The Musical Innertube - Volume 2, Number 141 - Eric Jorgensen

JOHN

Our guest today on the Musical Innertube is Eric Jorgensen. Eric is the president and publisher of Wine Business Monthly, an essential information resource for wineries and wine grape growers. He runs the business, poor guy, from Sonoma, CA, and he's here with us today to talk about wine, the changes in the business, and what the future looks like for those who make, sell and buy the grape stuff. Welcome to the Musical Innertube, Eric.

ERIC

Thank you, John. Thank you, Don.

JOHN

I should immediately say that Eric and I are old friends, from the time that Eric was going to the University of California at Berkeley, which I hear is an institute of higher learning, while I was going to Stanford, which is not recognized in Berkeley. But we were good friends all the way back there in 19?? --

ERIC

I was going to say we don't say old friends, we say long-time friends.

JOHN

Yes!  So, Eric, let's start with the softball question of softball questions. You come home, you've been working hard all day. And you're a little bit - it's been hot in Sonoma and you're sort of, you know, you'd like a glass of wine. What do you pour for yourself? What have you been pouring for yourself recently?

ERIC

You used a keyword. If it's warm, usually I'll have a rose, a dry rosé, which just gained a lot of popularity in the last, I don't know, 5- 6-7 years. It's a nice, refreshing wine, because it has high acidity, and so it goes well with food, but it's also a great glass of wine to have after a day. If it's in the winter time, I might do a red wine with something that's served it a little warmer temperature. Kind of helps warm you up on a on a cool day.

JOHN

Who makes a good rosé? What's a good rosé out there?

ERIC

Well, there's – so, the thing about rosés is - I don't know how geeky wine you want to get, but - rosé can be made from any kind of grape. I particularly like wines, rosés, made from Sangiovese. But it's traditionally been a pinot, has been used for rosés.  And in Provence, of course, it's Rhone varietals that are used for making rosés. And I like those kind of either Rhone varietals or Sangiovese. Those tend to be a little lighter, not as much fruit and a little more acidity. That's kind of the ones I tend to go with.

DON

Eric, when I go out to dinner with friends, wine seems to be more and more the drink of choice for a wider variety of people. If I go out to a pub where it's beer and wine or mixed drinks, a lot of people are ordering a glass of wine now. Not just the women, but also some of the guys, and of course, with the dinner, a lot of people are ordering a glass of wine. Do you see, have you seen in your recent travels, and your recent talking to people, have you seen an increase in people accepting wine as opposed to a mixed drink or something a little heavier?

ERIC

Well, that's an interesting question. If I could give a little, maybe a little background. So, you've probably heard, 60 Minutes, this little show, did it show, did an episode, thirty years ago on the “French paradox,” which was, the French people eat all this cheese, they eat all this meat, you know, and yet they have a lower incidence of heart attacks. Why is that? And the show sort of sort of credited red wine, maybe for being the reason that that was happening. And boy, did that cause a boom in wine consumption in the United States. It really was one of the things, probably along with Robert Mondavi's great marketing sense, helping to turn America into, or the US, into a more of a wine drinking nation. We are now the leading consumer of wine in the world, not per capita, but in total in total volume and in total dollars. That was certainly not the case before that show aired. So it's been a long, a lot of years for steady growth for wine. I think that there has been in the last few years some growth in spirits. You know, you see all these celebrities doing tequilas and all of this, and that has definitely moved the needle. So spirits has done very well. Wine has leveled off a little bit. It's not growing as quickly as it used to, but as I say, it has become more of a wine culture, the US has.  And when COVID hit, there was a big pickup in wine, and I think, you know, first of all, we were all, you know, sheltering in place, or a lot of us were. And the one  little bit of fun you could add was a glass of wine. But the other thing that COVID did was kind of changed people's priorities. And you heard words like family, authentic, all those became maybe more important to us, or maybe as important to us as they always should have been, but reminded us how important those things are, and wine fits really well with that, right? When I ask you where your beer’s from, or where your vodka’s from, or you know, bourbon, you know, it has some sense of place - Kentucky bourbon, maybe - but it's not like wine, where you're really tasting where it was grown, and the authenticity of wine,  the family part of wine, I think really played well. You know, people came to it as part of a change in the values during COVID, and that has kind of continued.

