Wine Club Newsletter - September 2019
China Trade Wars - Wine
Hank Wetzel’s vineyards stretch to the horizon, a swath of green straddling Sonoma County’s Russian River, farmed by generations of Wetzels for half a century. It is a long way from Shanghai.
Nonetheless, seated outside his tasting room on a recent morning, the 68-year-old patriarch of Alexander Valley Vineyards was scrolling through photos from China on his tablet: a shot of his booth at a giant Shanghai trade show, thronged with customers. Another of Chinese restaurateurs sampling wines at a $1,000 dinner he hosted. And several of the pandas at Shanghai’s zoo.
When he began exporting to China two years ago, Wetzel had high hopes of penetrating its fast-growing imported wine market. But today, as President Donald Trump’s trade war shows no sign of waning, “the economics of selling there are horrendous,” he said. “Our importer is keen on our wines, but every $15 bottle I sell her now ends up costing her $30. We could soon be out of business there.”
Since April 2018, in response to U.S. tariffs, China has slapped retaliatory taxes on $110 billion in U.S. imports — products as varied as electronics and soybeans. For wine, taxes and tariffs now amount to a 93 percent surcharge on every U.S. bottle. That’s double the amount on French wine, long favored by well-to-do Chinese. At the same time, wines from Australia and Chile, which recently signed free trade agreements with the Asian giant, are flooding into China, taxed at just 26 percent.
Global exporters view China as a barely tapped opportunity, given its exploding middle class and growing appetite for the quality and prestige of imported wine. The U.S. exported $1.46 billion in wine last year, 95 percent of it from California. China was the fifth-largest destination after the European Union, Canada, Hong Kong and Japan. “China was our fastest-growing export market,” said Honore Comfort, vice president for international marketing at the Wine Institute, a San Francisco trade group. “We were heavily ramping up our activities there, adding restaurant promotions and cultivating relationships with key retailers.”
But U.S. wine exports to China were down by 33 percent in the first half of this year compared with the same period in 2017. As the trade conflict drags on, “Chinese importers will buy from a different country,” she predicted. “We’ve worked on building those relationships for two decades. Now all of that time is basically a loss.”
Wetzel’s was among the first wineries established in Sonoma County and played a key role in establishing the Alexander Valley appellation. His wines, from Cyrus, a $65 cabernet blend aged for 24 months, to Gewürz, a $15 wine made with organic grapes, have won national and international awards.
Over decades, Wetzel cultivated markets across California, in Texas and in other U.S. states to the point of shipping 175,000 cases last year. But he had never sought business abroad until he visited China two years ago. With his sons taking over day-to-day operations and sales, Wetzel and his wife, Linda, who oversees the winery’s bookkeeping, were looking for a new adventure. “Twenty years from now, China could be the largest wine market in the world,” Wetzel said. “We want to be ready.”
At Shanghai’s trade show, they met Rose and Jack Sun, a young couple who operate Shindy Wine. “It was the kind of small operation I was looking for,” Wetzel recalled. “They had one Australian wine, one Chilean and one producer in France. I get more attention as their only U.S. wine.”
At the show, he was struck by the level of sophistication as hundreds of Chinese stopped by his booth. Although the vast majority of wine consumed in China is low-end domestic product, high-quality imports are gaining social cachet through social media and a savvy new breed of trained sommeliers.
Last fall, Wetzel hosted the Suns in Sonoma County. “We ate meals and drank wine for three days,” he said. “We showed them our harvest so they could go back to China and tell our story. We became friends.”
Alexander Valley Vineyards shipped just 750 cases to China last year — certainly no competition to large wineries such as Gallo and Mondavi, which have marketed there for decades. “The wine business moves slowly, like a turtle,” Wetzel said. “It takes a long time to build relationships.” Preserving those connections takes continuous effort.
This weekend, he will embark on his third trip to Shanghai, for the opening of China’s first Costco, which has bought 250 cases of his wine. In June, while it was in transit, China imposed its latest tariff of 15 percent. Costco agreed to absorb half the increase, with the Suns taking the other half.
“There’s a dinner with Costco’s buyer,” Wetzel said. “I’m interested to see how they present the goods with these hefty prices.”
Wetzel also plans to travel with the Suns to Anhui, a province west of Shanghai, where they are opening a wine store. But with the trade war, “I expect to get an earful,” he said. “I hope this won’t be the end of our relationship, but the mood right now is pretty ugly. I don’t see how things could get much worse.”
Fellow exporters have been sharing the pain. “Even larger wineries that have traded for a number of years are extremely discouraged,” said Wetzel, who was elected board chairman of the Wine Institute in June. “They’ve lost a lot of business in the last six months.”
