Sunday, October 04, 2009

Tear Down This Wall

Thinking my last post came from a frustration of seeing prices going up, not down, and listening to Italian winemakers telling me how much the crisis was over, I sought some retail therapy over the weekend. With an hour to kill while waiting for a plane to arrive I stopped in at a nearby shopping center and cruised the aisles: Neiman-Marcus, Saks, JC Penney’s and Burlington; roughly 4 levels of the retail channel.

Inside a nearly empty environment, I walked from store to store. Starting with the higher levels, I noticed sales. A shirt on sale for $150, a jacket with an Italian sounding name (made in China) for $300. A pair of Hugo Boss shoes (also made in China) for $250, a t shirt for $80. All of a sudden Super Tuscans for $200 weren’t sounding so strange. We could just market them to the same people that were in these stores. If there were any.

I asked a clerk if this was normal, so quiet for this time of the day. “Well, there is probably a football game on,” was her reply. Probably so. But most people seldom pass up the opportunity to buy a deconstructed Armani suit on sale for only $1250 in lieu of watching sports on TV, yes?

Chances are many people were still safely ensconced behind the wall of their gated community. Out here in the sparse plains of North Texas, north of the DFW airport, the sprawl from the urban center has led to giant themed communities, where people sit in their 5,000 square foot homes and drive their extended cab pickups and SUV’s and wield their platinum or titanium credit cards to find a life of meaning. Have some in our Italian wine community bought into this vision of America too?

A close friend told me that when his Italian visitors come to NY they want to go to Nike, Abercrombie and Fitch, Apple and other places that signify a level of status, of having arrived at the end of the trail of the dream their parents and grandparent started on. Large appetites aren’t only confined to Americans.

And while some of the Italians go back home and present their latest Super Tuscan to their friends onboard their newest 40 meter sailing ship in the hopes of getting some relevant feedback, have the decisions they have made been any better informed that ones made by people who lived behind the Berlin Wall or within the walls of a compound in Taliban held Afghanistan?

A multimillionaire tells their winemaker friend, “Your Merlot from Maremma is so wonderful. But it must be worth more than $50. It is at least twice more valuable than that.” I kid you not. True story. Really happened. Killed the wine dead. Will not resuscitate.

Informed decisions are not made on the deck of a yacht, working on one's tan as one is streaming into Porto Cervo for a well-deserved weekend of rest and relaxation. The world outside of the enclosure one situates one within is a different story. A shirt on sale for $150 just isn’t going to have a wide world market right now (or maybe not for a long time, when $150 will be more like $25.).

Gambero Rosso to the rescue
As alluded to in the earlier post, Gambero Rosso seems to be the mantra many Italian winemakers are chanting. Maybe it was the wonderful summer they had in Panarea or Lampedusa that gave them this clarity of thinking, but back in the world of the living, the reality is that Daniele Cernilli cannot save your brand, no matter how many red shrimp he throws at it. If you are making a Marche Rosso that will ultimately have to sell on a wine list in San Francisco for $100, think again. If this were a battle against Hizbollah or the Sendero Luminoso, would you wave a sheet of paper on it with three red glasses to achieve your aims? If so it better be on a large white flag.

On a lay-over between coasts, one of my Italian importer friends visited this weekend. His portfolio is young, but so far this year he has moved through 3+ containers (about 4,000 cases) in his primary market, metro NY. He's on target for moving about 8,000 cases his first year. Not bad for a one man show with a company that started up at the end of 2008, just as the economy was imploding. His secret? Keeping his relationships alive with one-on-one interaction and keeping the wine prices in check. Nothing over $30 wholesale. Falanghina selling for $9, A Maremma Rosso for $11, an Aglianico del Vulture for $9, a Valtellina Superiore for $14, a Langhe Nebbiolo for $14. Solid wines, made by small farmers, not large co-ops with fancy labels or marketing budgets. The work of the day. Mano a mano. Everyday. On terra firma, not terra incognita.

So while some of the winemakers talk of coming to America, which in reality is an extended grand tour of NY, Miami, Vegas and LA-SF, the ones who are gaining ground are doing these things:

1) Visiting other markets and keeping their relationships alive.
2) Turning away from expensive (and tiring) barrique aged wines
3) Listening, really listening, to their colleagues in the field who have been in this battle for 5-10-20 years and know what is going on.
4) Responding quickly and not doing it half-heartedly.
5) Putting their personal pleasure, entertainment, recreation aside while coming to these markets to really serve the needs of the consumers, the intermediary agents and ultimately to their family and business back home.

Today’s battle needs the correct response. When the machine gun was introduced into the theater of World War I it marked a turning point that the older way of fighting was over. Soldiers on horses were no match for a mechanized tank formation. And that is what things like Gambero Rosso, focus groups on yachts in Porto Cervo and out-of-touch within-the-compound mentalities are. The battle field has changed, as has the overall landscape. The Berlin Wall is down. It is time overdue for the Italian to come out from their gated cloisters of comfort and to rejoin with us to retake the hill we all have been battling over for so many years.


  1. i love the way you think - - - truly.

    i am no longer carrying 'super tuscans' unless they are sangiovese, and priced accordingly, i will put a sign up that says: "super tuscans once lived here"

  2. Thanks, Ceri!

    I'm glad we're in this battle together...

  3. The amazing thing about the economy, and not just in the wine business, is the denial. I talk to people all the time: "Business is good. What's everyone complaining about?" Yet when I am in their stores, I am the only customer.

  4. Well put, maestro. Then there are those Barolos and Barbarescos with very little age on the shelf. What will happen to their prices when they sit there and age in overlit stores well above 60 degrees?
    I have the same reaction to t-shirts on sale for $50 or those shoes for $650. It's endemic. The tide has gone out, people.

  5. Very well said indeed. I have done market and economic research in the U.S. wine industry for years, and I am still amazed at the amount of decision-making that goes on anecdote or impulse, without any kind of research or data, inside the echo-chamber of a small fine wine district or circle of fans. There are all kinds of wine consumers out there, many of them neglected and most of them different from the people encountered by luxury wine producers.

    Christian Miller
    Full Glass Research

  6. I'm so glad I found your blog. I drank lots of wines during my recent trip to Italy--why stop the fun now that I'm back in the USA???

  7. Jeff- Sure seems that way.

    Marco- you being retired it must really be more acute from your perspective.

    CMM- thanks for stopping by and confirming some of our suspicions.

    Jeremy- grazie tanti!

    Mary Gordon- Stop by often, there's all kind of useless Italian wine ( and non Italian wine) info here). We generate your appreciosity!

  8. I am not a wine connoisseur nor even a wine drinker. But I love good and interesting writing. Thanks for the blog.


Real Time Analytics