Virginian Andy Beckstoffer Inspires WU Audience to Follow Napa’s Example

Apr 02

The most memorable speech and inspiring wine-related speech that I, or perhaps anyone in the audience has heard, was given by renowned independent grape grower and vineyard owner Andy Beckstoffer, during the keynote lunch at Wineries Unlimited on March 11th.  Beckstoffer summarized the major developments that had transformed Napa Valley from a sleepy agricultural district 50 years ago to the most well-known wine producing region in the U.S. today.

Prior to the luncheon event, Beckstoffer spoke on a grower panel, explaining how he developed the formula tying grape tonnage prices to the final cost of a bottle of wine (100 times the bottle price should equal price per ton). “Generally, in agriculture the grower wants to overproduce and the processor wants to underpay.  Our scheme eliminated that.  Everyone worked for maximum quality in the grapes and the wine and for effective marketing.  This brought an increase in wine quality.”

Beckstoffer deftly summarized other major developments in the evolution of the wine industry in Napa Valley, which he pointed out was only 50 years old at most; “In 1970 the price per ton for cabernet sauvignon in Napa Valley was less than the price for the Napa Gamay variety.”

The world economic crisis of late brought “trouble to paradise,” he noted, adding that all U.S. producers face the dual threats of cheap imports and “American” labeled wine which regulations currently allow to contain up to 25% imported wine, which he urged the audience to join him in petitioning for a change to the TTB.

However, Beckstoffer concluded his address on a positive note for Eastern producers. He observed that the new Millennial generation “couldn’t care less” about what their parents drink, though they are promising wine consumers. “It’s a brand new world and East Coast wines have as much chance as anyone.  I can hear a Pennsylvania-born Robert Mondavi saying just that today!” Beckstoffer concluded by declaring “the main ingredient for a successful wine future, whether in California or here, will be an entrepreneurial spirit.  Wines from the American East Coast could rival import sales in the U.S. and that would be wonderful for all of us.  It’s up to you!  California will likely always be the major player, but there is a larger spot for Eastern U.S. wines [in the market] if you want it.”

Beckstoffer’s speech, used by permission

MARCH 10, 2010

I’d like to thank the Vineyard and Winery Management magazine, which I do read, very much for inviting me to speak to you today and you for coming to listen. I am honored and delighted to be here. One thing that you should know at the beginning is that while I live in California, I am a Virginian, born and bred, married to my childhood sweetheart from Richmond, Virginia. I should also tell you that I am a graduate of Virginia Tech. That is, however, not the reason that I know of Bruce Zoecklein and respect his work here. I further know that the father of the American wine business was Mrs. Jefferson’s boy, Thomas. He probably never heard the word “California.”

When Richard Leahy asked me to speak here, he didn’t specify what I was to talk about. He only gave me the conference theme “Balance of Costs and Quality for profits.” More direction, however, came from friends who said that they were coming to hear how California did it. How we get all the publicity and all the high ratings and prices for our wines. I don’t pretend to know your viticulture or even your business in any detailed way. Since I spoke earlier this morning at the panel discussion about quality, cost, profit AND OUR GRAPE PRICING FORMULA, I would like to take my time now to talk about the bigger California picture. I would like to tell you a story of California wine history in a way that will hopefully challenge you to create a better story of your own.

The California story is not unlike the story of a great vineyard. The total equals more than the sum of the parts. But an understanding of the parts can help attempts to repeat it.

It wasn’t until 1967 THAT dry table wine sold more volume in the U.S. than sweet wines. So, any modern California story can start there less than 50 years ago. In 1969 I participated in the acquisition of United Vintners and its major brand, Italian Swiss Colony. We felt at the time that United Vintners revenues were equal to Gallo’s (we could not get reliable data on the family-owned Gallo) because UV’s product mix was more weighted to the higher-priced dry table wine while Gallo’s total volume was somewhat higher. Paul Masson and Almaden defined the premium table wine business. There were 30 wineries in the Napa Valley, but only six– Beaulieu Vineyard, Inglenook, Louis Martini, Charles Krug, Christian Brothers, and Beringer–had any business to speak of.