JOHN

I think that as a person who certainly doesn't drink as much as I used to when I was an undergraduate or in graduate school - I mean, I don't know how I could have, and survived - but I have gone to wine, more. One of the reasons, I think, is the variability of wines from maker to maker, from variety to variety. I like when somebody says oh, I'll give you an oblino, or I'll give you a pinot noir. or something like that, no two or alike. And I love the slight differences in character that you can get in wine. And I know that beers aren't all the same, but it does seem to me that wine still has that, sort of, cornered, that if you want a different or unique experience in your glass, wine might still be, you know, a really good bet.

ERIC

Yeah, especially if you want to tie to something. I mean, yeah, you know, beer, craft beers kind of try to do the same thing, although they do - it's more about the brew master. And the same with mixed drinks, more about the bartender. You might get something unique, but it's this bartender’s unique drink, right? Or this bar’s unique drink. Whereas with wine, you're not tasting that, so much as you're tasting - we have a saying in the wine industry called “the hand or the land,” right? Is it the hand of the winemaker, or the land that influences what's in your glass? The answer is, that depends what kind of wine you're drinking, but most of us tend to gravitate towards the wines that, where it's the land, right? Where you can taste where the wine came from.

JOHN

That's so interesting.

DON

Yeah. It's interesting. too, when you go to a restaurant and order a glass of wine, some people are very specific. They want a specific label, a specific brand that they're used to. But I know if you just go out to several restaurants, and when you go you order, say, a pinot noir or a pinot grigio. The glass that you get, depending, if you don't order a specific type, a specific brand, the glass you get is going to be different from restaurant to restaurant, depending on, you know, which they're serving as just their glass of wine. And it's kind of interesting to say, you know, I have people say, oh, I love pinot grigio. And they'll get a glass, you know, of wine to go with dinner and say, “This isn't the one I'm used to.”

ERIC

Yeah, I mean that's a - I don't say it's a problem, it's the other side of the coin for the wine industry, which is, you know, people know what a Coke’s gonna taste like. They know what a Budweiser is going to taste like. They even know what their craft beer is going to taste like. You know, it's much easier to be consistent. And so, with wine, if you're - again, there's kind of two different types of wine in the wine industry. There's wines of place, and there’s wines made by a wine maker to a certain taste profile. And those can be more consistent, right? So if you're buying a KJ Chardonnay  - or Jackson Family Chardonnay now - you kind of know what you're going to get. They're sourcing grapes, it's a big brand, they have to source grapes from all over. You're not going to really taste the vineyard that it came from, but you're going to take - but it's consistent, and you know what you're going to get if you order a glass of Kendall Jackson Chardonnay. Whereas if you're ordering Chardonnay from Santa Rita Hills, or Chardonnay from Carneros or Chardonnay from Russian River, those are going to taste different because of where they’re grown.

JOHN

By the way, I might add that, speaking of media impact on wine varieties, Sideways had quite an impact for the sales of pinot noir, didn't they? I mean, one of the sexiest moments in any movie, where a guy and a girl fall in love with each other while talking about pinot noir, and, sales went up, I know that. I even wrote about it back in the day. And I started drinking it too. I think it's, again, you're right, it tastes different. And you can travel 50 miles, 20 miles in California and get a sort of different character.

ERIC

Yes, and that's one of the reasons people like, and the wine makers like - you know, it's a, it's a finicky grape, but part of that means it's very sensitive to how it's grown. And so, it tends to reflect the terroir very well. Shiraz, another grape which unfortunately has fallen out of favor maybe, but also it's one of, when you talk to winemakers, one of their favorite grapes, and wine to make is to make wine with Syrah because it reflects the terroir so well.

JOHN

By the way, can we define that word, terroir?

ERIC

Ah, well, it's a -  there's debate about what that means, but it certainly means the land and the climate that it grows in. Some people would argue it means even the yeast. So if you're using native yeast in your fermentation, they get on the grape skins. Those yeasts are indigenous to that area. They can be part of the terroir. I think some people would include that in terroir. And some would even say the way that things are farmed, since they tend to be culturally different, different areas, is part of terroir. I- it's certainly the land, it's certainly the climate, the others, people can disagree over.

DON

As people do.