Dwight Bonewell, director of West Coast Wine Group in Napa, began exporting relatively inexpensive wine to China 12 years ago, sourcing grapes from the Central Valley. He sold his own brands and produced private-label wines for Chinese companies. With 20 distributors in China, Bonewell was on track to ship 43,000 cases this year.
“We thought we were going to have a banner year,” he said. Now he expects to sell just 7,000, tallying his loss at about $1 million. “The moment duties went up, many of our customers said, ‘We can buy, but you have to absorb the difference.’ But we can’t do that.”
Despite the setback, Bonewell said he expects his wine originally destined for China will sell in the U.S. market. “We are not giving up on China,” he said. “It is a huge market. We’ll wait for it to come back.”
Wineries that export more expensive bottles have suffered less from the tariffs, as wealthier Chinese can better absorb the price increases. “While our exports to China are off in volume, they are up over 30 percent in value year-to-date,” offsetting the tariff, said Ryan Stewart, director of international sales for Foley Family Wines in Santa Rosa, which owns vineyards in California, Oregon, Washington and New Zealand. “Our portfolio is more skewed to premium and luxury price points.”
Nonetheless, he added, “Several discussions with potential new import partners in China have been temporarily put on hold.”
At Wine Intelligence, a London consulting firm that tracks the global market, Chief Operating Officer Richard Halstead points to the “extraordinary amount of money” Australian and Chilean brands are spending to build China distribution. “They are squeezing out countries that don’t have favorable tariff regimes,” he said.
U.S. wine sales to China are a small target for a trade war, compared with motor vehicles, semiconductor components or soybeans — just 1.1 million cases last year out of 56.7 million cases that China imported globally. “But wine often gets involved in trade disputes because it has cultural symbolism,” Halstead said. “As China views it, it is about hitting a misbehaving trade partner where it hurts.”
In June, Trump took aim at French wine, complaining that it is allowed into the U.S. virtually tariff-free while France imposes duties on U.S. wine. “It’s not fair,” he told a television interviewer In Sonoma County, Wetzel says he voted for Trump because “he was a businessman.... But in the short term, these tariffs are not working.”
Meanwhile, he is taking the long view. “I’m going to see my importer with hat in hand,” he said. “I hate to think our investment is all dashed because of this trade war. But if it is, we’ll try again in five or 10 years. I hope this will pass sooner or later.”
Margot Roosevelt
2017 Cabernet Sauvignon, “Trios”, B. Wise
Growing Region: Napa Valley, California
Varietal Composition: 92% Cabernet Sauvignon, 4% Cabernet Franc. 2% Syrah, 2% Petit Verdot
Fermentation: French Oak Fermentation
Alcohol Content: 15.5%
Suggested Retail: $110.00
WineSellar Club Price: $89.99
Broad Strokes: SOLD OUT at the WINERY
Our neighbor to the east, Napa Valley, with its landforms curated by earthquakes and continental drift, makes possible a Cabernet that can be made nowhere else in the world. As the B. Wise project has matured, the desire to create wines that pay homage to this varietal has naturally upped the ante for our viticulture and oenology.
The B. Wise Napa Cabernet is based on working with fruit from high caliber Napa Valley vineyards where Brion is fortunate to be able to participate in farming decisions, using blending as a flexible tool to maximize flavor and aromatics for each vintage.
Appearance:
The label is simple, agreeable, marketable, and states the product nicely. The bottle is heavy, and you expect quality when you pick something like that up. And you’ll get it! The wine is black at the core, and bleeds out to dark red on the edges.
Nose:
Very dark Cabernet Sauvignon berry fruit is quite evident from the start. Cassis, blackberry/blueberry with toasty vanilla oak and even a hint of violets, I also got white and black pepper, anise and black currants. Fabulous aromatics!
Texture:
Medium full in body, with a large yet balanced presence, the wine is smooth and does have substantial power to be reckoned with. Silky tannins and a solid base of youthful acidity hold it in tight for 45 minutes
Flavors:
The cassis and currants from the nose are first impressions on the palate. Then the other dark fruits kick in, as does the sweet vanilla oak, toast, dark chocolate, lead pencil and a crush of fresh herbs. I also got a touch of caramel or maple syrup, Bing cherry and spice-like clove.
Serving Suggestions:
Check out the savings on this wine for our Gary Parker Collection members. Though not yet rated, I am giving it a solid mid 90’s rating, and believe it belongs in our cellars! Bon Apetit!
