Monday, April 22, 2024

Some (new) notes on Rudy Kurniawan and his activities

Rudy Kurniawan is a well-known name in the wine industry, especially in the USA. He was born in Indonesia, but he attended California State University (Northridge) from 1998, and so became integrated into American society. Sadly, he then became a well-known wine forger, and was sentenced to 10 years’ imprisonment in 2013, then being released in 2020 and being returned to Indonesia.

However, it seems to me that some of the numbers cited with regard to his original case do not add up sensibly; and I discuss here some notes from one of my correspondents that might shed some light on the matter.

Rudy Kurniawan

Kurniawan apparently acquired a taste for fine wine in c. 2000, and became a purchaser of old and expensive bottles. Indeed, by the end of 2006 we he was reported by The Los Angeles Times ($75,000 a case? He’s buying) like this:
Kurniawan’s outsize taste for old wine, however, has changed the market, say auction house insiders. Since he started buying, prices for rare wine have skyrocketed. As he stepped up his acquisitions in 2004, a dozen other ultra-rich buyers emerged to compete with him for the best bottles. And the market for old wine exploded.
Not bad for a recent migrant. The newspaper article further notes:
It was at a birthday dinner honoring his father at a restaurant on San Francisco’s Fisherman’s Wharf just before he died that Kurniawan took his first sip of fine wine — a 1995 Opus One, the most expensive wine on the list at $150 a bottle. The restaurant is long forgotten, he says, but after that first taste, wine became a consuming passion.
Some of Rudy's discarded fakes

Turning now to the scale of his nefarious activities. Most commentaries tend to be sensationalist, and therefore quote dollar amounts, like $150 million, for the amount of fake wine involved. Few articles have looked at the number of bottles. The best of them is: Running the numbers on Rudy’s fake wines. This article translates the dollar amount as 70,000 bottles, and questions whether this is even feasible in the 10 years available.

Obviously it is not feasible, but nor are some of the other numbers bandied around. For example, the 2016 Sour Grapes documentary notes at the end: “It is estimated that there may be as many as 10,000 of Rudy’s bottles still in private collections”, while The Globe and Mail review of that documentary (Caper-tale doc explores a world of greed, wine and money) suggests 40,000.

Let’s do some basic maths. Even the most wildly optimistic estimate might suggest that Rudy spent 30 minutes to create a fake bottle of wine — from sampling the fraudulent wine blend for verisimilitude, creating the fake front and back wine labels using his laptop computer and digital scanner/printer, marking up the cork, and affixing the “correct” looking capsule. That’s only 2 fake bottles per hour of time, perhaps three.

So, 10,000 bottles equals 5,000 hours. A 40-hour week yields 125 full weeks of doing little else than bottle wine. Is this likely?

My correspondent in answering this question is Bob Henry, a wine consultant based on the west coast of the USA.* He comments:
I knew Rudy fairly well. We first met when he would hang out on weekends at Pasadena Wine Merchants, near Caltech. I managed the wine bar on Fridays and Saturdays; he visited and sampled. He later joined my wine-tasting luncheons here in Los Angeles, each based on a “theme”.
He liked to drink and eat and have long conversations about the finer things in life. He hated actually “working”. I can’t see him having created that many fake bottles of wine. Rudy is many things, but having an indefatigable “work ethic” to crank out tens of thousands of fake wine bottles is not one of them. He liked to party very late into the night with his wine friends (not me), and then sleep in late.
An Opus One line-up

Bob (a former administrator for one of the leading law schools in the U.S.A.), and his friendly acquaintanceship with Kurniawan, should not, of course, be misconstrued as him condoning any of Rudy's nefarious deeds.

Anyway, one of the wine-tastings that Bob mentions above is especially worth looking at here (see the table below). Bob continues:
Rudy attended many of my organized wine-tasting luncheons here in Los Angeles. His participation preceded his nefarious deeds… The first event he attended was a 20-year-vertical of Opus One [1979–1998], in 2001 (or perhaps 2002). The first “great” wine he claimed he ever tasted [see the quote above]. Before the tasting began, Rudy predicted from his first-hand drinking experience that the 1996 vintage would show best / be the preferred wine. And he was correct.
He brought to the event the first three vintages in magnums. I sourced the next 17 consecutive vintages in 750ml format. The wines were not tasted “single blind”, because I wanted to showcase how the wine’s style evolved over time, through successive “hands” of winemakers. First “style” from the outset was very “French-like” due to the influence of the folks at Mouton. Second “style” was more of a hybrid between France and California. Third “style” is distinctively Californian. No-one confuses it with a red Bordeaux these days.
Results of the Opus One vertical tasting

For reports on more recent Opus One verticals, by other people, see:
Anyway, there you have it. It seems to me that Rudy Kurniawan was credited by those who met him with having a superb wine palate, especially for older vintages. It seems to me that, with a palate like that, he might have done a lot better by creating his own legitimate wines, rather than by misleadingly imitating those of others. Sadly, his fame apparently continues, in SE Asia, where the drinkers know they are getting a re-creation: Wine forger who duped Hollywood producers and California billionaires strikes back.



* Bob Henry CV:
  • consumer goods marketing advisor
  • nonprofit fundraising advisor
  • wine advisor to Los Angeles area wine stores
  • wine advisor to Los Angeles restaurants
  • wine-tasting luncheon organizer
  • current and former wine judge for magazines and county fairs
  • private wine-locker organizer
  • personal wine shopper for private wine collectors
  • wine blog commenter [the one that introduced him to me].

