Screwcaps and New World Wines a Marketing Innovation Charlotte Read Villa Maria Estate, New Zealand March 21 2010

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2. Presentation Outline The Premise for screwcaps History of screwcaps use in wine Impact of Screwcaps - the rapid spread of screwcaps – especially in the New World Does the use of screwcaps represent a Marketing Innovation in the wine industry? The future  2 This presentation is not a closure debate. Accordingly to a recent article in Drinks Business Jamie Good said that closures were the hot topic in the wine industry, but now to talk about it seems a little last year, or last decade..This presentation is not a closure debate. Accordingly to a recent article in Drinks Business Jamie Good said that closures were the hot topic in the wine industry, but now to talk about it seems a little last year, or last decade..

3. Why Screwcaps?A picture says a thousand words 3 This is a Marketing Innovation Seminar therefore this talk will not focus on the technical aspects of screwcaps. But this famous picture from Godden’s AWRI study shows the huge degree of bottle variation under cork closure. P. Godden et al (2001) Conclusions about Screwcaps (Analytical): 1. Lowest Reduction in Free and Total SO2. 2. Highest retained Free SO2. 3. Highest retained Ascorbic Acid. 4. Lowest incidence of Browning (OD420). 5. Least variation between bottles for all compositional variables. The Australian Wine Research Institute conducted extensive research using bottles of a US$7 Australian Semillon sealed with 14 different closures in 1999 :   two different grades of natural cork 2 technical corks incorporating a synthetic component 2 Twintops 9 varieties of synthetic 1 screwcap   Scientists then used a range of criteria to test the effectiveness of the stoppers. The 3 main tests were tainting, extraction force and sulphur dioxide retention. The shock winner was the screwcap, which was easy to get off, retained the most SO2 and had virtually no tainting. The results showed that screwcap is by far the most effective seal against oxygen. If you want to prevent a wine from going brown and losing freshness this research clearly showed a screwcap is best. This is a Marketing Innovation Seminar therefore this talk will not focus on the technical aspects of screwcaps. But this famous picture from Godden’s AWRI study shows the huge degree of bottle variation under cork closure. P. Godden et al (2001) Conclusions about Screwcaps (Analytical): 1. Lowest Reduction in Free and Total SO2. 2. Highest retained Free SO2. 3. Highest retained Ascorbic Acid. 4. Lowest incidence of Browning (OD420). 5. Least variation between bottles for all compositional variables. The Australian Wine Research Institute conducted extensive research using bottles of a US$7 Australian Semillon sealed with 14 different closures in 1999 :   two different grades of natural cork 2 technical corks incorporating a synthetic component 2 Twintops 9 varieties of synthetic 1 screwcap   Scientists then used a range of criteria to test the effectiveness of the stoppers. The 3 main tests were tainting, extraction force and sulphur dioxide retention. The shock winner was the screwcap, which was easy to get off, retained the most SO2 and had virtually no tainting. The results showed that screwcap is by far the most effective seal against oxygen. If you want to prevent a wine from going brown and losing freshness this research clearly showed a screwcap is best.

4. Why Screw Caps 4 Because this is not a technical presentation you will not see 2,4,6, trichloroanisole typed anywhere in this presentation!Because this is not a technical presentation you will not see 2,4,6, trichloroanisole typed anywhere in this presentation!

5. Urban Myths A cork is required for wine to develop and age properly Screwcaps might be OK for wines you drink young, but Great wines need corks to age Wine needs to breathe and only a cork allows this Screwcaps can cause reductive characters in the wine THEY ARE ALL WRONG - LIBRARY OF WIDESPREAD EVIDENCE NOW AVAILABLE TO DISPEL MISCONCEPTIONS 5

6. Where did the screwcap revolution all begin? A map showing the centre of the winemaking universe ? The hilarious thing about screw caps is that the technology was developed in France, but they are among the last producer countries to widely embrace the closure. As cork has been used for centuries – people are very suspicious of change. Michel Laroche said the winds of change blow very slowly in the old world. In 2004 on 3 well known producers were using SC on their ultra premium wines – Andre Lurton, Paul Blanck and Laroche It has been the New World wine producers; the collaborators on this Down2Earth stand that have put it on the mapA map showing the centre of the winemaking universe ? The hilarious thing about screw caps is that the technology was developed in France, but they are among the last producer countries to widely embrace the closure. As cork has been used for centuries – people are very suspicious of change. Michel Laroche said the winds of change blow very slowly in the old world. In 2004 on 3 well known producers were using SC on their ultra premium wines – Andre Lurton, Paul Blanck and Laroche It has been the New World wine producers; the collaborators on this Down2Earth stand that have put it on the map

