To Cork or Not to Cork: The Wine Industry's Battle over the BottleneckPublished: December 06, 2007 in Knowledge@Wharton
Anyone who has popped open a bottle of wine will agree with George Taber that it is one of the few sounds in the world that brings true joy to the listener. But if the opponents of cork have their way, that sound might disappear, as Taber, a veteran business journalist and author, explains in his new book, To Cork or Not to Cork: Tradition, Romance, Science, and the Battle for the Wine Bottle (Scribner).
For nearly three centuries, cork has been used to seal virtually every bottle of wine. Since the 1970s though, that dominance has come under attack by other forms of closure such as screw caps, plastic seals and glass stoppers. Wine closures are a $4 billion business world-wide, according to Taber. Each year, 20 billion closures go into wine bottles and increasingly they are not corks. What lessons can be learned from this battle for the bottleneck? Knowledge@Wharton asked Taber to address this topic. An edited version of that conversation follows. You may also watch the interview in the viewer provided below.
Knowledge@Wharton: What is cork, and why has it been used for so long to close bottles of wine?
Taber: Cork is one of the most mysterious and, in a lot of ways, one of the most wonderful products that nature has made. In the book I call it "nature's nearly perfect product." It's very light. That's why it's been used for fish floats and buoys. In fact, that was its very first use. Cork has been used for about 4,000 years, according to my calculations. And as a way to seal wine containers, it was used for about 1,000 years -- from 500 BC to 500 AD.
Then, for 1,000 years, it wasn't used as the world went to different things and trade collapsed after the fall of the Roman Empire. About 1600 it came back into use. And it, as you say, it has been the monopoly closure for close to 400 years. Throughout history, cork has always been considered almost a magical product.
In the 17th century, 1660 to be exact, there was an English scientist by the name of Robert Hooke, who was with The Royal Society of Scientists in England. He had developed a new microscope and, as part of the work, he went around and he picked up different products. They were just day-to-day products, like a piece of shell, and he looked at that under a microscope. Then he picked up a feather and looked at that under a microscope.
Cork was one of the things that he also looked at under a microscope. When he cut the piece of cork off, he looked at it and was absolutely amazed at the structure. He saw millions and millions of little things that were kind of rectangular boxes. These boxes reminded him of a monk's cell -- a place where a monk prays and sleeps. So he said, "Let's call those things cells." That is the derivation of the word cell -- as the building block of all living things. It goes back to cork.
Knowledge@Wharton: Why is it coming under attack now?
Taber: There are a couple of things. There was a chemical that nobody understood but that fouled certain bodies. It tainted certain wines. It's always been there and nobody knew what it was until about 1981, when a Swiss researcher discovered it. It's called TCA. There's a great debate over whether it's in 1% of bottles or 10% of bottles that are corked. But certainly, there have been a number of bottles that are tainted, which is a disaster. Somebody who spends $400 for a bottle of wine, takes the cork out and blah -- they don't want to drink it.
Knowledge@Wharton: Is there any way to know which bottles of wine are going to be affected?
Taber: It's totally random. There are two types of cork that are tainted. They are very similar, but nobody can really identify which is which in advance.
Knowledge@Wharton: How widespread is this problem and what are some of the alternatives that are coming up?
Taber: Theproblem was widespread enough to cause people to search for alternatives - especially after the first realistic alternative came on the market. As one of the researchers in the field told me -- and I thought it was a very insightful point -- "You know, you can only identify a problem when somebody comes up with a solution for it."
They identified the problem in 1981, which was this chemical compound called TCA or Trichloroanisole -2,4,6 -- and that's the limit of my scientific knowledge. But, it wasn't until about 1990 that a company in Seattle called Supreme Cork came up with the very first credible alternative.
There had been alternatives before, but Supreme Cork produced a plastic cork that got very wide acceptance, especially in the British market and then increasingly in other markets. It's a true entrepreneurial company that was started by a guy who had been a liberal arts graduate from The University of Washington. The first company that he started made plastic glasses; the second company that he started made plastic hockey helmets; the third company that he started was this cork company.
Knowledge@Wharton: You once said that the experience of the cork industry shows that monopoly is bad for consumers and also for the monopolist. What did you mean and what lessons could this offer to other industries?
Taber: I think that it makes monopolists lazy, not competitive, and they don't keep up with their industry. Because cork was the only source of sealing bottles, the cork industry is predominantly in Spain and in Portugal. Cork is made in a lot of countries, but its made best made around the Mediterranean, from Sardinia to Tunisia, just along the coast of the western Mediterranean.
The largest cork producer is Portugal; the second largest is Spain. And, they had a monopoly. It was a very inefficient monopoly: They had no quality controls, it was a backyard industry and they had lousy consumer relations with their customers. They were fat and arrogant. It was a true monopoly.
Knowledge@Wharton: Is the cork industry fighting back as a result of all of these challenges and is there a dominant company that is taking the lead in all of that?
Taber: They are absolutely fighting back. For a long time...especially when plastic first came on, they tried to dismiss it and say "This is a crazy thing ... no one is going to ever change to it and..." -- but as they started to lose market share, they definitely started to react. They are very fortunate that a new generation of leadership came into the largest company.
They are something of a producer but really they are distributors and that where the market share is very important, with distribution of cork around the world. The company is called Amorim. This is a fourth generation family-run firm that was started in El Porto three generations ago.
They had a new CEO who came in. He was a member of the family, was in his 30s and recognized for the first time that they just couldn't put their heads in the sand -- like they were doing before -- and blame it on everybody else. The cork sales people were saying, "It's the wine makers fault because they are putting bad products into their wine and they're not keeping their cellars clean." It was everybody's fault except theirs. He, in effect, stepped up to the front and said: "We have to change and we can't continue doing this anymore." He made some very substantial changes.
