The Road to Grapeness : California Wineries Pour Their Efforts Into Building Reputation Overseas
Crichton Hall Vineyard sits atop a rise off the beaten path in Napa Valley, down a dead-end lane and up a dirt drive that winds between rows of hillside vines. It has no tasting room and leases space at another winery to make its 5,300 cases of Chardonnay, Pinot Noir and Merlot.
But its pint-size presence in Northern California’s storied wine country belies its magnum-size aspirations in Europe, where last year Crichton Hall sold 30% of its production.
“Europeans like the idea of small, specialty wine producers,” said Richard Crichton, the British-born former investment banker who owns the winery with his wife, Judith Hall Crichton. “What is a disadvantage here becomes a positive advantage in Europe.”
Throughout California’s winemaking regions, vintners small and large are going to costly lengths to build markets in such far-flung locales as Thailand, China, Hong Kong, Sweden, Singapore, England--even France, the land of Burgundy, Bordeaux and wine snobs.
The value of American wine exports, more than 90% of them from California, soared 23% last year to $242 million, according to the Wine Institute, a trade group in San Francisco. That is seven times the value shipped 10 years ago. Customers overseas sipped 38.8 million gallons of U.S.-made wine in 1995, up from 7.3 million gallons in 1986.
The robust growth in exports demonstrates that, 20 years after California wines beat out French rivals at a now-legendary tasting in Paris, they are gaining world-class cachet in the international arena--particularly in London, home to such influential wine critics as Jancis Robinson and Hugh Johnson.
Indeed, the United Kingdom last year surpassed Canada as the No. 1 export market for U.S. wine.
“The export market is becoming a more and more important part of each winery’s total marketing plan,” said Joseph Rollo, director of the Wine Institute’s international department.
That’s a good thing for wineries seeking a high profile to help them endure for the long haul, industry observers say.
“If they’re not looking to exports, they will miss the boat,” said Stephen Brauer, vice president of marketing for Seagram Classics Wine Co., the premium-wine division of Seagram Co.
The export surge is only part of a bigger international picture. Like other industries, the wine business is becoming increasingly global. A leader in the movement is Robert Mondavi Winery, which in partnership with Philippe de Rothschild’s family began selling the pricey Opus One in 1984 and recently joined forces with Vina Errazuriz to import that Chilean company’s wines and to jointly produce a line of Chilean premium wines to be introduced in this country in September. Other California wineries also are hooking up with winemaking partners in South America and Europe.
Importing, exporting and joint ventures all help wineries make bigger names for themselves and establish beachheads from which to expand. They also aid in balancing out the vagaries of a cyclical, unpredictable industry. During the recent U.S. recession, for example, when wineries found themselves with a glut of better wines, export sales helped buoy Crichton Hall.
In the last two years, grape shortages--exacerbated by vine-killing pests and rough weather--have combined with rising demand for premium wines to produce tight supplies and higher prices. Wineries now are parceling out squeezed inventories to loyal customers and, in many cases, to new accounts overseas.
Brauer noted that the United Kingdom has become the single largest market for Seagram’s Mumm Cuvee Napa, a sparkling wine. Wines from the company’s Sterling Vineyards in Calistoga, Calif., are in such short supply that exporting is not a major strategy. But, Brauer said, it makes sense to “supply important customers overseas for the visibility of California.”
Despite California’s national fame as a wine producer, in Europe it is still considered the new kid on the block. Like other U.S. businesspeople, savvy vintners realize that success in the “global village” can mean gallivanting for weeks at a time and spending years winning over often-skeptical clients.
Jack Cakebread, owner of Cakebread Cellars in Rutherford, Calif., and self-described “road warrior,” left San Francisco in early May for a grueling, seven-week tour of seminars, trade fairs, dinners and tastings in London, Hamburg, Frankfurt, London again, Singapore, Hong Kong, Tokyo, New York, Grosse Pointe, Mich., Calgary and Banff.
“It is hard work--and expensive,” Cakebread said. “This is a long-, long-, long-term prospect. You must be patient.”
Helping propel some wineries into other nations is a controversial federal export-assistance program, called the Market Access Program, that matches money spent to advertise wines overseas. The paperwork-intensive program tends to benefit big players such as E&J; Gallo (by far the largest exporter, accounting for roughly one-third of the nation’s exports) and Robert Mondavi Winery, which already have deep pockets for promotion.
*
Smaller wineries such as Crichton Hall say they benefit more from participation in trade tastings and trade fairs sponsored by the Wine Institute or groups such as the Napa Valley Vintners Assn. Crichton Hall also got a boost in April, when its 1992 Chardonnay became the first California wine to be featured on the first-class wine list of feisty Virgin Atlantic Airways.
Exports might look like a drop in the barrel contrasted with last year’s nearly $5 billion in suppliers’ sales of wines for U.S. consumption (which translated into more than $12 billion at retail). But the contribution of an export program to a winery’s image is substantial, if difficult to quantify, vintners say.
To be sure, Crichton noted, pitfalls await when vintners venture overseas. Traveling within Europe can be costly, and it takes a number of years to develop close relationships with distributors. In times of oversupply in the United States, some U.S. wineries unload wine at sharply reduced prices on overseas markets, making it tough for small fry like Crichton Hall to compete. Currency fluctuations once cut Crichton’s profit margins in half in Holland.
Even so, wineries seem inclined to stick with their effort to raise the world’s consciousness of California wines and ensure that customers can find them in upscale hotels, restaurants and shops in Rome, Oslo or Bangkok.
“We could sell all of our wine in America, and it certainly would be easier and less expensive,” said Richard Ward, a general partner in Saintsbury, a Napa winery that sells a big chunk of its 50,000 cases in 16 foreign nations. “But on the other hand, we think it’s important.”
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
U.S. Wine on a Roll
In the last decade, the value of U.S. wine exports, more than 90% of them from California, has increased nearly sevenfold. In 1995, Britain surpassed Canada to become the leading foreign market for U.S. wine.
Top export markets for U.S. wine in 1995, millions of dollars
Britain: $59.9
Canada: $53.8
Japan: $32.5
Switzerland: $13.2
Netherlands: $9.4
Germany: $5.4
Belgium: $4.8
Taiwan: $4.6
Denmark: $4.6
Hong Kong: $4.2
Source: Wine Institute