Monday, April 15, 2024

American producers are making the current wine problem worse

Last year, I wrote a post expressing my disbelief at the poor reaction of much of the global wine industry to the ongoing issues regarding the fact that global production exceeds global consumption (When is the wine industry going to wake up to itself?). This situation is illustrated in the graph below, showing that production has exceeded consumption since 1960 (taken from: The smallest global wine production for 55 years?).

Well, it turns out that, at least in California, things are worse than I thought. So, it is worth writing about this topic again.

Global wine production and consumption

In a previous post (Why does world wine production always exceed consumption?), I noted that, in most countries, wine production is not increasing, so that increasing global over-supply must logically involve decreasing consumption. That is, the wine industry presumably sees the situation as “under-consumption” rather than over-production!

As has often been reported, this is happening because younger people currently prefer both beer and RTD to wine. That is, changing consumer preferences are a key driver of the downward trend in the wine industry. Even in French supermarkets, last year beer sales surpassed wine for the first time (How France is turning from wine to beer); and Bordeaux wine has never been cheaper (The only solution for Bordeaux — cut volumes and raise prices).

Since this is a global issue, several national governments have had to address the situation. For example, in France surplus wine has been distilled, at government instigation (and expense). However, the grape growers have argued that this is only a short-term response, so that the economic crisis will continue (French government offers aid to struggling grape-growers, but no long-term solution). So, removing vineyards has been the way to go, and has already started (Bordeaux bloodbath! France pays winemakers to dig up vines).

Grubbing up a vineyard

So, not unexpectedly, there are currently trade tensions between many of the wine export and import countries. This has been tangled with other trade issues — for example, when he was president, Donald Trump imposed tariffs on French wine as part of a long-standing transatlantic feud over subsidies to aircraft makers Airbus and Boeing; but this has now supposedly ended.

In this sense, I would expect the wine-producing countries of the world to follow each other, in terms of reducing production. However, this still leaves the issue of the current global wine lake, and what to do with it. Clearly, it must be sold cheaply, either as wine for retail or as a source of spirits.

If it is sold as wine, then it must be transported to the retail location, presumably in bulk (to cut costs), and then packaged locally. The big question, though, is: how is it packaged? It can be either packaged as is (with its origin clearly indicated), or it can be blended with something else. How familiar are you with the latter concept in the USA?

One might think that the incremental cost of transporting bulk wine to the USA would out-weigh discounts achieved by buying domestic fruit, especially during a wine-grape glut. However, this is apparently not always so (The international bulk wine market: mysterious price drops). This can lead to the situation where any given retail wine can contain both American and foreign fruit, blended.

This is all well and good, so far — but how is the resulting blended wine labeled? According to the US Alcohol and Tobacco Tax and Trade Bureau (Wine labeling: Appellation of origin), the American rule for wine is a percentage:
  • If a vintage-dated wine lists a specific AVA, 85% of the grapes must come from the stated year and AVA
  • For wines labeled with a state or county, the minimum is 75%
  • All wines listing a varietal designation from the USA must be made from a minimum of 75% of the stated grape variety grown in the USA.
In other words, a wine labeled “American” can be one-quarter from anywhere in the world!

California wine retail

Well, apparently the larger US producers know this, and are currently exploiting it increasingly (Global wine glut compounds headaches for struggling California vineyards). That is, it is currently cheaper to blend the foreign and local stuff than to blend just the local stuff. You can read all about it from the Lodi Wine Growers a week ago: Imported foreign bulk wine: the dirty secret no one in California wine is talking about. They pull no punches, and cite the numbers to show just how much of this is apparently going on. *

They don’t stop there, though. The Lodi Growers point out that the local California grocery stores are equally cavalier about the sources of the boxed wines they are retailing. Distinguishing the local stuff from the imported stuff currently takes effort on the part of the purchaser, because the retailer often puts in no effort at all at distinguishing them (see the picture above). This is no way to behave towards one of their most important local industries.

I am an outsider to the industry, in the sense that I am a consumer rather than a producer. In that sense, this is California’s problem more than anyone else’s. And yet, many locals apparently are not putting their money where their mouths are, either at the level of production or the level of retail. So, this is hard to say, but: I weep for them not — they have made their own bed. Sadly, the rest of the locals have to lie in that same bed, too.



* Dan Berger has also looked at this topic, a couple of days ago, after I had written this post, in: The growing wine lake.

Monday, April 8, 2024

Re-using (re-cycling) wine waste is essential in the modern world

Recycling, or re-use, is an important concept in the modern world. For example, where I live, the supermarket car-parks have bins where we can recycle: clear glass, colored glass, plastic containers, cardboard containers, metal containers, and newspapers (see the picture). My household collection has one roadside bin for compostable material, and a separate one for refuse. *

So, it is hardly surprising that the wine industry is involved as well.

Swedish recycling bins

We all should know that compost and mulch are of great benefit when growing plants. Since grape-vines are plants, this applies to them as well — for some details, see Vineyards benefit from compost and mulch (from UC Berkeley) or Compost as mulch for vineyards (from CSIRO, Australia). One of the key components is carbon, and soil contains about twice as much carbon as the atmosphere and plants combined (A new estimate of US soil organic carbon to improve earth system models). There is growing recognition that agriculture should invest in building up this level through sustainable land management practices.

However, the wine industry sometimes goes further, by way of providing monetary incentives. For example, the California Association of Winegrape Growers has announced the California Compost Tax Credit Legislation. This legislation “seeks to incentivize sustainable agricultural practices, undertaken by winegrape growers and other ag producers, by offering a tax credit for the utilization of compost to enhance carbon sequestration efforts.” Other wine-grape regions should follow suit, around the world.

