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A column that appears in the September 2010 edition of Meininger's Wine Business International
Are you an artist or an artisan? The question is one that needs to be carefully considered by anyone in almost any kind of business today. The difference
between these two similarly honourable human activities is quite fundamental. Artisans make things like tables, chairs, clocks, glasses and rugs. They may use artistic skills to render these items aesthetically pleasing, or they can adopt utilitarian designs that place function above form. In either case, however, whatever they produce has, to use the modern jargon, to be fit for purpose.
Tables and chairs usually have four legs of equal length because most customers reject wobbly furniture. Another essential quality expected of artisans is consistency. Even when they are blowing glasses by hand, they still have to produce a set of goblets that are almost identical.
Artists march to the beat of a very different drum. Their task is to express themselves and their personal perception of the world around them. An artist might quite legitimately make a chair out of ice cream cones on which no one could actually sit. Or a clock whose hands never move. Crucially, he or she is rarely expected to explain or defend the artworks they have conceived. These are supposed to speak for themselves - if they have something to say — and it is up to viewers to develop our own understanding of them, possibly with a little help from a well-informed critic.
I’d like to suggest that almost every commercial activity can be more or less pigeonholed into one of these categories. Michelin-starred chefs are artists (though they have to maintain a certain measure of consistency); the cooks in most humbler restaurants are, however, artisans. Most of us would prefer a taxi driver to be an artisan; his job, after all, is to get us from one place to another as efficiently a possible. And the same might be said of authors of factual books, whereas novelists and poets are artists. Journalists are allowed the occasional poetic phrase, but they are as obliged to respect the facts of their stories as carpenters are to create chairs that can withstand the weight of an average human being.
Now let’s look at the world of wine. Most winemakers, even when they are at the helm of enterprises turning out tens of thousands of cases of wine, instinctively consider themselves to be artists, and openly reject many of the characteristics associated with artisanship.
Consistency – unless the wine in question is non-vintage Champagne – is usually treated with disdain. Winemakers take pride in the variation between vintages and, in an astonishing number of cases, are still happy to accept the random oxidation and occasionally mouldy character that inevitably accompany the use of natural corks. The very idea of wanting to iron out vintages is dismissed as “industrial”.
When winemakers talk about the need to “educate” consumers about grapes and regions, it is eerily reminiscent of artists’ calls for more art appreciation courses. European winemakers’ reluctance to provide informative back-labels or main labels that reveal the grape variety used to make the wine, or its sweetness, recall a painter refusing to disclose the meaning of his or her “opus one”.
Art and wine classes are obviously a good thing – for people who choose to take them and absorb their contents. But art, for most people, is probably a mass-produced poster that cheers up an empty bit of wall. And wine is a liquid they enjoy drinking without the expenditure of too much thought.
Winemakers who look down on this kind of attitude should perhaps take the time to look around their own homes. How many of the things by which they are surrounded are the work of artists, and how many conform to more artisan rules?
Does the hand-knitted sweater in the cupboard reveal the nature of the fabric from which it has been made and how ir should be washed? Does the single-estate oliveoil come with recommendations of how long it should be kept? Do the covers of the book on the bedside table include a description of the nature of the story within and a few words about the author?
Someone once bluntly said in response to the suggestion that a bottle of wine was an artistic masterpiece, “If I want art, I’ll buy a painting”. Maybe that was going a little too far, but is it too much to ask for winemakers to accept that they might possibly have more in common with a chair maker or a cheese maker than a sculptor.
Thursday, January 06, 2011
Is the UK the wine world's Afghanistan?
A column that appears in the December 2010 edition of Meininger's Wine Business International
The notion of the unwinnable war is far from new. The difference today, since the later days of the Vietnam war and the beginning of hostilities in Iraq and Afghanistan, is that it has become acceptable to talk about unwinnability without automatically being accused of wanting to demoralise the troops. There is a parallel with business. In wars and sporting encounters, it is customary to grit one’s teeth and fight until the bitter end. In the world of making, buying and selling, however, it is acknowledged that, when the numbers cease to add up it is quite proper to sell up or close down. In recent weeks, the biggest example of this kind of acknowledgment has been the decision by Constellation Brands to sell its Australian and UK operations to a Sydney-based private equity group. The sale, and its financial implications are significant. The US giant paid AU$1.85bn for these businesses in 2003; today, it is offloading 80% of its shares in them for a mere AU$290.
