Veteran marketer says to stick to what you're best at

All vintners have developed long-range plans. They are a must, but they are, in truth, theoretical exercises. They will be changed time and time again just as conditions are changing in the marketplace. Sometimes we go too far into the future. A great deal of time has been spent on the year 2000. The year 2000 will probably take care of itself if the right moves are made right now and in the rest of the decade.

With the exception of the famous "French Paradox," there has been almost no good news for the wine industry. Bad news, of course, is magnified way out of proportion by the media. Rather than paying attention to the gloom and doom of the media, we must take hold of ourselves and literally mold the future in our own individual ways.

The name of the game is to have the right wines to sell at the right price. Distribution networks must be perfected, and every winery must realize who they are and what they want to be. The wine business, believe it or not, is still a people business. Each winery must have good people to do the job. The distributor responds to good people. The trade responds to good people. Good people strive to make better wines, and whether the pricing is modest or high, the wines have to be very, very good.

Obviously, the industry faces some severe problems. It is in a cycle, and vintners must face these problems and contend with them until a new cycle begins, if it has not begun already.

The industry drifts in and out of cycles so often that their beginnings and endings are difficult to remember, especially when wineries are busy putting out daily brush fires.

Now, only old timers remember the 1950s and early 1960s when fortified wines outsold all table wines combined. Until the early 1970s, red wine outsold white wine. Roses were immensely popular and later gave way to Blush wines. Now the Blush wines are going out of their cycle. The real key to success is the anticipation of these changes and discern the difference between fad and trend. Prophecies are difficult indeed. If one is to be a prophet, he had better make a multitude of prophecies for a small number of them to come true. Most of them will not. The only reference to the future is the past and present. The jump from the present to the future in the wine business takes more time than in other industries. Vintners are all limited to some degree by what grape varieties are available in their own vineyards and in the bulk market. It takes a few years to T-bud or replant. Therefore, we have to take a careful approach, at least when we are planting our vineyards. We must be ever aware of what is going on, and again, differentiate fad from trend. With phylloxera causing some current problems, when we have to replant, we must make good choices.

Let us look at white varieties. Indisputably, Chardonnay is king of the white varietal wines and has been for quite some time. There are hundreds on the market. There are too many. Many medium-to-large wineries market two or three Chardonnays -- a limited, expensive reserve Chardonnay, a workhorse specific-appellation Chardonnay, and a lower-priced California Chardonnay -- the better to get a piece of the "fighting varietal" market. The lower-priced Chardonnay is usually a secondary label. The reserve is limited in quantity and is supposed to win the medals. The workhorse is a primary label and does the larger volume and is the profit maker. Lower-priced Chardonnays don't make money unless volumes are considerable. They can erode the primary label, and the price has no bottom on the market. Many wineries are falling into the same trap. Few are able to make a success of more than one label. Vintners must learn to stick to what they are best at. Still, everyone is tempted by the volume of the "fighting varietals."

To understand fully the popularity of Chardonnay, one must go back to the late 1950s. This was a time when only a dozen or so California wineries had national distribution. Ironically, Semillon, Grey Riesling, Johannisberg Riesling and California Chablis outsold Chardonnay. French and German wines dominated the market. Portuguese rose had a big share, and Chilean wines were in and out. A French White Burgundy, called Pouilly-Fuisse, burst upon the scene and quickly captured the market. Prices for Pouilly-Fuisse were not high. It sold for as little as $5 per bottle retail. However, California Chardonnay ran from $1.49 to $3.50 a bottle.

Pouilly-Fuisse outdistanced Graves, French Chablis, Vouvray and Liebfraumilch in a very short time. With a name difficult to pronounce by Americans, Pouilly-Fuisse was quite a phenomenon. The French sold all they could produce. Predictably, the price of Pouilly-Fuisse started to soar. Distributors sent their own people to France to secure supplies. The inevitable happened; excessively high prices killed the market. Importers started to push Macon Blanc at original Pouilly-Fuisse prices, but Macon was not accepted.

