For nearly a half century Empson  & Co. has championed fine Italian wines in the United States and around the world. Founded by Neil and Maria Empson  in 1972, when most Americans knew nothing but Chianti, Valpolicella and Soave , the importer was the first to bring in the highest quality wines from names like Gaja, Marcarini, Sassicaia, Conterno Fantino, Boscarelli and dozens of others, now with operations in all 50 states and 28 countries.
     Last September Neil Empson appointed their daughter Tara, 34, to succeed him in his role at Empson & Co., and, as of April 1, Empson USA. I sat down with Tara over dinner at an Italian restaurant in New York and asked how the business of importing and distributing wine has changed in the past decade.

Your parents have seen the enormous growth of Italian wine worldwide since 1972. What factors in that decade contributed the most to success?  What did the family do in those early days to change the image of Italian wines?

 

    The selection of wines was very limited in the market, as the French had marketed themselves and their wine in an impeccable manner. My parents’ struggle was to go out there and teach about Italian wine diversity and potential of quality at a time in which the best vineyards were often owned and sold locally by small farmers. They dedicated their life to traveling (as they began as brokers prior to Empson USA being founded in 1991) and established connections and relationships with their various clients and with this also trust in selecting and importing “fine” Italian wine.

My parents were amazing at seeing the potential in the wines that they decided to represent and with that they entered the market with iconic names such as Sassicaia and Gaja. Their interest was not in mass production but in qualitative production.

    One of the principal factors to the early success was in their selection of wines that were both intrinsic to the Italian culture and cuisine, while also made with such elegance that these wines — while very different from most being offered from other countries – were also suitable to the international market.

 

Your website reads: "At Empson & Co. … family, integrity, leadership, and authenticity are the four key strengths that have enabled the Empson Company to establish its standout positioning as a pioneer in exporting fine Italian wine worldwide.”  What are the ways these strengths have dealt with a wine world composed of giant corporations and a reputation for toughness that goes back to Prohibition?

 

  Our relationships and the wineries we partner with have defined who we are. We have always gone above and beyond business by supporting and investing with our partners where we could. Life is not just about celebrating the good times, it’s also about weathering out the “less than ideal” times and this is a valuable lesson my parents taught me. We are known for celebrating many years of partnerships with our wineries and we have many in our portfolio that are well beyond 30 to 40 years, like the  generations of the Speri family of the Veneto (left).

    We still very much believe in the “human touch” wherein everyone can be involved in making a difference. Lastly, most of our wineries are family owned and run. We value this very much as we ourselves are a family-run company and we understand the values and sometimes the struggles that come with the necessity to grow and always try to improve.

We know that the power of marketing, when it comes to large corporations, is difficult to compete with, so we target a different route to market, preferring clients who understand the value of hand selling, story telling and relationship building.

 

Explain simply how the selling and buying of wine works, i.e., how does a wine estate in Italy sell its wine abroad and what role do importers and distributors play? What role do state wine laws play in the U.S. as to what may be imported?

 

  The uniqueness and difference of the U.S. market lies in the fact that it is one country but each state has its own taxes, laws and requirements. This situation many times acts as if we were dealing with 50 different countries rather than a single entity, so the back office and bureaucracy can be very extensive for any importer.

Importers have a distinct and select portfolio of wines that they choose to develop and promote. They hold the relationships and choose to co-invest when needed to support that same portfolio. Importers’ selections traditionally are based on similar vision and ideology with their winery partners. There are many new importers each year in the market as the wine selections are more numerous and the need for a strong representation through a reputable importer is more essential than ever.

Distributors hold most of the inventory needed to supply retail stores and restaurants on a daily basis.  These days, inventory at distributors’ warehouses can be very tight, with a much greater need for a highly efficient logistics operation on the importers’ side to reduce times and to try to prevent retailers and restaurants from running out of supply. This is just one of the many important services that good importers perform for their distribution network.

 

If a winery sells a wine to an importer for, say, $10, why does it cost what it does, eventually, in a wine store? In a restaurant?

 

It all depends on the kind of representation the winery has, which route to market the winery employs, what kind of exchange rates can be secured and for how long, how many markets the winery wishes to be in, and what kind of investments are available or agreed upon to support the wineries. It is also important to take into consideration how long the distribution chain needs to implement programming . Prices can vary 20-40% in states that are right next to each other. So with so many variables, even within the individual winery selection of a portfolio, it’s very hard to give a formula to arrive at a price for all wines. Generally, a wine shop will sell it for $28-$30. 

