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business of wine

#Wine – plan forward to take home Africa – #WOSA

“South Africa’s historic ties to sub-Saharan Africa and also India will give it an advantage in these markets. It’s an unexpected idea, but Nick is a good economist, so I suspect there is something to it. We all accept that China is a good potential market today, so why not Africa is 10 or 20 years?”

In the latest edition of FORBES ASIA (July, 2011), we ran a book excerpt from Wine Wars: The Curse of the Blue Nun, the Miracle of Two Buck Chuck, and the Revenge of the Terroirists (Rowman & Littlefield Publishers), in which author Mike Veseth takes a look atChina’s emerging wine business (its output recently surpassed Australia’s). I asked Veseth, the Robert G. Albertson Professor of International Political Economy at the University of Puget Soundin Washington State and author of The Wine Economist blog, a few questions about the wine world in general.

We mention Grace Vineyards and Changyu in the excerpt we ran. Changyu’s tasting notes were hilariously bad (“urinal crust” being a particularly evocative one). Any more thoughts on how bad China wine is now and how it will evolve?

I think the wines will get better quickly. Technical winemakingimprovements will come first, of course, but the final improvements will take longer because they involve the entire supply chain. Quality wine begins in the vineyard and requires that both the raw materials (grapes) and final products (the wine itself) are handled really well. If either the grapes or the wine spends much time in overheated trucks or rail cars, for example, the final product will not be very good.

From your blog about the conference in Bolzano, I was struck by the comments of the South African who says India and Africa will be his country’s next big customers.

Nick Vink, the South Africa expert I cited in the blog post, told me that there are growing markets in sub-Saharan Africa. I think he sees expanding middle-class consumer markets in some of the cities. He believes that South Africa’s historic ties to sub-Saharan Africa and also India will give it an advantage in these markets. It’s an unexpected idea, but Nick is a good economist, so I suspect there is something to it. We all accept that China is a good potential market today, so why not Africa is 10 or 20 years?

When did you start your Wine Economist website and what are your favorite wine websites?

I started the Wine Economist in 2007 as a way to learn how to write about wine and to try out ideas in a public space where I could benefit from reader feedback. It’s been very successful. I am more interested in industry news and analysis more than reviews of individual wines, so my daily  reading list looks like this: Decanter;Wine Industry InsightWine BusinessWines & VinesJancis Robinson.

Were you always a wine economist?

I haven’t always studied wine with the same intensity I do now. I started out as a government finance specialist, and when federal debt began to pile up in the 1980s I decided to approach the problem historically. Have other rich, powerful nations fallen into massive debt (and what happened to them)? This question led to my first big book, Mountains of Debt (Oxford University Press), which compared the U.S. to Victorian Britain and Renaissance Florence, the other rich, powerful, debt-plagued cases.

What did you taste in your recent tour of Italy?

I went searching for local wine cultures that have been able to thrive in spite of market pressures to conform to an “international standard” and I found them frequently on this Italy trip. My favorite discoveries were Pignoletto from the hills outside of Bologna, Ruché from Piedmont and Kerner from the Valle Isarco. All three were distinctive and commanded a strong local market.

Will anybody be able to afford Bordeaux if China keeps buying it all up? Or are they?

wrote about this recently on The Wine Economist. Bordeaux doesn’t matter anymore. Or at least it doesn’t matter in the same way it once did here in the U.S.

Name a few wineries that “get it” from a business standpoint.

I think Chateau Ste Michelle gets it here in Washington State. Ste Michelle Wine Estates has a “string of pearls” operating philosophy that allows each of their winery brands (including Columbia Crest, for example, and Stag’s Leap Wine Cellars) a good deal of independence while benefiting from the economies of distribution, etc. Even the large production facilities like the white wine facility in Woodinville contain mini-wineries that allow the winemakers to do small scale projects while also producing hundreds of thousands of cases of the mainline products.  Chateau Ste Michelle balances the big and the small without losing their terroirist souls. Boisset and Frog’s Leap (both in California) are examples of two totally different companies that both get it. In particular, they both get the environmental problem, although they approach it in very different ways.

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