A Twirling Crystal Ball (2012 Predictions)

#200 – January 12, 2012

With your loyal support this week’s newsletter achieved another significant milestone for Yossie’s Wine recommendations – it is edition #200!  I wanted to take the opportunity to thank you all for your readership and hope you have enjoyed reading these weekly editions as much as I have enjoyed writing them (and tasting the related wines of course).  Just a quick reminder that I am also on Twitter where I post daily links to varied wine-related articles and other wine-related tidbits.  Please consider following me there as well @yossieuncorked.  As you will read below, I also anticipate a number of positive changes to my website over the coming year, many of which have been suggested by you folks and which I hope you find useful.  As always, I am very interested in any thoughts, comments or suggestions you may have to better this publication so feel free to contact me with any such suggestions.

Before we segue into some of my predictions for what 2012 will hold for the wonderful world of kosher wine and the potential impact such changes may have on our collective palates and wallets, a reminder that Royal Wine’s Kosher Food & Wine Experience (food before wine guys – really?) is rapidly approaching. The event will once again be held at Chelsea Piers, this year on February 13th. It’s an incredible annual event, offering the opportunity to taste the massive number of wines in Royal Wine Corporation’s portfolio, including some of the outrageously expensive ones you might not otherwise have opportunities to enjoy. The food component has grown in recent years and affords the ability to try the wares of many kosher food vendors, including some of the higher-end restaurants and caterers. For some folks the food component is the main draw (gasp) and it also provides welcome activity for spouses of wine-lovers who are not that interested in the wine. I attend every year and consider it money very well spent. For more information and to acquire tickets, click here. There are a number of discount codes floating around including a special one for readers of this newsletter: YOSSIE10. Use it to obtain $10 off each ticket (if purchasing multiple tickets enter the code once for each purchased ticket separated by a comma). There is also a corresponding event in LA that typically has fewer wines, winemakers and food vendors but has the added benefit of food catered by the incredible Chef Aarons at Tierra Sur. Coupon code YOSSIE will get you 10% off your tickets for the LA event. For more details/info check out the “Coming Events” page of my website.

As a follow on to newsletter #198 where I discussed many of the events and trends in the kosher wine world that occurred in 2011, this newsletter discusses some of my predictions as to the direction the world of kosher wines will be taking over the coming twelve months.  Obviously, many of these predictions are driven by the events of the prior year, with Daniel Rogov’s passing potentially having a huge impact over the next two years in many different ways.

Too Much Wine:  As interest has increased and sophistication of the kosher wine consumer has developed over the last few years, increased demand for quality kosher wines led many Israeli wineries to significantly increase the vineyard acreage under their control, increase their production and generally grow their operations (or open new ones). As discussed last week in depth, wineries also made substantial capital investments in anticipation of expected growth in the industry over the coming few years. The result of all this investment is a glut of wine for which I don’t believe there is sufficient demand either in Israel or abroad (which was the intended target of a significant portion of all this increased production). While I don’t anticipate this glut of wine to turn into the French “wine lake” of 2005 that resulted in 100,000,000 liters of AOC wine being distilled into ethanol, I do anticipate some shake-ups to the industry including some of the following:

(1) Prices:  One outcome of the capital expenditures has been an exponential increase in higher tiered wines with corresponding higher-end pricing (think about all the now near-annual single vineyard releases and Katzrin and Rom wines from the Golan Heights Winery). While the majority of these wines are truly delightful, I believe that the main pillar supporting the wineries’ exponential growth of new wines and their ability to charge high prices for said wines were the high scores of Daniel Rogov. While many (including myself) feel Rogov’s scores of Israeli wines were slightly inflated, as discussed in #198, his scores were obviously a huge factor in moving these wines (a bit more on this below in connection with scoring of Israeli wines by non-Israeli critics). While there are other wine writers who critique and score Israeli wines (see below), without Rogov’s high-scores and his tireless promotion, I think the market for these will substantially soften resulting in (i) a decrease of new high-end wines coming to market in the short-term (after the backlog through the 2010-2011 vintage clears out) and (ii) newer vintages of these wines will be held back until current releases sell out, creating a serious backlog. As an example and while more affluent and serious wine connoisseurs may find them interesting, there is no market for three single vineyard Merlot wines each year from the same winery when such wines are priced around $50 and are more-or-less made in the same style.

