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Editor's Letter

 

Enology vs. the Economy

June 2009
 
by Jim Gordon
 
 
What the wine industry needs to remember about the current economic recession is that it won't last forever. It will run its course in due time, with the help of federal stimulus funds and new vintages. Vintners and growers need to be ready when the economic arrows start to point up again. They won't be ready for the recovery, however, if they're too focused on the arrows that still point down.

Optimism underlies Tim Patterson's cover story and touches several other articles in this 60th annual Enology Issue of Wines & Vines. Despite depressed sales revenue, the wine industry still has plenty to look forward to. Patterson counts 10 ways in his piece alone, starting with the idea that if winemakers can't afford as many new barrels for 2009, they could make wines that better reflect their grape varieties and vineyard origins.

The brightest sign is that prospects for continuing growth in wine consumption remain very strong. At least two broad points support this: Consumers did not drink less wine in the recession year 2008, they drank more. And everyone by now has heard that the Millennial generation loves wine at least as much as baby boomers. Those young people should continue drinking it for the next 50 years, which supports long-term optimism.

For an upbeat view from the wine marketing trenches, we asked Jason Haas of Tablas Creek Vineyard in Paso Robles, Calif., to share the sales strategies that have enabled his organization to increase its direct sales dollars in recent months, at the same time that many wineries' revenues from the three-tier system have shrunk. Jason, who as a youngster must have absorbed a lot of sales savvy at the dinner table with his father, wine importer Robert Haas of Vineyard Brands, says there is no secret to it: just remember the rules of direct marketing, and follow them diligently.

Diligence is even more important for gutsy vintners who are just getting started in business today. In her Marketing Matters column Dixie Gill Huey advises what not to do when beginning a winery. Readers with more established businesses may recognize lessons they learned years ago and now take for granted. Neophytes, however, should cut out this article and tape it to the wall over their computer monitors, where they can't ignore it.

Lending institutions deserve their share of the blame for the home mortgage crisis that initially cut the economy off at the knees. What were home lenders thinking when they accepted stated incomes on mortgage applications and loaned more than the appraised value of a property? Lenders to the wine industry today sound a positive note in Paul Franson's article about the availability of financing for winery construction and equipment. They've learned from their counterparts in home loans that the basics really do matter, so don't expect any deals that are too good to be true. But if your business plan makes sense, your cash flow is positive, and your project is sound, they want your business (and their rates sound good).

The economic crisis has put barrel purchases under very close scrutiny this year, so our Northwest correspondent Peter Mitham takes another look at the topic while there's still time to prepare for the 2009 harvest. He asks knowledgeable winemakers who love new barrels how they're spending their oak dollars. Most of the vintners he talks with say they are not significantly cutting their orders for premium French barrels.

For other winemakers, who must save money while keeping the oak profiles in their wines, Dr. Richard Carey shares the latest research on the sensory qualities that alternative oak products bring to wine (page 44). In part two of a two-part series, he compares and contrasts the various formats of oak, showing in detail what flavoring substances they provide and the optimal lengths of time to apply them. Carey, a vintner in Pennsylvania and a longtime winemaker, is very optimistic about oak products' benefits for the environment, for wine quality and for a winery's bottom line.

These are just a few ways to think positively about the interaction of enology and the economy, almost half-way through a year that's been disastrous for many workers and industries. Tough times force us to re-examine our businesses in order to stay alive and well. It's important to make an honest assessment right now if you haven't already, make the tough decisions that need to be made, and move on. That re-examination sets us up to take better advantage of the good times when they start to roll again.

 
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