With admirable understatement, Rob Sands, Constellation’s chief executive described the sale as “tidying up” its portfolio in the face of "challenging market conditions." It is no coincidence that brands like the Canadian Jackson-Triggs, and Inniskillin, New Zealand’s Nobilo and California’s Robert Mondavi and Ravenswood were not subject to this kind of early spring cleaning. These, of course, are labels with a successful record in the US, while the brands that were sold all depended heavily on the UK.
Constellation is far from alone in feeling disenchanted with the British wine market. The renaming by Foster’s of its historically UK-focused wine business as Treasury Wine Estates and its hiving off have widely been seen as a prelude to a sale. Pernod Ricard also set up a separate fine wine division in 2010, giving rise to rumours that it might sell off Jacob’s Creek and Brancott Estate, the New Zealand brand that was formerly known as Montana. The French firm may indeed be intending to hold onto these brands, but there are certainly questions about how committed it is to the UK market. The renaming of Montana, after all, was driven by the need to make the brand more palatable to US consumers who were unready to buy Sauvignon Blanc they thought came from a sparsely-populated state in the north of their country.
If Pernod Ricard is not pulling out of Britain, it is certainly pulling back from the games UK retailers have asked it to play. Along with the similarly disenchanted Gallo Family Estates, it has made it clear that loss-making discounting is not an activity it wishes to pursue. And if this means losing market share, so be it.
Diageo, the other giant of the wine world, has wisely, consistently and revealingly, declined even to try to sell its premium US wines in Britain. Instead, it has restricted its vinous efforts there to Piat d’Or and Blossom Hill: non-regional products with low production costs.
So, is the simple conclusion that the British wine market, for the moment at least, has become the Afghanistan of the wine world? Is it the market where the battles are too costly and thoughts of capturing hearts and minds now seem to be too ambitious?
Or is there a bigger question? Was Philip Bowman right when, as CEO of Allied Domecq, he openly wondered whether ownership in the wine business was really more appropriate for families and cooperatives than for investors looking for short- and even mid-term returns. The spirits business is far from easy, but it ticks many more boxes for anyone watching quarterly and half-yearly results. Scaleable major brands can be launched and built, and value can be added to them in ways that winemakers can rarely dream of. Just think of Hendricks gin and Grey Goose vodka. Of course many fail - as do many films - but the hits succeed so much more dramatically than any wine. The week that brought news of the Constellation sale also brought an announcement from Brown Forman that it was ready to offload its Californian Fetzer and Bonterra wine businesses. These are not Australian brands retreating from being battered by UK retailers; they’re US brands selling in North America.
I wish the private equity buyers of Hardy’s et al well, but I wonder how much fun they are really going to have with the extravagant Christmas present they have bought themselves.
The notion of the unwinnable war is far from new. The difference today, since the later days of the Vietnam war and the beginning of hostilities in Iraq and Afghanistan, is that it has become acceptable to talk about unwinnability without automatically being accused of wanting to demoralise the troops. There is a parallel with business. In wars and sporting encounters, it is customary to grit one’s teeth and fight until the bitter end. In the world of making, buying and selling, however, it is acknowledged that, when the numbers cease to add up it is quite proper to sell up or close down. In recent weeks, the biggest example of this kind of acknowledgment has been the decision by Constellation Brands to sell its Australian and UK operations to a Sydney-based private equity group. The sale, and its financial implications are significant. The US giant paid AU$1.85bn for these businesses in 2003; today, it is offloading 80% of its shares in them for a mere AU$290.
With admirable understatement, Rob Sands, Constellation’s chief executive described the sale as “tidying up” its portfolio in the face of "challenging market conditions." It is no coincidence that brands like the Canadian Jackson-Triggs, and Inniskillin, New Zealand’s Nobilo and California’s Robert Mondavi and Ravenswood were not subject to this kind of early spring cleaning. These, of course, are labels with a successful record in the US, while the brands that were sold all depended heavily on the UK.
Constellation is far from alone in feeling disenchanted with the British wine market. The renaming by Foster’s of its historically UK-focused wine business as Treasury Wine Estates and its hiving off have widely been seen as a prelude to a sale. Pernod Ricard also set up a separate fine wine division in 2010, giving rise to rumours that it might sell off Jacob’s Creek and Brancott Estate, the New Zealand brand that was formerly known as Montana. The French firm may indeed be intending to hold onto these brands, but there are certainly questions about how committed it is to the UK market. The renaming of Montana, after all, was driven by the need to make the brand more palatable to US consumers who were unready to buy Sauvignon Blanc they thought came from a sparsely-populated state in the north of their country.
