Category:Wine trends

Big Wine growth 2016

Big Wine growthThree sets of numbers — two public, one passed to me by my source in Big Wine — show just how dominant Big Wine continues to be, and how Big Wine growth will affect everything we drink.

The first public chart, reproduced here, was compiled by Lew Perdue at Wine Industry Insight, and shows that the three biggest companies — E&J Gallo, Constellation, and The Wine Group — control almost half of the U.S. wine market. In this, the eight biggest companies sell 60 percent of the wine in this country, which leaves more than 7,500 wineries to fight over the other 40 percent.

Those are almost the same numbers in the second public study, the annual Wine Business Monthly top 30 producers list, which are similar to the finding in the magazine’s 2014 report, when Gallo, Constellation, and The Wine Group controlled half the U.S. market. Meanwhile, the top 30 companies in the 2016 report accounted for 74 percent of all the wine sold in the U.S. Interestingly, that’s less than they reported in 2014, when the top 30 sold 90 percent of the wine; chalk that up to bigger companies, like Diageo, selling their brands to smaller companies.

The three biggest companies (again, Gallo, Constellation, and The Wine Group) controlled about half the U.S. market in the landmark 2011 Big Wine study conducted by Phil Howard at Michigan State.

It’s important to understand how big big is. First, the Wine Business Monthly top 30 total just .04 percent of all U.S. wineries, which makes the infamous One Percent look like an all-inclusive kumbaya sing-along. Second, Jackson Family, which makes Kendall Jackson and is about as close to a national brand as wine has, isn’t one of the half-dozen biggest producers in the U.S. It’s eighth in the Wine Industry Insight chart and ninth in Wine Business Monthly’s rankings with almost six million cases. That’s still big, but the biggest companies are so gigantic that even some of their brands, like Gallo’s Barefoot, sell more than all of the Jackson Family portfolio.

In other words, every time we buy wine, the odds are better than not that we’re buying a Big Wine product even if we don’t want to. My colleagues in the Winestream Media pooh pooh this whenever I write it, arguing that wine drinkers have more choice than that. What about those other 7,500 wineries? The catch, and what they don’t understand, is that most of us don’t shop in places that sell wine from the other 7,500. We shop at Costco and Walmart and grocery stores, and those retailers account for almost half the wine sold in the U.S.

Case in point: Sales statistics for 2015 that my source in Big Wine passed to me for 10 U.S. states (none of which are California), and where Big Wine (defined as a company that appears in either the Howard study or the Wine Business Monthly top 30) dominates at all prices:

? 9 of the 15 best-selling wines between $15 and $20 are from Big Wine, including La Crema (Jackson Family), Louis Martini (Gallo), and Meomi (Constellation).

? 12 of the 20 best-selling wines between $12 and $15 are from Big Wine, including Wild Horse (Constellation), Kendall Jackson (Jackson Family), and Chateau Ste. Michelle (Altria). And I didn’t include Hess and Rodney Strong, both on the Wine Business Monthly Top 30 list but family run.

? All of the 20 best-selling wines between $9 and $12 are from Big Wine, including Menage a Trois (Trinchero), Cupcake (The Wine Group), and Apothic (Gallo).

 

Wine trends in 2016

winetrendsWine trends in 2016? Expect to see consolidation continue, producers continue to aim at the consumer smooth tooth, and retailers focus even more on private label. And, not surprising given all of this, more of us move away from wine in favor of craft beer:

? Distributor and importer consolidation: Big Wine will get bigger in 2016, which won’t be anything nothing new. The real news will take place among distributors and importers, as the biggest among those two groups buy smaller companies. We’ve already seen some of this, and there will be more for two reasons. First, historically low borrowing costs, which will make it possible for the biggest companies to buy more smaller companies than usual and even to overpay. Second, the graying of the family distributors and importers who started their businesses in the 1980s and 1990s and who brought us so much interesting wine. If you run a family business and you’re nearing retirement, and someone throws a ridiculous amount of money at you, wouldn’t you sell, too?

