Judgment of Paris

by George M. Taber

  While the White Paper signaled that France is focusing on its troubled wine industry, it is questionable whether these modest measures will be enough to bring back domestic and foreign consumption of French wines to their former levels. Looking out at the very competitive international wine scene, the French have many obstacles to overcome just to hold onto the market positions they now enjoy.

  One of the largest hurdles is that the French are, in a sense, competing against themselves. The world has adopted France’s noble grapes such as Chardonnay and Cabernet Sauvignon. Consumers looking for a good Chardonnay can buy the Burgundy original or an Australian or California version, often at a better price for similar quality. In the Cabernet Sauvignon market they can buy a French First Growth or perhaps a Super Tuscan, Italy’s answer to red Bordeaux. I personally believe that New Zealand today makes the world’s best Sauvignon Blanc and Australia now sets the international standard for Syrah/Shiraz.

  As they struggle to compete, France’s winemakers are held back by the excessive regulations of the Appellation d’Origine Contrôlée system. In today’s fiercely competitive markets, producers must be flexible and ready to adapt quickly to changing situations. Thegaragistes in recent years have introduced many innovative new products and procedures, but those developments took place outside theappellation rules. Indeed, it was done in direct opposition to them. More flexibility in the types of grapes that can be grown or greater use of irrigation are not going to be the downfall of the country’s wine culture. They could even improve it. But French winemakers looking to experiment are locked in an often-archaic system, which the government stubbornly remains reluctant to overhaul.

  When it comes to marketing, the French are handicapped by their confusing wine names that international consumers find difficult to pronounce and nearly impossible to remember. While millions of people around the world know the expensive wine stars like Château Latour, they are lost among more affordable wines in a morass of Château This and Château That. Christian Moueix, owner of the prestigious Château Pétrus, notes that in Bordeaux alone there are 14 Châteaux Belairs and 151 châteaux with Figeac in their names. There are no less than fifty-sevenappellation s in Bordeaux, but consumers in Chicago or Singapore are unlikely to know more than the most famous two or three.

  The U.S. market provides a good example of how quickly France can lose its market position because it lacks strong brands. In the early 1990s, five French labels were among the top twenty-five American wine imports. Now only three remain—Georges Duboeuf, Barton & Guestier and Louis Jadot—and even they are slipping toward the bottom of the list. Between 1994 and 2004, France’s share of the U.S. market for imports fell from 26 percent to 14 percent, while the Australian slice jumped from 5 percent to 31 percent. As one French export expert told me in June 2005, France is now considered“le has-been.”

  Charles de Gaulle once quipped, “How can anyone govern a nation that has 246 different kinds of cheese?” Today one might wonder how France can be a major exporter of wine when it has 35,000 independent producers. A study done by the national wine group Onivins found that 72 percent of French people over the age of fourteen found it “difficult to choose a wine.” If even the French can’t keep their wines straight, pity the rest of the world.

  French winemakers and export officials alike complain that their country will continue to slip behind in that race for the $10-to-$20 market unless they have a big company’s financial resources to invest in marketing and brand building. Establishing an international brand is an expensive endeavor where only very big companies can compete. Jacques Berthomeau, a special advisor to the French agricultural minister, in 2001 published a controversial report urging the French government to foster the development of one or more global companies that would be able to build international wine brands. France has several billion-dollar companies in the wine business, including Pernod Ricard, LVMH, and the Castel Group, but none of them has developed the international brands that Berthomeau saw as essential to success in today’s global wine trade. As he said ruefully, “While we philosophize, our competitors sell.”

  Although French companies have had difficulty building wine brands below the trophy wines, it’s not impossible. Starting in the 1960s, Baron Philippe de Rothschild used his famous Mouton name to create the inexpensive Mouton Cadet brand. Although sales have slipped in the U.S., Rothschild still sells some 1 million cases of red, white, and rosé Mouton Cadet annually around the world. French companies have built strong brands in Champagne (Moët & Chandon and Taittinger) and Cognac (Hennessy and Remy Martin). In addition, France has major brands in the world market for both yogurt (Danone, sold as Dannon in America) and bottled water (Perrier). In the latter two cases French companies virtually created the global market for national products, taking brands that had grown up in France to the world. So clearly the French know how to build strong brands.

