Tag Archives: Big Wine

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Post-modern wine marketing

wine marketing

Wine marketing is not just about shelf talkers anymore.

Wine marketing, like the rest of the wine business, has always been done the same way — some junk written on the back label, mostly useless, and the cute labels that have been the biggest innovation over the past couple of decades. Otherwise, unless there is a shelf talker (the printed card attached to the shelf under the wine with a score or description of the product), you’re on your own.

That was always fine with the wine business, which assumed that anyone who went into a store was going to buy a bottle, so what was the point otherwise? There is even a term for this — “building a brand,” in which the distributor and retailer work together to sell you certain wines.

This is one reason why there has traditionally been so little advertising, TV or otherwise, for a $40 billion industry. Ketchup ads are everywhere, even though the ketchup market is 1/80th the size of wine.

All of which is changing, thanks to our friends at Big Wine. They understand, in a way that their forebears did not, that wine has become just another category in the food business, and it needs to be marketed like ketchup. We may not see TV spots with fresh young things touting wine the way they do yogurt, but we’re going to see more and slicker efforts to get us to buy specific wine brands.

Perhaps even more important, these ads will focus on consumers who don’t buy wine in the small retail shops that have traditionally been the backbone of the wine business. As an executive at one of the biggest wine companies in the world told me a couple of weeks ago, the future of wine retailing is Costco, Total Wine, and grocery stores, so expect Big Wine to target consumers who shop there. This is revolutionary for wine, where it has always been about making a decision on brand in the store. You may want red wine for dinner, but which red wine? Big Wine, knowing no one is around to help you pick a specific red wine at a supermarket, wants you to decide on their brand before you go to the store. It’s all about brand loyalty, the same way it is with Heinz and Tide.

Hence, these two marketing efforts, which are just the beginning. This spring, Little Black Dress, the $8 brand owned by Fetzer (which itself is owned by Chile’s $1 billion Concha y Toro), did a spa day sweepstakes, where “entrants will be asked to tell Little Black Dress about their best friend and why she deserves a day of pampering for a chance to win two $300 gift cards to a local spa.” I can’t imagine too many of the Winestream Media’s favorite “oaky and toasty, redolent of cigar box aroma” wines doing this.

Or baseball wine. Seriously. Nineteen teams have official wines, made by some company called Wine by Design and part of the “MLB Club Series wine collection.” Who cares what the wine tastes like? It has my team’s logo on it, so let’s buy a case.

Again, this is about cutting the tie between retailer and consumer, which has always been essential to selling wine. Big Wine doesn’t need the traditional retailer, and it’s going to do everything it can to usher in post-modern wine marketing.

For more on wine marketing:
? Chateau Ste. Michelle, wine marketing, and wine blogging
? Diet wine, and why we’re stuck with it
? When Blue Nun ruled the world

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Winebits 403: Big Wine, wine scores, wine regions

big wine ? The big get bigger? An industry analyst says Diageo, one of the biggest wine producers in the U.S., should merge with beer giant SABMiller to increase profits as the global drinks business slows down. Talk about Big Wine: the combined company would total $8 billion in sales, and its products would include Miller beer, Johnnie Walker scotch, and Rosenblum and Sterling wines. How do we know the speculation is more than gossip? The news story included the word synergies, as in the combined company would save money because it had them. As regular visitors here know, synergies — which, like unicorns and wood nymphs — exist only in the minds of those who believe in them, and are always given as an excuse for a multi-national merger. Because, otherwise, what’s the point?

? A wine snob temper tantrum: The Italian Wine Guy, who knows more about Italian wine than almost anyone else in the world, recounts his experience with a wine drinker, and it’s not pretty. The customer wanted a 100-point Robert Parker Brunello, and he wasn’t going to suffer anything as foolish as advice from one of the most knowledgeable Italian wine people in the world. What’s worse is that the customer was rude about it, treating the Italian Wine Guy as if he was some idiot foisted on the customer by an inept store owner. This is the harm in scores, regardless of anything else: If all we do is buy wine by scores, we cheat ourselves of all wine has to offer. It’s snobbishness of the worst degree, as bad as the snobs who make fun of people who drink sweet wine.

? Calling wine by its regional name: The U.S. and the European Union have been arguing for some 20 years about strengthening the international agreement that prohibits U.S. producers from calling their sparkling wine Champagne and stops French companies from calling their potatoes Idaho. Now, though, the two sides may be close to an agreement, thanks to a U.S. compromise. The article, from the Conversation.com website, is long and little legalish, but it does a good job of explaining why these trade laws exist, why the U.S. traditionally didn’t care for them, and what might happen next. Who knew Feta cheese was a deal-breaker?

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Why Big Wine will keep getting bigger

Big WineThink this year’s wave of Big Wine buyouts was impressive? Just wait. Big Wine is only getting started.

