December 2014 Issue of Wines & Vines

A Global Perspective on Regional Wine Identity

Think global drink local

by Mike Veseth

All the world is a stage, and we are all players—that is what I told my audience when I spoke at the Southern Oregon Wine Cluster Industry Conference in August 2013. We were gathered near Ashland, Ore., home to the Oregon Shakespeare Festival, which perhaps explains why I invoked the Bard to this group of winegrowers and producers.

“The world is a stage, and all the men and women merely players.” This famous line from Shakespeare is true in general and particularly apt for those of us in the wine business. Wine is certainly local—the product of a particular time and place—but the business of wine is clearly global, with many complicated international impacts and influences.

practical winery vineyard

You might not think of yourself as a global market participant, I told my audience, but consumers are keenly aware of the global stage, because they encounter it—with its hundreds and thousands of players—every time they choose a wine. So long as consumers can entertain choices from around the world, we all are players on the global stage—whether we want to be or not!

Importance of regional reputation
It can be difficult to get attention in this global arena. Having a distinctive national or regional wine identity is an advantage, although it is obviously not the only important factor. Oregon has worked hard to develop its market identity and has benefited from these labors. Oregon stands for quality to many wine enthusiasts, and the glow of this image obviously benefits all producers throughout the state.

But many consumers see Oregon more narrowly, as Willamette Valley Pinot Noir. This is problematic because, while the image certainly helps sell Pinot Noir, it can present something of a barrier to other regions—especially Southern Oregon and the Columbia Gorge—and to the many other wine varieties that Oregon produces so well. What can Southern Oregon do to forge its own identity to compete more successfully in the marketplace?

One answer is to gather together the “usual suspects” who have succeeded in establishing an identity in recent decades and try to learn the lesson of their success. Argentina, New Zealand and Australia have all experienced tremendous U.S. market growth in the past 20 years based, at least in part, upon a strong wine identity. It is important to learn the right lessons from these cases, however.

The conventional wisdom is that having a signature variety is the key to each of these success stories. Australian Shiraz, New Zealand Sauvignon Blanc and Argentinean Malbec. These are three wines that led the successful market charge, so it is natural to suppose that grape variety is the key to success.

Signature variety: wrong lesson?
This explanation is flawed in several ways. First, while Shiraz, Sauvignon Blanc and Malbec did open doors for the three associated countries, they did not open them as far as you might suppose. Argentinean Malbec opened the door for more Argentinean Malbec. Sales of the many other excellent Argentinean wines have not increased as much as you might expect. Argentina is experiencing a Moscato export surge just now, but that is obviously not driven by Malbec.

The same is true of New Zealand Sauvignon Blanc, at least now that the “Sideways” interest in Kiwi Pinot Noir seems to have faded a bit. Although exports of New Zealand Sauvignon Blanc continue to grow at a breakneck pace (it is now the best-selling white wine in Australia, even outpacing Aussie white wine!), the good news has not spread very far to other varieties. This fact makes many Kiwi producers a bit nervous as they ponder the possibility that the boom might someday turn to bust.

Australia is the worst-case scenario in the sense that it became so identified with Shiraz (and a particular style of Shiraz) that when consumer sentiment turned away from this wine the results were quite devastating. Now Australian winemakers are working diligently to convince consumers to embrace other wines and other regions. The Aussies certainly have the right raw materials to work with, but redefining a brand is almost as hard as unringing a bell. Thankfully it can be done (and I think they will do it in time).

The lesson for Southern Oregon? They grow so many great grape varieties that it would be a mistake to choose one to represent the region. It is more important to work to increase quality across the board, and the growers and winemakers seem committed to this quest.

Learning the right lessons
What are the right lessons to learn from these cases? Well, in real estate we say that the three most important things are location, location, location—and this is surely also true in wine where terroir is such a key factor. But let me argue that distribution is at least as important from a wine business sense, and effective distribution arrangements were key in the rise of each of these wine-producing countries.

Brand Australia was built upon solid global distribution channels such as the W.J. Deutsch and Yellowtail partnership that, at one time, sold more Yellowtail wine in the U.S. market than all French producers together! It is probably not an accident that two of the three top Argentinean brands in the U.S. market are distributed through the Gallo system. The high degree of international ownership and control of the New Zealand wine industry guarantees efficient global sales. Distribution drives success on the global stage.

I have often observed that every industry ultimately organizes itself around its most important bottleneck, and in wine that bottleneck is distribution. I have advised winemakers to look closely at their most successful distribution channels and to organize their operations around that. For many Southern Oregon producers, direct wine club and tasting room sales are key, so increased attention to managing these sales vectors may be more important than trying to get out-of-state distribution, for example.

Location and distribution are key, and so is quality. Location and distribution are dead-end streets without the ability to supply high quality within the context of the relevant category. Regional wine identity needs to be based on a strong sense of place, a high level of quality and an understanding of distributional challenges and opportunities.

Global stage again
A highlight of my visit to southern Oregon was attending a grand tasting at the World of Wine festival in historic Jacksonville, Ore. The idea is to show off the region’s diversity of soil and climate, grape variety and wine style. You do not have to stray too far to find wines like those from many parts of the world. World of Wine is maybe not the sharpest or most memorable slogan that I have ever heard, but at least it reflects reality. Regional wine slogans are not very important anyway, compared with the other factors I have mentioned. Can you think of a wine slogan that has the impact of “Got Milk?” Neither can I.

Southern Oregon does indeed offer a world of wine and has the benefit a strong potential consumer base because of the area’s proximity to cultural and recreational opportunities. By drawing the right conclusions about quality and distribution—and avoiding the wrong ones—Southern Oregon’s wine industry can enhance its reputation and enjoy an even brighter future.

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