WINE BUSINESS INSIDER - Zinfandel Advocates & Producers

WINE BUSINESS INSIDER
The Leading Source for Analysis of the Wine Industry
Cyril Penn, Editor
February 5, 2007 Vol. 17 No. 6 www.winebusiness.com
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Wine Business Insider
Published Weekly by Wine Communications Group, Inc.
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Editor: Cyril Penn
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Contributing Editors: Jim Budd, Mary-Colleen Tinney,
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Copyright 2007. All Rights Reserved.
Short passages may be quoted without permission if attributed
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Rosé, Single-Serve
Segments Picking Up
One of the hottest segments in the wine industry is rosé, and
that holds true in the sparkling wine and Champagne categories
as well. Anecdotally, Champagne houses and sparkling wine
purveyors report that rosé is one of the biggest sellers in their
portfolios.
“Rosés, for some reason, are on fire,” said Gary Heck, president
and owner of Korbel Champagne Cellars. “The color is fashionable right now, and consumers
like the taste of it. They think it’s sweeter—it’s the perception that it’s sweeter.
Maybe it’s the feminine side that they like.”
Others are also reporting strong interest in the rosé category. “Rosé, which is a niche
category in the universe of Sparkling wine, is growing by leaps and bounds in the last
few years,” said Xavier Barlier, vice president of marketing and communications at
Maisons Marques & Domaines, a marketing and import company that began as the
U.S.-based marketing arm of Champagne Louis Roederer. “My understanding is that
we are all pretty much sold out. We see that in rosé still wines, too, which we also
import from France. Sales have been absolutely booming.”
Eileen Crane, winemaker at Domaine Carneros, said that consumer perception of
blush wines initially haunted the rosé segment, but now it appears to be a selling point.
“Rosé anything in this country fell out of favor in the past; nobody wanted it. It somehow
connoted ‘cheap,’” she said. “But we’re well over that. Rosé still wines came back
into popularity, and cosmopolitans, the mixed drink, got really popular in the culture.
And, of course, pink has been a very fashionable color in clothing for the last several
years. People no longer feel that if they order something pink they are drinking something
cheap.” �
THIS WEEK’S TOP STORIES
Evans to Define 17-20 Virtuals the Right to Donate and Pour Wine . . . . . 2
Estimated 9,000 People Celebrate ZAP’s 16th Tasting & Festival . . . . . . . 4
Pernod-Ricard Launches Three Vines . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Yarraman Improves Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Antonin Rodet Acquires Maison Dufouleur Père et Fils . . . . . . . . . . . . . . 4
People . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
BULK WINE & GRAPE SALES
Selected Recent Sales of Grapes & Wines in Bulk . . . . . . . . . . . . . . . . . . . . . 5

February 5, 2007
Vol. 17 No. 6 2
Guerra agrees that the image of rosé has evolved as consumers
become more educated about the wine segment. “France has
been doing phenomenal rosés for a very long time, and people
who are real wine geeks know that,” said Guerra. “I think it’s
due to the evolution of our consumers in the U.S. that the word
rosé is now connected with attainable quality. It used to have a
bad feel about it, but now all of us are starting to educate people
that that’s absolutely not the case. We all like to believe
that whatever we love is not going to make a bad move, so
consumers are willing to go along with the winery’s direction.”
Korbel recently released a rosé packaged in a 187ml bottle,
capitalizing on two of the hotter trends in the category. “The
187ml category’s been on fire for us, and we just barely got
through the year without running out. It’s the same with rosé.
So, because they’re on fire, we’re coming out with a 187 rosé
that will be available for Valentine’s Day,” said Heck.
The single-serve 187ml market, though off
a small base, is up 10 percent in the 52
weeks ending January 13, 2007.
The single-serve 187ml market, though off a small base, is up
10 percent in the 52 weeks ending January 13, 2007. Overall,
the sparkling wine and Champagne category is up 4 percent in
that timeframe. According to Korbel, sales of their 187ml format
bottles, which are made in the traditional Champagne
method, are up by nearly 20 percent.
The Korbel Brut Rosé Champagne 187ml is sold as a four-pack
with a retail price of $14.99. Initially, the winery shipped 5,000
cases (six four-packs per case), and plans to add an additional
15,000 throughout the year.