  Another French problem in the global marketplace is the country’s vulnerability to international political winds. French wine is easy to boycott since there are now many good wines from other countries on store shelves. In October 1995, when French President Jacques Chirac resumed nuclear testing in the South Pacific, the antinuclear group Greenpeace led a worldwide boycott of French wine. Eventually France ended the tests, and Greenpeace claimed it was because of its actions.

  After the diplomatic conflict between the Bush Administration and Chirac in the walkup to the American war in Iraq starting in 2003, a spontaneous U.S. boycott of French wines broke out, and French wine exports were reported to have slumped by 50 percent in early 2003. In the spring, Robert Parker decided not to go to Bordeaux for the first tasting of the 2002 vintage. His explanation was that the war made travel more dangerous, while some thought it was in protest to French policy on the war. Wine insiders also speculated that he didn’t want to comment on the disappointing 2002 vintage.

  A detailed statistical study published at the Website www.liquidasset.com showed that the American boycott was much less effective than had been first believed. Moreover, much of the drop could have been caused by the declining value of the dollar against the euro, which made French exports to the U.S. more expensive. Nonetheless, the danger of boycott always remains a threat to French wine producers, and their exports to the U.S. fell significantly in both 2003 and 2004.

  Finally, France is a high-cost producer in a very price-sensitive global business. French winemakers have a hard time competing in the low-cost part of the market against their counterparts in Chile and other countries because of France’s high wages and generous social benefits. These make it more expensive to produce in France what is basically a very labor-intensive agricultural product.

  While the decline of French wines, particularly in export markets, is a cause of great concern in Paris, France and its winemakers still retain substantial advantages in the global wine game.

  The most important is the continuing ability of French vintners to be creative, despite the restrictions of theappellation system. Much of the recent innovation is happening outside the traditional bastions of Bordeaux and Burgundy. Languedoc-Roussillon, an area that stretches along France’s Mediterranean coast from the foothills of the Pyrenees on the Spanish border to the mouth of the Rhône River, has been a particularly exciting region in recent years. Once a producer of outstanding wine, the area’s winemakers in the early twentieth century made the mistake of switching their focus from quality to quantity and began concentrating on the market forgros rouge qui tâche . In the days when Algeria was part of France, Algerian wine was often blended with southern French wine to bulk up the taste of thin domestic products. By the 1970s, Languedoc-Roussillon was economically in decline and winemakers were in the streets demanding help from Paris. But as Jean-Luc Dairien of Onivins explains, “Difficulties make people intelligent.”

  French regulators in 1979 established basic rules for the new category of Vins de Pays, with the most important and largest group being the Vins de Pays d�
�Oc covering Languedoc-Roussillon. Winemakers made the most of the new category, and the wines they began producing are well placed in the low- and moderate-priced end of the market.

  One of the big hits in the U.S. market from Languedoc-Roussillon goes under the unseemly name Fat Bastard. It’s an Anglo-French project between Guy Anderson, a British marketer, and Thierry Boudinaud, a French winemaker, and their first names are on the label. The company was started in 1995 with the goal of selling varietal wines from Languedoc-Roussillon in foreign markets. In its first year in business Boudinaud made an impressive, buttery Chardonnay that Anderson dared to compare to Burgundy’s famous Bâtard-Montrachet. Using a bilingual pun, Boudinaud called it a “fat bastard of a Montrachet,” a name that stuck when a British importer bought the first batch. The initial vintage was only eight hundred cases, but sales to the American market soon exploded. When Anderson and company had trouble with U.S. retailers because of the name, they said it was supposed to have a French pronunciation—Fat Bas-tarrrd. They also came up with the apocryphal story printed on the label stating that the name came from “the British expression describing a particularly rich and full wine.”