The wine industry is going through unprecedented consolidation, and even I’m surprised — and I’m the one who predicted it. That’s because three things have made this the perfect time for companies like E&J Gallo, Constellation, and The Wine Group to snap up smaller producers the same way a small child attacks Chicken McNuggets. This is a mixed blessing for the consumer, who will get increased access to well-made wine, but at the cost of much of the wine tasting the same regardless of where it’s from and who made it:

? Cheap money. Interest rates are not just at historical lows, but have been there for almost 10 years. That makes the cost of borrowing to buy a winery so low that even those of us who aren’t M&A geniuses understand how much sense it makes. Plus, rumors of an interest rate hike this fall may have spurred this summer’s wave of buying, so that Big Wine could lock in all that cheap money.

? The biggest wine companies are preparing for a world where we buy most of our wine at grocery stores, warehouse stores like Costco, and large chains like Total Wine. This will happen sooner rather than later (if it hasn’t already), and anyone who doesn’t understand how important this is is missing the biggest change in the wine business since the end of Prohibition. Big Wine wants product to fill all those store shelves, and the easiest way to do that is to buy another winery. Could the local wine shop, with someone who waits on you, become as quaint as the corner drug store and gas stations with attendants who clean your windshield?

? The end of the family winery era in California, which started in the 1980s and did much to make California wine some of the best in the world. But wine is not immune to the laws of family business, which say that any family business that lasts past the first generation is the exception. And most of the family wineries that have been sold in the past couple of years are first- and second-generation companies. As one banker told me, there are more wineries that want to sell than anyone can imagine.

The other thing about all these buyouts? That wine, despite what so many think, is no different from any other industry, and the same kind of consolidation that has transformed U.S. business since the beginning of the century — Heinz buying Kraft, for example — will transform wine. This is a change many don’t like and even more don’t understand, but it seems inevitable.

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Winebits 385: Whole Foods, Big Wine, Cameron Hughes

whole foods ? A new format: Whole Foods, the word’s most powerful natural grocery store chain, said last week it would launch a second, less expensive version aimed at 20-somethings who can’t afford to shop at the grocer. This is mind boggling, if only because no one has ever attempted it — like Walmart doing an upscale grocer to attract aging urban Baby Boomers who think Walmart is beneath them. It also probably won’t work, or else it would get a separate post, because Whole Foods Jr. could wreak havoc with the wine business. That’s because, assuming wine will be as important to Whole Foods Jr. as it is to the parent, the chain will have to stock cheaper wines without the noxious markups it currently uses, like Chateau Bonnet for $16. That means private label wine on the scale of Trader Joe’s, which Whole Foods Jr. sounds suspiciously like. And if that’s the case, all the gloom and doom about the end of the cheap wine business in California will be over. All that Whole Foods Jr. $5 wine will have to come from somewhere, and that’s what California’s Central Valley exists to do.

? No, no, Big Wine: The Wine Curmudgeon is finally and apparently not the only one who has noticed the role Big Wine plays. A group of northern California activists met last week to call for a halt to Big Wine’s growth in wine country. “They hire a chef before a wine-maker. This has to stop. We cannot let them pave over more of our ag land,” said one of the speakers. In this, the new group may be echoing what has happened in France over the past 20 years, with farmers and vineyard owners protesting Big Wine in its European guise of internationalization.

? Bankruptcy? The company that owns Cameron Hughes, the wine geek’s favorite discounter, has been forced into receivership and a sale or merger is possible, reports Lew Perdue at Wine Industry Insight. The bank holding Hughes’ debt forced the action, which is often part of a bankruptcy. In this case, though, says Perdue, that probably won’t happen, and the receivership appears to be part of tug of war between the company and its bank over unpaid loans. The Hughes parent company issued a statement saying it was trying to reach an agreement with the bank to restructure its debt and would continue in business.

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Winebits 379: Big Wine, diet soda, regional wine

big wine ? Big and getting bigger: Wine sales in the U.S. were mostly flat last year, which makes the growth in E&J Gallo’s various brands. including Barefoot, all that much more impressive, reports Shanken News Daily. Total U.S. wine sales were 321.8 million cases in 2014, and 17 million of those were Barefoot — more than five percent of the total. Given the thousands of wine brands in the world, that one brand, and especially one that isn’t sold in many wine shops, accounts for that much wine is difficult to imagine. It speaks to Big Wine’s ability to put product on store shelves and to market it onces its there. It also illustrates the divide in the wine business between what we’re told we’re supposed to drink and what most of us do drink.

? Is diet soda dead? Which matters to wine drinkers because the sales of diet Coke, Pepsi, and so forth appear to have started an irreversible slide, down 20 percent from their all-time high in 2009. The reasons are many, reports the Washington Post, but center on health, including the artificial nature of diet soda. So where will diet soda drinkers go next? It’s not soft drinks, which are also declining in sales, again for health reasons. The Wine Curmudgeon could offer wine as an alternative, pointing to the growth of Barefoot and what are considered wine’s heart health benefits. But that would mean the wine business is interested in attracting non-wine drinkers through education and outreach, something that we know isn’t true. Ah, missed opportunities.