7. The Beginnings 7

8. Decade of the Screwcap 8

10. Screw Caps Today Quoted in Decanter, March 2009 as 2.5 billion units - 14% of the 17.5 billion global wine market. 10 Latest News Screwcaps take 15% of global market March 9, 2009 By Jamie GoodeScrewcaps now boast a 15% share of the world's closure market, according to a leading screwcap manufacturer.Italian closure company Guala claims global screwcap sales have increased by 25% in the past year to 2.5 billion closures. Anne Seznec of Guala said recent growth had come from Europe, which is regarded as a tough market for alternative closures. Related stories: Nomacorc leads major study into closures NASA technology found to remove cork taint Screwcaps are best: Decanter verdict'We've seen a lot of growth in France, Germany, Austria, Spain and Italy,' said Seznec. 'Screwcap sales have been growing much faster than we'd thought, since the end of 2006.' We agree with Guala that the wine screw cap market size globally is about 2.5 bn closures', said a spokesperson for Nomacorc, a leading synthetic cork producer. 'Synthetics represent 4 bn closures', they added. Carlos de Jesus, marketing and communications director of cork giant Amorim, suggested these figures were an over-estimate, and put current screwcap sales at 1.7 bn. He believes sales of both screwcaps and natural cork will increase in coming years at the expense of synthetic corks. According to Seznec's estimates, European screwcap sales top one billion. The Australian and New Zealand wine industry use 800m screwcaps every year while Argentina and Chile account for 250m screwcap sales. 'There was fantastic growth in Argentina last year,' says Seznec, 'which surprised us.' Approximately 17.5bn closures are used each year. Latest News Screwcaps take 15% of global market March 9, 2009 By Jamie Goode

12. Screwcaps and New World Wines – to add figures for countries in red Percentage of wines under screwcap New Zealand – 95% California South Africa Chile Argentina Australia - approx 70% 12

13. New Zealand and Screwcaps Such high uptake from New Zealand producers due to a number of factors: History of innovative attitude (stainless steel, refrigeration canopy managements etc) Not bound by traditions/ legislation. Collective approach - big and small producers Willingness to include breadth of offering: red and white/ all price points. Signature variety of Sauvignon Blanc particularity suited to screwcap, but quickly adopted for all varieties. 13

14. Not Just New World Producers New World countries driving this, but also estimated 1 billion sales from European wines Jamie Goode, Decanter March 2009 2002 Domaine Laroche, the first French producer to use screwcap on Grand Cru wines. In 2005, Burgundian négociant Jean-Claude Boisset announced its move to screwcaps in these words: "The tasting which triggered this off was that of a distinguished Mercurey 1966 closed by a screw cap, presented by a dignitary of the Chair of Oenology at the Université de Bourgogne…. It turned out that the wine had an absolutely fantastic freshness, great body, and was in superb condition."  14

15. Is the Screwcap a Marketing Innovation? Widespread introduction of the screwcap, driven by winemakers, seeking improved quality and reliability in their wine. Without 100% commitment to screw cap to guarantee quality Villa Maria could not remain true to its commitment to be New Zealand’s most awarded winery which is the centre point of its positioning However Michel Laroche back in 2004 stated that innovation is one thing. Transforming it into a reality that is widely accepted by the consumer is quite another... 15

