The ‘‘French paradox’’ refers to medical studies demonstrating that, despite a diet rich in saturated fat, a sedentary lifestyle, and substantial tobacco usage, the French have lower rates of coronary artery disease (CAD)—the leading cause of death among Americans—than most Western nations. When this fact became widely known in theUnited States following an episode airing this topic on the television program 60 Minutes in 1991, rebroadcast in 1992, wine sales, espe- ciallyred wine sales, increased more than 40 percent. 60 Minutes did a follow- up segment in 1995 that added information from the Copenhagen City Heart Study demonstrating a similar lowering of CAD with moderate wine consumption
for people in Denmark. As expected, sales of red wine increased again in the United States following this broadcast.
Although the term was first coined in the late 1980s to describe findings from epidemiological studies, the French paradox had been discovered much earlier. Samuel Black, an Irish physician, noted the relative lack of CAD among the French in 1819. Between 1979 and 2000, many epidemiological studies on this subject were published in the medical literature. Some demonstrated that mod- erate consumption of alcohol decreased the risk of CAD, and a host of studies from a broad range of nations confirmed that moderate red wine consumption (defined as up to one or two glasses per day for women, one to four daily glasses for men) seemed to provide further protection from CAD and deaths from heart attacks. The magnitude of such protection suggested by the pub- lished investigations varied, but was up to a 50 percent reduction of deaths from CAD.
This research remains controversial because of concerns about the concomi- tanthealth risks associated with alcohol consumption in general. The decreased likelihood of heart disease due to alcohol consumption comes with social risks, as well as an increased risk of a range of cancers. In addition, studies show that fruit and vegetable consumption also protects from heart disease and that wine drinkers inFrance and other parts of the world are more likely to eat fruits and vegetables. Such confounding variables cloud the findings somewhat.
Thousands of medical studies have been published in an attempt to discover the mechanism by which red wine protects from CAD. Polyphenols found in wine as a result of skin and seed contact have medical effects that may explain some of the benefits of red wine. These include antioxidant, anti-clotting, and anti-inflammatory activities, as well as a tendency to open up blood vessels.
Patrick Farrell
FUTURES
Wine futures, also known as selling en primeur, is a mechanism by which wine is sold in advance of its actual release by producers, with the purchaser con- tracting to take delivery on an agreed-upon future date. It is generally used to describe the sales of relatively high-end, long-lived wines that require significant maturation time between harvest and bottling, as opposed to the bulk wine market.
Selling wine as futures evolved as a way for growers to spread some of the risks inherent in the capital-intensive nature of the wine business. These include the unpredictability of producing an agricultural product whose quality and quantity are largely subject to the vagaries of weather conditions during the growing sea- son, the length of time required to bring the finished wine to market, and the related economic and political factors that can dramatically affect the value and demand for the wine during that time.
By selling all or part of their wine as futures, producers have options that enable them to hedge against these risks, generate cash flow, and outsource certain aspects of wine production,promotion, and sales. This has resulted in the
creation of a large speculative market that involves a host ofwineries, brokers, importers, merchants, retailers, critics, and consumers.
Bordeaux, by virtue of its long history and highly organized trade, is the region most strongly associated with the sale of wine futures. For more than 300 years, Bordeaux wines have been sold through a three-tier system known as the Place de Bordeaux. This structure has allowed proprietors to shift risk and recoup capital tied up in inventory by selling futures to merchants (also known as ship- pers orne´gociants), who handle marketing and sales. The third tier consists of brokers or courtiers—middlemen who negotiate and facilitate the transaction on commission (courtage). About 5 percent of Bordeaux’s total annual wine sales of 60 to 70 million cases is in futures; the actual volume of wine sold as futures varies each year in relationship to vintage quality, supply, and demand.
Historically, the futures market was conducted almost exclusively among the three tiers of the trade. In the 1980s, however, the increasing influence of the wine press, combined with greater consumer interest in wine, resulted in sub- stantial consumer participation in the futures market, a trend that has continued to the present. The power of the press plays a large role in the futures market, fueling demand for wines and vintages that receive high praise—and creating difficulties selling vintages and wines that do not—often causing large swings in price and demand.