Through wine tastings and wine writers, the public ultimately became convinced that California Chardonnay was not only from the same grape, but was a better value and, in fact, a finer wine. From this point on, Chardonnay started to dominate all other white varietals. Pinot blanc, Semillon, Grey Riesling and Chenin blanc all went by the wayside or into virtual obscurity. This trend has continued to the present. Sauvignon blanc is still around, and many vintners produce their own versions. Sauvignon blanc had a run under the name Fume blanc, but inexplicably, most wineries went back to the original varietal name. In the '50s and '60s, Sauvignon blanc was made in an off-dry style and even in a sweet style. Robert Mondavi is credited with bringing in a bone-dry Sauvignon blanc and calling it Fume blanc.

Sauvignon blanc sells well for some and poorly for others. It cannot command the price of Chardonnay, and perhaps its lower price has sustained it. Some of it has a vegetative or intensely herbal characteristic in some years that many consumers find objectionable. It will never surpass Chardonnay, because it is not as consistent.

When Chardonnay was becoming popular and the price was rising, generic chablis was by far the biggest seller in the country.

When consumers started to turn away from brown spirits, chablis was the fashionable substitute. Jug chablis sold like the mineral water of today.

Gradually, Chardonnay became the upgrade wine for chablis consumers. Generic chablis was dry, clean, crisp and refreshing, especially when served very cold. The elements lacking were varietal character, discernible nose, and fullness of body. So, all that chablis had was there in Chardonnay and more. It has been a gradual but predictable metamorphosis.

Chardonnay really exploded in the 1980s, when because of greatly expanded acreage, a surplus developed. Enterprising vintners moved in and bought up Chardonnay at bargain figures. They marketed Chardonnays at previously unheard of low prices. They came close to the generic level. Therefore, many consumers made the upgrade, and Chardonnay is now almost a household word. Still, however, a great deal of chablis is being sold.

All of this at least tells us the taste preference of the American white wine drinker. I cannot see any other variety making a serious dent in Chardonnay.

Johannisberg (white) Riesling is an excellent wine, but it offers delicacy and fragrance rather than assertive character. It is best when off-dry because it develops, as Gewurztraminer does, an unpleasant steeliness when bone dry. As both wines age, this characteristic is even more pronounced, and the American consumer does not want it. The Alsatians have produced dry Rieslings and Gewurztraminers for many years, and these have never been accepted worldwide.

Again, Sauvignon blanc is acceptable in a dry state to the American consumer. It is a great wine, but too herbal and not as clean as Chardonnay. Colombard was never very good to begin with, with objectionable pungency. Chenin blanc has fragrance but doesn't offer much else in a dry version. There is a place for off-dry wines in the market place, but they don't command the prices of Chardonnay, nor do they attain large volumes.

The famous Viognier grape of Condrieu in France is getting some press. It is a superior variety but very hard to grow. There is very little around, so it is hard to predict what it will do. Viognier, however, seems a good bet for the small winery, and some are having some success.

Semillon is a real sleeper. Remember, it once outsold Chardonnay. With proper viticulture, it can produce outstanding wines of great longevity. The good part is that it can be blended with both Sauvignon blanc and Chardonnay and improves both.

The Australians have had great success with Semillon-Chardonnay. The classic blend is 60% Semillon and 40% Chardonnay. They sell well in the U.K. and are starting to do well here. Several U.S. wineries produce Semillon-Chardonnays. I believe this blend is something to watch. If you can't switch the consumer, give him a variation. The variation has an excellent point of consumer reference -- Chardonnay.

The point is that there are just too many Chardonnays. All wineries feel that they need to make and market a Chardonnay. That certainly is logical, but only if the winery is in a good area for Chardonnay. If not, that Chardonnay will have to enter the price war. If a winery wants to be successful and sell its Chardonnay in a sea of competitors, it had better be a good one. The winery that innovates and does some niche marketing stays ahead of the pack and makes a name.

Smaller vintners can sometimes capitalize on a temporary downtrend. When a great number of wineries drop specific varieties for new offerings, the niche opens up for a producer to fill a need. Make a great Gewurztraminer and you can get good press and sell cases. This is true with many varieties. You must know what is going on.