  No matter how you pronounce it, Fat Bastard has been a great success in the entry-level U.S. market at about $8 a bottle. It was soon selling 450,000 cases annually of Chardonnay and Syrah in the U.S. and began exporting Merlot in 2004. Anderson told me that he had concluded that name recall is the biggest problem in the wine business, especially for French wines. “Even if people love a French wine, they can’t remember its name,” he said. “Our solution was a daft name for a very good product.”

  Another interesting international collaboration out of Languedoc-Roussillon is Red Bicyclette, which got off to a strong start when it went on sale in the U.S. in the summer of 2004. The wine is a joint venture of California’s Gallo and Sieur d’Arques, a wine cooperative that earlier made wines for Baron Philippe de Rothschild that sold under the label Baron’arques. The first Red Bicyclette wines were Vins de Pays Chardonnay, Merlot, and Syrah specifically tailored to the American palate. The grape varieties are prominently positioned on a colorful yellow label showing a Frenchman riding a red bike. The wines all sell for less than $10. The name Gallo is not to be found on the bottle, but the company’s goal is for Red Bicyclette to be the top French wine import by 2006.

  The Vins de Pays category has been so successful that even Bordeaux winemakers are considering establishing their own Vins de Pays as a way of making it easier for consumers to find their way through the thicket of labels. While waiting for that to happen, the Bordeaux Chamber of Commerce in June 2003 reclassified the Crus Bourgeois, those lesser wines below the 1855 classification of Grands Crus Classés. It was the first change in the Bourgeois ranking since 1932, and it was hoped that consumers would start looking for Cru Bourgeois on a wine label just as they now look for the Grand Cru Classé marking. The wines were put in three categories: Cru Bourgeois Exceptionnel, Cru Bourgeois Supérieur, and simply Cru Bourgeois. Only 9 wines made it into the top ranking, while 87 were listed in the second and 151 qualified for the third. All the wines come from the Médoc region of Bordeaux. At the same time, 243 wines were dropped from the Cru Bourgeois list, making the classification more selective and reliable than it had been before.

  In the absence of a giant French company marketing its wines, the country’s regions are promoting their area’s products. Bordeaux has the biggest advertising budget, and its ads stress the good life of drinking Bordeaux wine, with a significant appeal to female drinkers. The level of spending, though, is insignificant on a world marketing scale. Bordeaux spends only about twice as much for promotion in the British market as California’s Gallo alone spends there. Rhône Valley wines have also launched successful regional promotions. In addition, many of its Syrah wines have benefited from the popularity in the U.S. of Australian Shiraz. Regional brand building, though, has only limited effect and is not a long-term solution to France’s problem.

  The global wine business is developing in two directions at the same time, and France is in a good position to take advantage of that if it can make its wines simpler for consumers to understand and appreciate. On the one hand, there will be global companies offering good wines at a very competitive price/quality ratio. Languedoc-Roussillon and Côte du Rhône wines do well in that market segment. On the other hand, though, handcrafted wines will appeal to the small but affluent segment of the market, an area where France already excels. As the generation of New World wine drinkers matures, they will move beyond the familiar Cabernet Sauvignon and Chardonnay that were their introduction to wine. When they do, France will be able to offer them a broad selection of interesting wines.