In 1970 Gallo bought 50% of the grapes produced in the Napa Valley. In 1970 the price per ton for Cabernet Sauvignon in Napa Valley was less than the price for the Napa Gamay variety. Today Italian Swiss Colony no longer exists. Paul Masson an Almaden are jug wines. Two of the six top wineries—Inglenook and Christian Brothers–no longer exist as Napa Valley wines. Charles Krug is not a major super-premium player. Gallo is about the only guy left standing. Beaulieu Vineyard belongs to the giant Diageo and is no longer considered in the top rank. Louis Martini belongs to Gallo and Beringer to Foster Brewing from Australia. None of these brands are really part of today’s story of high-scoring, high-priced, extreme quality California wines that some now feel define Napa Valley, Sonoma, and the best wines of California.

So, what happened in California? Whatever it was, it happened while many of us here were around. This is not a story about something that happened 2,000 years ago in a foreign land.

First, it must be said that California has a unique climate and the soils to produce quality winegrapes. Napa Valley and the coastal areas are particularly blessed with a Mediterranean climate: warm days, cool nights with adequate rainfall. This climate exists in only 7 regions of the world.

Second, different from Europe’s fine wine business, in California modern vineyard and winemaking technology was allowed to blossom. California had the academic institutions, U.C. Davis, Fresno State COLLEGE, Cal Poly at San Luis Obispo, to train the new scientists and managers. Then there was Andre Tchelistcheff and other older vineyardists and winemakers who accepted us graciously and were only too willing to share their knowledge and experience.

GRAPE GROWING IS A BUSINESS AND WE ORGANIZED FOR STRENGTH, ANALYTICAL ABILITY, LEADERSHIP AND A UNITED FRONT FOR A GROUP OF INDEPENDENT ENTREPRENEUR FARMERS. In 1975 we founded the Napa Valley Grapegrower Association to enhance the social, economic and political status of grapegrowers. Through this organization the grape farmers began to demand a seat at the table. The focus on vineyards and sustainability had its start!

A disaster hit the Napa Valley in 1989. The modern phylloxera infestation ruined 95% of Napa’s vineyards. That was turned into an expensive but major opportunity by the Napa vineyard owners. Combating phylloxera required new rootstock but the Napa vineyardists replaced not only the rootings but also the scion woods, the vineyard spacing, the trellis systems, YIELD EXPECTATIONS, and most vine manipulation and irrigation schemes. The replanting was complete by the mid 1990’s and a new age of grape and wine quality began around 2000. Napa Valley took on a new leadership role in the world of grape and wine quality. The $100 per bottle wines began to appear with the 2002-2004 vintages, as the ripe flavors and high alcohol of the new wines fit the palate of James Laube and Robert Parker. All those great soils, bright young minds, AND GROWER ORGANIZATION cannot prevent a natural disaster, but the human spirit can turn it into an opportunity.

California has a youth culture where people expect us to do things first. The sunshine, the movie stars, the history of Americans going West to seek their fortune can be very energizing; can demand that you try something exciting. demand That you not just take up space on the earth. In agriculture winegrapes hold a special place. As someone said, “No one ever got laid over an apricot!” Basically it was an entrepreneurial spirit that manifested itself in the wines as well as in Silicon Valley.

Then there was Robert Mondavi. Up until sometime in the late 1970’s or early 1980, the major Napa Valley icon was Andre Tchelistcheff, a production man, and the major California marketer was Ernest Gallo, a standard wine producer. Then came Robert Mondavi and the Napa Valley and California wine business was never the same again. Bob did a couple of things. His first mission was to say that drinking wine was healthY. The California Wine Institute fought him on this out of concern for product liability. In 1980 America experienced the “tobacco suits” when the producers of cigaretts were ravaged by lawsuits and the “evils of tobacco.” We were holding our breath awaiting the same assault on the sins of alcohol and wine. In 1991 CBS and 60 Minutes aired “The French Paradox.” Soon thereafter the U.S. Health people produced the Nutritional pyramid with wine as a healthful food. The California wine Institute picked that up, embraced Robert Mondavi’s mission, and wine became a health food and not a “sin.” Bob then said that wine was part of the good life, and our wines were as good as the Europeans. He talked a lot and he traveled a lot.

