One of the greatest examples of terroir is Parmigiano Reggiano, the unmistakable and incomparably delicious cheese made in the region of Emilia-Romagna (in northern Italy).
They make a similar cheese, using similar methods, just across the Po river on the north side of the great waterway (which flows through the Po River Valley, northern Italy's agricultural hub, akin to our San Joaquin Valley in California or the Loire Valley of France). It's called Grana Padano (you can find both cheeses at Central Market and Whole Foods). And even though it works well as a grating cheese, it simply doesn't have the friable texture of Parmigiano Reggiano.
No matter how hard they try, producers of "Parmesan" cheese in Argentina and America (and even those just across the Po) can't achieve the same quality.
If you travel to Parma or Reggio Emilia (the two provinces where it's made), the locals will tell you that it's the unique combination of climate and soil that sets their cheese apart. There are actually a number of factors at play: Climate, soil, terrain and exposure (to the sun) are all part of the mix. But locally and natively occurring bacteria also play an important role. And so does the human factor: History, culture and tradition are fundamental variables in this equation.
Without the unique combination of all these elements, the Emilians wouldn't be able to create their distinctive and age-worthy cheese.
In Jancis Robinson's excellent Oxford Companion to Wine (which I highly recommend to you; also available via online subscription), terroir is defined as follows:
Major components of terroir are soil (as the word suggests) and local topography, together with their interactions with each other and with macroclimate to determine mesoclimate and vine microclimate. The holistic combination of all these is held to give each site its own unique terroir, which is reflected in its wines more or less consistently from year to year, to some degree regardless of variations in methods of viticulture and wine-making. Thus every small plot, and in generic terms every larger area, and ultimately region, may have distinctive wine-style characteristics which cannot be precisely replicated elsewhere. The extent to which terroir effects are unique is, however, debatable, and of course commercially important, which makes the subject controversial.
Perhaps the greatest example of "terroir expression" in wine is found in Burgundy.
Just try tasting a Willamette (Oregon) Pinot Noir, a Russian River Valley (California) Pinot Noir and a red Burgundy (100% Pinot Noir) side by side and you'll see that it's nearly impossible not to note the distinctive aroma of Pinot Noir grown in Bourgogne (as it is called in France).
And while this phenomenon also occurs in other wine-growing regions of the world (the Langhe hills of Piedmont are the first that come to mind), the aromas and flavors of wines made in Burgundy are also one of the most highly "parcelized" appellations in the world.
From village to village (sometimes just five minutes driving time between them), hilltop to hilltop, vineyard to vineyard, and cloister to cloister, the distance of stone's throw (and I'm not exaggerating here) makes for divergent, however nuanced, aromas and flavors in the wine.
I believe that terroir is much more than just a unique combination of climate, soil, exposure and bacteria. I am convinced that the human experience is a factor in the equation: Culture, history, tradition and idiosyncrasy also play a fundamental role in terroir and its expression.
I also believe that terroir is defined by the exegesis of those who write and describe wine (whether professional or laical). In other words, the perceptions of end users -- like you and me -- are an element in terroir (some would call me a historical deconstructionist for this statement, but my observation is more Augustinian in its nature).
What's important about terroir and its role in wine, grape-growing and winemaking?
In a world where homogeneity is increasingly encouraged by consumer-driven society, terroirs and their expressions are among the last holdouts of site specificity.
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But it's most important because the divergent expressions of terroir across the world are a seemingly inexhaustible source of pleasure and fascination (at least for me and my fellows in wine).
Take a look at Levi Dalton's visit to the vineyards and cellar of one of my favorite wineries in the world and one of the greatest expressions of terroir.