(2) More “Dumping” on the US Market:  Together with the fact that 2008 was a Shmittah year and less Israeli wines were exported, and 2009 and 2010 were less than incredible vintage years in Israel, I think we are going to see more dumping of Israeli wines on the American market at extremely reduced prices. A prime example of this phenomenon is what happened to the prices of Galil Mountain’s Yiron 2007 in the fall of 2011 where the price point was abruptly reduced by the winery (owned by the Golan Heights Winery) from slightly over $20 to $12. In Israel, where reducing prices would set unacceptable market precedent, it is important for the wineries to hold the line on pricing so they “dump” the excess abroad. While this is usually manifests itself in over-the-hill vintages being sold at fire-sale prices to make way for the next vintage to the detriment of the unsuspecting kosher wine consumer, it does sometimes yield a benefit to the wine consumer in the know (as in the case of the Yiron 2007). I expect dumping of both the good stuff and the nasty to continue and even increase in the coming 12-18 months as wines from the less then stellar 2009 and 2010 vintages need to be cleared out to make way for the substantially better 2011 harvest.

(3) More Wineries will become Kosher:  As we have discussed in the past, the primary factor behind the decision to “go kosher” in an economic one. With extremely limited exceptions, wine cannot be sold in Israeli supermarkets (where the majority of Israel’s wine is purchased) unless it is kosher and, despite the Israeli wine industry’s efforts to change this (see below), the primary market abroad for Israeli wines is the kosher market. For kosher consumers, this is a welcome change with the most recent additions to the list of such wineries including Tulip, Saslove and the famed Flam winery whose wines are arriving on our shores as we speak. As their economic situation worsens, more wineries will become kosher in an effort to save them from economic ruin; only some of them will be successful.

(4) Wineries Going out of Business:  Despite the romance of wine and the romantic notion of owning a winery, it is important to remember that a winery is first and foremost a business and a business needs to generate a profit; this will become increasingly difficult for many wineries over the next few years. While you don’t usually hear about wineries going out of business or being acquired by other wineries, this does happen and I expect an upswing in such unfortunate activity to increase over the next 24 months. I note that often a winery will simply cease producing wine but maintain its existence. If it owns vineyards, it will sell its grapes to other wineries for a few years and hope to rebound in the future.

(5) Fewer High-End Wines:  With the continued weakness in the global economy, the anticipated glut of wine and the increasing availability of quality kosher wines at decent prices, the higher-end and exorbitantly expensive so called trophy wines are going to be a hard sell. As a result, I anticipate a decrease in hyped launches of high-end, so-called Super Israeli wines and, partially resulting from the aspects of marketing Israeli wines worldwide discussed below, a renewed focus on producing quality wines at a sensible prices. Yet another boon to the consumer whose options for quality kosher wines around the $15 price range have decreased substantially over recent years.

(6) The Bigger Wineries will Flourish:  As more wineries feel the cash-flow crunch, the larger wineries will flourish. The larger and profitable wineries such as Carmel, Golan Heights, Barkan and even some of the mid size wineries with positive cash flows and substantial financial backing like Dalton have sufficient cash to continue their development, innovation and expansions even in troubled economic times which will enable them to emerge when things pick up stronger then ever. In the packed kosher wine market where the need to stand-out is paramount (see more on this below), if you take your feet off the marketing pedal for one minute you are going to be left behind which is what will happen to many of the smaller wineries.

New Wines & Wineries:  Lest you think that it will all be doom and gloom for the next couple of years, in order to maintain their competitiveness in our increasingly global economy there will continue to be innovation (albeit primarily by the larger wineries) in order to better compete with other growing wine regions around the world and to eliminate the immediate association of Israeli wine with kosher (more on that below). The result will be more experimentation with winemaking styles, techniques and new varietals. While adventurous Israeli winemakers will explore varietals from around the globe, I expect a focus on Rhone varietals and other grapes indigenous to countries and wine-growing regions with climates and terroir similar to Israel – look for Carignan, Petit Verdot, Cabernet Franc and Syrah to continue to flourish and for Grenache to start taking an increasingly important role. Given the problems associated with its transport and storage and the importance of the export market to the industry, I expect it to be a few years before natural wine finds a holding in Israel (if ever). Additionally, given the romantic and everlasting optimistic views of wine makers and lovers, new wineries will continue to crop up with new and exciting offerings. Pro-rata to the kosher wine industry as a whole, I expect most of these wineries to come from Israel but look for increasing number of kosher offerings from California, Spain, Chile, Argentina and France.