? Keeping it smooth: The number of red blends and pinot noirs, which have grown like crazy over the past couple of years, will keep growing. This includes (most importantly) sweet red wine, as well as any red blend tasting of massive amounts of fruit and without much in the way of tannins. It includes pinot nor, because pinot made for less than $20 is usually blended. It also includes Prosecco, which has jumped in sales the past couple of years and is increasingly being made to fit the smooth flavor profile even if that doesn’t necessarily taste like Prosecco.

? Bring on the private labels. One of the most important statistics about wine was buried in a Nielsen marketing report last year — 4,200 new wines were introduced in 2014, about 12 1/2 percent of the market. Those weren’t necessarily wines from new producers or new wines from old producers, but wines made for specific retailers, whether grocers or chain wine stores and called private label wines. They can be sold for a little less than national brands, or even the same (right, Kroger?) but reap more profit.

? Flat wine sales. Since the recession ended, annual wine sales have hardly grown at all. As wine market analyst John Gillespie has written, that could be because we’re switching to craft beer, where sales have surpassed almost everyone’s expectations. The most telling number: The craft beer market is worth $24 billion, which is two-thirds of the entire U.S. wine market. And it’s not like craft beer has been around for very long.

Call me cranky, but the first three things on this list explain the fourth. If wine is becoming boring — the same kinds of wine made by the half-dozen producers who dominate the U.S. market, why wouldn’t we look for something else to drink? Throw in that these are increasingly ordinary products, which so much private label is but are sold for higher prices, and wine’s sales slump seems obvious.

Wine prices in 2016

wine prices in 2016Wine prices in 2016 won’t necessarily be higher or lower; instead, they’ll be more confusing. That’s because more retailers will move to tier pricing, where each wine has two or three or even four prices, making it that much more difficult for consumers to figure out what’s going on.

This approach, which grocery stores have used successfully for the past five or six years, features a combination of sale prices, club prices, and quantity discounts, and it will become more common for a couple of reasons. First, the big chains like it — for example, BevMo, with 155 stores on the West Coast and in Arizona, offers a regular price; a cheaper, club price; and sales prices. Spec’s, with 160 stores in Texas, has cash, credit, club discounts, and sales prices. And World Market, once a bastion of fairly priced cheap wine, now has so many prices — as the photo shows — I’ve stopped shopping there. The Matua, for example, is $10 or $11 elsewhere for one bottle.

Second, it makes price comparison that much more difficult, and retailers don’t like price comparisons. Showrooming, where shoppers check prices on-line before they go into a store, makes retailers crazy. But if you’re not sure what the price in the store really is, showrooming becomes less effective. Third, tier pricing makes it seem like the product is cheaper than it is. If a bottle of wine is $12.99 list, $10.99 with your club card, and $8.99 if you buy six bottles, you’re more likely to focus on the $8.99 price, even though most of us will never buy six bottles at one time.

Fourth, no one is sure where prices will go in 2016, and tier pricing allows retailers to hedge their bets. Christian Miller of Full Glass Research in Portland, who studies wine pricing, says he expects prices to be flat between $8 and $15 even if some retailers want to raise them. That’s because the biggest distributors and retailers will keep suppliers and producers from raising prices, since the former can still make money on the smaller margins — and higher sales — that come with lower prices.

There is also evidence, says John Gillespie of the Wine Opinions research group, that the $10 to $15 range is still the most attractive price for wine drinkers, regardless of all the talk about premiumization. If that’s the case, then retailers will want to keep prices steady.

In addition, there are a couple of wild cards for wine prices in 2016:

? Several retailers I talked to, including one of the biggest in the country, said price resistance seems to be holding at $25 and up, and some high-end producers who raised prices last year were discounting their wines at the end of 2015 to get rid of excess inventory.

?Will the strong dollar, which should make imported wine cheaper, do that, or will importers and distributors keep the difference for themselves? If they do, then retailers will have more leeway on pricing for domestic wine.

? The California drought, which cut yields for some varietals in some areas in 2015. No one is quite sure what this means to pricing, either this year or next. If higher prices for grapes, thanks to the drought, force wine prices up, will consumers trade down instead of paying more?