Grape pomace.

Moreover, we can also go one step further than this, into a broader perspective.

Obviously, what are usually called “winery wastes and by-products” are organic matter, and thus eminently suitable for re-use. The main solid by-product generated through winemaking is called Grape Pomace (GP). It comprises skins, seeds, stems, and disrupted cells from the grape pulp, and is reported to represent 20–25% of the total weight of processed grapes. So, there have been suggestions that we need to plan for its sustainable disposal.

This topic has recently been reviewed in: Grape pomace — advances in its bioactivity, health benefits, and food applications. The first step is what is fancifully called ‘valorization’, which simply means working out what each of the pomace components is worth, in terms of future use, such as offering new functional foods, but also contributing to solve waste management problems in the wine industry.

It is noted that GP comprises nutritional and bioactive compounds (eg. polyphenols, organic and fatty acids, vitamins, etc). Particularly, GP polyphenols have been recognized as exhibiting technological and health-promoting effects in different food and biological systems. This could be used as a food additive / ingredient in the development of novel food products (eg. enhancement of physicochemical, sensory and nutritional quality), along with technological and functional advantages. So, the review paper summarizes the current knowledge about the bioactivity and health–promoting effects of polyphenolic–rich extracts. There seems to be enormous potential; and the grape industry should be actively involved.

Biodynamic vineyard.

There is also the matter of organic viticulture (also called biodynamic farming, which name is celebrating its 100th anniversary this June) — this seeks to leave the vineyard as natural as possible. For further information, this is discussed in a multi–part web resource by Britt Karlsson, at: Organic, biodynamic and sustainable wine, an overview.

This approach can be taken even further, by adopting what might be called ‘regenerative’ practices. This basically involves leaving the ground undisturbed (ie. no ploughing of the soil), and also keeping the ground permanently covered with vegetation. This aims to increase the microbiological life and carbon content in the vineyard soils. One interesting example of this approach, aiming to re-instate the native vegetation where possible, is discussed in: Why Doña Paula is embracing nature in Argentina.


As a final point, at the moment it seems that re-cycling / re-using is one area in which Artificial Intelligence is not yet involved for the wine industry (What’s ahead for wine and artificial intelligence?). Currently, AI seems to be focused on productivity gains, rather than environmental sustainability. After all, in France, Bordeaux wine is now cheaper than bottled water (Winemakers’ anger over €1.66 Bordeaux wine)! You could also check out: A new definition for natural wine: it’s the people who are “natural”, not the wine (no AI here).

[Don’t miss last week’s short post on Easter and wine]



* I gather that in California, all of this recycling is done via three kerbside bins.

Monday, April 1, 2024

Easter and wine

Today is a public holiday throughout much of the Western world (Easter Monday). It therefore seems to be appropriate to briefly consider the topic of Easter and wine, a topic that I have not really touched on before in this blog. I will not say much, since religion is often a sensitive subject, sometimes with very strong opinions from all directions.

Easter is fairly early this year — it is a movable celebration that falls on the first Sunday after the first full moon on or after the spring equinox — this is called the Paschall Full Moon (How is Easter determined?). (If the Full Moon is on a Sunday then Easter is celebrated on the following Sunday.)

Easter is, among other things, a Christian festival and holiday commemorating the resurrection of Jesus Christ. We are told that Jesus of Nazareth was, himself, raised in a Jewish culture, and thus his association with wine was presumably that of a regular adult member of his place and time.

Wine therefore makes regular appearances in the Bible, at many events associated with Jesus. Indeed, his first reported miracle was turning water into wine, at the wedding at Cana in Galilee (Gospel of John 2:1-11).

I learned much of this because my father was a Methodist minister (in what was then the Methodist Church of Australasia) at the time of my birth (it is now part of the Uniting Church in Australia). * He continued in this role for some time afterwards (as also did his younger brother); but he eventually discovered, during my teenage years, that he was a much better computer programmer than a minister.

Da Vinci Last Supper

Easter Sunday is one of the most festive events among Christians; and, as suggested above, wine is commonly a part of those festivities. However, there are many references in the Scripture warning against drinking too much wine (eg. Proverbs 20:1, Isaiah 5:11), so we can conclude that excess intoxication is certainly a sin and should thus be avoided. Consequently, many people conclude that it is better to be safe than sorry, and stay away from alcohol altogether.

However, the latter is one of the two possible opposite interpretations. We can also go the other way, and ask relevant Easter questions like: Did Jesus drink wine at the Last Supper? ** As a Passover meal, it is likely that they would have drunk fresh grape juice if they had it (Last Supper: What wine was served at Jesus and the Apostles' final meal?). Along with the unleavened bread (ie. without yeast), they could have also have had unleavened drink (ie. without yeast). The question then would be where would they find fresh juice, with no refrigeration and the harvest being over for 6—7 months? Wine could be made with as little as 0—3% alcohol content, so perhaps this is the wine that was used. ***

I will finish with a comment more typical of this blog, which is about data not religion. Naturally, scientists are also interested in the topic of wine and the ancient world. As an example, you can read about one especially intriguing approach with the cheeky title: Could we soon drink the same wine as Jesus? DNA from ancient seeds is being used to resurrect 2,000-year-old drinks. ****

In the meantime, I hope that you have been enjoying your 2024 Easter, with or without suitable wine. *****



* The current President’s 2024 Easter message can be heard in this video.

** According to all four Gospels, the Last Supper was Jesus’ last meal with his disciples during the Passover week, before he was crucified on what is now called Good Friday (or Långfredagen in Swedish).