Wine Writing & Criticism:  In addition to the pricing issue discussed above, this is the area I believe that will be most impacted by Rogov’s passing over the next year or two for one very simple reason –for years Rogov was the be end all of Israeli and kosher wine critics with no exceptions or peers. Despite increasing attention paid to the Israeli wine market by renowned international publications like the Wine Spectator and the Wine Advocate, Rogov reigned supreme among the kosher wine consumers who are the primary market for Israeli wine outside of Israel. While there are additional respected wine writers in Israel, Rogov was clearly the most powerful and sole market-shaper. Another area in which Rogov stood alone was his publication of tasting notes for all the wines he tasted, positive or negative. Among others, I believe his passing will have the following impact on the world of wine writing for the kosher and Israeli wine industries:

(1) Rising Stars:  While Rogov’s advocacy for the local wine industry was massively influential in putting Israeli wine on the international map after a hiatus of nearly hundreds of years; I believe that his strong voice stifled the opinions of many others. In Israel and among the Hebrew press, there are number of other influential and talented wine writers but with few exceptions, there are very few English speaking individuals writing about Israeli or kosher wine on anything resembling a regular basis. While Mark Squires and other internationally acclaimed critics do review Israeli wines with growing frequency, none of them focus on Israeli wines. While they are slowly “learning” about Israeli wines and its unique terroir, I believe they still have a significant lack of understanding of the wines, wineries and the industry as a whole, which hampers their ability to effectively review and portray the wines. With Rogov gone and his incredible (and some say suspect) output simply irreplaceable, I believe the kosher wine consumer will seek alternate sources of information. This will result in the rise of multiple wine writers who will cover Israeli and kosher wines, providing a diversified yet knowledgeable view such wines. Initially many of these writers may not have the ability, knowledge or writing talent to be effective; however with time we will see many talented individuals stepping up to the plate providing us with a rich and diversified group of palates from who to learn.

(2) Conflict of Interest:  Despite the numerous complaints (some justified and some the standard jealous fare every top dog is subject to), Rogov was the only professional wine writer in Israel with no commercial ties to the wine industry, providing him with an unparalleled conflict of interest-free aura of legitimacy. It is the unfortunate reality of the Israeli wine industry that (and Rogov was the sole exception) it is currently impossible to make a respectable living from wine writing and therefore virtually all of the wine writers have commercial ties to the industry in one way or another which severely limits their effectiveness and impairs their objectivity. Hopefully we will see more writers stepping into the breach who are free of commercial ties that have the potential to limit their objectivity or, at the very least, provide a decent level of transparency to these potential conflicts of interest.

(3) Diversified Palate:  As has been the case with Robert Parker (whose influence is clearly on the wane), it is unhealthy for the palate of one to dominate an entire industry. While a gifted individual and a phenomenal writer, Rogov was still one person with one person’s palate and opinions. As current sources of information will carry less weight and authority than Rogov, I expect consumers start trusting their own palates again and to stop using the opinions of wine writers and critics as directives but rather as guides for finding new wines, learning about them and providing an educational aspect to their oenophilic tendencies, which is what the enjoyment of wine is all about.

Marketing:  As discussed in newsletter #198, with increased competition members of the wine industry (wineries, importers, distributors, retailers alike) continue to search for ways to stand out from the pack and are pouring increased resources into their PR and marketing efforts. An example of this is Royal Wine’s launch of the Israel Wine Producers Association initiative that is intended to help market the approximate 15 Israeli labels under their import umbrella. Another method is increased tinkering with labels. Here is some free advice to wineries – stop mucking with your labels! The name of the game is consistency – let the consumer know what to expect when he sees your label on the shelf. Changing labels every vintage or two is hurting you much more than helping. It is not a coincidence that two of the most successful and internationally known Israeli wineries make a limited number of wines and have not changed their labels since they were launched – Yatir and Castel (of course it helps that they both make great wine as well, albeit in completely different styles). As part of the marketing push, I believe we will see more and more Israeli wineries attempt to position themselves as Mediterranean wines (geography aside, it is going to take a whole lot of PR wizardry to have the world view Israel as Mediterranean and not Middle Eastern) and not kosher (as Carmel is doing overtly and many wineries are doing via a change in their style of winemaking like Recanati).

Popularity of Israeli Wines:  As the quality of Israeli wine continues to grow as a result of the better marketing referenced above, the increased quality and the continued efforts of the general wine world to explore new wine-growing regions, I expect the popularity of Israeli wines to continue grow, finding fans from around the world which will enable the industry to continue to grow, innovate and survive. I expect this to be driven both by increasing attention paid to the region by the international critics like Mark Squires, Jancis Robinson and Hugh Johnson among others, by the capable PR and marketing people at the individual wineries and by the new crop of wine writers. As I mentioned above, as wineries realize that their competitive Achilles Heel is price, I expect efforts to be made to reduce prices as well (whether this is possible given the high land, labor and kosher supervision costs remain to be seen), which will increase their competitiveness on a global scale.

Yossie’s Corkboard:  As I mentioned, I will be making a number of changes to my website – www.yossiescorkboard.com – over the coming months. While this newsletter will continue to provide exclusive content not available anywhere else, the website is going to start including additional content exclusive to the site, including a list of recommended wines only available in Israel, lists of wineries I recommend visiting in Israel and around the world with pertinent information, recommended retailers and some subscriber only discounts and potentially, tasting notes for many of the wines I taste that don’t make it into my newsletter.