Contact
AAWE
Economics Department
New York University
19 W. 4th Street, 6FL
New York, NY 10012, U.S.A.
Tel: (212) 992-8083
Fax: (212) 995-4186
E-Mail: karl.storchmann@nyu.edu
The most-visited winery in the U.S. is not in California. The Biltmore Winery in North Carolina entertains about a million guests per year. By comparison, the Korbel Champagne Cellars hosts about 120,000 visitors and Robert Mondavi is in the neighborhood of 100,000 (Horiuchi, 2011 and Schlabach, 2011).
This is one of the anecdotes that Prof. Ian Taplin includes in a lively and entertaining history of the North Carolina wine industry. The book is filled with anecdotes about people, places and wineries. It also includes speculation about what forces might explain the recent revival of viticulture and wine making since 1990. But the work suffers from two defects. First, Taplin does not identify the position of the North Carolina wine industry in the national and global wine market. Second, he has tried to use an analytical framework (knowledge-based clusters) to add structure to his history. Taplin is not an economist and has allowed the lure of the cluster idea to blind him to other considerations.
Wine has been made in the southeast from the native muscadinia rotundifolia grape, commonly called muscadine, since the 1600s. But the real history of North Carolina winemaking begins after the end of prohibition.
Prohibition began in North Carolina on May 26, 1906, eleven years before the 18th amendment was adopted, persisting for five years after repeal. There was a surge in wine production in the 1970’s when the state imposed a differential sales tax on wine from outside the state, causing muscadine wine production to jump from virtually nothing to a high of 200,000 gallons per year. Production collapsed when the tax was ruled unconstitutional.
According to Taplin, vinifera plantings in North Carolina started in earnest in the Yadkin Valley and northern Piedmont in the early 1990’s. There were about 21 vinifera wine-makers and 200 growers by 2001 (Taplin, 2011, p. 78).
Taplin lists several causative factors – people like Charlie and Ed Shelton with the vision to see the Yadkin Valley as the “Napa Valley of the East,” (Taplin, 2011, p. 86), knowledge network effects of local wine production clusters, retirement of growers of traditional crops (especially tobacco), growing cultural acceptance of alcohol, and anticipation of the removal of the U.S. tobacco quota and price supports (finally ended in 2004).
Taplin believes the dynamism of clusters and of key North Carolina personalities caused this growth, but offers no stronger evidence than proof by anecdote:
“ . . . the number of wineries would double again every two years up to the present. . . . one can discern a pattern of trial-and-error learning, a gradual accumulation of viticultural knowledge and the establishment of informal procedures for exchange of tacit operational details.” (p. 69)
…
“One can see [. . .] how a series of intersecting events has produced circumstances that enabled an incipient market to develop. It did so through the growth of informal structured interactions based upon cooperation and knowledge exchange that provided allocative efficiency to firms.” (p. 100)
We have two comments about these excerpts. First, clusters create allocative efficiency? A citation for this claim would have been nice. Second, this dynamic is nothing new. In other regions, winemakers routinely help each other. At the 1981 opening of the Amador Foothill Winery, owner Ben Zeitman thanked Bardon Stevenot who had been making wine nearby for several decades. Although Taplin did find that a few North Carolina winemakers obtained advice or hired staff from out of state, he paints a picture of a very insular wine industry. North Carolina winemakers mainly talk to each other.
This is the first flaw in the analysis. Taplin has failed to recognize the transmission of misinformation. He complains that North Carolina vinifera wines have a vegetal smell caused by methoxypyrazine, a problem which can be eliminated using well-known vineyard management techniques (Scheiner, et al., 2009). According to Taplin many North Carolina winery owners believe the vegetal smell and flavor are virtues rather than flaws to be fixed. Taplin fails to recognize that when a cluster is closed, misinformation transmits and becomes group truth just as easily as good information.
The second major flaw is Taplin’s failure to acknowledge the terror dimension of geographic cluster formation in the wine industry. Wineries tend to be built in areas that have appropriate terroir – absolute advantage – for growing vinifera. Terroir is at least as important as knowledge in fostering growth of a winery cluster.
Taplin stresses the role of tobacco at various places in the book. For over 50 years, North Carolina tobacco growers received about 38 percent of all tobacco support payments, the most of any state (Tiller et al., 2004, Table 2, page 8). Families kept their land and grew tobacco. California, a state without significant tobacco price support, started reviving wine production promptly after prohibition was lifted in 1933. In North Carolina wine production only began to pick up around 1990. However, after spending many pages discussing the transition from tobacco farming to growing vinifera, it turns out that only 1–2 percent of tobacco growers actually made this transition.