16. Innovation in Marketing Innovative Marketing strategies needed to overcome initial resistance from some trade and consumers with regards to lower quality perception/ loss of ‘romance’. Breadth of offering crucial – not just drink-now, lower priced wines - top quality wines (red as well as white) offered. (VM along with other NZ wine producers started using screwcaps with our Reserve wines first rather than lower priced wines) Hit the influencers – use of comparative tastings crucial: Media – “I didn't know it at the time, but I was about to experience one of the most profound wine comparisons I have ever encountered”. Tyson Stelzer at comparative tasting for Felton Rd 2001 Pinot Noir in 2007 Trade/ distributors Sommeliers /restaurateurs - “ screw caps.. offer better freshness and overall quality”. Joelle Marti, wine buyer Great Eastern Hotel, London Retail :supermarkets /independents Examples of how Villa targeted these audiences 16 By Tyson Stelzer – August 2007www.winereviewonline.comI'm about to give you two glasses of the same wine, one from a cork-sealed bottle and the other from a screw-capped bottle. Can you tell me which is which? It's a question I faced last month when I visited Felton Road winery in Central Otago, New Zealand. I didn't know it at the time, but I was about to experience one of the most profound wine comparisons I have ever encountered. I wish I could take you back there with me, but for now you'll just have to accept me handing you the two glasses in cyberspace and asking you to decide which is which from my notes. The wine was the Felton Road 2001 Chardonnay. The glass on the left was a brownish yellow colour, while the wine on the right had a light yellow tint. A quick check of the nose revealed that the wine on the left was corked, and it was quickly whisked away and replaced with another glass. The replacement was the same colour as the first, with a slightly flat bouquet and a palate showing spicy melon flavours. It was clearly oxidised and would, no doubt, have been a better wine some years earlier. The wine on the right was full of life, with integrated peach and grapefruit flavours which lingered on a long finish, supported by fine, minerally acidity.How did you do? Cork-sealed wine on the left; screw cap on the right? No prizes for getting this far!Now let's make it harder. 2001 Felton Road Pinot Noir. Same question. This time the colour told me nothing--they were identical. Left: Spicy, lifted and dusty on the bouquet. The palate displayed attractive red berry fruit, great length, fresh acidity and well-defined, slightly angular tannins. Right: Slightly muted at first, and the finish was a little short. It hadn't been decanted, but after a few minutes of swirling in the glass, attractive spice and red berry fruits blossomed and the finish filled out to even greater length than the wine on the left. Fresh acid again, but the real difference lay in the structure. Here the tannins were finer, more integrated, softer and more rounded. Which is which? My guess was that more integrated tannins pointed to a cork seal. I got it wrong.The question of the ageing of red wine under screw caps has been hotly debated for years. But it's about to take on a whole new perspective, because for the first time in history we now have commercially significant quantities of premium red wines with sufficient bottle age to show some development. The opportunity to taste these wines is now available to everyone. In the past, such wines have been limited to very rare tastings. Now they're going public. Screw caps have been on trial since 1961, and in commercial use for wine since 1972. The first formal trial was conducted in Australia during the 1970s under the direction of Dr. Bryce Rankine. The trial involved some 3000 bottles, red and white, three different screw caps, corks, and countless tastings by trained panels over seven years. By the end of it all, Rankine concluded that this trial confirmed "unequivocally," that, 'the range of wines examined retained their quality with a Stelvin closure significantly better than with a cork.' Reds and whites. This announcement was made almost thirty years ago, but it has only been in recent times that we have seen evidence of the ability of wines to age under screw cap for extremely long periods of time, thanks to bottles which remain from those original trials of the 1960s and 1970s. It is in this area, more than any other, that the screw cap offers an advantage which cannot be replicated by any other alternative closure which has--or will be--developed. Winemakers can have confidence in the ability of the screw cap to sustain a wine long-term because we now have forty-five years of evidence to demonstrate it. In 2005, Burgundian négociant Jean-Claude Boisset announced its move to screw caps in these words: "The tasting which triggered this off was that of a distinguished Mercurey 1966 closed by a screw cap, presented by a dignitary of the Chair of Oenology at the Université de Bourgogne…. It turned out that the wine had an absolutely fantastic freshness, great body, and was in superb condition." The wine was tasted in the spring of 2004, at all of thirty-eight years of age. It emerged from the early screw cap tests conducted at the University of Burgundy, among the first of their kind in France. An even older remnant of these trials, a 1964 Nuits St Georges Premier Cru Burgundy, was opened at a recent tasting and, in the words of Professor Feuillat in the French journal Revue des Oenologues, it "astonished participants by its remarkable state." That's all very well for Pinot Noir, but what about big reds with firm tannins that need to be tamed? In 2005 I had opportunity to present a series of seminars for the wine trade in Japan. One of these involved a comparative tasting of wines under cork and screw cap. The highlight was a bottle of 1996 Penfolds Bin 389 Cabernet Shiraz which had been bottled for a study investigating the role of oxygen in the ageing of wine. Under screw cap, the wine was a delight, but the contrast under cork was dramatic. The first cork-sealed bottle showed flavors and aromas of cork wood. The second had a dusty character and its fruit was flat and lifeless. Neither showed the fruit definition or the balanced, aged complexity of the screw-capped bottle, which had developed exactly as one would hope for a full-bodied red almost a decade into its life.Comparisons such as these, and many others like them, confirm that wines can certainly age magnificently under screw cap. And yet it's also apparent that they do not age in