Brandy is Dandy (if Liquor is Quicker)

What happens when you distill the pulp, skins, and stems left over from wine making?

You get grappa.

What happens when you take wine and distill it?

You get brandy.

(Side note: eau de vies are brandy-like distillates that are made from non-grape bases)

Brandy etymologically comes from shortening the Dutch word brandewijn, whose root words mean “burned wine.” The distilling process brings the 10-15% ABV wine up to around 40% ABV. Brandy is oftentimes aged in use wine or spirits barrels (back at the distillery we used old bourbon barrels to age the small batch of brandy we made). There are four age classifications for brandies:

-V.S. (very special): means the brandy is aged at least two years

-V.S.O.P. (very superior old pale): means the brandy is aged at least four years

-X.O. (extra old): designates brandy aged at least six years

- Hors d'âge (beyond age): for cognac, this is equivalent to X.O., though for Armagnac, this designates an age of ten years or more

While brandy has historically been made in the Old World, California brandies are gaining popularity. The nice thing about brandies is that you can find well-aged products at prices that won’t break the bank—oftentimes much less expensive than whiskey with comparable age statements. 

One great value California brandy is Osocalis Rare Alambic Brandy: at $45, the brandy is aged at least 6 years, is made with Colombard and Pinot Noir grapes, and has notes of stewed fruit, chocolate, and spice.

If you’re looking to spend a bit more, at $72, Germain-Robin Coast Road Reserve contains juice aged at least 9 years, with some of the blended brandy as old as 20 years. They distill their California grapes in a still from an abandoned distillery in Cognac (which is pretty cool).

Long story short, if you’re keen on seeing what happens to wine if you heat it, cool it, and age it some more, pick up a bottle of brandy next time you’re at the store.

Rosé on the Rise

Numerous posts on this blog and articles across the web have cited the growing popularity of rosé, especially in the United States. To add a little data to the consumption trends, I looked at Google search trends.
 


This graph shows U.S. searches for rosé and white wine over the past five years. There are several interesting points about this graph. The first point is the annual spike over the holidays: Thanksgiving and Christmas/New Years generate a substantial increase in traffic. This was true across all alcohol search terms that I observed.

Another interesting element to the graph was the cyclical nature of rosé. There's a clear spike in the summer months, which becomes increasingly apparent from 2015 onwards. White wine, by comparison, has a far less visible seasonal change. Summer 2017 showed enormous growth for rosé, handily outdoing the search presence of white wine.

These metrics don't paint a perfect picture: obviously searching for a wine is not equivalent to drinking it. Other consumption metrics are likely more reliable. However, the last piece of data that I found interesting was Google's correlate tool, which identifies the search terms that are highly correlated with others. For example, the search term "winter" is highly correlated with "men's ski." The results for "rose wine" were as follows:

Some of these make a ton of sense (cooler bags! parks!) while others are totally bizarre (air mattress pump?) but the list was pretty entertaining overall. I have a working theory that corn is primarily consumed in the summer by both people and dogs at barbecues where rosé is served, but would love to hear other ideas that could be driving that list.

Happy searching!

Southern Grows

We talk a lot about tipping points in business school: the moments when you’ve won the market. The market seems to be trending towards a tip since the 2016 merger between Southern Wine and Spirits and Glazer.

Southern Glazer’s Wine and Spirits now distributes over 150 million cases of wine and spirits each year. With nearly 400,000 customers, they generate nearly $18 billion in revenue—representing over a third of the market value. Unicorns at a value of $1 billion are the talk of the town in Silicon Valley, but clearly there are other markets where growth isn’t slowing.

I’m curious about how suppliers and retailers feel about this huge conglomerate. On one hand, distribution in 44 states provides a huge potential value for producers, who can more easily garner access to new markets. Cutting out the quantity of middlemen in the process generally makes the system run more efficiently.

However, the challenges of working with such a large (21,000 person!) corporation are also obvious: retailers and suppliers have to deal with bureaucracy, inefficiency, and potentially less personalized service. Additionally, there’s a practice of big wholesalers predominantly pushing the large brands with deep pockets//huge advertising budgets, to the detriment of the smaller labels. As a result, it may prove challenging for a more boutique winery to work with Southern Glazer.

The merged company is so large that it has geographic divisions (Transatlantic, Coastal Pacific, etc) as well as vertical divisions (Fine Wines, Emerging Spirits Brands). The question becomes whether the whole is greater than the sum of its parts.

The rapid growth of SGWS brings into question the future of smaller distributors. I’m curious to see if anyone in today’s class presentations proposes any new distribution methods….

Cork'd: Crossroad for Growth

At year-end 2009, a few months after the relaunch of Cork'd, the Company stood at a critical junction for growth. It has gained more traction in attracting new users, thanks to increased level of media coverage including TechCrunch and WSJ, but customer engagement was lacking and even decreased in the period, with fewer comments posted and lower user month-to-month stickiness. Meanwhile, the website continue to lag in user experience and offerings due to limited cash generation / injection and its historical roots. To sustain its growth and survive in the long run, Cork'd needed to aggressively focus on enhancing user experience and differentiating itself to create a loyal, active user base.

The success of Cork'd's business model is predicated upon the capability to capture a sustainable and engaged user base. It makes money from wineries signing up for annual membership (and potentially partnership with online retailers when individual users buy wines), which naturally competes with each other and importantly don't generate much utility for the individual users. Therefore, winning individual users is not only important for creating the network effect within the user base, but a critical mission to provide value for Cork'd's "customers" - wineries who pay the annual fees.