2015 Bruce Patch, Zinfandel, McClone Vineyard
Growing Region: El Dorado, El Dorado County
Varietal Composition: 95% Zinfandel, 5% Petite Sirah
Fermentation: French Oak Fermentation
Alcohol Content: 15.9%
Suggested Retail: $35.00
WineSellar Club Price: $31.49
Broad Strokes: 90 Points Zinfandel Chronicles
Bruce and Andrea Patch moved to the Russian River Valley in the late 1990s, and Bruce transitioned his sales and marketing background into a successful distribution business representing small independent wineries in Sonoma County. This would lead to a passion for and knowledge of winemaking that would inspire the creation of his own wine — Wine Guerrilla. Over the course of a decade, he built the brand and won accolades for his line-up of stellar single vineyard zinfandels. Today, Bruce brings this history and experience to his most promising venture yet. Bruce Patch Wines sources the best grapes from throughout Sonoma County, including many vineyards like Clopton, Harris-Kratka and Carreras Ranch with whom Bruce has long relationships and a history of producing acclaimed wines. Only 70 cases produced,
Appearance:
Art work of Sean Colgin is lovely and makes an attractive, distinctive package. The feel is artistic and thoughtful. The wine is a very dark red, with gray and black tones at the core.
Nose:
Lovely and forward nose of raspberry, blackberry and black pepper, typical of good Zinfandel. Grilled sour dough bread and graham cracker are laced with a fruity freshness that somewhat contradicts it being four years old.
Texture:
The fruit, acid and alcohol seem very balanced at the entry, even though the alcohol content is high. Creamy, close to seamless, with some nice astringency on the finish cleans the whole affair up nicely. The finish is long . . .
Flavors:
An explosion of flavors, starting with the blackberry and raspberry from the nose, then notes of balsamic, pomegranate, caramel, black walnuts, and even chocolate. These all come to me individually, and in a matter of thirty minutes, I got all of these things in one mouthful.
Serving Suggestions:
I think the wine has years to go on the evolution scale, but is great for drinking with grilled meats, BBQ, spicy pasta and cheeses. Enjoy!
2016 Bruce Patch, Zinfandel, Harris Kratka Vineyard
Growing Region: Alexander Valley, Sonoma County
Varietal Composition: 85% Zinfandel, 10% Carignane, 5% Petite Sirah
Fermentation: French Oak Fermentation
Alcohol Content: 15.5%
Suggested Retail: $35.00
WineSellar Club Price: $31.49
Broad Strokes: 94 Points Zinfandel Chronicles
Bruce and Andrea Patch moved to the Russian River Valley in the late 1990s, and Bruce transitioned his sales and marketing background into a successful distribution business representing small independent wineries in Sonoma County. This would lead to a passion for and knowledge of winemaking that would inspire the creation of his own wine — Wine Guerrilla. Over the course of a decade, he built the brand and won accolades for his line-up of stellar single vineyard zinfandels. Today, Bruce brings this history and experience to his most promising venture yet. Bruce Patch Wines sources the best grapes from throughout Sonoma County, including many vineyards like Clopton, Harris-Kratka and Carreras Ranch with whom Bruce has long relationships and a history of producing acclaimed wines. Only 200 cases produced,
Appearance:
Art work of Sean Colgin is lovely and makes an attractive, distinctive package. The feel is artistic and thoughtful. The wine is darker than its McClone mate, and drips quite beautiful drapes down the side of the wine glass.
Nose:
A very sophisticated, deep, rich aroma of red and black fruits, with tones of coffee bean, espresso, vanilla, chocolate, and spices of Madagascar. Hints of orange zest, vanilla oak, blackberry, chocolate nibs and even beef jerky is in there. Oh my!
Texture:
I found the palate on this medium to full-bodied wine absolutely agreeable to my textural senses. With some structural acid dancing across the mouth, there is a creaminess that I really enjoy. The wine is dense without being over-weighted
Flavors:
Flavors reminiscent of reduced black and red fruit juices leave a solid, exciting impression. Blackberry and raspberry do dazzle, as does vanilla oak, mocha, and grilled bread. Also note the spices of Madagascar, to include vanilla bean, bourbon, and clove. Truly unique in a wine.
Serving Suggestions:
A total winner! too bad only 200 cases produced. Drink yours and get six more!
2017 Jeremy Chardonnay, Shinn Vineyard
Growing Region: Lodi, California
Varietal Composition: 100% Chardonnay
Fermentation: French Oak Barrels 30% New
Alcohol Content: 14.2%
Suggested Retail: $24.00
WineSellar Club Price: $21.59
Broad Strokes: 90 Points Cellar Tracker
From the Winery: Jeremy Wine Co. is owned by Jeremy & Choral Trettevik. Their best memories were times when they sat down with friends & family, with a table full of delicious food and even more delicious wine. Together they began to dream of one day sipping their own wine at a table full of friends, family & food. Through determination and naivete, they set out to achieve their dream. Their first harvest (of barely 5 tons) took place in some shared space inside another boutique producer. Today they harvest well over 100 tons of grapes each year in their own boutique winery, and love to share the resulting wine in their tasting room.