*** By way of contrast, see also: Low- and no-alcohol wines really do need to be the way of the future.

**** The oldest known evidence of wine-making dates back 6,000 years, in what are now Georgia and Armenia.

***** On Easter Saturday (Påskafton in Swedish), my wife, her sister, and I tasted: three small beers (Slottskällan Easter Dark Lager, Wisby Påsk, Nääs Påsköl), a red dinner wine (Vasse Felix Cabernet sauvignon 2012), and a small sweet white wine (Gardo & Morris Noble Riesling 2017). They were all excellent.

Monday, March 25, 2024

Decreasing wine consumption nearly (but not quite) everywhere

As a wine lover in the modern world, the hardest thing to write about is wine consumption. It is decreasing, consistently, and has been for quite some time (see my post: Global wine consumption has been declining for a long time). My new blog post this week simply compiles a collection of the related data released in very recent months. The data all say the same thing: in most places you should sell your vineyard now, while you still can get some money for it. I wouldn’t go into the wine-production business any time soon.

World wine consumption recently

So, let’s start with world wine consumption, as depicted in the report: the OIV State of the World Vine and Wine Sector report for 2022. As you can see (above), consumption has been decreasing (erratically) for the past 15 years. with a steeper decrease for the past 5 years. The media make it clear that it is the younger generations (Millennial and Gen-Z) who are responsible for much of this, by not taking up wine drinking in the same way that their elders did (Why the world has a huge wine glut and why it’s only going to get worse). So, this situation is not likely to change any time soon. Part of this attitude is due to alcohol moderation, of course; and it is not yet really clear how much this is directly affecting the wine industry (Who is winning from the moderation trend?).

Recent wine consumption in several countries

We can now look at the consumption in various individual countries. The above graph covers several well-known wine-consuming (and producing) countries (these FAO data come from: Gro Intelligence). So, France and Italy are going down, China and the USA are going up, and Africa is steady. This means that it is not all gloom and doom.

Wine consumption in Sweden recently

We can even look at the declining consumption in Sweden, which is also down, for even longer than the global trend. This graph is from my local newspaper, Uppsala Nya Tidning (16 mars 2024). (Oddly, the downward trend started at exactly the time I moved to Sweden, from Australia!)

The reasons for decline are discussed by, for example: Why are so many wine regions dealing with oversupply? Dan Berger also discusses the issue (Growing price sensitivity among consumers):
The decline in wine sales is pervasive, challenged by an increasing array of non-alcoholic beverages and changing consumer behavior. Gone are the days of reasonable wine markup in many retail shops and restaurants, leaving a market now brimming with quality wines that are still overpriced. This shift comes as American wine consumption per capita has dipped to its lowest in two decades, signaling a significant change in consumer preferences.

Per capita US wine consumption

These data interact with the traditional value-versus-volume distinction (eg. Germany books wine exports value growth but dip in volumes). In this case, the volume of consumption decreases but the consumed wine is of higher value — it is the cheaper stuff that usually decreases, leaving the up-market consumers still drinking.

Furthermore, these graphs refer to the total consumption. We can also look at the per capita consumption (ie. per person), which often shows a different pattern. The above graph is from: Is wine consumption set to decline in the U.S.?, where the overall US increase is matched by the consumption per person. At that link, Tom Wark discusses this pattern in detail.

Per capita wine consumption in Europe

For comparison (above), are some equivalent data for European countries per person (from: Europe's heaviest drinkers: These are the countries that are drinking more alcohol than before). It shows that overall per-person alcohol consumption in the E.U. has declined by 0.5 liters between 2010 and 2020. However, the individual countries differed a lot, so that consumption fell in 25 countries but increased in 11 countries. In 2020, annual alcohol consumption varied from 1.2 liters in Turkey to 12.1 liters in Latvia.

Sales and inventory of wine in the USA

It is also of interest to compare the wine sales to the accumulating wine inventory, which we do above for the U.S.A. (from: Growing price sensitivity among consumers) — both sales and inventory have plateaued recently. In this regard, global consumption patterns can, of course, have a big effect on all wine-exporting countries (eg. Global decline in wine consumption further reduces Australia’s export performance), which consequently increase their inventory when their export sales decrease.

Mind you, America’s love of wines from southern Europe, (France and Italy especially), is a one-sided affair (America’s one-sided love of European wine). According to Eurostat data, the U.S.A. imported more than 5 million hectoliters from France and Italy between August 1 2022 and July 31 2023, while Europe’s five largest wine producers imported little more than 300,000 hectoliters of wine from the U.S.A.

I have also wondered about the data saying that nearly 68 million gallons of foreign bulk wine was imported by California wineries in 2022 (Imported foreign bulk wine: the dirty secret no one in California wine is talking about). How can this be happening when local U.S. production is at risk? After all, 2023 was a dreadful year for wine sales, with a 9% drop in shipments from producers to distributors (The big US wine market roundup). If you want to read up on this, the data at that link are sliced and diced by age group, race and gender.

Finally, on a brighter note, it is worth noting that: China bucks the Gen-Z wine trend, with increasing alcohol consumption in that particular generation. Also, IWSR forecasts suggest a continued upward trajectory for India’s beverage alcohol market in 2024 and beyond (Bucking the trend: India’s promise as a beverage alcohol market). Against a backdrop of 1% volume growth for global total beverage alcohol in 2022, spirits volumes in India increased by 12%, with beer up 38%, wine up 19% and RTDs up 40%. Even the U.S.A. has people predicting a “turnaround in the middle of 2024” for wine sales, followed by “a slow recovery in 2025” (Turnaround predicted for wine sales in the US in 2024).