Heck said that consumers are drawn to the single-serve format
despite higher costs. “The 187mls are more expensive to produce
and are not a good deal for the consumer. We’ve been
trying to get people to understand for years that you can keep
an opened bottle of Champagne for two days, but they just
don’t buy it,” said Heck. “I don’t think people really are paying
much attention to the price as much as the convenience. A single-serve
187ml bottle of Korbel is half what a full bottle costs.
That’s not a very good deal, but it is for the consumer if there
is a perception of zero waste.”
Because of the high costs of producing 187ml-format
Champagnes and sparkling wines, however, this category is
destined to be a very small segment of the overall market.
Several Champagne producers have targeted a subset of the
market by marketing the 187mls with straws, wristlet hangers
or other attention-grabbers, but growth there appears to be
limited.
“They are fighting for a share of the market. It’s not something
that the ultra-premium producers make,” said Crane. “It’s not
something that the people in the $15-$20 range make. While
there are those people who are making high-end single-serves,
they’re trying to capture a different market. Serious
Champagne drinkers are not buying the novelty 187mls. Those
are marketing to a younger consumer, I would guess.” �
—Mary-Colleen Tinney
WINE BUSINESS INSIDER
Evans to Define 17-20 Virtuals
the Right to Donate and Pour Wine
Donate your Cabernet to charity and go directly to jail is a wine
country paradox that 7th District Assemblywoman Noreen
Evans plans to resolve with her proposed legislation. She will
introduce a bill later this month to end the confusion over
whether virtual wineries—those without buildings—can donate
and pour their wines for the 300-plus non-profit charities in the
North Coast.
“My bill will be introduced before February 23 to give nonprofits
and virtuals a sense of the law and what is required of
them,” Evans said in a phone interview. “It’s not fair that virtuals
are being penalized for donating their wines to charity. My
legislation will try to redefine the law to allow virtuals to
donate and pour their wines. It will only narrowly modify the
present law by allowing the virtuals to do what many have
been doing for years, but weren’t aware it was illegal.”
Evans has scheduled a town hall meeting this Friday, February
9th, at 10:30 a.m. in the Community Room of the Napa County
Library at 580 Coombs Street, Napa. She wants input from her
district and urges everyone interested in the issue to attend,
including those from Sonoma County.
The issue came to a climax last May when a number of virtual
wineries donated and poured their wines at the Tiburon Wine
Festival. They were then cited by representatives of the ABC,
the state’s Alcohol Beverage Control department for not having
the proper license to donate their wines or pour them to
consumers at charity fundraisers.
Confusion comes from the fact that California has close to 100
licenses to control the production and sales of alcoholic beverages,
which is also regulated by the Federal government, as
well as the county and cities. Most favored treatment goes to
actual wineries with their own facilities (Brick-and-Mortar wineries),
and who operate under a type-02 license.
Virtuals generally operate under a combination type 17 and 20.
According to Matthew Botting, who is the ABC’s special council
for trade enforcement, a type 17 license allows a person to
be a wholesaler, and to have someone make wine for them. “It
doesn’t give them the right to make wine,” he said. A type 20
gives them an “off-sale” license and allows them to sell to the
public.

February 5, 2007
Vol. 17 No. 6 3
The usual approach is to have a brick-and-mortar winery (a custom
crush facility) provide the building, equipment, and staff to
produce, store and bottle the wine. The 17-20 licensee then
sells the end product. Some are growers with their own grapes,
while some must even source their fruit.
Barbara Insel, of MKF Research in St. Helena, completed a
study last year, which indicated that there are approximately
390 brick and mortar wineries in Napa County alone. She
believes that if virtuals were added to the list, the number
could more than double.
Three vintners appealed their citations and accepted a judge’s
five-day suspension over fines that approached $7,000. They
are Ken Nerlove of Elkhorn Peak Cellars, Claudia Sansone-
Hampton of StoneFly Vineyard, and Bill Wolf of Eagle Eye
Vineyard.
