Archive

France

“Prices are going to go up. How far? I have no idea. The market will decide.” Corinne Mentzelopoulos, Chateau Margaux

A number of wine producers in New World have dipped their toes into trying to sell their wines through an en primeur-type system, setting prices and obtaining the advantage of certainty of sales and early cash flows.

The Bordeaux 2009 En Primeur campaign, conducted in the Spring of 2010, has been characterised by record price levels as buyers have grabbed almost everything they could get their hands on. 

Against this we have reports that US demand overall was poor, Asian buying was up on the past but much more muted than had previously been forecast, while high prices scared off many traditional European buyers.  The campaign was conducted, after all, against a back drop of continuing global economic weakness.

Moreover, everywhere there were reports of small allocations. 

Then again, according to the authoritative vintage account published each year by Bill Blatch of Vintex, except for pockets of hail affected vineyards (which missed most of the key areas) crop yields were quite high.  The health and balance of the vines in the ideal weather conditions will have meant a reduced need for green harvesting and other forms of yield control.  The level of production of a quality oriented producer certainly need not have been unduly reduced – high production and high quality have occurred in tandem many times before, with the famous 1982 vintage a case in point.

Something in this doesn’t quite seem to add up.  If price setting is a factor of the market, of the law of supply and demand, the balance on the apparent evidence does not seem as one-sided as the pricing would seem to suggest.  Moreover, the question arises whether the supply was as it seemed, or whether this was a case of a “manufactured” shortage?  Was Adam Smith’s “invisible hand” tied behind the market’s back?

This goes to the heart of the way that en primeur marketing works if, as in Bordeaux, it is used as a clearing mechanism.  The way that the Bordeaux system works, with the network of courtiers and negoces as middlemen with selling conducted by importers/distributors and retailers in different countries, clearly implies a mechanism far more sophisticated than the typical direct-style selling campaign referred to as en primeur selling by some New World producers.  Such producers can ill-afford to indulge in the degree of information asymmetry mastered by the Chateaux of Bordeaux.

For this is the secret of the high prices achieved by the often large premier crus of Bordeaux.  Information asymmetry is the market equivalent of a poker bluff. The difference is that the chateau has five cards, but the other players have only been dealt two or three and must decide whether they will ever get another chance to buy at a comparable price. 

In a poor or merely average vintage the answer is often likely to be yes, so that producers are forced to reduce prices and therefore rely heavily on the way wines are reviewed to create some degree of countervailing pressure.

In a potentially classic year (disregarding the sceptics who may point out that every year is a potential classic these days), the chateaux owners have honed and perfected the methods that ensure no one will ever know how much they are actually selling.  By combining small opening tranches that will inevitably be sold out, the lack of information how many tranches may be released or what actual proportion of production will be withheld, then tightly managed allocations so that even reduced demand will be difficult to satisfy.  In the middle are the importers trying to judge the demand of their end customers and well aware that if they do not participate they may experience reduced allocations in other years.  Played carefully, prices may rise even if demand falls – the antithesis of a normal market.

If this is the case, will prices actually be sustained in the post-delivery market?

One can only assume that the gamble taken by the producers is that the wine they withhold from sale during en primeur will be saleable at good prices in 2 years time; that thanks to any unfilled demand and in the absence of other price signals, prices would be unlikely to fall materially.  In the meantime they may be able to open new markets or to sell in regions that struggle with the concept of paying and waiting for delivery later.

The sceptics might also add that there is no saying samples provided to the wine media at the start of the campaign will necessarily bear any relation to the finished wines two years later.  While technically correct, and not ignoring the fact that there are certainly wines every year that turn out markedly differently, it does appear that for the most part there is some degree of consistency between samples and finished wines.

In the case of smaller but highly renowned producers, the likes of some of the leading crus of the Right Bank, for example, there is little doubt that almost all production that is going to market will be sold through the en primeur system.  If loyal regular buyers want it, they have little choice but to buy through the system.

A flawed system?  There is no shortage of commentators who will say so, including many in the Bordeaux trade.  There are regular calls for an overhaul.

For now, however, it is hard to see how the major beneficiaries of the system would want to see a change.  The cards are loaded in their favour, with the 2009 vintage a spectacular example of how lucrative this can be.