I have produced a few other previous posts on this topic of wine consumption:

Monday, March 18, 2024

Is AI in the wine industry all that it is cracked up to be?

Well, of course not. After all, the people advocating Artificial Intelligence (AI) are often the ones selling it; so they are wildly enthusiastic. Moreover, it is probably not the biggest issue currently facing the wine industry (for examples, see: California isn’t on track to meet its climate change mandates; or Wine Market Council explores demographics and engagement). However, there are clearly uses for AI, or no-one would be pursuing it. So, let’s look at some of the suggestions for the wine industry.

AI involves the use of computers to perform tasks previously done by humans, but without immediate direct human control (sometimes called Machine Learning). So, using a spreadsheet to calculate the farm budget does not count as AI, but having a computer run your farm tractor does. The tractor’s computer program was, originally, written by a human being, of course, but after that the computer takes control of the tractor.

Given the very broad nature of the wine industry (agriculture, production, distribution, wholesale, retailing), there are lots of ways AI can get involved. So, let’s look at some of the AI involvements that have been suggested (see also: How artificial intelligence will change the world of wine, from vineyard to wine glass). A complementary idea is the Internet of Things (IoT), which refers to devices with sensors, processing ability, software and other technologies that connect and exchange data with devices and systems over the internet (or other communications networks) — it is usually a valuable complement to AI.

AI and IoT.

We’ll start with what is perceived to be the current situation and the expectations. Simone Loose, head of the Institute of Wine & Beverage at Geisenheim University, has said (Wine industry needs to professionalise to survive):
The wine industry is years behind other sectors in terms of technological advancement. Two-thirds of producers aren’t even using Excel, which means they’re not analysing their commercial business. This is a big problem ... How are wine businesses going to reach the consumer? If they’re not profitable as a business, how are they going to pay for marketing strategies? The ones who will survive are those who are the most professional.
She has described how AI can help boost professional productivity, particularly when it comes to smaller producers who have yet to properly commercialize or strategize engagement with customers. Sadly, AI is currently cost-prohibitive across the supply chain for most people, except for the larger producers (small producers and Big Wine live in completely different universes!). Yet, she contends, utilizing AI in more focused areas could help make a big difference to smaller producers’ sales.

So, it has been reported that vine-growers and winemakers are, indeed, incorporating technology into their production process, as the industry faces challenges with consumer demands and the climate crisis (Vineyards embrace AI and IoT for better, tastier wine). We have often done this sort of thing in the past (eg. planting entire vineyards with a selected preferred grape-vine clone), but not always to our ultimate benefit in the modern world of changing climates (Why producers are reviving this ancient planting system).

Monarch MK-V tractor

So, I guess that we should start with the vineyard. First, here we encounter the IoT, where sensors can be installed across the vineyard. These allow viticulturists to visualize data about the relevant environmental parameters, like temperature, humidity, soil moisture, and wind speed. These parameters matter because grape-vines are perennial plants, so that each one lives for many years in the same spot, accumulating the effect of its local environment. * There is also the idea of using AI-powered robots to control vineyard pests without chemicals (Robots in the vineyards: could AI be a green winemaking solution?), by naturally disrupting the mating of those pests.

Similarly, it is reported that Monarch Tractor, for example, which is the maker of the MK-V, the world’s first fully electric, driver-optional (autonomous) smart tractor (pictured above), is expanding globally (Monarch tractor expansion across the US and Europe). This follows on from the original appearance of electric tractors themselves (First Monarch electric tractor arrives at Oregon vineyard). Moreover, using AI-robots for harvesting (grapes, apples, strawberries, etc) is actively being worked on — it seems to be only a matter of time (it was all the rage in 2020, but you don’t hear quite so much about it these days).

In the winery, we also encounter IoT sensors, which, when inside fermentation tanks, can help detect leaks, monitor the fermentation activity, and show temperature trends. Computers already control things like press cycles, fermentation temperatures, and other processes. Furthermore, AI-powered tools can be used to help wine-makers find optimal wine blends, where AI and chemistry combine to create wine-blending recipes.

When it comes to bottles, it has been reported (Greencroft Bottling: ready to offer most sustainable packaging possible) that the latest artificial intelligence technology has been integrated into some of the systems (for example, AI drives the inspection equipment on the labeling machines).

Of course, as mentioned above, the cost of the grapes, the wine-making, packaging, shipping, additional warehousing and transportation, and then the multiple layers of distribution, all need to be budgeted. This has long been where computers are very useful, and where forecasting can thus benefit from AI. This may not have much to do with wine-making, since grapes are seldom more than 10% of the total cost (Gross margins: breaking down the price of a bottle of wine).

Retailing is a whole other thing. As an example, linguistic tools such as ChatGPT have the capability to convert information on a producer’s inventory and brand into marketing or e-commerce strategies. Conversely, one of the most interesting discussions of the negative effects of AI is: The smartphone’s role in wine's decline.

When it comes to recommending wine to the wine-buying public, there are, indeed, AI-powered wine recommendation tools, which are reported to increase sales (New data shows DRINKS AI-powered personalized wine recommendations deliver surge in online wine sales). Indeed, this prompts us to ask the basic question: Can machines taste wine? The answer is currently “yes and no”; but it does prompt us to start Rethinking the role of wine professionals.

The bottom line, at the moment, is that electronic drinks recommenders are based on data from the established critics / commentators (Is AI like Chowbot coming for my wine critic job?). So, humans are still needed at this level. Indeed, it can be argued that To Save the wine industry, we’ll need a human intervention.