Nerlove gave his account of the Tiburon event: “ We were
pouring, and the people from the ABC showed up at the tasting,
took our pictures and checked licenses, and then gave
citations to all the virutals. They said we could pay a fine or file
an appeal. Some just paid, right off. I was told I could take a
suspension and close up for 15 days or pay a $7,000 fine.”
Nerlove, who produces about 1000 cases of Pinot Noir sourced
from his own 20-acre vineyard in Jameson Canyon, said the
citation was based on a 50 year-old law that few knew about
and is rarely enforced. “I’ve had my vineyard since 1983 and
have been donating and pouring at charity events for 15 years,
and this is the first complaint I’ve had,” said Nerlove
He said he understands that two wineries in Sonoma filed the
complaint. “I guess they don’t think we pay our dues because
we don’t have a building,” he said. “It’s just sour grapes. I’ve
always supported the industry. Some of these 02 wineries may
have a building, but don’t have a single grape of their own.”
Nerlove added: “Wineries have to get into the 21st century.
This is the age of the Internet, and every type of industry now
has virtual companies. The laws have to get on the same page.
Not everyone has to have a brick and mortar winery. Our
wineries help consumers and charities. They create competition.”
Nerlove’s wine is produced at a small winery in St.
Helena.
Claudia Sansone-Hampton of StoneFly Vineyards, who was also
cited at the Tiburon event, saw the incident as an interesting
learning experience for her and the hundreds of virtuals in
Napa County. “Everyone is learning from it,” she said.” When
you get your permit you’re not told that you can’t pour to consumers,
so you assume you can. The book they give you is so
thick, and everyone has allowed us to pour, so it never was a
concern. We’ve been doing this in the open for 12 years. No
one realized we were breaking the law.”
Sansone-Hampton said she doesn’t blame the ABC. “They’re
complaint driven, so they had to follow-up on the complaints.”
She said large wineries have large staffs and large budgets.
“This is the only way virtuals can offer their wines and let the
people decide. I wonder why some feel so challenged by us?
We’re such small operations.”
She and her husband, Robert, make a Cabernet Franc and a
Cabernet Sauvignon from their 1.5-acre vineyard on Hagen
Road. “We don’t have a brick and mortar winery, and I guess
we’re being punished for it. That doesn’t seem fair.”
Evans said she wants to streamline the process and is acting to
protect the interests of the non-profit organizations, as well as
the virtual wineries. “A number of nonprofits have called to
express their concern over the loss of these donations. One
called to say it had already cancelled its event. Others told me
they are thinking of canceling theirs. No one wants to see
these non-profits lose out on these people who have been
especially generous. And it would be sad to see these charities
lose such a valuable source.”
Evans said she and her staff have been meeting with the ABC,
wine executives and the Napa Valley Vintners to produce effective
legislation.
Botting concurred that his agency is working with Evans. “My
department has taken no position on this issue, but we are providing
technical assistance to help draft the language so that
its consistent and enforceable,” he said.
Botting admitted that enforcement of the present law has been
sketchy. “We have to work with limited resources, and put
them into high priority concerns, such as underage drinking.
Once we receive a complaint, we have to look into it. It’s still
the law.”
NVV repesentative Rex Stoltz said the association sees a need
for changes in the law that would benefit the nonprofits. He
said he has been in contact with Evans over these changes to
help virtuals donate to legitimate non-profit charities.
“The change won’t be a blanket ability to pour wine to consumers,
but only a chance to donate to and show their wines at
legitimate charities,” Stoltz said. “The NVV is in total support
of the proposed legislation and the direction Assemblywoman
Evans is taking at this time. This will allow non-profits to benefit
as a result. It’s a good compromise for the situation.”
Evans, who chairs the Select Committee on California wine,
agrees: “I’m very optimistic about its passage. After all, it’s the
right thing to do.” �
—John Intardonato
WINE BUSINESS INSIDER

February 5, 2007
Vol. 17 No. 6 4
Estimated 9,000 People
Celebrate ZAP’s 16th Tasting & Festival
An estimated 9,000 people attended the 16th Anniversary
Zinfandel Advocates & Producers Tasting on January 27 at
Fort Mason Center in San Francisco. 273 Zinfandel wineries
poured at least one wine each, with a total field of wines available
to taste approaching 550; the wines were primarily the
2004 vintage and barrel samples of the 2005.