 

The global wine market is huge and hugely competitive, with far too many wines trying to gain market share at any one moment. Do some nations make it difficult, as with import taxes and quotas, to sell wines in their countries?

 

  Yes, of course, but then again there only recently has been a will to invest heavily in other markets other than the United States. Many countries, like certain states within the U.S.A., actually are controlled by the state with a monopoly system that makes all the decisions for all wines being bought and distributed.  While difficult to enter in many cases, it does offer both the producer and consumer a fairer “playing field,” with wines more often gaining visibility due to a genuine price-quality ratio rather than thanks to large marketing support programs.

Up until the crisis of 2008-2009 the U.S.A. was considered the prime market for many wines out of Italy (as it still is), but when things took a turn wineries understood that they had to put their eggs in more than one basket and also think of their financial growth and stability. Many markets do not import as many wines as the U.S.A. does and the market layout is very different and at times very expensive.

 

If a wine store owner or restaurateur finds a wine from a small estate in Italy, how does he arrange for it to be brought into the U.S. and what minimum quantity is required?

 

  It depends on the structure of the winery and what arrangements they have set up for importation into the U.S.. If they have a good relationship with their importer, the importer can arrange through its distributor to bring the wine in for the specific account.  There are, however, several factors that always have to be considered before doing this: getting U.S. TTB [Alcohol and Tobacco Tax and Trade Bureau] approval for the label; calculating production and shipment timing, and having the security that the restaurant will fulfill their side of the arrangement. Minimum quantities also depend heavily on the size of the winery, the distributor and the volume that the account can sell though.

 

Obviously the best-known labels can sell for exorbitant prices, e.g., DRC, Premier Cru Bordeaux. But why do so many Italian wines like Tignanello sell for such high prices, despite their easy availability? Do the Italians argue with importers that their wines should sell for higher prices in the U.S.?

 

All the time! When you look at some of the very high prices out of France, or many U.S. wineries, for example, and compare cost of production, size of production, world demand for that wine, and the amount of similar wines on offer, there are many examples of Italian wines that merit higher prices. Even though the Italian “fine” wine segment has grown over the last two decades, with some more top “cru” wines now being recognized on an international level, the number of these is still relatively small. For such a serious and historic wine producing country, we should have many more “Tignanellos” to offer. Fortunately, we’ve also seen the sliding margin scale applied more and more, with importers, and restaurateurs, looking at the dollar revenue per bottle instead of a fixed margin structure. We are major advocates for this and have witnessed very positive results where this principle is worked through all the way to the consumer. Today’s high-end wine consumer is no fool, and whilst prepared to accept the need for a controlled and certain guarantee for the wine he or she is buying, they are fully aware of its pricing at many levels.

 

Apparently wine consumption is down in Europe. Why do you think that is?  Italian wine?

In general the consumption per capita has decreased as people are drinking less but better. As far as wine goes, the “still” wine category has taken a major hit as Prosecco has recently dominated the market. But the new trends and exciting grape varietals, many of which are indigenous to Italy, are reshaping consumption.

 

Maria Empson is an artist who specializes in work whose subject is wine.

China continues to be a difficult market for importers to work with and make deals with. Have you found this to be the case?

 

China is a market which has come a long way in a relatively short space of time.  The fastest area in this growth is undoubtedly the knowledge and appreciation for wine. As with other Asian markets, many Chinese have an ability to understand different styles and flavors very distinctly. This said, the overall picture and “education” is still in infancy, but with a growing middle income bracket, interest for more serious wines is definitely happening.

Due to the size of China, together with its diverse business models, consistent and well planned distribution channels can be still the biggest hurdle to overcome. There are several very serious and well-organized importers and distributors for wine, but there is a clear need for many more with the amount of growth still occurring today.

 

How do you think global warming is affecting the world’s vineyards within the next five to ten years?

 

We’ve already witnessed a change over the last 10 years with more high elevation vineyards coming into the fold of top quality, as well as seeing new “cooler climate” wine growing areas gaining awards. This, however, is partly due to a string of particularly warm summers (e.g, in Europe) which may not repeat every year. To see the real effects and new possibilities created from global warming in the world of viticulture, we’ll need to monitor the averages for much longer than 5 to 10 years.

This said, each and every winery has a story to tell on how global warming is playing a role in the fast or slow term.