TDA Article

In the future, pockets of high-quality wine production will emerge around North America which are not on
the West Coast. Most of these wines will be characterized by higher mineralities and will, as such, be much
more similar to their European counterparts than the West Coast wines we are accustomed to. In the more
distant future, 20-30 years from now, these “pockets” may form what will be a “Continental” wine industry,
which will exist parallel to the “Coastal” wine industry we have now. Additionally, the Continental industry
will mostly NOT be multi-varietal: we will see high-quality riesling from Michigan, Chardonnay from
Massachusetts, Merlot from Virginia, and Tempranillo from Texas, among others. In this regard, the
Continental industry will look more like a wine map of Europe with varieties spread out North to South and
East to West. Californians think nothing of having riesling and chardonnay growing next to Cabernet and
Merlot, but globally speaking, this is not the norm.

To make matters more complicated, the production techniques and procedures of high-quality,
high-mineral wines are mostly unknown to American winemakers. The Californians have never had a need
for this knowledge. The rest of the continent is just now emerging. Very few Texas winemakers are even
aware of how severely impacted their fruit is by their terroir, since they have learned from California where
minimal impact exists. (Arguably, there is more change in terroir between St. Julien and St. Estephe in
Bordeaux than in the entire state of California.) Without radical, even diametrically opposite, changes in
technique, the result is often thin and chalky wines more reminiscent of the Languedoc or Roussillon
districts where the French produce their cheapest wines. Having grown up in the beverage industry and
been a professional wine buyer with money on the line, I learned to recognize these flavors immediately.
Likewise, these thin, chalky flavors are the same for which Texas wines have been much maligned.

So where does the change begin? Certainly in the winery, but it has to start before that. Certainly, better
vineyard techniques are required, but it starts before that too. I am entering my 30th growing season. My
work has been scattered over 6 vineyards with 34 grape varieties now, and spanned Texas almost 500
miles. Tragically, the number of well-situated vineyards planted to the correct varieties for each locale in
Texas are very few. Equally tragic, almost every vineyard begins with land that people already own, then
they go in search of something that will work, or survive at best, dooming the project from the start. This
process automatically eliminates “ideal” sites from consideration in favor of randomly developed sites based
on convenience. (In fact, land may be the cheapest part of starting a vineyard in Texas.) Good business
dictates the opposite: Make a solid plan. Decide what product you want to produce. Start with an ideal site
so that everything is in your favor from the outset. This is the formula for success. If you do not understand
the product you are trying to produce, then you need a lot more experience before starting, or subcontract
part of the process from someone who does.

Thirty-two years ago, I was a young man sitting at the breakfast table of a very famous winemaker in
Napa. I posed the question, “How much of what you do is within your control, and how much can you
NOT change in the winery?” He answered immediately, “If you compare the whole process to the
alphabet, I take over at the letter “R”. Everything else I cannot change.” I have lived by this edict my whole
life and have never found it to be untrue. The production of great wine is a sequence of events that must
line up and fall like dominoes until the last drop is in the bottle. The state of the Texas wine industry today
is a collection of efforts so randomly assimilated, that it will take decades to sort it out. And worse, so
many wineries have given up trying, that they have simply resorted to selling California wine (mostly bad
California wine) often deceptively passed off as Texas wine. More on that in Question #3.

The Vineyard at Florence is a special place. Although it offers diverse amenities, I believe that a large
number of people who build there will be people who are fairly serious about food and wine. These people
often dream of living in a villa overlooking a vineyard in Italy or France someday when they are able. But the
truth is that by the time you might be able, it's really hard to rip apart your social fabric of family and friends
and move 7000 miles away. With it's excellent Old World architecture, stunning views of the vineyard, and
proximity to Dallas, Austin and Houston so people can be just far enough (but not too far) away, it becomes
the perfect place for people who would rather watch the Food Network than the Golf Channel. Having
high-quality wineries on site that produce premium wines from the real vineyards on the estate where you
can know the winemaker and share the wines and experiences with your friends creates amazing
opportunities for entertaining.

Developers have approached me several times over the years about combining vineyards and real estate,
but I have never seen a project fully developed like The Vineyard at Florence. Usually, the vineyard is a
afterthought, is not properly cared for, and dies after a few years when they find out how hard the work is to
take proper care of it. To my knowledge, the only other fully developed projects like The Vineyard are in
California and New York.

Obviously, tourism works extremely well with the wine industry. Having been one of a small nucleus of
retailers that introduced Napa's famous brands to Texas (Caymus, Chappellet, Phelps, and many others) in
the 1970s, I remember Napa as a very different place than it is today. Far from the glitz and glamor it
represents now, it was a land of fruit stands, tractor dealers, orchards and even cattle. The power of the
wine industry to transform an area into a tourist destination is remarkable. However, there are some caveats:
First and foremost, to be a lasting success, it needs to be the real deal. People will eventually demand
authenticity. To define a wine destination, the grapes need to be grown there and the wine needs to be made
there. Texas is a big place, and people are certainly willing to accept that some vineyards are far away. But
passing California wine for Texas will kill wine tourism and permanently damage the Texas wine industry as
people realize how much of it is going on.