JOHN

Yes, as they do. And that's one of the things so much fun about wine is that there's so much discussion, still today, I mean, and so much - I remember, and Eric will remember, and Don will remember, from the mid to the late 70s, some Chardonnays started coming out that were so woody, that it was almost like drinking a plank.

ERIC

You’d get splinters in your gums from those!

JOHN

Yes, you know, and you almost got knots in your teeth! But the whole idea was that when they first came out, it was, really, heavily flavored Chardonnay. Chardonnay was this huge thing that, it just took the world by storm in the late 70s, and everybody was serving it, and I think a lot of people burned out on it, for that reason. But they were really different. I mean, people would say, oh, I like Oregon Chardonnays, for example, because they were milder, at least at first.

DON

And I also do remember in the 90s and into the early 2000s, there was a push by wine makers to emphasize that their Chardonnay was in steel, and not in oak. And I guess maybe that was the selling point, that people had overdosed so badly on oak Chardonnays, that steel barrel Chardonnays were actually preferred because of their taste.

ERIC

Yeah, they're called naked Chardonnays. Yeah, there's two things that are done to a Chardonnay that make it a bigger wine. One is, as you're saying, it can even be fermented in barrels, but it's often aged in barrels, so it picks up the oak flavor, which is a lot of vanilla. And then when you hear the term buttery Chardonnay, that means - so there's two types of fermentation a wine can go through. It's the initial fermentation of the sugar, which creates the alcohol, and then there's another fermentation, which is called malolactic fermentation, and it's just like, it ferments the malolactic acid. And when you do that, it changes it to a buttery flavor. And so some Chardonnays don't go through any malolactic, red wines almost always go through malolactic fermentation. But whites typically don't, but they started making - Chardonnay is the one grape that they do put through malolactic, and that's what gives that buttery flavors that you get in a in a buttery Chardonnay. So, a lot of wine makers now are no longer doing oak or malolactic with Chardonnay. Then you get a really crisp, steely wine, very different than what we grew up with, as you pointed out, John. And there was there's a movement called “ABC” - anything but Chardonnay, right? And that's because people were reacting to those buttery, oaky Chardonnays and wanted something else.

JOHN

And I noticed you mentioned that Syrah has dropped out of favor. Are there reasons for that? People, did they overdose on that? Because I know there was a time when it was quite - it wasn’t as heavy as some reds, and it seemed to be pretty versatile. You could, you know, drink it with a lot of different dishes. So, I'm wondering, is this just this natural thing where different varieties come to the floor at different times? What do you think?

ERIC

Yeah, I think it – so, Shiraz, the Australian Shiraz and Syrah are the same grape. And clearly there was a time when Australian Shiraz was big and it was made in a very big style. Lots of fruit just, you know, kind of a really overwhelming, maybe, for some, wine. And I think that that ran its course, but unfortunately that made it big enough, you know, Yellowtail made a big enough impression on the wine drinking public that that's what they associate with Syrah. And it's too bad, because Syrah - cool climate, Syrah, so Santa Barbara, those areas, they make some beautiful Syrahs. Washington makes some beautiful Syrahs, Washington state, and they’re a good deal. If you're looking for a buy,  Syrahs from Santa Barbara or Washington are pretty good buy.

JOHN

We’ll be back to our podcast in just a moment, but first, here’s a soothing musical interlude.

DON

Eric Jorgensen is the President and Publisher of Wine Business Monthly, which covers news and development in the wine industry for wineries and grape growers. He’s been with Wine Business Monthly since 2000, and has been President and Publisher since 2002.

JOHN

Despite having a BA in economics from UC Berkeley and an MBA from the Wharton School at Penn, Eric has had a long and successful business career, including stints as a financial analyst with Apple Computer, general manager of Excite@Home, and positions at Taligent and Pacific Telesis International.

DON

With offices in Sonoma, California, Wine Business Monthly features original reporting on news and current events, and also special features such as WineJobs.com, an employment exchange; Classified Notices, and data analytics for the wine business community. 

JOHN

And now we return you to the Musical Innertube, already in progress.

JOHN

So, in the most recent issue of winebusiness.com, I notice that folks are worried about something that the feds might do. They might ratchet down the definition of healthy, in terms of how much you can drink. Right now, it looks like it's two drinks a night for guys, and one for gals, generally speaking, but that they might ratchet that down to one apiece or one every week. If so, I'm moving to Canada, where they buy the most wine from American makers. I think that's true, isn't it? Isn't Canada the country that buys the most wine from us? I thought I read that somewhere, but you know.

