• Premiumizing Prosecco: These days, it’s not enough to increase sales of a product eight-fold. You have to trade consumers up, even if that means you’ll sell less of the product. That’s the situation with Prosecco, the Italian sparklng wine, reports the Shanken News Daily website. Sales have passed 4 million cases, almost exceeding Champagne. But that’s not good enough, say marketers, since Prosecco rarely costs more than $15 – just a fraction of what Champagne costs. So the push over the next several years will be to convince consumers to buy higher-priced Prosecco, even though the reason for its growth and popularity is that it can cost one-third less than Champagne.
• Take that, Michigan: Remember the good news about three-tier last week? Not so fast, says the state of Michigan. The liquor cops there, who still seem to have a chip on their shoulder from losing the landmark Granholm case in the Supreme Court in 2005, are cracking down on wineries who ship to consumers in the state. ShipCompliant, which helps producers navigate the various local liquor laws, reports that wineries who don’t list their special Michigan license number on the packing label are being cited. If this seems nitpicky, but it’s all part of the fun that is 50 laws for 50 states.
• Bring on the booze: What do you do if you’re a struggling national bookstore chain? Sell beer and wine, of course. Barnes & Noble will add alcohol to stores in Virginia, California, New York, and Minnesota this year in an attempt to boost long-depressed sales. Ironically, Barnes & Noble is suffering at the same time that independent bookstores are enjoying a revival; what does it mean that independents who don’t sell wine are doing better? Hmm. Customer service, perhaps?
• Important rose advice: Dave McIntyre at the Washington Post, a long-time pal of the blog who was drinking rose when the hipsters thought Zima was cool, offers some rose wisdom and five roses to try, all of which is much appreciated: “After all, there are delicious pink wines made all around the world” he writes. “Pour a rosé you like, shed the cares of the day and consider your true priorities under the setting sun.” Is it any wonder Dave and I get along so well?
• Cheap wine wisdom: The VinePair website, which usually offers practical wine advice, is mostly on track with this effort about how to buy cheap wine. Much of it will be familiar to the blog’s regular visitors, including the admonition to look for wine from less expensive places. I was a little confused, though, by the part about avoiding closeout bins, not because it’s wrong but because of the reason: “These are the wines a shop can’t sell, and that often means there was no one at the shop who was passionate enough to sell them.” Which isn’t always true; I’m more concerned with the age of closeout wines, because if they’re too old, it doesn’t matter who liked them. The wines will have faded and not taste like anything.
• Arizona allows direct shipping: You can now buy wine directly from wineries in Arizona, the 42nd state to allow the practice. That’s the good news. This is an informative piece from our friends at the Wine Spectator, complete with informative map. The bad news is that winery to consumer shipping, and not retail to consumer shipping. The latter is still illegal in many states and often incredibly difficult when it is legal. One other note: Two of the eight states that don’t allow winery shipping are Utah and Pennsylvania, about as odd bedfellows as one can have.
? The big get richer: The Wall Street Journal is reporting that Kroger wants to contract management of its wine and beer departments to Southern Wine & Spirits, the biggest distributor in the country, so that the grocer doesn’t have to worry about buying or stocking the shelves. If accurate, this represents another significant change in the way we buy wine and the choices we get when we do. For one thing, Kroger is one of the biggest wine retailers in the country, and has paid for political campaigns to allow supermarket wine sales in many states, including Texas. Second, Southern could favor its brands over those of other distributors, giving its products better shelf space. Third, and the story isn’t clear on this, producers would have to pay Southern for the privilege of having it manage the shelves, and how many small producers could afford to pay those fees? I’m going to follow this story, because if it happens, other big retailers will follow, and our wine-buying lives will get that much more difficult.
