Monday, May 26, 2008
Tom Ward says his interest in wine began to grow in 1980 when he started working in the advertising and marketing field. Seven years later, he took on the role of building the subscriber base for a publication called Wine Advocate, under the direction of Robert Parker Jr. The two of them remain friends; in fact, Ward wrote in an e-mail, “Keep an eye out on the wine news … [Parker] just did a wine tasting on the Great Wall of China!”
Since 2000, Ward has been working full time in the wine trade, largely in sales and extensively with imports. “I helped to set up and run an import company [Vinocopia],” he wrote, “did a lot of work for the Australian Trade Commission, all done as an ‘independent contractor’ under the company name Green Tree Wine Company. He also has been working with winemaker Paul Smith, whose OnThEdge Winery in Calistoga, Calif., includes former Eagles and St. Louis Rams coach Dick Vermeil as a partner. Those include the Jean Louis Vermeil line of wines, which pays homage to the ancestors of Vermeil that, prior to Prohibition, used to own and farm that same Napa Valley land.
Ward responded quickly to my e-mail inquiry about how the weak dollar is affecting imports and whether buyers might see any trends during what figures to be a summer long on crisis and short on stability. He wrote:
“I just checked historical data Paul. The Euro on May 23, 2001 was worth just under 86-cents US; it now takes a little more than $1.57 US to buy a Euro. That is an 83% increase in the value of their currency.
“I was an Economics Major in college and studied under two great professors who were trained at the University of Chicago, so I understand market financial dynamics quite well. Our current administration has always favored a weaker dollar to drive down the cost of US produced goods overseas. Not an opinion…they have made plenty of statements supporting this position. What is scary (and this is commentary) is that we are now at the mercy of market forces that could prevent us from getting back to any of level of relative equilibrium, and indeed could make the gap more dramatic, for years to come.
“In terms of how that has affected the price of imported wines, the brunt of the dollar devaluation has been picked up by (1) foreign wine producers and (2) the wine trade, especially importers. I haven’t formally studied pricing changes on imports, but I’d venture to guess they have only increased about 1/3 versus the 83 percent valuation swing in the dollar; that’s a rather wide margin discrepancy.
Just some things to consider . . ."
The obvious follow-up question was two-pronged: How much longer will producers and importers carry the load before the burden switches to the consumer, and for American consumers looking for bargains, how steady will prices remain on South American and Australian wines?
Ward responded within a couple of hours: “Actually South American wines haven’t gone up as much in price because the Argentine and Chilean Peso have remained stable versus the US Dollar relative to the dramatic changes of the Euro,” he said. “But there is another factor; consider that prime Napa Cabernet Sauvignon fruit now goes for $6,000+ a ton. That translates to almost $10 per bottle. Doesn’t sound like a lot, but that is just the cost of fruit! Now factor in oak (another $4 per bottle for French Oak, again thanks to the weak dollar), two plus year aging, cost of bottles, labels, corks, capsules…you get idea. The cost just to produce the wine is probably $20+. Then the winery has to make a profit, the distributor has to make a profit, the retailer has to make profit – voila, you are at $55 a bottle.
“Alternatively, I have a Spanish producer I’ve represented whose family has owned the vines going back to 1640 (documented). Low tax structure, government support, etc, etc. … they can put out a 90-point Wine Advocate rated wine that retails for under $20 a bottle. Now in reality they are assuredly selling it at a lower price point than they would like to because they, like every producer in the world, want very, very much to be in the U.S. marketplace. Life is a series of tradeoffs, and their presence in the US market is what helped to get them in front of the Wine Advocate and help to build their brand for many years to come.
Lots of dynamics at play . . .”
This list and link are courtesy of Jennifer Eckinger, of the Pennsylvania Winery Association, whose help has been so valuable in my getting this blog off the ground.
2008 Keystone Wine Competition
When: March 1, 2008
Where: Crowne Plaza Hotel, Cromwell, Conn.
Conducted by: Amenti Del Vino
Winners: 180 - 79 bronze, 60 silver, 35 gold, 6 double gold, 4 special awards
BEST WINE IN COMPETITION
2006 Cherry Valley Vineyards Marechal Foch
BEST RED WINE IN COMPETITION
2006 Cherry Valley Vineyards Marechal Foch
BEST WHITE WINE IN COMPETITION
2007 Pinnacle Ridge Winery Riesling
BEST FRUIT WINE IN COMPETITION
2006 Rose Bank Winery Apple Mulled
For further results, including a listing of all award-winning wines of the 2008 Keystone Wine Competition, visit pennsylvaniawine.com/Awards.aspx. That link includes not only all the winners from the recent Keystone competition, but lists Pennsylvania wines that have earned recognition in other regional and national competitions dating back to 1999.