ERIC

It's probably true, I don't know.

JOHN

And they buy more American wine now than French wine. Ha ha ha, France, ha ha. But are people really worried about that, Eric? What do you think?

Speaker 1

Yes! Just as I said that, you know, one of the defining moments for the wine industry was this 60 Minutes report that kind of implied that red wine was good for you, the wine industry is very worried about what will happen when the government comes out and says, you know - I hope that it's more moderate than what I'm hearing. I'm hearing it could come out, they may come out say no amount of alcohol is good for you. And, it's a tough one. The wine industry is very reluctant to come out and say, wine is good for you. The science really has not changed much over the years. It's very hard to do a long term study over what happens. There are mechanisms, they think, where why might actually have some healthful benefits. There's no question that alcohol in toxic amounts is not good for you, but the wine industry has been reluctant to kind of take on, though, “Yeah, this is actually a health drink.”  And so it makes it a little hard to push back on this particular issue. You know, the wine industry is very concerned about it, and what it and what it might do. I was talking to my niece about it, who was in her late 20s and she was asking me what I thought. She said, “I love wine. What do you think?”  And one of the studies that you read, right, is that one of the most healthy things you can do and for your happiness and your health is to have great relations and be social and do that. And so, you know, we were talking about, well, it's got to be more healthy for you to meet your friends after work for a glass of wine, then just sit at home by yourself and eat a bag of carrots. I just think it is, right?  I just think that, you know, their life is about enjoying things and, so I - but it's very hard as an industry to take that point of, to put that point of view out there. But I guess the point I want to make is this change by the government is based on what's happening with the World Health Organization. And it's not driven by new science. There's no new science out there that suddenly says, oh, we're wrong, that this amount of wine is not good for you. We're going to change it. That's not what's happening. What's happening is more of a political thing that, you know, there's always been a temperance movement in this country, which of course led to Prohibition. The temperance movement has gained more political power at the World Health Organization, and that has led them to take stances that are a little more anti-alcohol, and the US is considering following that World Health Organization recommendations. But again, it's not based on any new science that's come out. That’s  not what's happening.

DON

You mentioned earlier that wine drinking among the public has leveled off, and I do remember a time when there were thousands of wineries operating. There don't seem to be thousands now. I don't know if it's been consolidation, or some of the smaller ones are really limiting where they sell, but - how is the wine industry overall looking as a business? Is it something that is in a whole pattern, or is it starting to decline, or - where are we exactly with that?

ERIC

Yeah, there's a couple of things going on. Let's put aside what we just talked about, the health thing, ‘cause that could be a serious headwind for the wine industry. But there's certainly a demographic thing going on, where the biggest wine consuming generation by far was the baby boomers, was us. And as we age out, to drinking less, we're drinking less wine. Now, the good news is for the wine industry, the millennials are really starting to consume wine, so that's great. So, I think demographically we're actually going to be OK, but it's going to take a little while for - the millennials aren't in their peak wine drinking, purchasing years yet, but they're getting there. And so that will be good. But it's, right now the decline of the number of baby boomers drinking wine is something that is definitely a headwind for the wine industry. So, I think that's part of it. I do also think, though, that there's consolidation going on, as you pointed out, right?  One of the big changes I've seen in the wine industry is, when I started, Gallo didn't make wine above $6 a bottle, or something like that. Now, they're one of the biggest land owners in Napa, right? I mean,  Gallo has become a huge player in all areas of the wine industry. And they just announced this week they're moving into beer. So, that’s definitely been a change. Some of the big players, the big players really just used to play at the bottom of the price tiers. Now, the big players have moved up into the high end, and that's of course squeezing the people that were at the high end. So, there's more competition there than there used to be.  But one thing that's really worth pointing out, though, is that wine used to be a California thing, or Northern California thing, right? It is really expanding up. We sometimes we take for granted, you know, the fact that 20 years ago if you said you were drinking wine from Oregon, people said, you know, like, “Oh, my God! Why? Oregon makes wine?”  So, yeah. You know that people love Oregon, you know? And they love -  and Washington is making great Merlots. And as I mentioned earlier, Shiraz and Cabs, Rieslings. And the East Coast, we're seeing real growth on the East Coast in the wine. I would point to particularly Virginia, New York's been a big state for a while, Pennsylvania. But Virginia is really seeing growth and they're kind of figuring out that the hard part for a lot of the East Coast wineries is  what grapes to grow, right, what is going to do well. I think Virginia has figured out that Viognier, and Cab Franc, and Petit Verdot are going to make some nice wines for them. So, there are some headwinds, but the tail winds is that we really have become a country of wine drinkers. and the wine country has expanded to across the whole country. So that's pretty exciting.