What’s wrong with California expensive wine?

California expensive wineNothing, actually. But what happens when one of the world’s top wine writers picks only a handful of California labels as her best expensive wines in the world for 2015? If you’re a California expensive wine devotee, it’s time to panic, and many did on Twitter and elsewhere. If you have a little more perspective, Elin McCoy’s choices speak to how much great wine is made in the world, and how even those who buy pricey wine sometimes don’t understand the need to try something different.

McCoy’s list of the 50 best wines for $50 or less in 2015 had just seven wines from California. Excluding the six Champagnes on the list, that meant 7 of 44 — just 16 percent of the best expensive wine in the world — came from California. Is it any wonder so many howled so loudly? It’s one thing when I criticize California for making such ordinary, grocery-store cheap wine. But expensive wine? That’s the Napa and Sonoma reason for being, and if those regions don’t dominate lists like this, their supporters figure something must be wrong.

But as McCoy said when I asked her about it, “Those seven wines were more than from any other place but France, so I guess I don’t feel I neglected California too much.” And, she added, the list doesn’t have any wines from Chile, Argentina, and Washington state, which also make great wine.

Hence perspective, something too many American wine drinkers lack. Because it’s not enough to have 17 percent — it must be 50 or 60 percent or even more. Because, dammit, expensive California wine is the best wine in the world. Everyone knows that. And if you don’t, you don’t know anything about wine (and no, I’m not going to link to the blog posts that say that — no need to start the new year with a flame war).

Which is that lack of perspective. I’ve written many times that California makes the best wine in the world, cheap or expensive, but only when it wants to. The rest of the time, it’s content to make wine other people think it should make, be it a focus group or the Winestream Media. And if anyone complains, we get the speech in the previous paragraph.

Or, as one noted wine competition judge told me when we discussed this, “California wines have gotten boring, for the most part. Same ole, same ole, year in, year out. … I can appreciate the box they have built for themselves. Why mess with success? But no one wants to discuss it because we are all so close to those people and that industry, but the reason I love Old World wines so much is that they are interesting, with unexpected, often delightful, surprises. And every year, they are different.”

And difference brings perspective.

What does the Gallo wine survey mean?

gallo wine surveyWhat does the Gallo wine survey mean? That even the world’s biggest wine company can’t untangle the confusion that is the post-modern wine business.

The survey, which E&J Gallo released last week, asked 1,000 frequent U.S. wine drinkers, ages 21 to 64, about their wine drinking attitudes and behaviors. The biggest contradiction in their answers stands out like a red wine stain on a white table cloth.

Our “wine fears” are minimal, Gallo says of the results, because only-one third of us feel awkward when we order wine at a restaurant and two-thirds of us aren’t worried that others will make fun of the wine we drink. And why not? The survey asked respondents to identify the wines they buy from 40 well-known brands, Gallo and otherwise, across a range of price levels. We picked an average of three, which pretty much explains the fear answer. How can we be scared of what we drink when we drink the same wine every time?

Or that 35 percent of survey respondents identified themselves as ?wine adventurers, ? who want to “explore options and to have new experiences with wine.” Which doesn’t exactly jibe with the three out of 40 brands answer, does it?

Or that 37 percent of survey respondents said box wine is a convenient option and about half said they would consider keeping a box in the refrigerator to have wine on hand. So why does box wine account for only three percent of U.S. sales?

Also complicating the picture — Gallo defines a frequent wine drinker as someone who drinks wine on more than one occasion per month and has at least one glass of wine per week. That means its frequent wine drinker is more or less the average U.S. wine drinker, who has one bottle of wine a month (and where four glasses equal a bottle). In other words, not very frequent at all. The typical French wine drinker has four times as much wine as that.

This is not to say that American’s aren’t drinking more wine, that we don’t appreciate wine more than ever, or that Gallo jiggered the results. Rather, it speaks to how difficult it is to get quality information about wine drinking in the U.S., which is something I have lamented for years. Wine is so terrifying that consumer surveys like this run into a fudge factor — the answers to the questions may not always be accurate (to be polite) and those being surveyed too often say what they think they should say rather than what they really think.