In Bordeaux, the futures campaign takes place in the spring following the vin- tage with a series of tastings of the wines, which at this point are still unfinished and in barrel. Shortly thereafter, the proprietors set prices based on the quality of the vintage, estimated demand, and the stature of the chaˆteau, its classification, and its reputation. The wines are then offered in series of releases known as tranches, with each successive offer issued at higher prices (depending on demand) until all of the wines allocated for futures are sold. The entire campaign is completed over a period of several months. Delivery of the wines generally takes place two to three years after the vintage.
Many other regions and producers engage in some sort of futures sales, albeit without the same organized structure and scale as Bordeaux. These are some- times held in conjunction with charitable organizations or local trade groups. The presales, auctions, and tastings (such as the annual AuctionNapa Valley) can help to generate interest in the specific region, build goodwill through chari- table donations, and strengthen winerybrand image, as well as providing a way to recoup some of the capital tied up in inventory. Many wineries also independ- ently offer their preferred clients opportunities to purchase limited, allocated wines in advance of release or bottling as a reward for customer loyalty.
Reasons for buying futures range from the pure pleasure of collecting and even- tually enjoying the wines to acquiring wines as an investment to be resold at a later date. The risks are similar to many other investments and include changes inexchange rates and market conditions that can cause prices to fall, as well as fraud or bankruptcy of disreputable sellers. At the consumer level, and even at the merchant level, a considerable amount of futures wine is purchased without having been personally tasted. Trust is thus placed in the hands of the press or the seller, who has at best tasted only unfinished wines. The cost of money required to hold expensive wine to delivery and beyond to maturity has to be
considered, as do other expenses such as shipping and storage. The benefits to buyers, of course, include the opportunity to buy at reduced prices and the ability to secure wines that may be very difficult to attain at a later date. See also Auction Houses; Cult Wines; Ratings and Scores.
Christopher Cree
G
GALLO
The E.&J. Gallo Winery was founded by brothers Ernest (1909–2007) and Julio (1910–1993) Gallo in 1933 after the end ofProhibition and became the largest winery in theUnited States in 1966. The company built its empire and reputation on value wines produced in high volume at low prices. These were classictable wines, simple, straightforward, and generically labeled: white, red, rose´, bur- gundy, chablis, and so on; the company did not begin sellingvarietally labeled wines until 1974 and vintage-dated wines until 1983. The company was also well known for producingfortified wines, such as Thunderbird and Night Train. The brothers Gallo deserve credit for helping to establishCalifornia, and by extension the United States, as a major force in theglobal wine industry.
The Gallos’ winery began in Modesto, California, and is still there, albeit moved to a much larger property nearby. From 75,000 cases in 1933, the winery now produces around 60 million cases (mc) annually. The company also imports wine fromItaly, Argentina, Australia, and elsewhere. Gallo’s worldwide sales of 72.4 mc in 2006 gave it a 2.7 percent global market share, according to Impact data, second only toConstellation Brands, Inc. The recently renamed Gallo Family Vineyards is the world’s second largestbrand (after the Wine Group’s Franzia), with a volume of 23.7 mc in 2006, and Gallo’s Carlo Rossi brand is fourth globally at 12.6 mc.
In the United States, Gallo is number one in volume, selling 60.5 mc in 2006 and capturing 20.9 percent of the market. Its sales broke down as 84 percent table wine, 5 percentsparkling wine, and 11 percent dessert wines and other prod- ucts, such aswine coolers. Given the low average price point, however, Gallo was slightly behind Constellation in sales revenues at $3.31 billion.
As a means of market penetration and product positioning, Gallo has long sold wine under an assortment of labels and brand names, many of which do not carry the Gallo name. The company’s top brands in the United States, according to Impact, are Carlo Rossi (the nation’s second largest brand with sales of 10.3 mc in 2006), Gallo Livingston Cellars (7.8 mc), Gallo Family Vineyards Twin Valley
(6.5 mc), Peter Vella (5.5 mc), and Turning Leaf Vineyards (3.4 mc). Other famil- iar brands include Andre, Barefoot, Bella Sera, Black Swan, Boone’s Farm, Cop- peridge, Ecco Domani, Mirassou, Redwood Creek, and Wild Vines.