Conclusion

So, AI and the IoT should be helpers not replacers — we must benefit from them not rely on them. They do not allow us to work less (or not work at all), but mean that we will now work differently. AI is a tool that can make things better, but which can also be abused.

AI seems to be here to stay (EU Parliament approves the Artificial Intelligence Act), so we need to get the hang of it, and its impact. However, I am not sure that it is yet giving most of us anything that we either want or need. All it is doing is making things different.

I taught for years at several different universities, in both Australia and Sweden, and it is not sarcasm to note that Human Intelligence varies greatly among individuals. One of the great hopes of Artificial Intelligence is to try to level the playing field, so that we all get subjected to the same level of intelligence around us. Does it yet match that goal?

At the moment, my car’s computer system makes a lot of suggestions for what my driving should look like, at any given moment. However, I still do the steering, and press the accelerator and brake pedals (the clutch is automatic!). I am not sure how safe I would feel if the computer was doing the latter tasks, as well; but I and the drivers around me may actually be a lot safer if it was. **

Mind you, it was recently reported that two Indonesian airline pilots both fell asleep simultaneously on a flight (A plane flew for 28 minutes with both pilots asleep), thus relying entirely on the autopilot. They drifted off course a bit, but landed safely at their destination after they both woke up. This is AI at its best!



* The downside of being perennial is that grape-growers are loathe to pull them out (USA: Growers are pulling out grapevines — but not fast enough; Australia: Vineyards rush to sell millions of litres of wine at cut price).

** However, much of modern car technology is very expensive to maintain (The insanely high cost of tech failures in newer cars); and it also feels very much like an invasion of privacy, given how much of our personal behavior the newer cars record and permanently store (Mr Orwell, your car has arrived).

Monday, March 11, 2024

The demise of the Australian wine industry? Part 2

In last week’s post, I provided an introduction to my previous discussions of the Australian wine industry (The demise of the Australian wine industry? Part 1). Please check out that post before proceeding here, if you need context. Here, I provide a comprehensive summary of the current situation.

The main issue in this week’s post is that the Australian wine industry is repeatedly presented in the media as currently being in a dire position. This situation is, in many ways, real; but the entire world’s wine industry has a somewhat similar problem, so there is not much that is actually unique about Australia. Furthermore, the Australian position is often attributed particularly to a trade spat with China (How Chinese tariffs soured Australia’s wine industry); and it is true that this spat exists, but resolving it may not be the panacea that the Australians seem to be expecting.

The current situation for Australian wine

The essential problem is an over-supply of wine from within Australia itself. This is shown in the above infographic, from the Australian wine: Production, Sales and Inventory Report (by Wine Australia). Australian wine production is predicated upon exporting a large proportion of the product — as shown in the graphs at the very bottom of this post, consumption plateaued in 2010 but production did not. *

This origins of this situation have been discussed by several people. For example, according to  Pia Piggott, an Associate Analyst at Rabobank, there are three factors behind this (Australia’s wine swimming pool):
  1. The 218% tariff imposed on Australian wine by China in 2021, widely seen as retaliation for Australian criticisms (a government minister suggested that China should be formally investigated about the origin of the SARS-CoV2 virus). Until then, China had been one of Australia’s most significant export markets, with sales reaching A$1.2 billion in the year to January 2020.
  2. The logistical bottlenecks caused by the Covid-19 pandemic. As shipping prices increased four- and then five-fold, ships began to bypass Australia in favour of shorter, higher-value routes. Many Australian wineries could not fulfill export orders, and lost their customers, leaving the Australians with too much wine.
  3. Australia has recently had record production. For example, the 2021 vintage was the largest vintage on record — a 36% year-on-year increase.
To visualize this situation simply, one useful measure is the national stock-to-sales ratio, which is a measure of how many years’ worth of sales is held in inventory. This is shown in the next graph (from Australia’s wine inventory at historic high despite steady sales and reduced production). Currently, the value is 2.57 for red wines, which is 45 per cent above the 10-year average of 1.77. The latter figure equates to having just under 2 years’ worth of sales in stock, so that the current level is >2.5  years’ worth of stock. The situation for whites is somewhat better than for reds, with the stock-to-sales ratio at 1.49 (much closer to its long-term average of 1.35).

Australian wine inventory

So, the current situation has been developing for quite some time. Nevertheless, the Australian wine industry does urgently need to deal with how to get rid of its wine lake. The obvious way is exports. Sadly, this is precisely what is not working, as shown in the next infographic, from the Wine Australia Export Report (see: Export results reflect challenging global trends). Two countries dominate the picture. The United Kingdom takes 36% of the total export volume and 19% of total export value, while the USA takes 22% of volume and 19% of value; and both of these figures are currently down considerably. ** All of the lower price points have decreased in export sales, although >$10 has increased (ie. Australian wine exports are moving up-market, by default!).

The current wine export situation

Needless to say, the Australian grape farmers are unhappy with the situation. For example, the farmers have argued that they are being paid below the cost of production for their grapes, and in some cases they have chosen to dump their grapes or let them rot on the vines, rather than be paid below cost prices for harvesting them (Riverland wine grape growers drive tractors through Renmark in protest against low prices). Their key demands of the government include making wine grape prices more sustainable, and improving support from the industry and government for growers. To this end, the Riverland grape growers call for moratorium on vine plantings to ease red wine oversupply crisis; and the government has just now appointed a task force (Wine taskforce to spotlight glut as industry reaches crisis point).