? The next Napa Valley: During my many years working with regional wine, the one thing that has always made me crazy is hearing someone from a U.S. region talk about how they wanted Texas or Colorado or Virginia (or wherever) to become the next Napa Valley. To which I always asked: Why do you need to do that? Why can’t you be the best Texas or Colorado or Virginia (or wherever)? Turns out I’m not the only who feels that way. Rob McMillan at Silicon Valley Bank writes that he sees the same thing all the time, and with California wine regions. “Do you really want to be like Napa?” he asks. The post is a little technical for consumers, but the point is well made. If you can’t make world-class cabernet sauvignon, why would you even think of being like Napa, let alone build a region behind that goal?

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Winebits 378: Box wine, South African wine, nutrition labels

box wine ? Bring on the cartons: Box wine, since it’s too awkward for most store shelves and because consumers are confused about its quality, has been little more than a niche product in the U.S. But all that may be about to change with the news that E&J Gallo will sell a $20, 3-liter box called Vin Vault, which works out to $5 a bottle for something that will be the quality equivalent of $10 grocery store merlot. If Gallo — perhaps the best judge of consumer sentiment among Big Wine producers — figures the time is right for box wine, it probably is (witness the success of Barefoot and Apothic). Look for big-time promotions and price cutting for Vin Vault when it debuts next month, which should also spur price-cutting for Black Box and Bota Box, the brands that dominate the better-quality box wine market.

? Whatever happened to Sebeka? The $10 brand all but disappeared in the U.S. after Gallo gave up on it a couple of years ago, realizing how difficult it was to sell South African wine in the U.S. The wine itself was OK, but as the Wine Curmudgeon has noted many times, South African wines have many problems in this country that don’t include quality. But Sebeka’s new owner figures the time is right to try again, though I have my doubts given this assessment from a Sebeka official: “We don ?t know what will be the next big thing but hopefully it ?s chenin blanc or pinotage. It just needs that one breakthrough that everyone writes about.” I don’t know what the next thing will be either, though I do know it won’t be pinotage or that anyone in the Winestream Media will figure it out. They’re still unsure about sweet red wine.

? Ingredient labels: The recent arsenic scare is about more than contaminated wine; my take is that it’s just one part of the long battle over ingredient labels for wine. So the news last week — and before we found out we’d all been poisoned by cheap wine — that Big Wine producer Diageo would add calorie and nutritional information to its wine is worth mentioning. The company, whose brands include Chalone, Rosenblum, and Sterling, said it wants consumers to know what they’re drinking. In this, reports the Harpers trade magazine, Diageo is the first drinks company to offer the labels. Would that more producers, large and small, had that attitude.

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Winebits 373: Big Wine, Treasury, direct shipping

Big Wine ? How big is big? One of the most difficult concepts to get consumers to understand is that their wine probably isn’t made by who they think it is. As noted here, Big Wine controls a majority of the U.S. market, and Big Wine includes many companies most of us have never heard of. Case in point: Trinchero Family Estates, a 20-million case producer that wants to be a 30-million case producer. And how many of us have heard of Trinchero, a California company? It’s best known for Menage a Trois and Sutter Home, but those are only a fraction of Trinchero’s production and its three dozen brands. If Trinchero makes it to 30 million cases, it will be as big as the entire U.S. wine business was in 1965.

? Now they’ve figured it out: Regular visitors may remember the Wine Curmudgeon’s attempt to cash in on Treasury Wine Estate’s financial woes, which — not surprisingly — failed. One reason, aside from my lack of financial acumen, is that the people running Treasury were a little confused about how to sell cheap wine. Luckily for the company, that seems to have changed, and its results in the U.S. are much improved. Ironically, it seems this success came from a formula that I suggested when I wrote abut Treasury’s problems last year. Not that the company needs to give me credit — I’m used to saving really rich people lots of money.

? The judges like their wine: Supreme Court Justice Ruth Bader Ginsburg made a bit of news last week when she admitted she fell asleep during the State of the Union address in January because she had too much wine. This got giggles from many, but they missed the point, focusing on Ginsburg’s age, 81. Rather, it points to the real reason the court ruled in favor of direct shipping in 2005 in the landmark Granholm decision, which surprised many observers. Forget precedent and constitutional interpretation; the Supremes carved out an exception to the three-tier system because they liked wine and wanted to be able to have it shipped legally from their favorite California wineries. How else to explain that Ginsburg, Anthony Kennedy, and Antonin Scalia, all referred to in the BBC story in the first link, voted to allow direct shipping?