An opportunity for producers elsewhere to get in on the act?  I do not think so.

Advertisements

The role of Pinot Gris as a growth product to complement sauvignon blanc and pinot noir has been the subject of much recent discussion.  It is reported that winemakers seem to loath handling the grape, but consumers can’t get enough.

Globally, pinot gris seems to have been touched to some degree by the magic associated with the word “pinot”.  But not without its own grey clouds.

Under the guise of pinot grigio, primarily from Italy, pinot gris is the largest selling imported varietal wine in the United States.   However, pinot gris has already experienced multiple periods of (sometimes brief) fashionable popularity.  In the broader sense pinot gris suffers from twin identity issues: like pinot noir, there are only a limited number of countries that grow it successfully and, more importantly, it suffers from a significant lack of a global benchmark.

In fact, there are several different regions of the world that tend to be identified with pinot gris/grigio in the minds of winemakers and of the consumer – and rarely do these seem to align.

Within the winemaking community, when an effort is made with pinot gris it seems that the benchmark in the past has tended to be that of Alsace in France, where pinot gris (until quite recently often labelled as “Tokay d’Alsace”) tends to be made primarily as a fuller, rich, mostly but not always dry style, sometimes with an unctuous or oily texture not unlike many viogniers.  However, it must be said that this style has never become especially popular with consumers and Alsatian wines in general (including its rieslings, gewürztraminers and pinot blancs) have experienced declining sales during recent years – especially in the Anglophone countries that are also New Zealand’s major customers.

The largest producer in the world today is Italy, primarily in its northern regions, where the wines are labelled pinot grigio.  The vast majority of pinot grigio is made in a relatively light, usually dry style, not notably fragrant but suited to consumption with food.  Although demonstrably popular with consumers, especially in Europe and the USA, this style is often viewed with disdain by New World winemakers.

The third main European style is that of Germany, where the wines are commonly labelled under the local names for the variety: rulander and grauburgunder. German rulander may be dry or offdry through to sweet and typically has slightly higher acidity than the Alsatian and Italian pinot gris wines; and it has a flavour and palate profile arguably falling somewhere between those two styles.  This style is not widely exported, having little international profile, and it is largely consumed in the German domestic market.  Within Germany rulander is, after all, very much a minor grape variety.

The most successful New World producer to date has been Oregon in the USA.  Oregon Pinot Gris wines also tend to vary between mimicking the Alsatian and Italian styles depending on the producer, but are more likely to be labelled as “gris” than as “grigio”, and this template has been largely adopted elsewhere outside of Europe.

New Zealand plantings are still relatively small in the context of the wider industry, but have grown fast as a consequence of its increasingly disproportionate importance.  Sales have increased strongly, exports have followed, and many producers have struggled to keep up with demand so that grape prices have been relatively robust until only recently (when downward price pressure on other varieties has unavoidably affected pinot gris).  It remains to be seen what impact later plantings will start to have.

It is only recently that exports of pinot gris wines from New Zealand have started to threaten domestic sales – only five years ago sales were almost completely domestic.  The largest export market is Australia, where almost as much is sold as in the 2nd and 3rd largest markets, the USA and United Kingdom, combined.  It is not clear if the widely commented on stylistic divergence of New Zealand pinot gris wines contributed to the initial slow export uptake, although this now appears less of an issue.  Most New Zealand pinot gris tends to range from just off-dry to medium sweetness, but even within this band there is wide stylistic variance.  While there are some producers aiming to emulate the dry fuller-bodied Alsatian style, others use pinot grigio labelling and a nod to the Italian style.  In between, and especially from the more southerly regions, there may actually be a closer affinity to the German rulander styles.

The export growth of the last 2-3 years definitely suggests potential for New Zealand pinot gris, notwithstanding the stylistic issues.  There are still only a few countries in the world that possess the climate conditions suited to the grape – notwithstanding the fact that it is grown in Northern Europe and yet also in Italy.  This is hardly surprising given its pinot noir genetic origins.  Even so it is grown from the very north of the country to the very south (and in fact the regions that grow more pinot gris than sauvignon blanc are Northland, Auckland, Gisborne and Central Otago).

