For a product that has been around hundreds of years, the natural cork industry would seem to be the last type of business to have a need to advertise its product in Wine Country.
But that’s what it did over the holiday season with a $300,000 campaign on local radio and Facebook where area wineries such as Jordan Vineyard and Winery, Francis Ford Coppola Winery and Rutherford Ranch Winery touted their use of natural cork.
While not a massive ad buy, the effort did represent a shift for natural cork producers competing in an estimated $2 billion worldwide marketplace. It comes almost 20 years after being placed on the defensive over cork taint tracked to the chemical 2,4,6-Trichloroanisole, more commonly known as TCA, a natural compound that has been described as turning the smell of a nice bottle of sauvignon blanc into that of a moldy newspaper.
The TCA effects were costly as the natural cork industry slid from a market share of almost 95 percent in the 1990s to currently about two-thirds of the U.S. market, with plastic corks taking up a larger portion. Now the industry, which implemented a massive quality control and testing system in response to cork taint, is starting to get some of its swagger back. It is expanding locally and reporting revenue growth. The ad campaign is the most public example.
“We live in the shadow of a lot of problems that existed 15 or 20 years ago,” said Neil Foster, president of M.A. Silva USA, a Santa Rosa-based business that experienced more than 10 percent revenue growth last year in its cork business. It sells more than 100 million closures annually, ranging from 7 cents to $3 a piece.
“The reality is today’s cork is light years ahead of where it used to be based on the technology we use to test our cork,” Foster added.
The improved quality has translated to growth. The U.S. company, which opened its doors in 2000 and is a partner of a Portuguese family company, is building a $7.5 million facility across the street that will offer additional room for its bottle business and laboratory space where winemakers can participate in elaborate smell tests, with dozens of corks to sample for their choosing. It counts Williams Selyem and Kosta Browne wineries as clients.
“We will have the ability to do much more research and development,” Foster said.
The natural cork industry has been a crucial cog for the North Coast’s wine industry. All the big foreign players have set up their American operations here as well as major distributors targeting the U.S. wine market, the world’s largest.
Besides M.A. Silva USA, those include the Napa-based sister companies, Amorim Cork America Inc. and Portocork, Ganau America in Sonoma, Scott Laboratories Inc. in Petaluma, Lafitte Cork and Capsule in Napa, and Cork Supply USA Inc. in Benicia. Those seven also are members of the Cork Quality Council, a trade group that has set minimum standards for testing the quality of the cork.
Most of the cork sold in the United States is imported from Portugal and Spain, where bark from the cork oak tree is stripped every nine years for the raw material that ultimately ends up as cork. The bark is boiled, graded and then cut into flanks that will be punched into corks, overall about 12 billion annually. They also are washed and screened and tested before being shipped over to the United States.
After their arrival, members of the council also run the cork through independent laboratory testing in addition to whatever tests the companies do at their own U.S. plants, such as for dimension and moisture. For example, M.A. Silva USA was one of the first American facilities to get its own gas chromography and mass spectrometry machine to test for TCA, operated by those who have a background in biochemistry.
“The Cork Quality Council was instrumental in getting everything moving in the right direction,” said Carlos De Jesus, communications director for Portugal-based Corticera Amorim, the largest global producer of cork products. He noted its business for Portocork and Amorim Cork America have seen double-digit growth in recent years and each has about 15 percent of the U.S. market. “It took hundreds of millions to fix the problem.”
The lab efforts have paid off in reducing TCA. The council contends its screenings have shown that TCA levels are now 95 percent lower than in 2001, with taint from natural cork down to less than 1 percent.
“I do think the cork industry has made huge, huge progress,” said Kevin Sea, coordinator of the wine studies program at Santa Rosa Junior College, who has a doctorate degree in biochemistry and molecular biology.
He noted that natural cork manufacturers have become more aware of sources of TCA other than from cork, such as wood pallets and cardboard that can come into a plant. “They are working pretty diligent about it to take care of the problem,” Sea said.
During the TCA epidemic, plastic corks took advantage and gobbled up market share with their lower price being another attractive alternative. The U.S. market is dominated by North Carolina-based Nomacorc LLC, which claims it has more than 30 percent of the overall U.S. market for wine closures.
The company cites studies that show the TCA rate of natural cork is more like 3 to 5 percent. “I think there is still room for improvement in terms of TCA and cork taint,” said Whitney Rigsbee, spokeswoman.
Andrew Waterhouse, a professor of enology at UC Davis, said the taint rate is likely around 1 to 2 percent. For a product such as an iPhone, such a failure rate might be unacceptable for consumers, he noted.
“What rate of taint is considered acceptable?” Waterhouse asked. “It’s a philosophical issue.”
Waterhouse has previously received funding from the Plumpjack Wine Group to study closures, which made waves in 1997 by announcing it would bottle its best cabernet sauvignon with screw caps, and he also has received research support from Nomacorc.
He noted that data for synthetic and screw caps does not go back hundreds of years as for natural cork, so the impact on other key issues, such as oxidation, are not known for the newer entrants. That would be an important factor to determine how long a wine can age before it goes bad. “We know how wines perform under natural cork,” he said. “Certain wines survive 20 to 30 years.”
Both sides cite Nielsen data to make their case, though some in the natural cork industry still harbor rough feelings over how the synthetic market has portrayed them, as opposed to the more budget-minded screw cap producers. In fact, the “100 percent Cork” campaign has a page devoted to facts, myths and realities, noting that there is no shortage of cork oak trees in the Mediterranean and that wines sealed with metal screw caps and plastics can also have TCA.
Independent statistics are not widely available. But a survey conducted last year by Wine Business Monthly showed the number of wineries using natural cork was at 78 percent, about the same level it was 10 years ago. However, it also noted that more wines are bottled with synthetic closures, even though only 10 percent of wineries use them.
Natural cork producers contend their product works for all price ranges, but note that it is especially attractive for winemakers in the premium category in Napa and Sonoma counties as opposed to the more budget-priced wine produced in the Central Valley.
“We’re big believers in that,” said John Jordan, chief executive officer of Jordan Winery. “It’s part of our story. ... We’re traditionalists.”
Naked Wines bottled about 90 percent of its wines with screw caps when it started in the United Kingdom, where such wine closures are popular. But after expanding into the U.S. market in 2012, it now bottles about half its wines with screw caps and the other half with natural cork, reflecting the preference of American consumers, said Ryan O’Connell, a winemaker and marketer with company.
“People loved the wines,” O’Connell said. “But there was a lot of feedback about the closures.”The activity has attracted the notice of others from Europe. Mercader Cork, headquartered in Girona, Spain, has opened an office in Healdsburg to sell directly to wineries, instead of relying on a distributor. The company expects to triple its sales this year and would like to open a warehouse facility locally, said Sara Donoso Rathbun, general manager.
“The industry is still thriving,” she said. “There’s plenty of market share for everyone.”
Over at M.A. Silva USA, Foster said the cork market has matured in recent years in the aftermath of the TCA issue and the bankruptcies of a few companies. “The top players in the cork business are performing better than they have in the past,” he said.
He noted the key to retaining its 1,500 customers is through ensuring quality, especially in a business where reputation is everything.
“I’ve built a big business based on other people’s failures,” Foster noted.
You can reach Staff Writer Bill Swindell at 521-5223 or firstname.lastname@example.org. On Twitter @BillSwindell.