exactly the same way that they do under cork. Peter Godden of the Australian Wine Research Institute (AWRI) said recently, "in virtually every case, this is a positive and not a negative thing." He emphasised that the notion that "optimal" ageing is defined by the way in which wine ages under cork is now redundant. Cork is not a reliable reference point and should no longer be regarded as the benchmark for ageing comparisons. He stressed that in his closure trials, whenever wines were bottled under different closures, they were changed so radically that they could effectively be thought of as different wines. They aged not only at different rates but in different ways. The question of the ageing rate of wines in screw cap has been a hot topic of late. It is my belief that the rate at which mature notes (or "characters," as we say Down Under) develop in screw-capped wines is in fact absolutely no different to that under traditional closures. This is evidenced by the fact that wines under screw cap age at a similar rate to those with the very best corks. For a wine under an average cork, however, oxidation effects give the impression of accelerated ageing, which has led to the notion that wines mature slower under screw caps. I believe that the absence of oxidized characters in screw-capped wines gives the mistaken impression of slower ageing. And this is exactly why I thought the Felton Road Pinot Noir with more integrated, less aggressive tannins, was the cork-sealed wine. If you ever doubted that red wine tannins could develop and mature under screw cap, seek out this wine. It is proof in a bottle that red wines can not only age well under screw cap, but better than they can under cork. And not just this wine. Earlier in the same week that I tasted it, the same exercise had been conducted with a much larger selection of red and white wines from the 2001 and 2002 vintages in Central Otago. The result? Across the group of winemakers present, the screw-capped wines were preferred over the cork-sealed wines. In every single case. We can argue about oxygen and wine ageing. We can debate about different methods of measuring oxygen that passes through corks compared with that through screw caps. We can go on about random oxidation, flavour "scalping," cellaring conditions, whatever. But, at the end of the day, when the scientists put away their meters and notebooks and we are left with two glasses on the table in front of us, showcasing the same wine from bottles with different seals, there is only one question that matters. Which wine is better? It's a comparison that I encourage you to make at every available opportunity. Buy every wine you can find under different closures. Taste them young, taste them old, play "options" games to trick your friends, compare the wines, and decide for yourself. And while you're at it, keep an eye out for reductive characters. Hydrogen sulphide is a natural by-product of fermentation, but it can show itself in a wine in a variety of objectionable ways, in aromas and flavours that range from struck flint and burnt matches to rubber, cabbage and rotten eggs. These are described as "reductive" or "reduced," and in sufficient concentration they can overwhelm any wine.More criticism has been levelled at screw caps by the media in relation to reductive characters than any other fault. I encourage you to view these accusations objectively and judge for yourself. If there is a causal link between screw caps and reductive characters, as some claim, then we should be tasting more reductive wines under screw cap than under cork. Check it out for yourself, but my experience, and that of hundreds of experts with whom I have had this conversation, is quite the opposite. In my own tastings in recent years, comprising thousands of predominantly Australian and New Zealand wines, I have encountered more reductive wines under cork than I have under screw cap. The managing director of the AWRI, Professor Sakkie Pretorius, commented recently that "The idea that there is a high incidence of post-bottling reduction in wines sealed with screw caps is a false premise. With Australian wines, where the AWRI has particular expertise, this is demonstrably not the case…. Our position, which we believe is undeniable, remains that the propensity of a wine to develop 'reductive' aromas post-bottling is a function of the wine, and that post-bottling reduction is not the 'fault' of the closure but may be exacerbated by the closure if the wine has a propensity for such aromas to develop." "In his Screw Cap Symposium presentation, Peter Godden discussed data from one of our AWRI Advanced Wine Assessment Courses which indicates a higher incidence of reduction in wines sealed with cork compared to wines sealed with screw caps. Two subsequent courses have provided similar data."A lot has been written about screw caps as wine closures in recent years, but if you're not up to speed on the debate, all you really need to do is get out there and taste the wines (and this is always the most fun way to learn as well!). With a bit of practice, you might just do a better job than I did in picking which Felton Road Pinot was which. Best of luck! Tyson Stelzer has been named the world's most prolific writer on the topic of screw caps by The Oxford Companion to Wine. The Australian writer is the author of 'Taming the Screw: A Manual for Winemaking with Screw Caps' and five other wine books. He is a contributor to the closure entries in the third edition of The Oxford Companion to Wine and has presented seminars on the subject in five countries. Tyson was a finalist for the 2006 International Wine and Spirit Competition's Communicator of the Year. His books are available from www.winepress.com.au By Tyson Stelzer – August 2007www.winereviewonline.com

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18. Innovations in Marketing 18

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20. In Summary.... Screwcaps use in the wine industry has been a dramatic and very positive development over the past decade and the customer is getting a better quality wine – they are very unforgiving of clumsy wine making Will be great to observe wine consumers’ screw capped bottle aging expectations rise. As the wines—commercial and great, red and white—live longer and develop better in bottle Cork producers will continue down their own path of innovation The growth in the use of screwcaps has been rapid and will continue. According to the world's best known wine critic, Robert Parker, wines bottled with corks will be in the minority by 2015 20