Interestingly, plantings in several of the Southern Hemisphere producers that are perceived as competition for New Zealand in several grape varieties, such as Chile, South Africa and Argentina, are relatively small.  Australia grows twice as much pinot gris as New Zealand, most grown either in cooler southern regions (Victoria, Tasmania) or else picked early in the hot irrigated regions.

World Pinot Gris Hectares Year % Share
Argentina 347 2008 0.7%
Australia 2835 2008 5.7%
Austria 293 2006 0.6%
Canada 230 2006 0.5%
France 2360 2008 4.7%
Germany 4413 2007 8.8%
Italy*1 11600 2007 23.2%
New Zealand 1460 2009 2.9%
USA – California 11958 2008 24.0%
USA – Oregon 2600 recent 5.2%
USA – Washington 500 recent 1.0%
Other*2 11300 various 22.6%
       
Total World 49896    

*1  It has been estimated by Attilio Scienza that based on production and sales data Italian plantings may actually be closer to 14,000 ha

*2  Estimate – Includes unverified data regarding plantings in Eastern Europe (esp. Moldova, Romania, Hungary, Slovenia, Ukraine) as well as minor producers

The Market Question

So the real question is that of the market for pinot gris, both in New Zealand and internationally.

In my opinion a quite complex (and concerning) issue is that of the “palate polarisation” of the mass white wine drinking public. This is the situation where a large number of sauvignon drinkers profess dislike for pinot gris and chardonnay, chardonnay drinkers profess dislike for sauvignon blanc and pinot gris, and where pinot gris drinkers profess dislike for chardonnay and sauvignon blanc. These preferences can seem even to verge on snobbery.

Whether or not they actually do becomes increasingly moot.  It could be argued that there are similar issues within red wines, but I suspect these are far more limited given the wider range of red varietal and blended wines readily available.  The same cannot be said for white wines in much of the New World, with alternatives such as the aromatics and Rhone varietals both either less available or terminally underappreciated by the majority of people who want to drink the “big three”. (As I have posited in previous posts, there is a sense that riesling, for example, is more likely to be liked or appreciated by a pinot noir drinker than by most other white wine drinkers).

The absence of alternatives looms as a huge problem if palate boredom leads to changes in fashion, because socially acceptable fashion drinking is very much the demand driver here.

Some Alternative Alternative Candidates (and Reasons Why)

Of the hundreds of white grape varieties of the world, the vast majority are too obscure to discuss or of very marginal interest. 

Of the largest producing varieties of the world, the likes of Airen and Ugni Blanc are generally considered to be bland quality warm climate grapes.  While this does not mean that New Zealand could not create something different from them, the reputation of these varieties may always stifle any potential they might have.

There are perhaps two dozen white varieties that have sufficient interest, including expert opinions that they are capable of producing high quality wines.  (I am sure there are others, but the identification and importation issues stretch the issue of suitability too far for immediate consideration).

Arguably all but one of them shares the likelihood of pronunciation problems for many potential drinkers.  (We may just need to be a little creative to sell them). Several are Italian in origin, reflecting the wide diversity of grapes grown in that country.  Several are also, therefore, what might be described as Mediterranean in origin.

In alphabetic order (*marks varieties that are already grown in small quantities in New Zealand although no wines labelled Marsanne, Rousanne or Gruner Veltliner have yet been marketed, other than Coopers Creek’s “The Groover”):

Albariño  Native to northwestern Spain and northern Portugal (and scarcely grown anywhere else), but unlike almost anything else in Iberian wine.  In its home environment it produces a wine of light to medium body with subtle and distinctive fruit characters, although whether because of winemaking or climate there is often a sense that the style of the grape could be “tightened up” in the right environment.  Given that most New Zealand wine regions are near the coast, the fact that albariño is thick skinned and well adapted to relatively damp maritime environments suggests that it could have wide potential uses in New Zealand.  Moreover, albariño wines are highly fashionable at home in the Spanish market, and also starting to be noticed in the UK and US markets. Australia was also claiming good results for a wine it thought was albariño, curiously growing it in hot dry climate areas rather than near the sea, until it was proven to be a different grape altogether, Savagnin blanc, a distant relation of gewürztraminer.