  A company like E. Guigal in the Rhône Valley village of Ampuis may show the way for France to be more competitive at both ends of the international wine market. Guigal is a relatively new company by French standards, having been started only in 1946 by Etienne Guigal. His son Marcel now runs the firm, which has grown rapidly to become the largest producer of Côte Rôtie wine. The family-owned company’s singular achievement has been its ability to sell a range of both popularly priced and expensive wines. Winemaker Marcel Guigal has attracted an international following with a style that resembles thegaragistes and combines late harvests and the heavy use of oak. For its mass-market products Guigal buys grapes from more than four hundred Rhône Valley grape growers, but at the same time he carefully cultivates small vineyards in Condrieu and Côte Rôtie for premium products. Guigal makes some of the world’s most expensive wines, and three from the 1999 vintage (Côte Rôtie La Landonne, Côte Rôtie La Mouline, and Côte Rôtie La Turque) won rare 100-point ratings from Robert Parker, who has called Marcel Guigal “the greatest winemaker on the planet.” The retail prices of Guigal wines range from less than $10 to more than $350 a bottle. The winery has been carefully building a strong brand and its wines are found in many American wine stores.

  Finally, no country can match France’s wine infrastructure. Even its old European rivals in Italy or Spain do not have as much technical, financial, and human capital as France does in the wine business. The New World producers totally pale in comparison to France. That bench strength makes France a formidable competitor.

  It is no longer good enough, however, for France just to make great wine. It now has to do a better job of marketing and selling its products to a world awash in good and inexpensive wine. Arnaud Lesgourgues, whose family owns Laubade Et Domaines Associés, an Armanac producer that is now trying to break into the U.S. market with a line of Château Cadillac Club wines, told me at the big Bordeaux wine show Vinexpo in June 2005, “In order to make a successful wine today, you must start with a good wine, but then also have a good marketing plan and a good distribution network.” Thousands and thousands of small French producers, however, lack both marketing plans and distribution networks.

  Chapter Twenty-Five

  Napa Valley Revisited

  A bottle of wine begs to be shared; I have never met a miserly wine lover.

  —CLIFTON FADIMAN

  The last stop on my tour of the wine world was in California, where this whole story began. The most striking development there since the Paris Tasting is the growth of wine from an almost cottage industry into a $45 billion business that employs 200,000 people. There are now some 1,700 California wineries and 4,500 grape growers. At the time of the Spurrier event, virtually all California wineries were located within a sixty-mile radius of San Francisco. But today a string of wineries can be found from Santa Barbara to Mendocino County five hundred miles north. Some adventurous winemakers are even working in near-desert conditions close to San Diego on the Mexican border. While almost all of the land that can be cultivated has been planted in the Napa Valley, new vineyards have been going into areas like San Luis Obispo and Clarksburg. Today’s young successors to the new breed of winemakers who came to California in the 1960s are to be found in those wine-frontier areas, where land is still
affordable. The stories of the new winemakers working there reminded me of people like Joe Heitz or Rodney Strong of a generation ago. The newcomers are trying out different grapes, developing new techniques, and finding their unique styles.

  Wine tourism has also become a booming business, with 15 million people visiting California wineries annually. The Napa Valley alone welcomes some 5 million travelers a year, making it the state’s second most popular tourist destination after Disneyland. On any given Saturday year round, traffic on the valley’s Route 29 is full of cars, limos, and buses taking people from tasting room to tasting room.

  American per capita wine consumption during the past few decades has been up and down and then up again. It rose steadily through the 1960s, 1970s, and into the 1980s. But after hitting a peak in 1982, it began declining until the mid-1990s. Since then consumption has again been on an upward swing and in 2003 passed the 1982 peak and then topped that again in 2004.

  Many wealthy Americans, in particular those who had made their money in Hollywood and the Silicon Valley, have sought to gain the added social prestige that Napa Valley winemaking endowed. Much as the Rothschilds had done a century before in France, the new American money looked to wine toanoblir them—give them the esteem of nobility. Wealthy Americans who had run out of ways to spend their fortunes were entranced with the fame that came from having their own wine label. In 1978, Francis Ford Coppola, director ofThe Godfather movies, began producing wines with the help of André Tchelistcheff. Coppola eventually bought the famed Inglenook winery that had been founded by Gustav Niebaum, and renamed it the Niebaum-Coppola Estate. The Disney family also bought a winery, and racing-car driver Mario Andretti gave his name to another.