JOHN

I mean, they have Jersey wine all over the place where I live.

ERIC

And you know, they're not bad wines! I can tell you that I did - man, I probably shouldn't say this on air, but I did a Virginia tasting about 15 years ago, of about 10 or 12 wines, and I swear they were like - there was a Norton grape, which is a is a hard grape to drink. But there was like, three of them that you could really drink, right? And now that's just not the case anymore. The stuff you're getting from the East Coast is really good.

DON

And I never ran into Niagara until I got up to the northeast, and that is a heavily consumed wine in Pennsylvania and New York.

ERIC

Yeah, they're making, that Ontario escarpment, they're making, Niagara Escarpment, they're making beautiful wines there.

JOHN

I mean is that - I guess that's a good thing, right? That we have a larger area of people trying to make wines. I mean the, the, the kinds of varieties you're mentioning are less popular in California, for the most part. In other words, the states out here in the East Coast, they're going to have to deal with, you know, the fact of the matter, and, you know, our seasons, and the cold. And in New Jersey, the soil is pretty clay. There's a reason why we make bricks out here, and in Virginia, right? But you could still, if you know how to do it, you could still grow grape vines. You won't go to France and get the oldest vines, and bring them out here and say, “OK, go ahead, guys. Make me a millionaire.” It's a lot more complicated than that.

ERIC

Yeah, that's right. And you know, I mean, good wine is made in Germany, right? German Rieslings are fantastic. Austria makes wines. Well, they don't have any warmer weather than some of the parts of the East Coast. So, it's possible. It's just, it's at its infancy. Right? We're figuring out what's gonna really work on the East Coast. But yeah, already, New York figured out Riesling works great in the Finger Lakes. They're making world class Rieslings there. And I think the Petit Verdos coming out of Virginia are fantastic. So, I have high hopes that, given time, we'll figure these things out. I think overall it's a good thing, too. It exposes more people to wine, right?  If you just have to drive 30 minutes to go to your,  the local winery, that's great. Rather than having to fly to California/

DON

Yeah, definitely. And winery tours, at least here in Pennsylvania, and parts of New York, are a big attraction. To take people through small wineries, and then have a tasting at the end. That's something that they're peddling to tourists as well as locals.

ERIC

And, you know, restaurants tend, good restaurants tend to follow good wine. Hey, there's a lot of advantages. I think you'll see, Virginia is actually really actively supporting their wine industry in a way that most states don't. But yeah, and I think that that's going to really help them, and they think it's a way it can be an engine of economic growth for them.

JOHN

Now, you had mentioned about younger drinkers. What sense are you getting about millennial drinkers and Gen X folks? What are their tastes like? I know that they have different things possibly than we did growing up. They have energy drinks, they have a lot of stuff I wouldn't put in me. But what sense do you get of them and their habits when they do drink wine?

ERIC

Ready to drink drinks? Cocktails. All that is a big thing with them, right?

JOHN

That's true too.

ERIC

But in the wine side, natural wines really seem to be striking a chord with younger drinkers. Now natural wines is, you know, we're talking about terroir and the definition of that, “natural” is even more controversial about what makes a wine “natural.” But, the way we kind of think about it is, low intervention wine making, right? And we talked earlier about, the great attribute of wine that's hard to replicate is you can taste where it's from. And this is just an extension of that in my mind. People really wanting to taste the grapes and where they were grown. So, wine makers are doing less and less to, you know, to shape the wine and letting, you know, trying to allow as much as possible, where the grapes were grown and how they were grown come through in the wine. So, we think of it more or less as low intervention wine making, but natural wines, they're having a moment. I mean, you're seeing the there's stores, retail outlets that just specialize in just natural wine. So, and, you know, they can be - there's a reason there's some intervention made, you know, wine’s a natural living product, and it can go bad if you're not careful. So, the natural wines, you have to make sure you have a reputable producer who's making them the right way and doing the right thing so that that they stay good when they're on the shelf. But they can be great, and they really resonated with the young people right now.