Arneis*  A number of New Zealand growers are beginning to experiment with Arneis and a small number of wines have appeared both as blends and as single varietal wines (most notably by Coopers Creek).  The natural aroma of arneis tends to be relatively subtle, rather than strikingly pronounced in the manner of sauvignon blanc.  Most trials to date have been in more northerly parts of the country, but wider experimentation may be necessary to establish where arneis may work best.

Fiano  A native of southern Italy where it produces wines with hints of complex and exotic fruits.  While New Zealand conditions are not at all like those of the warm Italian south, warmer parts of New Zealand might still be able to ripen the grapes and harness its natural acidity for a quite different style of wine.  Greco and Falanghina are other varieties of interest grown in the same region.  All are typically grown at altitude to maintain acidity, but may suit warmer sea level New Zealand locations.

Garganega  In its native Italy this is the variety that forms the core of Soave.  Unlike some other Italian varieties it does not appear to have been widely exported to other countries.  While the reputation of Soave has sometimes been one of blandness (which may explain lack of interest from California to trial it), in recent years a handful of top producers have provided hints of what this grape is capable of if handled with care and skill.  In a different climate with different sunlight and influences, what might be produced?

Gruner Veltliner*  A native of Austria and also very rare anywhere else in the world.  It produces a distinctive and distinguished medium to full bodied white wine that is increasingly fashionable in both Europe and in the US (where it is sometimes referred to as “gru-vee”).  It has already been planted experimentally in the more southerly growing regions, but may actually have wider possibilities.  Note that it is reputed to respond strongly to the soil conditions in which it is grown.

Marsanne*  A white grape from the Northern Rhone in France.  As it grows in similar environments to Syrah and Viognier, it seems reasonable to assume that it may produce corresponding results in New Zealand.  Often partnered with Rousanne (see below).

Petit Manseng  A native of south western France and known for producing distinctive wines in a range of styles from dry to very sweet.  Produces small, thick skinned berries that have a reputation for being weather hardy.  Petit manseng wines are noted for exotic fruit characters and retaining good levels of acidity.  May produce interesting results, even if very different in character from the often rustic French versions.

Rousanne*  Like marsanne a native of the Rhone.  Often partnered with that variety to add fruit interest as marsanne can produce quite heavy wine when grown in hot climates.  While rousanne can be more challenging to grow, especially its susceptibility to powdery mildew, it may prove of considerable interest in warmer New Zealand sites.

Verdelho*  A native of the island of Madeira, its name indicates that it is known for its small green berries.  It is also widely grown in Australia where its high natural acidity is a virtue.  A small number of growers in New Zealand are experimenting with it and Esk Valley has produced some interesting wines.  The nature of the grape suggests that it may be limited only to the warmest locations in New Zealand.  Internationally it is regarded as being relatively neutral in flavour, although Australia seems to think of it as an aromatic variety.  It is sometimes assumed that Verdelho is the same as the highly fashionable Verdejo in Spain (which might perhaps even more interesting in its own right as it is often blended with sauvignon blanc), although it appears that what the Spanish know as Godello is more likely the same grape.

Vermentino  Vermentino is best known for medium to full-bodied dry wines produced in the South of France (where it is sometimes known as Rolle), on Corsica, on Sardinia and along the Ligurian and Tuscan coastal regions of Italy.  It is a thick skinned variety that has adapted to maritime conditions and is able to produce wines with structure and with distinctive fruit flavours even at relatively high yields (reminiscent of sauvignon blanc in this regard).  In Australia it is surprisingly grown largely in warm dry inland conditions, but it is the maritime origins, plus the relatively unsophisticated way it is largely made and marketed in its European home, that suggest it is an opportunity well worth examining in New Zealand.

Vernaccia  There are several probably very different Italian varieties with the name Vernaccia.  The most well known is that grown in Tuscany, which is responsible for the wine Vernaccia di San Gimignano, and this appears to produce the most interesting wine in the hands of quality-oriented producers.

And The Other Sauvignon Blanc Challenge is…

While it is high time for the search for the next sauvignon blanc to begin in earnest (and not just a re-run of the same old candidates), challenges remain for sauvignon blanc itself.