In a bid to shed its low-end image and move into the premium wine market, the company began buying a considerable amount of acreage inSonoma County as early as 1971, becoming one of the largest vineyard owners in the county, and introduced the Gallo of Sonoma brand in 1994. The winemaking facility there has a capacity of 4.9 mc. In 2006, the company announced a rebranding of many of its products in the United States, including Gallo of Sonoma, and almost the entire line overseas to Gallo Family Vineyards, featuring a new logo with twin rooster heads. The company’s copresidents are James Coleman, Joseph Gallo, and Robert Gallo, and 15 family members are active in the organization.
GERMANY
Germany is the home ofRiesling, death-defyingly steep vineyards, and some classicdessert wines. One of the most northerly wine regions in the world, it was the ninth largest wine-producing country in 2006 at 8.9 million hectoliters, the equivalent of 99 million nine-liter cases (mc). With 252,000 acres of vine- yards, Germany’s growing area is about the same size as that ofBordeaux.
Riesling is Germany’s most widely planted grape variety and the one that shapes Germany’s wine image worldwide. Its 52,000 acres represent nearly two-thirds of the world’s Riesling vineyards. German Rieslings thrive in various soil types, which helps account for the fascinating diversity they offer in terms of bouquet and flavor. The other principal white varieties grown in Germany are Silvaner, Mu¨ller-Thurgau, Kerner, Weissburgunder (Pinot Blanc), and Grauburgunder (Pinot Gris). Spa¨tburgunder (Pinot Noir) is Germany’s most important red variety with 28,400 acres planted, followed by Dornfelder.
Germany exported 35 mc in 2006. Its primary trade partner for wine exports is the United Kingdom, with theBritish market representing almost 30 percent by value and 40 percent by volume. TheUnited States and the Dutch and Scandina- vian markets were also major importers of German wine, and exports to the United States have tripled in the past five years.
Germany is the world’s fourth largest wine-consuming country, at about 222 mc. Wine consumption in Germany has increased in recent years, while production has remained relatively steady, and therefore Germany has become the world’s largest wine-importing country, bringing in about 145 mc in 2006.Italy was Germany’s main source of imports (45 percent share), a large portion coming in asbulk wine. Italy,France, and Spain combine to supply more than 90 percent of Germany’s imported wine—therefore about half of all wine consumed in Germany.
History. Grape growing reached the area that is currently Germany around 2,000 years ago, following the conquest of the Germanic lands by the Romans, who had learned viticulture from otherancient Mediterranean cultures. After the fall of the Roman Empire, Charlemagne reinstated the cultivation of vines in the eighth century.
In the Middle Ages, monks came, particularly fromBurgundy, and extended winegrowing from many newly foundedmonasteries. Wine cultivation continued
to be a privilege of the clergy, and today many vineyards still carry names going back to this time, such as Abtsberg (Abbot’s Mountain). Napoleon’s conquest brought this to an end, secularizing the Catholic Church’s possessions. The German nobility and many rich merchant families acquired the vineyards, and they largely remain in the possession of these families today.
German wine became very popular in Britain in the 1800s, when it was a favorite of Queen Victoria. As the nineteenth century ended, however, thephyl- loxera catastrophe almost brought German viticulture to a standstill. Then the two world wars and the intervening depression continued the hard times in Germany.
In the 1950s, German wines again became quite fashionable in other countries. The semisweet blended wine Liebfraumilch took western Europe and the United States by storm in the 1970s and 1980s. However, tastes then began to turn toward drier styles of wine, especially in theNew World, and German exports have remained stagnant at 25 to 30 mc for most of the past two decades. The latest figures indicate that exports may today be entering a new growth phase.
Regions. German vintners primarily have the warm North Atlantic Drift, an extension of the Gulf Stream, to thank for viticulture being possible at the coun- try’s latitude. Almost all of Germany’s winegrowing is concentrated in the south- west. The vines are planted on the southern slopes for greatest exposure to the sun, usually in the river valleys where the chains of hills that lie around them afford protection from cold winds.
