Gold Standard

Written by Mike Stepanovich

Some years back, I was talking with Gary Eberle, the genial owner of Eberle Winery in Paso Robles, about why he enters wine competitions. He told me: “Only five percent of the people who come into our tasting room have ever heard of Robert Parker [considered America’s preeminent wine critic]. Only twenty percent have ever heard of the Wine Spectator [wine magazine]. But everyone understands a gold medal.”

In this recessionary era, how else does one explain the influx of top-end Napa Valley wineries into the competitions? It used to be that you could increase your odds of success in the wine business just by having “Napa” on your label. Not true today.

First, other California wine regions are excelling, offering great wines, a good experience, and better prices, witness Sonoma County, Paso Robles, Monterey County, Santa Barbara County, Temecula, Sierra Foothills, Lodi, Madera County, and Lake County, among others. The California wine experience is now virtually unlimited, and “wine country” can be found from the Oregon to the Mexican borders.

Second, a proliferation of varietals new to California has caught consumers’ attention. Wineries in different parts of the state are looking for grape varietals that will distinguish them and that are well suited for their regions. Napa, and to a lesser extent Sonoma County, is the benchmark for Cabernet Sauvignon. That, of course, is not to say that other areas can’t or don’t grow good cabernet, it’s just that the wine-buying public perceives Napa as the standard. So Paso Robles, for example, has turned to Rhone varietals—Syrah, Grenache, Mourvedre, Viognier—to make a name for itself, and has been successful. Calaveras County has embraced the Spanish varietal Tempranillo and is doing a good job with that.

Santa Barbara County has focused on Pinot Noir and Chardonnay. Third, wine is a discretionary buy. Despite wine lovers’ insistence that we need wine, the vast majority of consumers don’t, and in recent years that has showed. Across the state, tasting room sales were off 30 percent or more in 2009 (a grim year on many fronts), and vintners told me that while people still visited the tasting rooms, instead of walking out with six-pack carriers or cases, they’d leave with one or two bottles—if that. Sales have improved somewhat, but are nowhere near pre-recession levels. Common wisdom became if you were listing wine for $25 or less, you were still selling; above that, likely not.

Recent news reports have said the price point has dipped further, to the $15-$20 range, but the good news is that wines in that range and lower are beginning to enjoy increased sales.

This poses a conundrum for high-end wines. They can’t really lower their prices much without sacrificing brand perception, but to justify their prices they need verification that their wines are worth it. How do you do that? Enter a wine competition and win some gold medals. Are all, or even a majority, doing it? Nope, but it’s interesting to see that some are.

To be sure, the wine competitions are suffering the recession’s effects as well: entries at competitions where I judge are down across the board. After all, it costs money to enter competitions—entry fees are typically $75 to $100 per entry.

When the recession hit, the first wineries to reduce their entries to competitions were the large corporate wineries. The wineries consistently entering competitions remain the smaller wineries for which the results are essentially their annual marketing campaign. If you don’t win anything, no one is the wiser; you’re just out your entry fee. Win a gold medal, and your sales reflect it.

In the 2011 wine competitions, Napa Valley scion Cakebread Cellars earned gold medals for its classic Napa Valley 2008 Cabernet Sauvignon ($61; all prices listed are suggested retail, though you should be able to find wines for less at retail outlets), and 2008 Napa Valley Merlot ($54) at the recent Pacific Rim International Wine Competition. The Merlot also was named “Best Merlot” at the San Diego International Wine Competition.

Likewise, St. Supery Vineyard & Winery in Napa Valley has done well at the 2011 wine competitions. At Pacific Rim, it won four golds for its 2006 Dollarhide Ranch Limited Edition Napa Valley Cabernet Sauvignon ($85; it also scored platinum at the Monterey Wine Competition), 2007 Elú Napa Valley Meritage ($65), 2009 Estate Sauvignon Blanc ($35), and 2009 Virtú White Meritage ($25). The 2007 Estate Cabernet won gold at Monterey. In fairness, St. Supery has been a long-time competition entrant, so it’s good to see them continue in bad times.

The historic Charles Krug Winery won gold medals for its 2008 Napa Valley Vintage Selection Cabernet ($69) and 2008 Napa Valley Merlot ($23) at San Diego. Frank Family Vineyards earned gold medals for its 2007 Napa Valley Cabernet ($45) at Pacific Rim and Monterey, 2007 Rutherford Reserve Cabernet ($85) at Pacific Rim and San Diego, 2009 Carneros Pinot Noir ($57.50, Pacific Rim and Monterey), and 2008 Napa Valley Zinfandel ($36, San Diego). And ZD Wines won gold medals at San Diego for its 2009 Carneros Pinot Noir ($45) and 2009 Carneros Reserve Chardonnay ($55).

I have listed the suggested retail prices for these wines, with the parenthetical note that consumers should be able to find them selling for less in retail outlets. How is this possible? It’s due to the three-tier system widely used in the United States since the repeal of Prohibition. Typically, wineries sell their wine to a distributor at what is known as FOB, or “free on board,” a term denoting the transfer of goods from seller to buyer. The FOB price is 50 percent of suggested retail. The distributor turns around and sells the wine to a retailer at “wholesale,” or about two-thirds of retail. The retailer is free to sell the wine at whatever price he or she feels the market will bear, quite often less than suggested retail.

With these wineries’ success, will more high-end wineries enter the competitions? Perhaps a few more will, but I don’t expect a big influx. Books such as Julia Flynn Siler’s The House of Mondavi, and James Conway’s Napa have provided ample testament that Napa has become a playground for the wealthy, with prices to match. I think most high-end wineries will continue to rely on Napa Valley’s cachet to sell their wines. It’s another part of the conundrum because while winning gold medals may confirm that $75 or $85 wines are good, it also confirms that $5 to $25 wines are good.

Consider Rutherford Ranch Wine Co., and Round Hill Winery, both in Napa Valley, owned by Bakersfield’s Marko Zaninovich family. Their 2008 Cabernet Sauvignon ($19) and Merlot ($18) won gold medals at San Diego, and 2009 Chardonnay ($16) and Sauvignon Blanc ($15) won silver medals at Pacific Rim and San Diego. The 2010 Round Hill “Oak Free” Chardonnay ($12) won gold at Pacific Rim. These wines are consistent medal winners.

And value-priced wines continue to prove you don’t sacrifice quality for price. Barefoot Cellars, Beringer’s Founders Estate, Charles Shaw (yes that Charles Shaw), Fetzer, Glen Ellen, flipflop, and Napa Creek have all won multiple gold medals this spring for cabernets, pinot noirs, chardonnays, and other varietals selling for $10 or less.

Article appeared in our 28-3 Issue - August 2011