So, it seems that the Australian wine industry is set to shrink, considerably. The most recent report from Australia’s Agricultural and Resource Economics Bureau (ABARES) predicts that, by the 2027—28 harvest, Australian wine-grape production will have fallen to 1.2 million tonnes, down from a peak of over 2 million in 2021 (Forecasting wine: current storm clouds unlikely to budge).

Australian vineyards

However, the issue seems to me to be that Australia’s situation is simply part of a general downturn in the wine industry, globally. For example, the number of regular wine drinkers in Australia is falling overall, and the under-34 segment has shown the sharpest decrease, which is part of a global trend (Wine leaves a bad taste for younger drinkers). Similar problems have recently been discussed for France, the modern “home” of the wine industry (France no longer defines global wine culture. Can it adapt?), and their farmer reactions have also been similar (‘Emergency’ €80m promised to French winegrowers amid farmer protests). The USA is no better off (More bad news: Sipsource report pulls no punches), and neither is the UK (UK wine sales decreased by 10 million bottles in the build-up to Christmas). Indeed, the US growers have gone one better than the Australians (Growers scrap vineyards as market dims).

Over-supply is therefore actually a global problem. This overall topic has been discussed elsewhere, so I will not repeat it here:
The bottom line here is that the anticipated return of the Chinese market as a destination for Australian wine (China wine tariff result by end of March) may not be the hoped-for panacea (Australian wine makers bet on expected China reopening with big shipments). After all, there has been a downward trend in Chinese wine consumption since 2018, as shown in the next graph (Chinese wine drinkers — unlikely to solve Australia's export woes); and wine imports have followed suit (Chinese wine market falls off cliff). A return of the China export market will therefore presumably not be a great boon. ***

WIne consumption in China through time

So, to summarize, we can safely say that the Australian wine industry is facing a crisis (It’s all change for Australian wine in 2024):
  1. Revenues in the sector, which directly employs more than 18,000 people, have declined at a combined annal rate of -6.3% over the past five years, and stood at an estimated AU$6.3 billion at the end of last year.
  2. The AU$1.3 billion-per-year China export market collapsed when Beijing slapped tariffs on Australian wine in late 2020; and while China is expected to soon remove — or at least modify — those impositions, the industry faces a much-changed global condition.
  3. Globally, consumers have moved away from commodity bottles in favour of premium priced labels, and Wine Australia calculates that the industry has surplus stocks of more than 2 million wine bottles.
  4. At the same time, home market demand has been declining for the past 4 years in Australia, and is forecast to reach 445 million litres this year, compared with a 10-year average of 480 million litres. Prices have increased only marginally since 2019.
This does not necessarily prophecy the demise of that industry, but things clearly have to change, sooner rather than later (Can Thor save Australian Wine?). The industry either needs to shrink, or some pretty big new markets need to be found.



* Australian wine consumption plateaued in 2010, and has even dropped recently; on the other hand, production has varied dramatically year by year, at about twice the level of consumption (the graphs here are from: Focus OIV 2023: Evolution of world wine production and consumption by colour).

Australian wine production through time

Australian wine consumption through time

** It is worth noting here that Australian wine exports to the USA have been declining since 2007, as shown by this linked AAWE graph.

*** So, the Spaniards should not be so keen, either (Can Spanish wine producers spread their wings in China?).

Monday, March 4, 2024

The demise of the Australian wine industry? Part 1

I grew up in Australia, and got interested in wine in the late 1970s (see: Some personal anecdotes). The wine industry had boomed in the late 1960s and early 1970s, and there was a vibrant industry for me to be interested in, along with a lot of other people. My local bottle shop (or liquor store / off-licence) started doing free tastings on Thursday evenings (late-night shopping night), and this grew into special organized (paid) tastings on weekends. There were also plenty of vineyards to visit (also for free!), as shown on this map.

Click to enlarge

So, it is very sad for me to hear about the current troubled state of the Australian wine industry — a country that is currently being disturbed by the global wine-industry downturn. It has not got to the end yet, but globally things are clearly going downhill in many ways, for the wine industry, as shown in this first graph.

Click to enlarge

However, the Australian wine industry has had its ups and downs before, as I have written about in previous posts, and as shown in the next graph (of Australian wine exports). At the end of this post is a categorized list of my previous posts about Australia. After this week’s look at the past, next week, in Part 2, I will summarize the current state of affairs, according to the media.

Click to enlarge

As you can see, the previous export trend has generally been upwards, exactly as you would expect from any producer gradually establishing itself on the global stage. However, there were occasional multiple-year downturns along the way. In particular, there was a distinct downturn from 2005—2013, occasioned by a saturation of the world market for cheap Australian wine (as discussed in my post: The rise, rise, fall and rise of Australian wine). Since then, the Australian focus has moved more towards the middle of the global market, with much better financial results.

Well, the upturn in export value over the past decade (ie. since 2013) has recently turned into a downturn again, with obvious consequences for the Australian wine industry as a whole. I will discuss this next week. Predictions of the demise are premature, but problems clearly exist.



Previous posts, in time order (within groups):

Vineyards
Wineries
Companies
Wine price
Wines / marketing
Exports

Monday, February 26, 2024

Try blending your non-alcohol wines, if you want to make them more drinkable

I have recently written a few posts about wine and its affect on our health, such as:
None of these posts finds a great deal of issue with consuming wine, provided that it is done responsibly. Intoxication is not the point of the exercise. Indeed, it has been argued that We don’t drink wine just for intoxication (Patrick Schmitt), because “looking at only the public health and intoxication issues of alcohol misses one of the main reasons why we drink it: nothing can match wine’s ability to enhance both food and mood.”