When Cork'd relaunched, it was already at a weak and defensive position vis-a-vis its core competitors. Due to inactivity during the revamp period, Cork'd has lost some of its most active users to other platforms. Though they have some willingness to come back, Cork'd faced an uphill battle to regain their favor - its competitors had differentiated, niche offerings to the wine aficionado. Unless Cork'd can create compelling value for users, it will not be able to gain a foothold in the market.

Therefore, I think Cork'd needed a fresh injection of capital in order to survive after 2009. It needed to hire more engineers to upgrade interactive features for the individual users, and need to spend more to acquire active, contributing users who have positive impact on user retention. Meanwhile, it should aggressively explore partnership opportunities with online retailers to broaden offerings, both to generate additional revenue streams and to complement the user experience with online shopping opportunities. If the embattled Cork'd could not break through its current limitations and rejuvenate its dwindling user engagement, it would be very difficult for the Company to survive.

Death Cab(ernet Sauvignon) for Cutie

If there's one thing I've learned about music and alcohol industries, it's this: People. Love. Mash-ups. Wine + cheese, wine + chocolate, wine + coffee, Ed Sheeran + Beyonce, Iggy Azalea + whoever will give her work. The more surprising the pairing, the more people want to give it a shot. So, when I saw an article about the mash-up of wine + music...I HAD to know more.

It turns out that music can actually change your perception of food and drink, according to research by a professor at Somerville College in Oxford. I am a big fan of food and drink as an experience for all five senses and simultaneously believe that music has the unique ability to evoke certain emotions and thoughts almost involuntarily. Thus, to hear that pairing these two sensory experiences can create positive spillovers that are even more intense is (dad joke incoming) music to my ears.

In fact, vineyards have been recommending pairings of wines with various tasting notes with diverse musical genres, from classical to alt rock, for quite a while. Prosecco + Ella Fitzgerald, Cabernet Sauvignon + Bob Dylan. But for those of you top-40 connoisseurs (present company included), never fear! Here is another article that recommends 6 wines and has a Spotify playlist for each. And here is one that includes some of the wineries we've encountered and discussed in class, like Charles Krug.

I CANNOT wait to try this mashup at my next wine-and-dine event. Grab a bottle and come embark on this alcoholic, auditory journey with me!

Source: https://www.theguardian.com/lifeandstyle/2017/jan/12/wine-pairing-with-music-not-just-with-food

Sour Grapes & Fake Unicorns

What do a luxury wine fraudster and maverick entrepreneur have in common?

During Christmas break last year, my family and I watched a riveting documentary on Netflix called Sour Grapes. It detailed the rise of Rudy Kurniawan, a rich Indonesian wine-collector focused on Burgundy, who spent millions of dollars on wine and sold them through, among others, renowned auction house Acker Merrall & Condit. Acker asserted that many of these wines had been authenticated by "some of Burgundy’s most discerning connoisseurs."

*SPOILER ALERT* Astute collectors and wine experts began discovering false vintages among the wines they'd purchased from Rudy. The FBI opened an investigation, eventually raided Kurniawan's house and uncovered a large-scale wine fraud operation, with fake vintages from renowned producers like Domaine Ponsot Clos Saint-Denis. Rudy had collected empty bottles, refilled them with cheaper wine and forged labels - duping collectors out of millions of dollars. He was taken to court, convicted and ultimately sentenced to 10 years in jail.

While the story itself was interesting, what I found most fascinating was how easily everyone in the upper echelon of the wine-collecting community was fooled by the charismatic fast-talker. To be fair, he did have a sensitive palate and had trained himself to taste wines correctly in order to gain entry into this exclusive club of luxury wine collectors (including movie producer Arthur Sarkissian). However, it is remarkable to me that once he was in the "club" and had established a certain reputation of being a generous, smooth-talking big-spending connoisseur, the other oenophiles just openly accepted him and didn't think to probe his claims too deeply...until it was too late.

I perceive this story as not so different from the dynamics between VCs and entrepreneurs here in Silicon Valley. As an entrepreneur, once you've attempted at least one venture (particularly one in a hot "buzzword' space like machine learning or blockchain), regardless of how it went, you will attract VC attention. And if you've had even a modestly successful track record, investors will be knocking on your door in their search for the next unicorn. While this approach has led to shining success stories like Amazon, AirBnb and Uber, it has also allowed a litany of scam artists and liars to take advantage of the ample capital and goodwill in the space.

This is not to say that the startup funding and growth model is broken, or that VCs should take a page from their PE brethren and only invest in sure bets. Doing that would severely cripple the astounding innovations we as a society are capable of achieving. But the Valley is in need of a more robust character evaluation process. It's not just quality of idea, breadth of experience and depth of grit that matter in entrepreneurs; their inherent moral compasses are also crucial in scaling and steering their businesses. By being more diligent in a ethical evaluation of the entrepreneurs they back, investors may miss out on a few good investments (good ideas with good execution by morally-poor founders) but will not be left in the lurch by a fraudster. Better to whine about sour grapes than be left with no wine at all.

Source: https://en.wikipedia.org/wiki/Sour_Grapes_(2016_film), https://www.entrepreneur.com/article/295304

Cold Brew Red Wine

Yes, it exists. 

Sometimes when you try a deep cabernet sauv you can get hints of coffee. But Apothic has taken things a step further by creating a coffee-infused red wine. According to the reviewer, "The blend has a very strong coffee aroma, but it tastes more like red wine with hints of chocolate than your straight-up morning cup of joe. It has a nice finishing hint of cold brew, though, and it's very enjoyable." 

And it's available starting April 1st. Would you try it? 

https://www.cosmopolitan.com/food-cocktails/a19417467/apothic-cold-brew-wine/