Since generic chablis still sells in large volume, I believe there is potential in upgraded wines under the proprietary concept. These are blended wines of specific or non-specific appellation with vintage date. They are generally made from superior varietals and are discernibly better than generic chablis, which is generally made from Thompson, Colombard and/or Chenin blanc. I believe vintners should have specific appellations and designate the constituents of the blend by their varietal name and percentage. They should be consistent and hold their own or best comparably low-priced Cabernets and Chardonnays. There is a number of these wines on the market, and they are doing well. The tendency is to do away with specific appellations as volume increases. If a winery makes a great value, it can get a fair price for it.

Cabernet Sauvignon is king of the red varietals. It doesn't do the volume of Chardonnay but can get a better price. Cabernet is a money-maker for premium wineries. Lower priced Cabernets do not sell nearly as well as comparably priced Chardonnays. Without a doubt, Cabernet is California's great red. As in the case of Chardonnay, Cabernet Sauvignon wasn't always the kind of reds.

Looking back into the 1950s tells us that Pinot noir was a better seller. In memory (and that is fallible) it seems that Pinots noir were better than they are today. They were bigger wines with superior fragrance and breed. One possible explanation is that in those days BATF called for only 51% of the variety. Whatever the blending procedures were at that time, they made Pinot noir a better wine. Some oldtimers say that Pinot St. George was available then, and it was a key constituent. Others say they added varieties such as Early Burgundy and Napa Gamay.

Some argue that more authentic, old clone Pinots noir were available, and more modern plantings of Pinot noir were actually Gamay Beaujolais. Today, they are legally interchangeable. In the 1960s, Pinot noir and Gamay Beaujolais were distinctly different in character and depth.

Gamay Beaujolais had a hot run in the 1960s. It displaced the standard Napa Gamay. Petite Sirah, Charbono and Barbera were fair sellers, but that was in the "red wine cycle."

Zinfandel was generally sold as a lesser-priced variety but was popular. The emerging small wineries began producing truly excellent Zinfandels. The rush to cash in on the White Zinfandel phenomenon wreaked havoc with this variety. Newer clones gave greater production, but the wines had far less character. Today the best Zinfandels are coming from old vines.

Zinfandel can, and will, make a strong comeback. In today's world of pasta, what is better? It always has had a place in California viticulture and is a versatile wine. When it comes from the right region, it is very good and desired by the wine consumer. The wineries with acreage in the right appellation should concentrate on it.

The future of Merlot is very bright. Merlot had a very good run in the 1980s. It was lower priced than Cabernet, and consumers went after it. There wasn't sufficient acreage to supply the demand. Wineries found themselves sold out a few months after a current release. What did they do? They raised prices until Merlot went above Cabernet in price. Just as abruptly as its sales had accelerated, Merlot slowed down. Consumers then perceived Cabernet to be a better value. Now, it is coming back strongly. This time there is more acreage. It is here to stay and will continue to grow. Why not? It is fragrant, soft and thoroughly appealing. It should be blended with Cabernet and Cabernet with it.

There are several newcomers on the scene -- two of them actually are obscure oldtimers. Mourvedre, a Rhone variety, is receiving some interest. It was formerly called Mataro -- an old variety used for blending years ago. Syrah is one of the oldest know varieties and also was planted in California, many years ago. Sangiovese from Italy currently is getting attention.

Sangiovese and Nebbiolo might be interesting, but most Italian varieties do not perform well outside of their native land. Sangiovese is not the world stellar performer that Syrah is. Syrah simply has been obscured by the more widely planted Petite Sirah, a much lesser variety.

Syrah is responsible for the magnificent wines of Hermitage. Before the turn of the century, Rhone wines were as valued as the greatest of Bordeaux and Burgundy wines. Transported to Australia, Syrah is the work horse grape there. It is responsible for Australia's greatest wine. It is grown in the warmer areas of Australia, and it makes outstanding every-day red table wines. The vine is vigorous, and the yields are heavy in marginal areas. The Aussies insist on identifying Syrah as Shiraz.

The Australians again have developed blends such as Cabernet-Shiraz. This is another possible variation opportunity.