? Rapid growth: The direct shipping market — wine sold to consumers directly from the winery and the only exception to the three-tier system — grew eight percent last year, to almost $2 billion. Which is a lot, though some perspective is needed: the U.S. wine market totaled about $39 billion in sales in 2014, so direct shipping represents less than five percent of the total. In addition, direct sales are focused on consumers in just five states, and one of them is California, where shipping costs are less of a factor. Also, the cost of the average bottle sold directly is $38, which means most U.S. wine drinkers are priced out of the DTC market. (And a tip o’ the Curmdgeon’s fedora to Steve McIntosh at Winethropology for sending this my way.)
? Cheap by whose standards? The Wine Curmudgeon has long advocated that Bordeaux’s sales problems in the U.S. are a function of price, and this gem from the Village Voice demonstrates that nothing has changed. It touts the value in the current vintages of Bordeaux, yet only one of the eight wines in the story costs less than $25, a $17 bottle from what’s called a satellite appellation — a lesser region of Bordeaux. To add insult to injury, the story says it’s difficult to find satellite appellation wines because they usually don’t have scores and you will have to consult a “Bordeaux connoisseur.” Yeah, like most wine drinkers have a Bordeaux connoisseur in their phone. And aren’t we done with scores yet?
? More obstacles: The Wine Curmudgeon has watched with glee and sympathy as Pennsylvania has tried to reform its state store system, where you can only buy wine from stores operated by the state. Some of it has been silly, like wine vending machines in grocery stores, and some of it points to how screwed up the political system is when it comes to liquor law in the 21st century. like state store reform held hostage in the state’s budget impasse. So we should not be surprised that spirits producers are threatening to hold their breath until they turn blue if the state allows wine to be sold outside of state stores but not liquor. Which means, I suppose, that state store reform is no closer today than in the past.
? Personalized direct retail shipping? The VinePair website reports that the next big trend in wine shopping will be stores or services that send you wine that you want without you having to decide what you want; the trendy 21st term is “curated wine.” Which sounds nifty, but doesn’t take into account three-tier. That’s probably one reason why the post has to quote a retailer in New York City that offers the service, shipping to New York customers. Yes, this is a terrific idea, but it will never work in the U.S. unless the retailer can ship to all 50 states with a minimum of fuss, paperwork, and legal obstacles. Which, unfortunately, will probably not happen any time soon.
? Blue collar wine: A tip o’ the WC’s fedora to Forbes’ Cathy Huyghe, who spent the month of November writing about the wine that most of us drink, and not Forbes’ one percenters. “…[I]t has turned out to be one of the most eye-opening projects I ?ve ever done. … The longer I ?m a wine writer, the further away it ?s possible to get from the wines that most people drink.” Welcome to the fight, Cathy. The more wine writers who learn this, the better off wine will be. One of the biggest problems I have is convincing my colleagues that there is demand for serious criticism of what your articles call “Blue Collar” wine.
? One person’s inexpensive: One more example of how restaurants are out of touch with their customers when it comes to restaurant wine prices. This new Dallas restaurant is boasting about its reasonably-priced list, because, said a restaurant official, “We have a low mark up on our wines, so we ?re priced fantastic.” That would be a wine list with most wines supposedly costing less than $100 (no website for the restaurant yet, so I couldn’t check). What would the official have said if there had been really expensive wines on the list? Is it any wonder, unless there’s a special reason to go, that the Wine Curmudgeon has all but abandoned Dallas’ restaurants? Besides, it’s more fun eating at home.
? Bigger and bigger: It’s not just wine companies that are getting bigger, but distributors as well. Wine Industry Insight reports that the 10 biggest distributors in the country control more than two-thirds of the wholesale business, which makes the group more or less as dominant as Big Wine. Why does that matter to consumers? Because, thanks to three-tier, every wine sold to a retailer or a restaurant in the U.S. has to pass through a distributor, which tacks on as much as 25 percent to the cost of the bottle for their effort. Fewer and bigger distributors means less competition, which means that percentage won’t get any smaller any time soon.