I think Fredericksburg does tourism as well as anyone. The city, the wineries, restaurants and stores have
melded beautifully into an exceptional destination. With all the amenities that have been added now, it surely
leads the state in the tourism area, although I still hear people express concerns about wine quality and
authenticity. Here at The Vineyard at Florence, even though we have some high-luxury in-house amenities,
we will never be able to offer visitors the breadth of things to do in Fredericksburg. However, our wines will
be the reason people come here, as we will have 9 wines between the two brands that are authentic Texas
Appellation estate-level wines of excellent quality ranging from $30-$80. The Inwood wines are already
served in over 150 of Texas' top restaurants and The Vineyard's wines will be of equal quality. We will also
have second-label wines at somewhat lower price points. Therefore, our target market is made up of
consumers who are serious about seeking out upper-echelon premium wines, plus we are much closer to
Austin and only 9 miles off I-35.

Besides tourism and real estate development, the restaurant industry holds many great and creative promises
for projects with wineries. Mandola certainly seems to be a leader in this area, and I think there are
opportunities out there for chefs who are willing to part with the notion that their restaurant must be in an
urban setting.

Ok, it's time to address the question I've been hinting at: The ultimate vision shared by industry insiders and
our fans in the public is that Texas will someday ascend to an authentic, peer-recognized, first-tier wine
region similar to the other famous regions we all know and love.

This will never happen as long as so much California wine is being sold by Texas wineries under less than
open and honest pretenses. This practice undercuts the very foundation of what a wine region is: a place
where grapes are grown and wine is made. A regional industry riddled with lack of authenticity results in a
public reputation that it is phony and contrived, like a tourist-trap. The authenticity question underlies 400
years of winemaking tradition and is the basis for the famous “Appellation” systems that people respect. We
will simply never graduate to peer acceptance in the larger wine industry without authenticity.

This is a ticking time bomb. People are driving out to Texas wineries every weekend for the experience of
Texas wine visits. They believe they are tasting Texas wines and are generously giving their support to these
businesses. These patrons feel betrayed and deceived when they find out that so much of the wine is
California wine. Worse yet, they report over and again that the wine was bad thinking it was Texas wine,
when they actually had bad California wine. That's even crazier.

Now, I'm well aware of all the problems. There aren't enough vineyards. There certainly aren't enough good
vineyards. The weather is bad. Disease is a problem. The list goes on. But why so many wineries then?
Does it not seem odd that people are willing to start wineries with no grapes and no intention of having any?
Obviously not, if they believe that nobody in the public cares about the authenticity of Texas wineries
producing Texas wine, or that they can “sell away from” this question in their presentation, and apparently
this is their position. Our position at Inwood Estates and at The Vineyard at Florence is the opposite.

I am not one to cast light on a problem without proposing a solution. The history and traditions of the wine
industry actually provide us with one and it is quite a good one for all willing to embrace it. Historically,
wineries have created what is known as “second-labels” which are wines they bottle and sell along with
their “primary” label bearing their name. These second-labels serve a variety of purposes including the
disposition of odd-lots leftover from their primary wines, lots that were not good enough to go into their
primary wines, as well as engage in the business of selling wines from outside their property or even their
region. Famous wineries everywhere have them: Chateau LaFitte has one, Mouton has one, Latour has
two. In the 1970s, Stags Leap introduced Hawk Crest. In fact, I was part of a small group that introduced
Liberty School to Texas for Caymus. There is no shame in second-labels, and there is also no risk of public
backlash. This is a much better practice than producing a line of wines with almost identical labels where
some wines are Texas and some are not. (Note to Consumer: The word “Texas” must appear on the
FRONT label and mean a “place of origin” for the wine to be classed as TEXAS Appellation.)

There is, however, one important thing about second-labels: they must cost less than the primary label. At
Inwood, we have “Segundo”, which obviously means “second” in Spanish. Our pledge to our customers is
that our primary line of estate series wines which bear the name “Inwood Estates Vineyards” will always be
TEXAS Appellation. The same will be true for The Vineyard at Florence brand. However, Segundo and
other second-labels which we will create for The Vineyard will be part Texas and mostly not. However,
they will sell for less money and the consumer will thereby get the right product at the right price and will not
be deceived.

The obvious long-term solution is to plant more well-situated, high-quality vineyards. Wineries will be
forced to do this when the authenticity question becomes insurmountable, and I suggest that if the immediate
locale of the winery is not well suited, then more outpost vineyards will have to be established to good
locations in higher elevations. Some of this is already being done in Terry County, and I predict we will see
a lot more in the future both there and elsewhere.