Friday, April 10, 2015

The next big thing in American wine: cheap, rich, smooth Tempranillo?

I got the $3-a-bottle Tempranillo blues
In January I went to a seminar of "flying winemakers" at the Unified Wine & Grape Symposium. I had forgotten it until last week, when I was throwing out some old notebooks and rediscovered a good story I had ignored for bigger news.

The big news from Unified was the first downbeat forecast for the California wine industry in several years. I also reported on a technical seminar on how to lower alcohol in wine, which was interesting because it wasn't a bunch of critics whining; it was a group of vignerons trying to reach a market they acknowledge exists.

As a story, the "flying winemaker" seminar was all over the globe. Consultant Nick Goldschmidt told us Syrah is in decline worldwide, not the market but the vine itself, as it faces some mysterious malady. He said the 3-tier system in the U.S. is actually protecting U.S. consumers from the huge discounting that he says "is destroying the UK market." He thinks the future of viticulture, because of climate change, is in Canada and southern Chile. And while we're now talking about different metals in wine, Goldschmidt said in January that China has rejected more than 300 wines for import for being too high in iron.

Kerry Damskey told us about making wine in India: some interesting technical stuff, such as yeast conversion rates aren't as high, so that grapes picked at 25 brix only yield 13% alcohol.

But the story I skipped over, because it made my skin crawl, was from Matthew Parish, a New Zealand native who worked at Constellation, was director of winemaking at Treasury Wine Estates, and now works at Naked Wines.

My timing is good for this post: Naked Wines was sold today for $100 millon. So clearly Parish knows what he's doing.

That said, one of the first things I have written in my notebook about his presentation is, "This is horrible.

"He's advocating just copying popular brands."

Because I am, at heart, despite my pragmatic exterior, an Eric Asimov-like romantic. But news is news, and better late than never.

Naked Wines has more than 250,000 customers and brings in $10 million a month. They are not Asimov-like romantics.

"Hard data is what we work with at Naked Wines," Parish said. "We know precisely what our customers want. We aspire to do what Netflix has done in viewing content, in wine."

Did you know "House of Cards" was created by metrics? Parish said Netflix researched the types of shows people watched and was able to do a market test with the BBC version before spending the money to produce the show.

Naked Wines uses two key metrics that it gets from its customers: a Buy It Again rating, and a Quality/Price ratio. The company sorts the numbers, figures out what kinds of wines do well in those metrics, and makes them. They give the people what they want. I'm not sure why that made my skin crawl; it's what Fox News does. Oh yeah, never mind.

So here's the news: the top-selling Naked Wines in the UK: Malbec, Tempranillo, Merlot, Syrah. But in the US, it's Tempranillo, Malbec, Cabernet Sauvignon, Pinot Noir and Zinfandel.

"In Australia they only drink Shiraz and Sauvignon Blanc," Parish said, which is a damn shame considering how good Australian Cabernet, Semillon and Grenache is, but fits with what Australian somms have told me.

Good for South Africa: Parish said South African wines do overall best in BIA and Q/P. If only South African wineries can extend that consumer love to the wider market.

OK, deep breath. Here goes.

"Naked Wines customers like 'rich and smooth reds'," Parish said. "We can use our data like Netflix does to re-engineer the next big thing. If I was going to do this for California, it would be a Tempranillo, we'd try to buy it for $3 a bottle, sell it for $10, and it would be rich and smooth."

Eric Asimov will weep if he reads that. I imagine myself trying to summon Eric's spirit to that room in Sacramento, and him struggling, trying to get away, like a toddler who doesn't want to be kissed by her gross uncle.

But that's the wine biz. I've never had a good California Tempranillo in my life*, and yet cheap -- $3 a bottle production cost? -- manipulated California Tempranillo is the next big thing.

(* I've only tried about 150, and if you make a good one, I probably haven't tried it, but PLEASE don't send it to me. I'm not worthy.)

Naked Wines is not some collection of artistes trying to make soulful wines from the best combination of climate, soil and variety. Why would they?

