Tag Archives: wine trends

wine advice

Beware wine vintage skulduggery!

wine vintageThe Wine Curmudgeon, ever vigilant in the cause of price, value, and quality, must sound a skulduggery alert about wine vintages. How serious is this? The headline to this post has an exclamation point, which I use only on the rarest occasions.

But this wine vintages alert deserves an exclamation point. Too many retailers, and especially grocery stores, have shelves stocked with cleverly named and cutely labeled wine, costing as much as $20, that are four, five, and even six years old. These wines were not made to age; even if they were, they haven’t been stored in ideal cellar conditions, but in warehouses and back rooms with minimal, if any air conditioning. And they’ve been driven around on trucks between these warehouses and back rooms, passed from distributor to retailer to distributor to retailer, in less than ideal cellar conditions, too.

It’s worth repeating – almost all of the wine made in the world today is not made to age, and almost everything we buy will go off in two or three years, whether it has oxidized, turned to vinegar, or has had something else ruin it. This is chemistry, and will happen no matter what the sales person says with his or her reassuring smile. (Not that I’ve ever had that happen to me.)

The rule of thumb: Don’t buy a rose older than a year old, a white older than two, and a red older than three. Check the winery’s website to see what the current vintage is, and if what you see on the shelf isn’t that close to the current vintage, you’re risking buying spoiled wine. Yes, there may be a tremendous discount, but all that means is that you spent less on something that you don’t want to drink.

That these older wines are still being sold speaks to retailer cynicism and to the vague idea consumers have that older wine is always better, and that too many retailers believe that what consumers don’t know won’t hurt them.

Cartoon courtesy of WholeCellar.com, using a Creative Commons license

Aldi and Lidl

Once more, how consumers buy wine

how consumers buy wine

Even I know — and I’m just a gratuitous cute dog so people will put this on Facebook — how consumers buy wine.

Dear Wine Business:

I know we have our differences, but we do want the same thing — to get more people to drink wine. Hence another of my letters, which I send you periodically to tell you what happens when I talk to consumers about wine. This time, how they buy wine, and it doesn’t have much to do with scores or premiumized wine.

Marlowe, one of the two official dogs of the Wine Curmudgeon, needed a haircut, so I took him to a local place, Kinder Kritter. I know the owner a little, but we’ve never talked about wine. This time, though, she was curious about my license plate, 10 WINE. I told her, and she asked me for some recommendations. What do you drink now? I asked.

I know you don’t want to believe this, Wine Business, but she drinks $10 Bogle cabernet sauvignon, and $12 J. Lohr cabernet when she wants to splurge. So cheap, Big Wine grocery store brands that are easy to find and aren’t sold on the basis of reviews, winespeak, or cute labels. In other words, none of the stuff she is supposed to drink and which makes her a fairly typical wine drinker.

Yes, small sample size, but it’s not like I haven’t heard it before. She likes red wine that is easy to drink, but has a little more going on than just that. I recommended the McManis cabernet and the Rene Barbier Spanish red blend. The former was similar to what she was already drinking, and the latter was like it in some ways, but also different enough so that she could expand her horizons. Because isn’t that what every wine drinker should do?

The owner was also very excited when I told her the Barbier was only $6. So much for premiumization, huh?

I’ll let you know what she thinks of my recommendations. And thanks again for your patience in reading this.

Your pal,
The Wine Curmudgeon

More about consumer wine buying habits:
How people really buy wine
Another study agrees: We buy wine on price
What drives wine drinkers? Price, of course

Costco wine and its retail domination

costco wine

Annette Alvarez-Peters

Know three things about this interview with Annette Alvarez-Peters, who runs the Costco wine program:

First, any interview with Peters is worth reading, no matter how technical (and this one is technical), because she doesn’t do many and she is one of the two or three most important wine people in the world. So when Alvarez-Peters says Costco isn’t going to sell wine over the Internet in the U.S., then it’s not likely any other big retailer will, and retail direct shipping will continue to languish in the netherworld it currently inhabits.