Syrah should do well in California, and I predict it will become a winner.

Many of the more obscure varieties can and should be used in the blending of upgrade every-day table wines. These should be outstanding red wines that people will recognize as great values. Again, I believe the formulation should be spelled out on the label. This effort should bring a higher price.

I have dwelled upon red wines in this article for a good reason. The "60 Minutes" television program called "The French Paradox" literally broke the door down for red wines. Most wineries report sharply increased sales of red wines, and I think it is just beginning. There exists, right now, an acute shortage of bulk red wine on the market. Oddly, wineries can buy Cabernet but not dry red.

Tell the public that something is good for them and, like oat bran, they will give it a vigorous run. Imagine the effect on our government, which insists on warning labels.

Our government's philosophy is that if it is bad for you, tax it out of existence. If it is good for you, don't tax it. We were headed for the former because of the wave of anti-alcohol sentiment. Now, if further research is favorable, we can enjoy the return of the red wine cycle. A lot of red acreage has been pulled. Look for the rush to replant lower-priced red varieties again.

There are American consumers out there, and I have seen them, who just don't take to red wine. We always say in the business, "White wine drinkers eat quiche." We do have to be tolerant.

It would not be surprising to see varietal rose wines come back with the new interest in reds. This time, I believe vintners will be more sophisticated and make them on the dry side and more towards the red in color. One indication that this will happen is in current, top-quality sparkling wines. Pink and near-red sparklers are getting some sales. Some of the reds make superb deep-rose wines, and someone will come up with a name for a new category.

The threat of excessive taxation is on the immediate horizon, because all levels of government are looking for money. The only defense for California vintners is to get politically involved and know their officials at all levels. We have always been apathetic about this activity. The politicians will listen to you, and if we can convince the vintners in all other states -- and there are lots of them -- we can create better defenses. Californians should, in my opinion, all support the Wine Institute. The Institute has been the most effective defense against taxation in our history. There cannot be any argument against this.

Distribution is a real problem that doesn't look like it is going to get better for awhile. The most important thing to do is to select the right distributor for your products. Don't switch houses unless all efforts and negotiations fail. Changing a distributor invites lawsuits (unless you do it right) and generally results in a 10 to 20% loss in sales the first year.

The diminishing number of distributors has thrown competitors together in the same house. Crowded distributor portfolios cause the cherry picking of product line, poor and infrequent presentations to key accounts, and bad pricing practices. If a distributor carries wines of too many vintners, he simply can't get the job of distribution done properly. The constant movements of major spirits lines and major wine lines have caused sheer havoc. The concepts of exclusivity, statewide and multistate coverage by large distributors tend to lure wineries away from local independents. The locals go out of business, and the choice narrows down to two or three. Then, there is no choice. But good wineries must try to make the existing distributors work. Distributors hate losing anything, big or small, and will respond to sensible approaches. Again, here is where good people come in. Unless the wine-for-health concept advances quickly, I cannot see an improvement in the distribution situation. Field representation is another matter of discussion but is not permitted by the brevity of this article.

I am optimistic, but guardedly. I see California wines eventually exceeding the quality of any of the world's finest wines. To get to this pinnacle, I believe we must concentrate on specific varieties that do best in each vintner's region. Vintners can no longer market huge sprawling lines. Currently, distributors won't do the job, and shelf space is shrinking. Every vintner must be unique in some way. Even if the vintner must have a Chardonnay and a Cabernet, he also must have something else.

(McClelland, with 35 years of administrative/management experience in the wine industry, is proficient in vineyard management, business development, production/quality control, winemaking and marketing. He is in demand as a speaker at wine conferences, tradeshows and international expositions and is an author. His experience includes nine years as president/CEO of Geyser Peak winery in California and 25 years with Almaden Vineyards in the latter's glory days. For the last seven years at Almaden he was president/CEO. He is a former chairman of the Wine Institute and served in the U.S. Army in the '50s in psychological warfare. He is a graduate of UCLA. McClelland lives at 4716 Woodview Drive, Santa Rosa, Calif. 95405, phone (707) 525-9673.)

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