One challenge is guarding our market space from increasing predation by South African and Chilean producers envious of our market position.  In this there is an element of being smarter with our brand positioning and never resting on our laurels.  Lower crop yields in the short-term may serve not only to bring supply and demand closer into balance, but also to help maintain a qualitative edge.

However, the other challenge may be trickier.  While we in New Zealand may choose to believe the extensive press that suggests New Zealand is the global benchmark for sauvignon blanc, and while our market position is clearly reflected in our high average prices in overseas markets, the reality remains that we do not come even close to producing the highest priced sauvignon blanc pinnacle or icon wines.  Several French producers from the Loire and Bordeaux sell their best product for prices far in excess of the highest priced New Zealand wines. 

So one challenge may yet be to produce a true pinnacle sauvignon blanc wine that is still distinctively New Zealand in character while undeniably an international star.  Several Marlborough wineries have special bottlings lavished with extra care and attention in the search for complexity, and are starting to indicate greater aging potential than the stock Marlborough sauvignon blanc intended for early drinking, but it is abundantly clear that there is still a way to go.

It may be that this is a marketing challenge as much as a winemaking challenge.

In my last posts I discussed regionality from the NZ perspective based on adoption of Geographical Indications regulations.

In Australia it is probably fair to say that regionality is being enthusiastically touted as the way back from the mire caused by the success of the long-term rapid expansion and subsequent “dumbing down” of Australia’s wine image (a lesson that, despite certain important differences, New Zealand ignores at its peril).  However, does regional emphasis and the common corollary emphasis of certain quasi-cultural, qualitative aspects of wine production, actually solve the problem?  Does it come with its own set of problems, some of which may serve to quash some of the individual character that advocates of regionally based wine making and marketing hold out as the desirable strengths of this approach?

Let me preface all that I say below by emphasising that I am a firm believer in the diversity of wine production.  In this industry there simply has to be large and small, blends and single vineyard wines, large brands and artisanal “anti-brands”, cheap wines and luxury products.  Problems usually arise when there is an excess emphasis on any one aspect.  If everyone was trying to make and sell multi million litre branded wines most of the industry would go spectacularly bust because there simply isn’t room in the market for two many people trying to do the same thing (and a whole section of the market that prefers small boutique products, for example, would be uncatered for).  However should the market only consist of “small players” there would be higher costs and nor would there be the infrastructure, including sales and marketing, to be able to support the resulting proliferation of labels and “noise” that would result – meaning the same outcome of bankruptcies and consumers not catered for.

Depending on who is expressing the opinion, regionality is both the strength and the weakness of countries such as France and Italy, and of parts of the Old World in general.  To most French, German and Italian vintners the local focus, often to the level of the village, is the source of their pride and identity. This historically derived emphasis, dating from a time when for many the village was the world,  is the bedrock on which each country’s reputation as a great producer has been established – without it there would likely be no Lafite, no Montrachet, no Hermitage, no Bernkastel or Schloss Johannisberg, no Barolo or Brunello. 

However, to other commentators the degree of focus on the local has diminished the capacity of each country to perform competitively.  Local typically means reduced scale and, therefore, higher costs.  In an ideal world where we can all choose between Romanee-Conti or Petrus on a daily basis, the cost of each would be much lower, but not so low that it would remotely compare with the lower price brackets in our supermarketstoday.

Moreover, it is very clear that regions within countries often go through cycles of fashionability, so that regions with big reputations in one decade, or even one century, cannot always maintain them intact.  Someone else rises.  The world is simply not big enough to handle every region of the world acting as if it is as important as Burgundy, Rioja or the Napa Valley. 

The global wine market is very much a pyramid.  It is smallest, and total demand is lowest, at the top.  If every producer in the world tried to price at the level of Cheval Blanc or Le Musigny, demand would slump (although, in a typical paradox, there would likely be significant under-supply or excess demand at lower price points).

