--Not a Road Trip Book!

"Wine Across America: A Photographic Road Trip" by Daphne Larkin

Somehow I didn't fully grasp from the Web page that this is a coffee-table picture book of photos of wineries across America--it is NOT a guide or travelogue you could use to visit wineries as you drive across country, which is what I wanted. I allowed myself to be misled by the words "Road Trip" in the title. It's not even a narrative of the authors' driving around the country visiting wineries!

In fact, you can't *use* this book at all, you can only look at the pictures, because there is no map of where these wineries are, or addresses to find them. Not what I had in mind, and this mismatch is why I give it a low score. (As a picture book, though, it's pretty.)