Naked Wines sold for $100 million because it was good at knowing and delivering what customers want. See you later, I've got to go sing the blues.

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Paul said...

I'm guessing that the sort of people that order from naked wines don't necessarily reflect the rest of the buying public in a particular region. I'm certainly not buying Shiraz and Sauvignon Blanc exclusively despite my location. It will be a cold day in hell before I drink Sauvignon Blanc full stop! I do drink Shiraz but I can confidently state that I have bought far more Cab Sauv, Pinot, Riesling and Vintage port than I have Shiraz over the past few years

Jack Everitt said...

No, the next big thing is White Tempranillo. (yeah, it's pink in color)

(Ha, I was correct in predicting White Merlot when the Merlot glut struck.)

Unknown said...

Nice photo! I miss your red glasses.

Douglas Trapasso said...

I'm actually open-minded enough (must be Friday) to listen with interest to anyone who believes Three-Tier is pro-consumer. Do you know if there is a transcript available of -that- presentation?

W. Blake Gray said...

Sorry Douglas, I don't think so. I don't think any other journalists are there. I vaguely remember that his point was that competitive discounting led to the success of only the cheapest wines, and that the market was too difficult for higher-priced wines. It's probably a good question for Jancis Robinson or Jamie Goode or somebody else across the pond.

W. Blake Gray said...

Aaron: I think the concept, based on what I heard, is pretty much just marketing.

Nick Katin said...

I'm with Paul. Sauvy Blanc no way. Cool climate Shiraz from time to time but a lot of 'decent' Kiwi and Victorian Pinot Noir, Cab Sauv and Chardonnay (I live near Margaret river) and anything else that may interest me. $20-$50 Vouchers from Naked wines seem to pop all over the place so it you makes you wonder how big their GP is. From what I can see I think they source wines in the same way as the cleanskin shops we have here, so they are probably getting their wine at pretty good prices. Still good luck to them, they have found a niche that works for them.

Anonymous said...

Hi Blake,

You caught me! I have to admit that I was trying to be a bit provocative that day, thinking that I'd be speaking to calloused wine industry souls. But I regret that I came off as a supporter of copycat wines, especially mass market stuff, and seeming like I try to suppress creativity in winemaking. I should be more careful next time I'm trying to rile people up to make sure that I don't sound like an industry shill.

I don't even mind egg on my face as much as it makes it look like all the winemakers at lose credibility when I talk like this. They are the "artistes" you're talking about and most have very very strong opinions about their wines (and their vines for those who own their own land).

If I had my time again I would hope you would walked away with this message ….

• We can truly tell what customers want if we remove the filters - critics, gate keepers, sales and marketing gurus and of course us winemakers
• Not because we are not good at what we do or unimportant, but our view is not always the customers'
• So what I presented was what is the customer really telling us. Our customers after-all are responsible for making this business what it is today.
• We then use this data to inform our winemakers of how customers are reacting. They can run with it or tell me to stuff it.
• It certainly makes my job easier, not to mention a bit more objective ….

Sorry for the misstep and thanks for calling it out …. will make sure to play the blues prior to my next presentation as a reminder ;)

Matt Parish

W. Blake Gray said...

Matt: You guys just sold for $100 million, so somebody values your methodology. Don't apologize for it here any more than you did when speaking frankly.

But save me the blues. I ain't gonna run the PR sell sheet when it isn't what you said.

Unknown said...

"Tempranillo's time" in California is akin to "vaporware" in Silicon Valley: always just a few years away.

From Wines & Vines
(May 2006 . . . yes a decade ago):

"It's Time For Tempranillo"


Those who reside in or who are traveling though San Francisco on Sunday, April 26th should consider attending the 8th annual Tempranillo Advocates Producers and Amigos Society (TAPAS) consumer tasting.


And for a "take" on what last year's event was like, see this Sacramento Bee article.


And finally, on using consumer research to craft / fine-tune "House of Cards," see this New York Times article.


Accompanying exhibit link:

Amazon also conducts consumer research to "tailor" its streaming video programs.