DON

Anybody who’s opened a bottle of vinegar....

JOHN

Yeah, I had  - the oldest wine I ever had a sip of, was too old to drink. But we had a sip of it anyway, so we can say we'd had it, you know? And it was a bracing experience, I must say! So, there used to be rules about drinking wine. What you could drink with different dishes. Do people observe those, or have they changed? Or are they dead now? Like, you could only drink whites with fish, Pino grigio with poultry. Those are just a couple of examples  -reds with beef, but possibly not with lamb - yeah, don't quote me on that - but what's your sense of all that?

ERIC

I think people are relaxing that a little bit, right? I would say a couple of things. One, wines that go best with food are highest high acidity wines, usually, right. And so that can be, there are certain grapes that are hard to make high acidity, but most wines can have, if they're made that way, can be high acidic. So, we talked earlier about rosés are great food wines, and they really, if it's high acidity, it'll go pretty well with any food. I do think things like Rieslings and their high acidity go best with spicy food. You know, it's hard to match spicy foods kind of stuff. So, Rieslings that are acidic are a pretty good match for that. But, I, you know, I drink red with salmon, I drink a Pinot with salmon. The thing that I've noticed even when I first – so, a lot of people like their pinots chilled a little bit. So, at restaurants when I started asking for the pinot to be chilled when it was served, “Yeah, that's a red wine, sir, we don't chill our red wines!” But even that has changed now in the last few years, people are starting to understand that red wines really should be served at a cellar temperature. And that's like 65° which is not normal room temperature, right? If the room temperature is 77, 75, that's a little too warm for your red wines. But I do think in general, people are opening up their thoughts, and if it's a wine that you like to drink, if it's got pretty good acidity, it's going to go pretty well with food.

DON

There's one other question I had before we go, and it goes back to what you were talking about, what we've been talking about the whole show, which is the growing conditions for the wineries. We're all slapped in the face lately with climate change and how warm spots are becoming warmer and cool spots are becoming warmer. Is that affecting the grape growers? It has to be. But how widespread is it, and how are they reacting to that?

Speaker 1

First, absolutely.  And, so, there's a couple of issues with climate change. One is rain, and water and that, you know, some areas will have problems with that, some won't. California, of course, that's a pretty big problem. Interestingly, in Napa, not so much, that we have pretty good water here. So, we're probably OK there. Some areas are going to have more trouble with that. The other thing is, it's not just the warming climate, it's just the extremes that really is the problem, right? And so we are getting more frost events. People are having to prepare for that. British Columbia, you may have heard, lost, probably, almost all their crop this year with a big frost event. So, those things are going to be coming  more frequently. I think that the wine industry has two ways to combat this. One is to change their practices. So, you probably know that, for instance, in Spain, it's illegal to irrigate, in some places, it's illegal to irrigate vines. And that goes back to the idea we want to taste the terroir. We don't want you putting water where it wasn’t. But they're going to have to relax some of that, those kind of very strict rules that will allow irrigation. And then the other thing is varietals, right? So, Napa is known entirely for Cab. And it may be that in 20 years Napa’s known for Cab and Tempranillo, or something that can handle heat a little bit better. So, you know, as long as the consumer comes with the industry, I think it'll be fine. So, you know, I think that's going to have to be how we adapt. The good news is that places like England are now making sparkling wine, right? So, that's, there's another part of it too. We just have to be ready to adapt. It's not impossible.

JOHN

Well, let's raise a glass to you, Eric Jorgensen, for being our guest today, and making us all a lot smarter, and a lot thirstier than we were when we first came here. I'm thinking I gotta chill that red wine, dude, I didn't know that. That I had never heard before, but it makes some sense, doesn't it? Because...

ERIC

Cellar temperature, right? Well, what I said, what's a cellar at? And yeah, that's right. I mean I think for sure pinos, but yeah, even to the other ones, you don't want to serve an 80° wine, right? It's just...

DON

You don't wanna boil it.

JOHN

Thank you so much, Eric. We'll have you back on. Thanks for coming on the Musical Innertube!

ERIC

Cheers.