If Pernod Ricard is not pulling out of Britain, it is certainly pulling back from the games UK retailers have asked it to play. Along with the similarly disenchanted Gallo Family Estates, it has made it clear that loss-making discounting is not an activity it wishes to pursue. And if this means losing market share, so be it.
Diageo, the other giant of the wine world, has wisely, consistently and revealingly, declined even to try to sell its premium US wines in Britain. Instead, it has restricted its vinous efforts there to Piat d’Or and Blossom Hill: non-regional products with low production costs.
So, is the simple conclusion that the British wine market, for the moment at least, has become the Afghanistan of the wine world? Is it the market where the battles are too costly and thoughts of capturing hearts and minds now seem to be too ambitious?
Or is there a bigger question? Was Philip Bowman right when, as CEO of Allied Domecq, he openly wondered whether ownership in the wine business was really more appropriate for families and cooperatives than for investors looking for short- and even mid-term returns. The spirits business is far from easy, but it ticks many more boxes for anyone watching quarterly and half-yearly results. Scaleable major brands can be launched and built, and value can be added to them in ways that winemakers can rarely dream of. Just think of Hendricks gin and Grey Goose vodka. Of course many fail - as do many films - but the hits succeed so much more dramatically than any wine. The week that brought news of the Constellation sale also brought an announcement from Brown Forman that it was ready to offload its Californian Fetzer and Bonterra wine businesses. These are not Australian brands retreating from being battered by UK retailers; they’re US brands selling in North America.
I wish the private equity buyers of Hardy’s et al well, but I wonder how much fun they are really going to have with the extravagant Christmas present they have bought themselves.
Plus ça change
A column that appears in the October 2010 edition of Meininger's Wine Business International
A lot can happen in two years, and much can change beyond most of our imaginations. 24 months ago, we were all told that politics and the way we spend money had changed for good. A black man had been elected to the Presidency and ushered in a time of hope. Faced with the threat of imminent collapse in the banking, motor and other industries, all the talk was of a permanent end to partisanship and a move towards collective efforts to get America back on track.
On other pages in those same newspapers columnists picked over the bones of one of the most obvious and predictable victims of the recession. Conspicuous consumption, they declared, was dead. At a time when countless people were wondering whether they would still have a job or a house, it was no longer appropriate to be dazzling your entourage with a $10,000 handbag, or a $1,000 bottle of wine. But even when good times returned, we would handle our disposable income differently. Paradigms, we were told, had shifted. We were moving into a period of more considered consumption and of sustainability.
Fast forward to the eve of 2011. Millions of voters seem, for reasons that remain opaque to many beyond their shores, actually to hate their president and see an appeal in some of the undeniably eccentric candidates of the Tea Party.
A similar revival has been seen in the realm of conspicuous spending. Two years ago, many in the publishing world openly wondered how long the Financial Times could continue to publish its glossy international ‘How to Spend It’ supplement. Where would the advertisers come from? Who would want to read about hedonistic ways to spend thousands of dollars?
Today, the magazine is packed with advertising for watches, art, cars and clothes and a digital version was launched this year with the help of a £2m ($2.9m) advertising campaign. The presence of all that advertising is explained by the remarkable recovery in the sales of luxury goods.
A study by US analysts Bain & Co on behalf of Fondazione Altagamma, the Italian association of luxury producers has revealed an extraordinary recovery between 2009 and 2010. Sales of watches, jewelry, leather goods and designer clothes dropped by 8% in 2009 - less than one might have expected - but last year they have surged back by an estimated 10%.
Bain’s figures are supported by the results declared by luxury brand owners such as LVMH and Richemont, owner of brands such as Cartier, Dunhill and Mont Blanc. Sales for the five months until August 31 2010 by the latter company rose by 37 percent. Obviously China accounts for much of this growth, but not as much as you might suppose. Richemont’s sales rose by a dazzling 51% in Asia Pacific - but an even more impressive 52% in the Americas.