A mariachi band greeted tasters at the entrances to the two
pavilions, embodying the theme “Viva Zinfandel!” Two lines, of
approximately 1,000 people each, formed in front of the two
pavilions before the tasting opened. More than 1,500 pounds
of international cheeses and 8,000 half-loaves of French
baguettes were consumed. More than 300 volunteers helped
keep the event proceeding smoothly. Zinfandel Advocates &
Producers has been told that this is the biggest single varietal
(wine) event in the world and possibly also the largest singlevarietal,
single-day wine event worldwide.
Each attendee received a commemorative wineglass (to use
and keep) as well as a baguette upon entering. Logo merchandise
and mixed cases of Zinfandels were available for purchase
as well. Water, coffee, cheeses, breads and fruits were available
throughout the two pavilions.
“The Festival was a smashing success and overall ZAP was able
to show the diversity of Zinfandels being made today,” commented
Justin Boeger of Boeger Winery and the president of
the Zinfandel Advocates & Producers Board of Directors. “We
heard over and over that we lived up to the theme ‘Viva
Zinfandel!’ We now know that the Festival is a way to demonstrate
how Zinfandel is such a unique grape and wine which
thrives in so many different California growing regions,” he
said.
“There is such a diversity of Zinfandel winemaking styles that it
keeps people curious and enthusiastic in returning every year
to the Festival,” continued Boeger. “The range of different
events also contributes to our success—what other wine organization
puts on four days of very different events which attracts
different people to learn about one varietal?”
In 2008 the 17th Annual Zinfandel Advocates & Producers
Festival will take place January 23-26, 2008. Visit www.zinfandel.org
for more information. �
Pernod-Ricard Launches Three Vines
To tie in with the annual Australian trade tastings in London,
Pernod-Ricard has launched a new range of three wines called
Three Vines within their Jacob’s Creek portfolio. As the name
implies, these wines (red, white and rosé) are a blend of three
grape varieties. The idea is that three classic Australian duo
blends—Sauvignon/Semillon (white), Shiraz/Grenache (rosé)
and Shiraz/Cabernet (red)—are made more subtle and more
“European” by adding another European variety that is less
universally known. For the white it is Viognier, for the rosé,
Sangiovese and for the red, Tempranillo. Three Vines will be
priced at £6.99 ($ 13.76) between the core Jacob’s Creek
range at £5.49 to £5.99 ($10.81-$11.79) and the Jacob’s Creek
Reserve wines, which are £7.99 ($15.73). However at the launch
event Pernod-Ricard indicated that they would be discounted
at £4.99 ($9.82), so it remains to be seen whether the discounted
price becomes the norm. Initially Three Vines will be exclusive
to the U.K. market, but in time it is expected that they will
be rolled out into Jacob’s Creek’s other major markets such as
the U.S. The Three Vines range is not expected to reach U.K.
retail shelves before June. �
Yarraman Improves Offer
Australian wine producer Evans & Tate said on February 2 that
it had received an improved offer from Yarraman Winery, Inc.
Under the new proposal, Yarraman is offering one of its shares
for 6.75 Evans & Tate shares. In the opening bid they offered
one to nine. The Yarraman bid now values the company at
$AU141 million ($109 million). This sum includes $AU97 million
($75 million) of debt. The offer closes on February 7. Shares in
Evans & Tate were suspended on February 2 until either the
opening a trading on February 6 or pending an announcement.
Yarraman started its surprise bid for Evans & Tate on December
21. The Evans & Tate board rejected the bid on January 12. �
Antonin Rodet Acquires
Maison Dufouleur Père et Fils
WINE BUSINESS INSIDER
Burgundian merchant and producer Antonin Rodet has bought
the wine brokerage business of Maison Dufouleur Père et Fils
based in Nuits-St-Georges in Burgundy’s Côte d’Or. The
Mercurey-based (Côte Chalonnaise) Burgundy Wine Group
Antonin Rodet was founded in 1875 and is a wholly owned
subsidiary of the Paris based industrial and services group
Sequana Capital. Founded some 400 years ago, Maison
Dufouleur Père et Fils sells wines from 70 different appellations
throughout Burgundy, as well as from the Beaujolais and the
Rhône Valley. As part of the deal Rodet have acquired the 10.5
hectares (25.94 acres) Domaine Barbier estate, which has vineyards
in Fixin, as well as Nuits-St-Georges. However, the 41
hectares (101.27 acres) of Domaine Guy Dufouleur, which has
holdings in Fixin, Nuits-Saint-Georges, Santenay as well as the
Hautes Côtes de Nuits, is not included in the deal, although
the estate has signed a contract to supply the new Rodet-
Dufouleur Group.
