Battle for the Bottom

(Originally published May 2009)

It’s been noted many times over of late that people are “trading down” and foregoing the purchase of more expensive wines in favor of inexpensive alternatives. Hanes can anecdotally concur with this as any wine store he has worked in of late, or even visited as a customer, has plenty of dusty bottles sitting around with $50+ prices tags on them. Just about the same can be said for bottles over $30 but those are typically on shelves low enough for the staff to periodically dust.

Allowing for this, what interests is analyzing the fight for market share among sub-$20 bottles and, more importantly, sub-$15 bottles. Australian wines continue to languish on the whole, the bloom seems entirely off the rose here. Only on rare occasions can domestic wines “kill” under $15, whereas alternatively there’s many recommendable wines between $15 and $20. France and Italy offer a few things here and there but the weak dollar continues to hurt pricing and “the market” still seems to perceive these wines as representing less bang for the buck, either believing the product has to be average at best to be priced at $15 or no one knows what the grapes are.

Which kind of brings us to the cheapie fave of recent years, Argentinean Malbec. Starting around the 1999 to 2000 vintages Malbec started to make a big splash as a credible inexpensive (like $8.99 inexpensive) wine that consistently over-delivered, plenty of fruit, no “weird” flavors, and all this with some modicum of structure. Since then Malbec has become the signature grape of Argentina and if you ask most casual wine drinkers they might be shocked to learn that Malbec is originally a French grape. Shocked. In any event, the United States is Argentina’s numero uno export market for Malbec and the amount of wine shipped here has grown just about every year.

The situation for Malbec is so rosy that the classic mistake is being made. Now, Malbec producers want to be, shudders, “taken seriously.” That means phrases like the ever-lame “world class wine” get bandied about and the wines see more new oak, get more fruit intensity and color extraction. and, naturally, the prices rise.

Now, don’t get Hanes wrong, there’s still a good amount of under $10 Malbec wines out there and new producers come along now and then to fill the void at the bottom of the food chain. But most of the established brands are either pushing $15 a bottle or getting close to $20. For our purposes here, Hanes is ignoring the “high end” Malbecs which were always created to appeal to the Cali Cab drinker and not the value customer. So, what’s the “new Malbec”?

All signs seem to be pointing towards Spanish Garnacha. Garnacha is the Spanish name for Grenache, a grape known primarily as the backbone of Southern Rhône wines and many from the Languedoc/Roussillon area as well. Grenache from the United States and Australia have some popularity but the prices can be steep, usually starting over $20. Spanish Garnacha, however, is almost always rock bottom cheap and appeals to the denuded American palate with oodles of berry fruit and close to no acidic or tannic structure. Now, before anyone gets too testy, there are some more complex Garnacha wines out there. A few. But basically this is the new tidal wave of cheap fruit-driven wines washing across the vast land we call America. Customers are swiftly getting over the unfamiliarity of the grape name (“tell ’em it’s Grenache”) and the prices are undercutting many Malbec wines as well as many Australian Shiraz wines (Yellowtail and such excluded).

Similarly to the “critter” labels and brand names that helped popularize Shiraz, many of the Garnacha wines have “fun” labels or at least are easy for the casual customer to read and assess. And, opposed to many Malbec wines which lend themselves better to the dining table, once you taste a customer on some Garnacha there’s a high probability they will walk out of the store with a bottle or two.

Again, pricing is key and unless the lower tier Spanish regions such as Yecla, Calatayud, Navarra, Campo de Borja, Tarragona, Montsant or Cariñena start jacking up the prices of their wines, there’s no reason to believe that Spanish Garnacha won’t earn more market share among sub-$15 and sub-$10 bottles. The market share of Australian Shiraz seems unlikely to regain past breadth while Malbec could win some market share back but probably won’t due to the Argentinean wine industry maturing and becoming more corporate (i.e., more profit needed for shareholders and general need to increase ROI among the delivery channel players). Chile, ehh. They had their chance. Portugal? Not likely, just too many foreign sounding grapes and many of the wines (even the cheap ones) are not as simple and straightforward as Spanish Garnacha. South Africa can’t produce the quantities needed to flood the market and create awareness of a certain type of wine (“Spanish Garnacha”) over a specific brand name. Spanish cooperatives and large farming operations can crank out production numbers usually reserved for the plonk Shiraz gushing out of Riverina, Australia.

The way retail sales are shaping up these days, Garnacha is what’s groovy. Get onboard before the Spaniards want their wines to be taken seriously!