Because, after all, this is wine.

Holiday wine trends 2015

Holiday wine trendsHoliday wine trends in 2015? Red wine — lots and lots of red wine.

That’s the consensus from the retailers I’ve talked to over the past 10 days. The red blends boom, combined with an upsurge in interest in pinot noir, has shoppers going for what Chris Keel, who runs Put a Cork in It in Fort Worth, calls “a bigger style in red blends.”

That was born out by numbers from Wine.com, where two-thirds of the wine sold over the past year were red. Mike Osborne, the web site’s founder and and vice president of merchandising, reports that the leading red wine categories, including merlot, have grown by double digits.

Interestingly, prices seem stable, particularly on the high end, and we’re still looking for value. But we’re also willing to pay for a holiday splurge, says Nick Vorpagel of Lake Geneva Country Meats. “They’re generally OK with $15, especially for domestic wine,” he says, noting the difficulty in finding quality for $10 from U.S. producers. “And I think consumers have decided that wine is an integral part of their meal and they’re OK with paying a bit more for a quality bottle of wine.”

Among the other holiday wine trends this year:

? Rose is still popular, even though it’s not rose season. Wine.com is selling more rose than merlot, which is as welcome a development as it is hard to believe.

? “Customers are looking for wine recommendations that fit their palate, not just a generic ‘best pairing’ recommendation,” says Vorpagel. “I’m having more customers come in and say, ‘I don’t like pinot noir; what other reds will go with turkey?’ It’s great because people are getting more comfortable with their palate to say ‘I’m not going to drink something I don’t like just because an expert recommends it.’ ” That sound you hear is the Wine Curmudgeon’s sigh of pleasure.

? Oak is not going away, no matter how much I want it to. Those of you who like it are still buying it, and especially in chardonnay, and producers have launched several wines in the $15 to $20 range for these wine drinkers.

The Wine Curmudgeon most popular posts 2015

wine curmudgeon

Change your logo as much as you want, but you’re still screwing up my site.

The Wine Curmudgeon blog has a new editor/publisher, but I knew nothing about it until I compiled the top 10 most popular posts from the past 12 months. It’s Google, which now decides what you read on the blog. I can try all I want — and I try very hard — to write relevant, informative, and helpful content, but my efforts matter less and less. That’s because Google directs people to the posts it decides are the most important, and for the first time in the blog’s history, those aren’t necessarily the posts I consider the most important.

Case in point: The top post from November 2014 to November 2015 was a five-year-old effort about Barefoot wine that didn’t make the top 10 last year. It’s bad enough that Google sent readers to the blog for something that wasn’t current, but the Barefoot post replaced the $10 Hall of Fame — my reason for being — as the most popular post.

Ain’t the Internet grand?

Almost none of the stuff that I wrote over the past 12 months that should have been in the top 20 was. None of the stuff that I thought was clever or funny made the top 20. Just old wine reviews — literally. Seven of the 10 best read posts over the last year were reviews of wines from 2014 or before.

This, for a writer, is as depressing as it gets, not unlike someone telling Michelangelo that the Sistine Chapel is nice, but an estimate for painting the house would be even better. What’s the point of reporting, and then crafting and sweating over a piece, when Google says not to bother because no one wants to read it? The search giant equates popularity with trust, so it sends people to the most popular posts because its algorithm says they’re the most trusted. Because, of course, they’re the most popular. That this is the Internet version of a Catch-22 doesn’t seem to matter.

Even the good news, that my traffic recovered in 2015 from the slump caused by Google’s ever-changing search methods and from revamping the website two years ago, was depressing. I’m getting more than 51,000 visitors — that’s visitors, not page views — a month, an amazing number for a one-person site. But what’s the point if they’re coming here to read stuff that doesn’t necessarily matter anymore?

Not to worry, though, if you like the stuff no one else does. I won’t change the blog’s format just because an algorithm says I should. Everyone should know me better than that by now. The most popular posts from 2015, plus a couple of other notes, are after the jump: Continue reading