In a separate deal Rodet has bought Clos de Thorey, a 3hectare
(7.41 acres) Premier Cru estate also in Nuits-Saint-
Georges. This property, which is farmed biodynamically, used
to belong to Moillard. The first vintage under Rodet control will
be the 2006, to be released in 2008. �

February 5, 2007
Vol. 17 No. 6 5
People
Yves Bénard, the managing director for wines and champagne
at LVMH (Moet Hennessy Louis Vuitton), said that he has
been approached by the French minister of agriculture to
become the new president of the INAO (Institut National des
Appellations d’Origine). An announcement is expected soon.
Bénard would be replacing René Renou, who died of a heart
attack in South Korea in June of last year. Bénard is currently
co-president of the CIVC (Comité Interprofessionnel du Vin
de Champagne) and on the board of the INAO.
Christian Davis has relinquished the editor’s chair at Harpers,
the wine & spirit weekly, to become news editor for Drinks
International, part of the William Reed group, which is based
in Crawley, U.K. Davis was with Harpers for seven years. Zack
Goldring has been appointed as Harpers’ deputy editor and is
now acting editor until a new editor is found. Goldring has
been a freelance journalist for the past 10 years, although he is
new to the wine trade. Harpers is published by Nexus Media
Communications.
Lauren Laubster has been appointed as marketing and administration
manager for Wines of Chile U.K. She takes over from
Zanna Marr.
Christelle Guibert, Decanter magazine’s former tastings director,
has joined Waitrose as a communication and information
manager. Waitrose is the U.K.’s sixth largest supermarket chain
WINE BUSINESS INSIDER
SELECTED RECENT SALES OF GRAPES & WINES IN BULK
Courtesy of Turrentine Brokerage, the leading broker of premium grapes and wines in bulk, 415-209-WINE (9463),
www.turrentinebrokerage.com. Individual sale prices vary widely due to quality, barrel age and other special circumstances.
W I N E S Year Appellation Gallons Sale Price Per Gallon
Cabernet Sauvignon 2005 Napa Valley 10,000 $18.00
Chardonnay 2006 Russian River 19,000 $14.00
Merlot 2005 Sonoma Carneros 6,900 $8.00
Chardonnay 2006 Monterey County 13,000 $7.25
Zinfandel 2005 California 6,000 $6.00
G R A P E S Year Appellation Tons Sale Price Per Ton
Cabernet Sauvignon 2007 Oakville 75 $2,200
with around 3.7 percent of the grocery market and is a part of
the John Lewis Group.
Marie-Christine Tarby was elected president of Vin & Société,
the French wine lobby group, at their annual general meeting
on January 31. Tarby, from Arbois, succeeds Xavier Carreau,
who owns Château de Barbe in the Premières Côtes de Blaye
near Bordeaux.
Angela Mount, the long-serving wine buyer for U.K. supermarket
Somerfield, is leaving the company at the beginning of
March. Somerfield is number five in the U.K. supermarket
league with around 5.5 percent of the U.K. grocery market.
Mount, who has been with the company for 15 years, is famous
for having her taste buds insured by Somerfield for £10 million
($19.49 million).
Alex Anson, the trading director of the Thresher Group (a U.K.
wine merchant chain), is leaving to become European buying
director for Nuance, the Swiss based airport, ferries and inflight
travel retailer based in Zurich, Switzerland. His replacement
at Threshers will be Lloyd Stephens, who is currently
Gallo’s U.K. sales director. Stephens will join Threshers at the
end of January.
Julie Buckley and Claire Illingworth have been promoted to
wine buyers for Oddbins, the U,K, wine merchant chain owned
by the French Castel group. �