The most commercially important wine regions of Germany are the Mosel, Rheingau, Pfalz, Rheinhessen, and Baden. The Mosel and Rheingau are home to most of the best sites for top-quality Rieslings. The Pfalz and Rheinhessen are the two largest regions, producing nearly half of Germany’s wines between them. Baden is the warmest and most southern region, known for being a high-quality producer of Pinot Noir, Pinot Gris, and Pinot Blanc.
Quality Levels. The lowest quality of German wine is Tafelwein (table wine), but few wines bear this designation. A marginally higher category is Landwein (country wine), which establishes a broad geographical identity for the wine. The twoquality wine levels are Qualita¨tswein bestimmer Anbaugebeite (QbA) and Qualita¨tswein mit Pra¨dikat (QmP), which are made from riper grapes that are subject to higher standards. QbA represents basic quality wines; more than two-thirds of German wines are at this level. Germany’s premium quality wines, QmP, are made from fully ripe grapes and are elegant, noble, and long lived. About a quarter of German production qualifies as QmP.
The following Pra¨dikate (special attributes) denote six ascending levels of ripe- ness within the broad designation of QmP: Kabinett (fully ripened grapes), Spa¨t- lese (late-harvest, fuller-bodied wines), Auslese (selected fully ripened grapes), Beerenauslese (BA; overripe, individually selected grapes), Eiswein (ice wine, made from grapes that are harvested and pressed while frozen), and Trockenbeer- enauslese (TBA; highly raisinated, botrytis-affected grapes).
Trends. Theclimate change over the last few years has produced a nearly unbroken string of good vintages since the early 1990s. With the expectation of continued warming, ‘‘southern’’ grape varieties, such as Chardonnay, have increasingly been introduced, and plantings of red varieties have increased.
Germans have recently begun drinking morered wine than white for the first time, and more than a third of German winegrowing areas have already been planted with red varieties.
As wine has become more popular as an accompaniment to German meals, the preference nowadays is for dry wines. The association of Germany with sweet white wine is so deeply fixed abroad that it has been possible only in the last few years to export modern dry German wines to other countries, along with red wines, but the recent upsurge in exports may be an indication that this is changing. In the United States, Riesling is currently experiencing a remarkable renaissance, becoming more and more popular inrestaurants in particular, although dry wines remain underrepresented. This new appreciation for Riesling is also spreading to other countries and promises a magnificent future for German wine.
Bruce Schneider
Further Reading
Diel Armin, and Joel Payne. Gault Millau, the Guide to German Wines. Munich: Johannes Heyne Verlag, 2005.
Brook, Stephen. The Wines of Germany. London: Mitchell Beazley, 2003. Price, Freddy. Riesling Renaissance. London: Mitchell Beazley, 2004. Wines of Germany. www.germanwineusa.com.
GLOBALIZATION
Globalization refers to the growing interconnections among individuals, busi- nesses, and governments that transcend national boundaries and threaten—or promise, depending on one’s point of view—to make the concept of countries obsolete. It is usually focused on multinational corporations that have ownership, production facilities, and business interests spread among numerous countries or on supranational official organizations, such as agencies of the United Nations or theEuropean Union that have the power to override the preferences of specific governments in the interests of the collective group. Globalization is often tied in withinformation technology, because the Internet and related technologies have made it feasible to conduct business or governmental affairs worldwide as easily as across the street.
For the wine industry, globalization takes on a somewhat different meaning, because there are far fewer opportunities for the globalization of wine than of most other products. In the first place, wine is an alcoholic product and is there- fore subject to much closer scrutiny when crossing national borders than, say, soft drinks, electronic components, or textiles. Second, wine is perishable, as well as bulky and heavy, so there are few economies available in transporting it other than in a more or less straight line from producer to consumer. In a wine discus- sion, the term globalization is more likely to refer to the ever-increasing availabil- ity of wines from other countries in local markets or to a trend toward greater uniformity among wine styles from all countries.
There are multiple ways of ‘‘going global.’’ The most basic is becoming an exporter. Selling products abroad allows a company to spread risk or capitalize on opportunities in multiple markets and hopefully avoid the wild ups and downs