We promoted quality, and vineyards, and vineyard history and focused on the location of our vineyards, their appellations—whether it be California or Napa Valley. Today there are no vintners in the Napa Valley. they are all “winegrowers.” We couldn’t promote our sub- appellations such as Rutherford or Oakville without saying Napa Valley as well. our family owns some quite famous vineyards: To Kalon, Dr. Crane, AND VINEYARD Georges III. Those vineyards could not so well know if not located in a proven vineyard area. It would not be credible for a great vineyard to exist in a viticultural wasteland. A rising tide lifts all ships. Ten years ago the best Napa Valley wines were “Reserves.” These were winery blends of different vineyard grapes. The program emphasized the skills of the winemaker. Today the top wines are “vineyard designates” with emphasis on the vineyard’s contribution to quality. CALIFORNIA WINES ARE AGRICULTURAL PRODUCTS– NOT PRODUCTS OF SOME CHEMICAL MANUFACTURING PROCESS.

Wines were and are sold and tasted in every kind of store in California. Clothing stores sell wine in California! Sometime around 1980 the Napa Valley Vintners, which had been a men’s luncheon society, hired an Executive Director, began to get serious, and soon became a major marketing force for California wines with Napa Valley at its head.

For the finest, wine prices began to rise and we tied the price of grapes to the final retail bottle price. Generally, in agriculture the grower wants to overproduce and the processor wants to underpay. OUR scheme eliminated that. Everyone worked for maximum quality in the grapes and the wine and for effective marketing. This brought an increase in wine quality.

Up until the mid 1970’s the French Chateau owners were primarily responsible for determining wine quality and vintage ratings. The wine tasting in PARIS IN 1976 and “the Judgment in Paris” changed all that. Robert Parker and James Laube did not come onto the scene until the mid 1980’s. fortunately for all of us, the main wine critics now spoke English and lived in America. All of this came together and inspired hundreds of young viticulturists and winemakers and entrepreneurs to emphasize quality in their history, vineyards, grapes, and wine and TO CHANGE CONSUMER PERCEPTIONS AS MUCH AS TO SATISFY EXISTING ONES and to market aggressively.

Before I leave this I would like to mention one item of concern to us all: the American Appellation. Today federal labeling laws allow wines with an “American Appellation” to contain up to 25% foreign wines. Today there are few wineries using the appellation, but with the current global wine supply situation and cheap labor and government support overseas, it could become a major threat to the integrity and profitability of our business. The California Association of Winegrape Growers (cawg) in conjunction with the New York Wine Grape Growers Association, and the Oregon and Washington Association of Wine Grape Growers, has filed a petition with the TTB to eliminate this foreign component. I strongly urge you to become more knowledgeable about this situation and request your local organization to join us in this petition.

Now, in 2010, there is AGAIN “Trouble in Paradise!” The U.S. and world economic collapse started in 2008. Many of the $100 wines that had never earned the right to make that charge have faltered. During the post-phylloxera planting rush many Napa lands that should not have been, were planted. The resulting grape and wine quality has brought us the $14 Napa Cabernet that PERHAPS diminishes the “Napa” brand franchise. The world is beginning to criticize california’s high alcohol, high pH wines as not complimentary to food and potentially lacking ageability. The new Millennium generation could not care less about what their parents liked in wine!

Is there anything in that story that could not happen here on the East Coast or that doesn’t provide opportunity in 2010? There are 70 million millennium American young people aged 16 to 33 arriving on the scene and they are experimenting with wine early. They have little respect for history and their parents’ tastes. They can be viewed as a threat to California and an opportunity for you. Perhaps the major winemaking company in the world, Constellation, is a New York company. Why are they concentrating on California? It’s a brand new world and East Coast wines have as much chance as anyone. I can hear a Pennsylvania-born Robert Mondavi saying just that today!

Imported wines are really inroads into our wine business. We in California are concerned about imports and we should be concerned about you. Their climate and soil in many places are arguably no better than yours. You have access to all of the technology. Students from the East Coast attend California schools. The main ingredient for a successful wine future, whether in California or here, will e an entrepreneurial spirit. Wines from the American East Coast could rival import sales in the U.S. and that would be wonderful for all of us. It’s up to you! California will likely always be the major player, but there is a larger spot on the Eastern U.S. wines if you want it.

One comment

  1. Terry Semmel /

    Andy better recognize that VA is producing some better reds than Napa. I’ve tasted them. Tim Fish better recognize too.

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