There are numerous pages scattered throughout the book that extoll the virtues of the Biltmore Winery. As mentioned earlier, Biltmore is the most-visited winery in the U.S. One reviewer (Lima) has tasted Biltmore wines. They are very similar to California wines. A search of the Biltmore Winery web site reveals their secret (Biltmore, 2011). Of Biltmore’s 17 wines, 16 are made from at least 50 percent California grapes. Only one (a chardonnay) uses 100 percent North Carolina grapes. Taplin’s use of Biltmore as an example of a successful North Carolina winery is misleading in the extreme. He does note that Biltmore sources juice from California and New York, but he attributes this to the inability of North Carolina growers to meet the demands of a winery producing 150,000 cases per year (p. 70).
But perhaps there is another reason. Recall the earlier discussion of the prevalence of methoxypyrazine in North Carolina grapes. Perhaps Biltmore is simply purchasing superior vinifera grapes from California.
The economic analysis in this book is often confused. For example, “. . . financial resources necessary to sustain them for years of red ink on the balance sheet” (p. 6). Few companies will survive long with red ink on the balance sheet. However, they might last several years if they only have red ink on their income statement.
Taplin’s frequent references to examining “these issues empirically” (p. 29 is one instance) leave the reader gasping for actual data. There are exactly four charts or tables, one with an obvious error. The metrics in Table 4.1 do not agree with those in the text. The table claims yields of 1,875 to 4,714 tons per acre. In the text yields of 2 to 8 tons per acre are cited. This glaring mistake makes the reader doubt the validity of the entire enterprise.
Readers of this book should focus on the lively narrative punctuated by quotations from Taplin’s numerous interviews with winery owners and winemakers. However, we recommend skipping the attempts at economic analysis. Reading those sections will only lead to confusion and headaches.
For the reviewers, the best part of the book review process was being spurred to begin reading Thomas Pinney’s masterly two volume history of wine in America (Pinney, 1989 and 2005). Naturally, Pinney includes a discussion of wine in North Carolina. See that book reviewed in this journal (Summer, 2006).
Tony Lima
California State University, East Bay
and Norma Schroder
Blue Weasel Productions
References
Biltmore Winery (2011). http://www.biltmore.com/our_wine/trade.asp. Accessed June 25, 2011.
Horiuchi, G. (2011). Communications Manager, The Wine Institute. Personal e-mail communication, July 11.
Pinney, T. (1989). A History of Wine in America From the Beginnings to Prohibition. Berkeley and Los Angeles, California: University of California Press.
Pinney, T. (2005). A History of Wine in America: From Prohibition to the Present. Berkeley and Los Angeles, California: University of California Press.
Scheiner, J.J., Sacks, G.L. and VandenHeuvel, J.E. (2009). How viticultural factors affect methoxypyrazines. Wines & Vines, November, 2009. Available at http:// www.winesandvines.com/template.cfm?section=features&content=68769&ftitle= How%20Viticultural%20Factors%20Affect%20Methoxypyrazines. Accessed September 24, 2011.
Schlabach, S. (2011). Director of Retail Visitor Services, Korbel Champagne Cellars. Personal e-mail communication July 13.
Summer, D.A. (2006) Review of T. Pinney’s A History of Wine in America: From Prohibition to the Present. Journal of Wine Economics, 1(2), 191–194.
Taplin, I. (2011). The Modern American Wine Industry: Market Formation and Growth in North Carolina. London: Pickering & Chatto.
Tiller, K.J., English, B.C. and Menard, R.J. (2004). Tobacco quota buyout legislation: economic impacts in the southeast. Paper presented at the Southern Agricultural Economics Association, February 17, 2004. Available through the University of Tennessee Institute of Agriculture at http://agpolicy.utk.edu/pubs/tillersaea04buyou timpact.pdf. Accessed September 7, 2011.
Zeitman, B. (2011). Co-owner, Amador Foothill Winery. Personal communication, September 12.
AAWE
Economics Department
New York University
19 W. 4th Street, 6FL
New York, NY 10012, U.S.A.
Tel: (212) 992-8083
Fax: (212) 995-4186
E-Mail: karl.storchmann@nyu.edu