Appearance:
During the days of owning a design studio, Jeremy always believed that every label should tell a story. This is the background of our large J/F Jeremy label. The fine embossed text on the label bottle represents: "Jeremy spent 40,000 hours in the wine industry working for others before starting his own winery. 6,000 hours in sales & marketing; 12,000 hours in production and winemaking; 22,000 hours in branding and packaging design". When you flip the label upside down, the J becomes an F and the subtle embossed Jeremy now reads Forty Thousand for the hours.
Nose:
Lovely balance of fruits, white flowers and spices in the glass: pear, baked apple, citrus (lemon zest), acacia flowers and vanilla all get along together in an elegant way. There is also a buttery-creamy touch to this wine followed by the tropical notes of pineapple and lychee stealing the show!
Texture:
Silky texture on the attack, this wine is medium to full bodied and really mouthcoating. The creamy and almost sweet feeling is backed by a nice acidity to keep it pleasant (feels just like eating an upside-down pineapple cake!). There is almost a Viognier-like viscosity to this wine.
Flavors:
We still have all the same players as on the nose, with a nice addition of minerality to complete the picture. Lemon curd, apple and white flowers and pineapple lead to a slightly toasty finish, revealing the use of partly new barrels.
Serving Suggestions:
This would be ideal with a cheese tray: the creaminess of the wine would get along with a nice creamy blue cheese or tangy chevre! Not a cheese fan? Try it with a black cod and beurre blanc!
2016 Bodegas Eguren, Vino de la Tierra de Castilla y Leon, Tempranillo, Pazos de Eguren
Growing Region: Castilla y Leon, Spain
Varietal Composition: 100% Tempranillo
Fermentation: Oak Fermentation
Alcohol Content: 13%
Suggested Retail: $16.00
WineSellar Club Price: $13.49
Broad Strokes:
From the Winery: A family who have always had a strong and deep-rooted conviction: “above all, we are grape growers”. This is something that is shown every day, in the care for the earth and the vines given that great wines are achieved in the vineyard. The result: exclusive wines that are well enjoyed even by the most demanding of palates.
In total six wineries, each with their own individual style where quality plays the most important role, something which we see reflected in the careful selection of the land, the scrupulous care of the vines, the choice of the barrels to be used... All this with the aim of obtaining wines with character, in accordance with the family philosophy and a level of quality that does not disappoint the consumers’ expectations, both nationally and internationally.
Appearance:
The wine is dark purple on the edge, becoming gray and black at the core. The label is a bit disjointed and hard to read for me. There are to many different fonts and font sizes, which I think hinders its individuality. Plus it is hard to discern this wine from their other products.
Nose:
A very attractive nose of ripe fruits, rose petals and vanilla oak. Notes of star anise, cola, root beer and even tomatillo wrap the plum/prune like fruit nuances. Cherry and tree bark, with notes of wood and spices abound.
Texture:
It shows excellent fruit intensity for a wine at this price level. It has a creamy center, but also shows aggressive pomegranate acid that bodes well for food. It is medium in weight, and feels like it is a wine you could quaff.
Flavors:
Great value red wine, rounded, with a lot of nice, ripe fruit and vanilla oak. There is a bit of a pleasant mineral edge going through it. With the cola, plum, and strawberry fruit, I just found this wine so easy and pleasant to drink.
Serving Suggestions:
Slightly chilled, cellar temperature, recommended by myself as well as the winery. Enjoy!
Grilled Fruit Marinade & Martini Fixin
Summer is still in full swing, and we have come up with another fun, refreshing, easy to make at home dish. It is a perfect accompaniment on your plate next to grilled meats or fish. You can use one fruit, or as many as you like.
After you marinate the fruit, save the leftover juice and ad it to a Martini.
I have listed below fruits that we have experimented with and got cool results. You can put them on a screen tray, and or make them with sticks, kebob style. When we did kebobs, we put a piece of prosciutto on the end to hold the fruit and add a bit of salt to all the sweetness.
Possible Fruits:
- Cubed or sliced watermelon
- Cubed or sliced cantaloupe
- Cubed or sliced Honeydew melon
- Cubed or sliced fresh pineapple
- Whole fresh strawberries
- Fresh peach, halved
For the Marinade:
- ½ cup of freshly squeezed lime juice
- ¼ cup of organic maple syrup or honey
- ¼ cup of extra virgin olive oil
- ½ teaspoon of red pepper flakes
- Pinch of salt & pepper
Method:
- Whisk the marinade ingredients together in a large bowl
- Add the fruit and toss, so all fruit surfaces engage in the marinade.
- Set aside for at least 30 minutes
- Grill at medium high heat until you get char marks, or the fruits start to become soft.
- Turn as necessary, and serve warm.
Gary Parker
September 2019