Which is where one strongly fears the Australian industry’s newfound (yes, I know in truth that it isn’t remotely new) determination to use regionality as the tool to solve its problems may only create new problems.  It is based on a belief that there is a market for something more valuable than the market that the purveyors of critter wines were managing to sell to.  The problem is that this market is a much smaller market than the market for critter wines, and it is an even more crowded market already.  It is simply not possible for an entire industry (that is, one of material scale already as opposed to a “cottage industry”) to migrate to a different business model targeting different price points. 

Even if the actual message is simply for small and medium producers to step out from competing with the big winemakers and marketers and to differentiate themselves on the basis of their origins, the number of producers for whom this would apply is still too large to be workable without affecting the economics of the shift.  Moreover, if the origins they are pegging themselves on are too diverse or obscure for all but a small number of consuers to follow, if the proliferation of geographical designations has created so much “label noise” that it has become largely meaningless to consumers, the vast majority of producers may find that little has changed: rising stock levels and downeard pressure on prices as the only way to get noticed in the marketplace.

Whether a regionally focused strategy is workable, other than at the margins for a few producers able to garner either attention or reputation, is open to question.  It is not a simple salve for all of the industry woes, but in the right hands it may still be better than the downward spiral that has developed during the global downturn.

“Beyond GI” Part 2

The International Precedents in Context

The reason it is appropriate to consider the issues arising from the implementation and development of geographic indication systems and associated regulations in place in other countries is because of the insights it may offer as to how and why things might develop in New Zealand, and also in Australia, in the future.  It is to be hoped that understanding such issues and why they have arisen will assist with the future management of designations and labelling regulations, and consequently help to ameliorate future pressures in this country.

In its European “Old World” forms, Geographical Indications have come to place considerable (but not universal) emphasis on the initial “C” such as in the AOC and DOC/DOCG regimes of France and Italy.  Going beyond simply specifying production boundaries, regulations associated with the regimes include controls over allowed varieties (and blend proportions), yields, irrigation, alcohol levels, viticultural practices and also winemaking practices (ranging from minimum aging periods to the applications or otherwise of sugar, acid and other additives).  To be able to use the local geographic labelling, the other technical requirements must also be strictly followed.  In many areas a wine must also be submitted for tasting prior to label approval.  Failure to comply with requirements may result in either declassification to a lesser regional designation, or, worse, declassification to a label category for which any form of regional association or claims will be illegal.  The potential consequences of non-compliance may be severe, including financial penalties and even imprisonment for label fraud, not to mention the consequences of negative publicity.

This system has not been without its tensions.  Such tensions typically arise when either regional complacency creeps in, aided and abetted by the evolution of ever more stringent layers of rules, such that quality-oriented producers may even consider themselves to be forced to step out of the system.  Tensions may also arise when the system fails to allow for pioneers of new varieties or types of wine or pioneers in new areas; or in circumstances such as may result from climatic change, major disease events, technological changes, economic adjustments or other dramatic changes.

From an historical perspective it is important to recognise that the AOC and DOC regimes in France and Italy did not arrive at their current, relatively extensive forms from the outset.  Both have evolved in terms of geographic coverage.  The French AOC system has been built on a progressive process of addition of new appellations ever since the first, Châteauneuf-du-Pape, was promulgated in 1923.  Since that time the number of controlled appellations has grown to 253, and the number of vin de pays designations to 153.

In some regions the historic patterns of grape growing changed with the sequential scourges of mildew, oidium and phylloxera.  One of the features of the recent moves to expand the list of communes entitled to grow grapes for the production of AOC Champagne has been the number of candidates pointing to the fact that grapes were grown in those areas until relatively modern times, but were simply not replanted between the outbreak of phylloxera and the adoption of the existing appellation boundaries.

Today other factors need to be taken into account, such as climate change and the expectation that growing may recommence in areas that have not grown grapes for wine for several centuries but may now again be suitable, with this suitability needing to be recognised in a legal form. 

In Italy there have been many notable instances of renegades rebelling against the structures of the system.  The so-called Super Tuscans arose at one time from the way that the rules governing production of Chianti had the (no doubt unintended) effect of imposing mediocrity, or worse.  There was no way within the system to experiment with new grape varieties – for better or for worse.  Ironically the first wave of super Tuscans was superseded by another that rebelled against blending rules that prevented the creation of Chianti wines using 100% of the most notable local grape variety: Sangiovese.  For many years these producers were forced to label their wines – often the highest priced wines they bottled – with the lowest label designation allowed: vino da tavola.  It took almost two decades before the authorities responded with a broad regional designation that also allowed a degree of freedom – Indicazione Geographica (with the name of the wider region appended) – equivalent to the French vins de pays designation; and also, separately, with more flexibility as to the constituents of wine labelled Chianti Classico.

