Stanford GSB

Stanford GSB

Monday, January 18, 2016

1976 Paris Tasting - Transforming the Californian Wine Industry

Today, we probably would have had no qualms regarding California as the leader in producing good quality premium wine. Many of us would have gone to Napa Valley for a holiday, and enjoyed ourselves in a place regarded as having good food, wine, hospitality and culture.

However, in the 60s and the 70s, California wine industry was no where near to what it is today.  As we discussed last week, production was dominated by cheap jug wines. There was practically no wine tourism industry to speak of.  A few leaders, like Robert Monday, which we learnt about in class last week, were trying to craft higher quality products, and penetrate both American and international markets.  It was a very challenging time because back then, France had a de facto monopoly on fine wines.  Even most Americans regard European and particularly French wines, as far better than California wine.

The Paris Tasting of 1976 marked the transformation and the launch of the accelerated growth of the California (and to some extent, the American) wine industry. In a blind tasting of French and California wine conducted by French experts, California wines won.  Of the four white wines, California white wines took three of the top four spots. Of the red wines, California red wine, produced by Stag's Leap Winery, took top spot.

Californian wines were henceforth regarded as one of the highest quality wine in the world. This enhanced branding translated into better pricing and economic values.  The economic potential, and possibility, inspired American winemakers to expand their operations.  Between 1980 and 1990, the number of Californian wineries tripled to about 900, as entrepreneurs moved in, bought land and planted vines.  The economic value to the producer soared sevenfold to 6.8billion over the same period.

For Stag's Leap Wine Cellars, that won the red wine blind tasting, the Paris Tasting conferred on it an branding aura that lasted till today and continues to be reinforced.  Stag's Leap Wine Cellars is regularly featured in books, movies and even the Smithsonian (for launching the American wine industry.  The premium Cask 23 retails for $250. The vineyard itself is beautiful, and receives many tourist visitors annually.  The Cellars was sold to Ste. Michelle Wine Estates and an Italian Winemaker Piero Antinomy for $185million in 2007.

In summary, the 1976 Paris Tasting marked the transformation and launched the accelerated growth of the California wine industry. For Stag's Leap Wine Cellars, it conveyed a halo on the brand that lasted till today and continues to strengthen.

2 comments:

  1. I highly recommend the fantastic 2008 movie about this, Bottle Shock, starring Chris Pine. Summary to be found here: https://en.wikipedia.org/wiki/Bottle_Shock

    The wrinkle the film adds to the story is that the bottles of California Chardonnay are brown when they arrive in France (due to "bottle shock" from the lack of oxygen in the wine-making process), and that the protagonists first believe the wine has gone bad...when really it's just a temporary effect.

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  2. I was just in Napa this weekend, and I heard two different winemakers make mention to the 1976 Paris Tasting. Still the single most significant event to happen in American winemaking and the catalyst behind the development of the American wine economy.

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