Knowledge@Wharton: What are some of the major trends in the closure market?
Taber: Diversification is going to be the biggest thing. I think the monopoly has been broken and it will never be put back together. There will never be a time when you will have 100% of the market or 98% of the market in any one closure.
I don't think screw caps, which are coming on very strong right now, will ever become dominant. [Nor will] plastic corks, which are also very strong; in fact plastic corks have a bigger market share than screw caps, although screw caps are growing faster. Cork is losing some of its market share. It's losing a lot fast and new closures are coming up.
One new one is glass stoppers, which a lot of people like. They call it the elegant solution. Just a couple of days ago, I was talking to a wine maker from Australia who is very excited about a second type of glass closure which he thinks is the ultimate solution.
Knowledge@Wharton: One of the things that's very interesting about your book is that you have these very unusual characters. Was there somebody who held a funeral for a cork in New York City. Can you tell us that story?
Taber: Randall Grahm is the 'Peck's bad boy' of the wine industry. This is because he is very much an iconoclast. He just does things that nobody else would dare do. And, one of the things that he did was, he had had a lot of problems with cork, like a lot of wine makers. He was getting tainted bottles and he just felt that it was unacceptable.
So, he first tried plastic corks, Supreme Cork in fact, and he didn't like it for some other reasons and problems that plastic has. Then he turned to screw caps and what he thought was the best solution. But he said, "If we're going to come out with this thing, we can't just limp into the market." His whole staff was telling him "Let's just try it out in Iowa or something." He laughed and said, "Look, that won't tell me anything. In fact, we've got to go nation-wide with this. And we have to come out with a bang. We have to create a lot of buzz." Since he was the owner of the company, he backed the company on this thing. He decided to turn 90% of his production over to screw caps. And he said, "Well, if we're going to come out big, let's hold a funeral for cork."
He rented a place in Grand Central Station and they got a hearse to bring out this casket. Inside this casket was a dummy that was made out of cork and his name was M. Thierry Bouchon. Randall is the world's ultimate punster. He loves puns; not only does he love puns, he loves multi-lingual puns.
Thierry Bouchon is a slight variation of the word for cork screw. But it's also a very legitimate French name. Thierry is a normal French name and Bouchon just means cork. He thought that was a wonderful name. He got one of the world's leading wine writers, Jancis Robinson, to come to his funeral and they just had a wonderful time. They got a lot of publicity. He is to this day a great advocate of the screw cap makers.
Knowledge@Wharton: What is your own personal favorite form of closure?
Taber: I like the variety. I think that in the end, it will probably come down to which kind of wine a producer makes. Is it meant for long aging? Is it meant to be drunk fast? I think that what you are going to be seeing in the future is winemakers adapting the closure to the wine that they are creating...what they want to create in the bottle. This is because the closures really do have a big impact on what the wine does.
The other thing is -- and this could change -- to date, there is no perfect closure. Every closure has its weaknesses and every closure has its strengths. I think that it behooves, especially the cork and screw cap producers, to solve their problems so that the consumer can be more confident. So they know they are not spending $400 on a bottle and it's somehow going to be tainted and then they just have to pour it down the drain.
Knowledge@Wharton: Before this book about corks, you had written another award winning book about wine titled Judgment of Paris. Is it true that this is being made into a movie?
Taber: Unfortunately, it is being made into two movies. There is the authorized version and the unauthorized version. The unauthorized version has already ended its filming and it's more fiction than fact. AS for the authorized version, I've been told that the screenwriter is going to have it finished by December and it should go into production by early next year. So, we'll have to see...
You know this has happened in Hollywood before. A couple of years ago, there were two movies about Truman Capote that came out at about the same time. So, you can't stop Hollywood. But the version that is fiction is way out there. I mean... I don't know if you saw the movie Sideways, but they were largely inspired by this movie and they are trying to one up Sideways. It's got a love interest, it's got a sex scene -- it's pure Hollywood. How do you get a sex scene in a wine movie?
Knowledge@Wharton: Do you have any control over the final version of the authorized version?
Taber: Not much. Somebody once told me about this quote and so I looked it up on Google, a quote in which Ernest Hemingway had talked about the relationship between Hollywood and authors. He said that "The producer and the writer should both get in cars and drive simultaneously to the California State border. Then the writer throws the producer the book; and then the producer throws the money to the writer, and then they both just get the hell out of there." I haven't done that yet because I haven't gotten the money from the producer. I'm already planning on not having high expectations.
Knowledge@Wharton: The current book, To Cork or Not to Cork, seems to be doing well which suggests that it has an appeal that goes beyond wine lovers. Is that true?
Taber: I hope that it does. I wrote it for a more general audience. I was a business journalist for most of my career and you know you can take the boy out of journalism but you can't take journalism out of the boy. So I think it probably reflects a little more of a business tone, because I think in a lot of ways, this is a business story.
If you look at the companies that are involved, you're dealing with some of the biggest companies in the world. Alcan is now the largest maker of screw caps. It was originally owned by Pechiney and Pechiney of course has been sold. Alcoa is in this game; Amorim produces two thirds of all of the corks that are made.
So this is a very big business. In fact, that's one of the things that's going to make it more difficult for new companies to get into it. People are still in garages trying to come up with new and interesting ways to close a wine bottle. But today, to get a wine product out into the market, it's a world market. Wine is being made all over the world. You have to market it worldwide and large companies like Alcoa and Amorim have a great advantage because they have economies of scale.