However, this is far from the end of the changes within Italy as many quality producers continue to feel constrained by the rules.  High profile cases in recent years have included Angelo Gaja’s decision to opt out of the Barbaresco and Barolo DOCG designations for his top cru wines and at a different level the decision of Antinori to opt out of the Chianti Classico DOCG for its high volume Villa Antinori label.

In some regions there are qualitative benchmarks for a producer to gain permission to use the geographic designation.  Such qualitative overlays may be policed by tasting panels.  While such panels are usually comprised of professional tasters, they are typically dominated by locals and this has often given rise to disputes when a grower’s wine is ruled unsatisfactory.  Accusations of political bias or of the abuse of panels for competitive reasons are not uncommon.  Even more common is the dispute over the acceptability (or otherwise) of divergent wine styles, especially if tasting panels are dominated by proponents of one style over others.

France – Appellation D’Origine Controlee

The driving intent behind the first and defining geographical delimitation regulatory regime, appellation d’origine in France in 1919 was to fight against rampant label fraud whereby poor quality wines were being labelled as coming from highly reputed regions.

Even in France the process of overlapping geographical delimitation with qualitative delimitation (e.g. the system of Grand crus or similar) has been fraught with endless debates and legal challenges.  The methods employed are invariably policed locally.

Another criticism that has become more trenchant of recent times is that in many regions the system has become overly complex, with too many sub-regional designations and sub-sub-regional designations, as well as criticism regarding the inflexibility of the production requirements associated with the qualitative pyramid overlaid on top.  Limitations with regard to aspects such as sugar (potential alcohol) levels, chaptalisation (in some regions), acid adjustment, oak barrel and bottle aging requirements.

European Reform

Since 2002 the European Community has been undergoing a wide-ranging process intended to unify the varying national regulatory systems into a new community-wide system.  Inevitably this process has invited controversy, both from conservatives unwilling to allow changes from the regimes in each country, and especially those in the countries that have previously adopted systems more at variance to the “simple” region of origin-type regulatory approach; and also from those who consider that, rather than resolving some of the marketing issues sometimes considered to be in large part responsible for the loss of market competitiveness of European wines, the result may be more likely to be a “dumbing down” of quality standards that will lead to even greater competitive risk.

Since the passing of the European Union wine law of 1999, the pre-existing national systems for recognition of geographic origins had been adopted and mutually recognised by the wider EU. By 2008, driven not only by the background of an increasing lattice of mutual recognition treaties with other wine producing countries but also by the growing “wine lake” and by evidence that the EU regulatory system was acting as a constraint for finding market-based solutions for wine market problems such as falling exports, falling prices and increased rural unemployment, the EU’s Agriculture Commissioner was ready to announce a new legal framework to replace the 1999 law.

The initial result in terms of framework was Council Regulation 479/2008.  This law set out a range of overriding principles covering areas such as support measures, regulatory powers, third country trade provisions including licensing, plus wider provisions governing matters such as legislated control on plantings. 

With this framework in place the focus has shifted to the detail, in the form of a series of regulations of which some have been highly prescriptive in nature (such as the controversial proposal to ban the production of rose wines using blends of both red and white grapes).

 In July 2009 a new law was enacted that will lead to the re-writing of some portions of the existing geographic designation regimes through bringing the different national systems under the auspices of a more unified EU-wide regime.  One of the fundamental underlying criticisms of the existing system that has led to this new initiative has been the perceived excess of detail and of definition to excess, and that this was inducing market stasis.  The new law reflects a desire for greater simplicity and flexibility – in other words a step back from the former level of prescriptive detail.  A very small step, of course, given that the final details reflect the intense heat of lobbying that could only be expected in the face of an initiative that threatened to undermine an industry of bureaucracy.

 As a consequence, the final outcome remains fluid.