Many - probably most - members of the wine world viscerally dislike the notion of a bottle of wine as a luxury item. For them, it is an agricultural artifact - a piece of terroir - or a food or an artwork. Or a combination of these. What it should not be is something people buy in order to show off their wealth. To read the comments by some European wine critics, the very idea of the $1,000 bottle is absurd, if not actually obscene. Chateau Lafite gained little applause from these writers for cannily exploiting its Chinese success by adding a gold figure ‘8’ to the label of its 2008 wine.
Looked at rationally, however, the $1,000 bottle is no more crazy than the $10,000 handbag, the $100,000 watch or the $250,000 car. The only difference is that the makers of humbler cars, watches and bags seem to be rather more comfortable with the situation than their counterparts in the vineyards and cellars. It’s time for the wine industry to wake up to reality. Many of us might balk at paying mad prices for fermented grape juice, just as many of us might shake our heads in disbelief at the readiness of US voters to support political candidates from another planet. But my guess is in some form or other both are here to stay. Some of the wine professionals who learn to give luxury buyers what they want may actually fare better than those who are currently struggling to offer value for money.
A lot can happen in two years, and much can change beyond most of our imaginations. 24 months ago, we were all told that politics and the way we spend money had changed for good. A black man had been elected to the Presidency and ushered in a time of hope. Faced with the threat of imminent collapse in the banking, motor and other industries, all the talk was of a permanent end to partisanship and a move towards collective efforts to get America back on track.
On other pages in those same newspapers columnists picked over the bones of one of the most obvious and predictable victims of the recession. Conspicuous consumption, they declared, was dead. At a time when countless people were wondering whether they would still have a job or a house, it was no longer appropriate to be dazzling your entourage with a $10,000 handbag, or a $1,000 bottle of wine. But even when good times returned, we would handle our disposable income differently. Paradigms, we were told, had shifted. We were moving into a period of more considered consumption and of sustainability.
Fast forward to the eve of 2011. Millions of voters seem, for reasons that remain opaque to many beyond their shores, actually to hate their president and see an appeal in some of the undeniably eccentric candidates of the Tea Party.
A similar revival has been seen in the realm of conspicuous spending. Two years ago, many in the publishing world openly wondered how long the Financial Times could continue to publish its glossy international ‘How to Spend It’ supplement. Where would the advertisers come from? Who would want to read about hedonistic ways to spend thousands of dollars?
Today, the magazine is packed with advertising for watches, art, cars and clothes and a digital version was launched this year with the help of a £2m ($2.9m) advertising campaign. The presence of all that advertising is explained by the remarkable recovery in the sales of luxury goods.
A study by US analysts Bain & Co on behalf of Fondazione Altagamma, the Italian association of luxury producers has revealed an extraordinary recovery between 2009 and 2010. Sales of watches, jewelry, leather goods and designer clothes dropped by 8% in 2009 - less than one might have expected - but last year they have surged back by an estimated 10%.
Bain’s figures are supported by the results declared by luxury brand owners such as LVMH and Richemont, owner of brands such as Cartier, Dunhill and Mont Blanc. Sales for the five months until August 31 2010 by the latter company rose by 37 percent. Obviously China accounts for much of this growth, but not as much as you might suppose. Richemont’s sales rose by a dazzling 51% in Asia Pacific - but an even more impressive 52% in the Americas.
Many - probably most - members of the wine world viscerally dislike the notion of a bottle of wine as a luxury item. For them, it is an agricultural artifact - a piece of terroir - or a food or an artwork. Or a combination of these. What it should not be is something people buy in order to show off their wealth. To read the comments by some European wine critics, the very idea of the $1,000 bottle is absurd, if not actually obscene. Chateau Lafite gained little applause from these writers for cannily exploiting its Chinese success by adding a gold figure ‘8’ to the label of its 2008 wine.
Looked at rationally, however, the $1,000 bottle is no more crazy than the $10,000 handbag, the $100,000 watch or the $250,000 car. The only difference is that the makers of humbler cars, watches and bags seem to be rather more comfortable with the situation than their counterparts in the vineyards and cellars. It’s time for the wine industry to wake up to reality. Many of us might balk at paying mad prices for fermented grape juice, just as many of us might shake our heads in disbelief at the readiness of US voters to support political candidates from another planet. But my guess is in some form or other both are here to stay. Some of the wine professionals who learn to give luxury buyers what they want may actually fare better than those who are currently struggling to offer value for money.
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