Thursday, March 26, 2015

Wine Institute choice on arsenic: defend every wine or tell consumers to spend more?

Everyone expects the Wine Institute to be the main line of defense on the arsenic-in-wine story. That's its role. But it has a choice to make.

Should it defend the big players named in a class action lawsuit, or kick them to the curb and urge consumers to buy more expensive wines?

Either is a legitimate strategy. The 83 wines named in the lawsuit are cheap. Even the lawyers who filed the suit, in a press conference, urged people to spend more money on wine.

"The lower the price of wine, the more arsenic you are getting," plaintiffs' attorney David K. TeStelle said.

Only 11 wineries are named in the lawsuit, and there are more than 3000 wineries in California. Most of them must resent the fallout they're getting from the story, as all must explain to their customers that wine is at least as safe as brown rice, brussels sprouts and apple juice (products shown previously to contain arsenic.)

Is it more effective -- and more rewarding -- to tell consumers that all wine is safe, or that all wine above $10 a bottle is safe?

The decision is complicated because of an enormous omission from the list of defendants. E. & J. Gallo Winery, the world's largest wine producer, is not one of the 11 wineries named.

Gallo's main competitors -- the Nos. 2, 3, 4, 5 and 6 California producers by size -- are all listed as defendants. After that the scale of production drops off dramatically. The 7th-largest producer, DFV (not a defendant), is less than half the size of No. 6 Treasury Wine Estates, according to Wine Business Monthly.

Gallo is often seen as the driving force behind the Wine Institute. And no wonder: the Wine Institute charges membership fees by production size, so Gallo is its largest source of income.

If you want to engage in a little conspiracy theory, it's possible that 1) Gallo already paid off the plaintiffs' lawyers to keep its name out of it, 2) Gallo is an invisible hand behind the suit because it noticed that its competitors had more arsenic in their wines, or 3) the plaintiffs' lawyers know the lab's data is unrepeatable and they fear Gallo's legal team more than the others.

Most likely is simply 4) Gallo, known for its technological prowess for decades, can make super-cheap wines with arsenic levels lower than others.

Mike Berg, plaintiff's attorney, told me, "From the testing we've done, Gallo does it right. They try to be competitive and try not to have excess arsenic in their wines. To me that's proof that it's not necessary to have excess arsenic in wine."

So that raises the question of, what does Gallo want in a defense strategy?

I asked Gallo's PR department and got a noncommittal 3-sentence statement about the company's commitment to food safety. I didn't really believe the company would share its strategy with me, but I had to ask.

I did hope the Wine Institute would tell me what it might be planning. Nope.

"All the resources of the Wine Institute are being engaged in responding to this issue, which we believe poses a threat not only to California wine but all wine," wrote Gladys Horiuchi, Wine Institute Director of Media Relations. "Because of the lawsuit, we don’t believe we should share our strategy and activities in a public way as that would not be in the best interests of the industry."

Much, perhaps most, of the Wine Institute's work goes on behind the closed doors of Congress and state legislatures. A huge part of its role is fighting anti-wine legislation. Some politician likely will  seize on the story and start agitating for the government to regulate the arsenic level in wine. I'd support such legislation: there's no limit to the arsenic that can be found in wine currently, and there should be. I wonder if the Wine Institute will support such legislation. Would it help defuse the public relations crisis or pour gasoline on it?

This might depend on what Gallo wants. If Gallo has a competitive advantage over the next 5 largest wineries, maybe it would like to see those companies have to adjust their production methods.

Legislative strategy and PR strategy are very different. I expect both Gallo and the Wine Institute won't expect consumers to be able to distinguish between Apothic Red and Barefoot (not in the lawsuit) and Cupcake and Simply Naked (in the lawsuit.)

That might lead to some grumbling from the more than 3000 wineries not named in the suit, some of them quite large. Jackson Family Wines, to name just one, is the 8th largest wine producer in California. Jackson Family is proud of its focus on quality and might prefer to see a line of demarcation drawn between the bottom-shelf wines that are the focus of the arsenic lawsuit and its own wines. You can take Jackson Family out of that sentence and sub in Bogle, J Lohr, Francis Ford Coppola Winery, Caymus Vineyards, and 3000 others.

To some extent, the wine industry as an amorphous organism will make both arguments. Anderson Valley Winegrowers, Santa Barbara County Vintners' Association, Paso Robles Wine Country Alliance, et al, can point to the names of the defendants and say, "You realize that's the cheap stuff, not our wines."*

* (I originally had Napa Valley Vintners in that sentence and then realized more than half the defendants have a winery in Napa Valley, though none of the wines named in the suit has a Napa Valley appellation.)

My guess is that the Wine Institute's official public position will be to throw all of California wine together, the Screaming Eagle and the Smoking Loon, and try to say it's all equally safe. Like it or not California wineries, you're all going to be in bed with Menage A Trois.

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jo6pac said...

WOW no comments on this story

W. Blake Gray said...

Not anymore, thanks Jo!

I am surprised too, but comments are a poor proxy for readership. This post has had an average amount of readers. Maybe people are in agreement?

curt504 said...

Jo, Blake, we smugly drink wine above the $10/btl point, so we think ourselves merrily are above this issue. :-//

I'm sadly thinking: high carb boxed foods vs expensive bought straight from the farmers grass fed meat and raw milk, and the cheap swill wine with Dr'ed up alcohol and "taste" now extra minerals vs the expensive stuff from hard to get to hill sides and hand picked better wines.

A case of haves vs have-nots. The have-nots are getting unwanted minerals.

Besides wondering the root source of the arsenic,,, I'm thinking about in-equality as I sip moderate priced French wine (hoping to God at least the French can be trusted to stick to historical methods!?!)