Nevertheless, there seems to be a growing market for people who want to replace their (proper) wine for a non-alcohol version. So, it is a topic worth looking at in this blog. Here is a graph showing us what some (self-selected) people did during last month, to avoid consuming alcohol. Note that about one-fifth of them chose a non-alcohol beverage.

Dry January participants

I will start by saying that it seems to me to be very easy to argue that “no-alcohol wine” is a contradiction in terms — wine, by definition, has alcohol in it, just as does beer, and scotch whiskey. That is, dictionary definitions usually specify that wine is the alcoholic product of fermented grapes (or other fruits, although these are often termed cider).

Indeed, I am not alone in thinking that Zero alcohol wine is not wine (Huon Hooke):
I have been diligently tasting the zero alcohol ‘wines’ that breathless PR people send me, and those that I buy off the supermarket shelves out of my own curiosity, but I have yet to find a red wine that tastes anything like wine. I have tasted one or two whites that had some appeal ... but on the whole they are seriously disappointing. They are no more an alcohol-free substitute for wine than any other soft drink or fruit juice.

In one tasting of 16 samples, I noted the residual sugar content of these beverages ranged between 25 and 45 grams per litre. And some confessed they contained ‘flavourings’ and ‘thickeners’. Sugar is evidently used in a vain effort to inject palate weight and flavour.
It is worth noting that non-alcohol wines are first made as normal (alcohol-containing) wines, and the alcohol is then removed, often by a more-or-less aggressive method of de-alcoholisation, such as centrifugal separation (eg. spinning cone) or reverse osmosis (see The challenges of making low/no alcohol wine). The result is then “adjusted” in order to make it drinkable, and hence the additives cited above. People are still working on gentler methods (eg. vacuum distillation), in an attempt to preserve some more of the key aroma and flavour compounds (eg. How Oddbird alcohol-free wines are revolutionising the No/Lo market).

The wine tasting

So, I decided to check this out for myself, and recently got together with a few relatives and neighbors to try some wines: 4 non-alcohol whites, 4 non-alcohol reds, 2 non-alcohol sparkling, and a couple of alcohol-containing wines for comparison. * This isn't a wine review, so I won’t give any tasting notes, but I can note the overall results.

The wines were all fairly inexpensive ($5.60 to $10.30 per standard bottle), but they cost enough to potentially taste like wine. Here they are listed by increasing price within each group:

Non-alcohol whites
  1. Hardy’s Zero Chardonnay 2022
  2. Leitz Eins Zwei Zero Riesling 2022
  3. Edenvale Pinot Gris
  4. Zeno Alcohol-Liberated White 20222
Alcohol white
  1. Hardy’s Nottage Hill Chardonnay 2022 (bag-in-box)
Non-alcohol reds
  1. Rawson’s Retreat Cabernet Sauvignon
  2. Oddbird Domaine de la Prade (Merlot & Shiraz)
  3. Edenvale Premium Reserve Pinot Noir
  4. Oddbird Grenache Shiraz Mouvèdre (Carignan)
Alcohol red
  1. Rawson’s Retreat Cabernet Sauvignon 2021
Non-alcohol sparkling
  1. Oddbird Veneto Spumante Rosé
  2. Thomson & Scott Noughty Sparkling Chardonnay
To put it bluntly, of the non-alcohol wines only the sparkling ones tasted like anything other than fruit juice. Sweetness was a recurring theme, as also suggested by Huon Hooke above. The Oddbird wines did not taste any better, in spite of their hype. The alcohol-containing wines tasted perfectly nice.

Since I was unimpressed, I tried some experiments. First, I mixed the alcohol and non-alcohol versions of the same producer/type (ie. the two Hardy’s whites, and the two Rawson’s Retreat reds). The results tasted like a low-alcohol wine, which was certainly an improvement (eg. it reduced the sweetness). I then mixed the other three non-alcohol wines of each type together (ie. the three whites, and the three reds). The resulting complexity increased greatly, and they were no longer just fruit juice. As suggested by this post’s title, this is what I would do if I was to make a habit of drinking non-alcohol wines — buy several and blend them.


So, do yourself a favor — if you want to replace your wine at any time, do it with some other drink, as wine really does need alcohol in order to be wine. If you want to reduce your alcohol intake, then choose wines that are made naturally lower in alcohol, in the first place (eg. originating in a cool climate).

Looking at the bigger picture, alcohol is not the only cultural thing with potential negative side effects. After all, there's inherent risk in almost all human activities. For example, cars can have a very bad effect on people (as can trains), because many people die every week, and their exhausts create air pollution. However, we have not banned cars, but we have instead tried to reduce their negative effects. The same logic applies to alcohol, which can have both positive and negative effects (eg. alcoholism). So, alcohol can exist in the same world with people, provided that it is used responsibly.

Part of the issue here seems to be younger people, who are the people most influenced by the anti-alcohol media (SVB State of the US Wine Industry Report 2024). It has been noted (Results of Consumer Survey on U.S. Wine Market Trends and Challenges) that:
The reported participation in “Dry January” or “Sober October” in 2023 was highest among respondents in the ages 21–39 segment, with over half of the cohort reporting participation by cutting back their wine consumption in those months or abstaining from wine altogether. Nearly two-thirds of the same age group indicated they intend to participate in one or both of these events in 2024.
If you want to read further on the subject, then here are some useful links:



* Some of them were chosen from among the following lists:
  1. The 23 best non-alcoholic wines
  2. The best nonalcoholic wines
  3. The 10 best non-alcoholic wines