? Best practices: Want to know how to help your wine survive shipment, whether it comes directly from the winery or from an online or local retailer? This list, from Entrepreneur magazine, hits the highlights nicely, emphasizing how little wine likes heat, vibrations, and being left on a delivery truck all day. One overlooked point: Give the wine, particularly the pricier bottles, a chance to recover from the trip. The bottles need to rest after being bumped across the country, and letting them sit in a cool, dark room for a week or so isn’t a bad idea.
? Handmade wins one: A federal judge has ruled that Maker’s Mark can call its bourbon handmade, even though it isn’t, because a reasonable consumer would know it isn’t. The Wine Curmudgeon, having reported the opposite result in a similar label fraud case, marvels at the U.S. legal system. If this judge thinks it’s OK to call something handmade when it isn’t, invoking the concept of reasonableness, then why did another federal judge rule that a reasonable consumer would confuse $7 Spanish sparkling wine Cristalino with $200 Champagne Cristal? No wonder my mother wanted me to be a lawyer. It sounds much more exciting than wine writing.
? The cost of delivery: Want to know why direct shipping is still such a tiny part of overall U.S. wine sales? This, from the Shipping Compliant consultancy, addresses the myriad laws and three-tier confusion that hamper direct sales, but also puts everything in perspective with one fact: “When a customer buys wine online, about 20 percent of every dollar they ?re spending goes towards shipping. … In a world with services like Amazon Prime, customers hate spending money on shipping. …” Which means, even if three-tier disappeared tomorrow, direct shipping would still likely remain a tiny part of overall U.S. wine sales.
? Kill all the wine writers? Because, apparently, we don’t need them. A study says U.S. adults 21 and older rely more on peer recommendations and social media than they do on traditional advertising when buying alcohol. Some of you may argue that wine writing isn’t advertising, but I’d point out you haven’t been paying attention. The report was conducted by a company that makes a social media platform and which queried its users, which is what should raise questions about the findings. Still, it claims four out of five consumers said they have bought alcohol they discovered on social media, and almost three-quarters use social media on their smartphone or mobile device when they’re buying booze. I guess I need to tweet more often.
? Lots of kinks to work out: Direct shipping, despite its successes over the past decade, is still a tiny part of the wine business, just single percentage points of the $17 billion in sales. One reason for that, of course, is three-tier, which makes it difficult for wineries to ship to consumers in different states. And three-tier has more to it than even those of us who think we know it can imagine; witness the lawyer suing Illinois wineries for not charging sales tax on shipping fees. This is perfectly legal in Illinois, where the law allows private attorneys to recover unpaid taxes on behalf of the state. Much of the coverage has been critical of the attorney, but that misses the point. Illinois law is vague on whether sales tax should be charged on shipping fees, so how how can direct shipping ever become more than a niche business if laws crucial to its success are as vague as the Illinois law? Because, given three-tier, this is certainly not the only vague, poorly written, or unclear law dealing with the subject.
? Retailer buyout: Majestic Wine, one of the biggest retailers in the United Kingdom, has bought another British retailer, Naked Wine. This is bigger news than it seems, since Naked Wine has a trendy U.S. division that sells what can best be described as craft wine on-line at discounted prices to its members. It means that Majestic, facing tremendous competition from grocery stores, is trying to find wine that consumers can’t buy at grocery stores. Given the increasing importance of supermarket wine sales in the U.S., this may be a sign of things to come in this country (within the confines of three-tier) as retailers look for exclusive products to fend off grocery stores. It’s also another indication that retailers want to get bigger to fend of the Costcos, Walmarts, and Aldis of the world.
? Nuts to Champagne: Prosecco has passed Champagne in sales at British grocery stores in news that is so shocking — given the British love affair with Champagne — that it should worry not only the Champagne business, but retailers around the world. If the British are buying Prosecco, the Italian bubbly that is at least half the price of Champagne, what does that means for retailers elsewhere? Has Champagne priced itself out of some markets? Do consumers prefer the softer, sweeter taste of Prosecco? Or are grocery stores playing a role in what’s going on? Even the story, from a British trade magazine, had a panicked tone.