Second, it shows Costco’s domination of U.S. wine retailing. It’s not so much that it’s the biggest wine retailer in the country or that it sold $1.69 billion of wine last year, but that it may account for as much as four percent of all the wine sold in the U.S. by dollar volume. In addition, the chain may do as much as $3 million in wine for each store, a gigantic number given that wine isn’t Costco’s reason for being. Kroger, whose wine sales could be close to Costco (parsing these numbers isn’t easy, since not all retailers break out wine revenue), has six times as many stores in the U.S. All of which means Costco has leverage with producers and distributors, even the biggest, that no one else has.

Third, a wine trend at Costco is a wine trend that producers pay attention to because the chain sells so much wine — and that means it’s a trend in the rest of the country that everyone else will be copying. So we are going to see Big Wine brands heavily discounted, lots more sweet red, premiumization, and rose. And Costco is dabbling with wine delivery; it it figures out how to make delivery profitable but affordable for consumers, delivery will become a trend.

We can argue whether any of this is good or bad, but that almost doesn’t matter. What matters is that what happens at Costco changes the way everyone buys wine, even those of us who don’t shop there. Unfortunately, the interview doesn’t do a good job getting that across.

More about Costco wine:
Costco and its role in the wine business

winetrends

Will Aldi and Lidl change grocery store wine?

Aldi and Lidl

See all this wine? You won’t find it at Aldi and Lidl.

Will German discounters Aldi and Lidl change grocery store wine in the I.S. the way they’ve changed it in Great Britain? That’s the question to answer as Aldi grows to 2,000 stores over the next couple of years and Lidl opens its first stores on the east coast.

Because the chains have significantly changed the way wine is sold in Britain, not only forcing traditional retailers out of business but cutting sales at mainline grocers.

“You wouldn ?t have believed it possible five years ago, but Aldi and Lidl are now setting the pace in the U.K. supermarket wine trade,” writes Finoa Beckett in the Guardian newspaper. “Between them, the pair have 10 percent of the U.K. grocery market, with Aldi alone accounting for one in every 13 bottles of wine we buy.”

By comparison, Costco, considered the biggest wine retailer in this country, has about eight percent of the U.S. market, while Kroger may account for about four percent. In other words, two upstarts in the U.K. have done almost as well in that market as two multi-billion dollar retailers do here. What does that say about the way grocery stores have traditionally seen wine in the U.S.?

What accounts for the Aldi and Lidl success?

? Cut-throat pricing. Each does $10 wine, even allowing for exchange rate foibles, in a way we can only dream of here. Beckett recommends Lidl’s 6.99 (about US$10) Cremant de Limoux, sparkling wine from the Limoux region of France; a similar wine costs $16 here. And she says Aldi does a French red and South African white for 5.49 (about US$8), about two-thirds the price of each in the U.S.

? Supply chain brilliance. A British grocery store consultant told me the companies get such good prices because they make producers an offer the latter can’t refuse. The grocers will buy all of a vintage at one time, so that the producer is happy to sell at a lower price because it has the cash immediately and doesn’t have to wait for the wine to be sold over the course of the year.

? Smaller selection. The same consultant said that smaller selection translates into lower overhead and keeps costs down. “The traditional supermarkets’ massive range makes choosing hard for the 99 percent of consumers who have no idea what most of the wines are,” he explained. “And the discounters have been winning awards and getting plaudits for the quality of their wines, which when combined with their much cheaper prices is a sure fire winner for most consumers.”

That’s the good news. The bad news? So far, Aldi hasn’t shown it wants to do the same thing in the U.S. My local Aldi, as well as the others I’ve visited, has good prices and a small selection, but most of the wines are of indifferent quality — too much Winking Owl and not enough Vina Decana, and I’ve yet to find a white to buy regularly. If Lidl follows the Aldi example, we haven’t gained much.

Still, there is reason for optimism. Most experts ignored Aldi and Lidl when they entered the U.K., and now even ASDA, owned by Walmart, is suffering badly from the discounters’ success. Besides, given the sad state of cheap wine in the U.S., any sign for improved quality and value is welcome.

winetrends

Has the death of $10 wine been greatly exaggerated?

$10 wineThe death of $10 wine, according to the wine pundits, is just around the corner. That corner, though, looks to be in a completely different part of town.

How else to make sense of U.S. sales figures for the 52 weeks ending Jan. 24, where 19 of the top 20 selling brands cost less than $10? And that eight of the top 20, all selling for less than $10, showed double digit sales growth in a market has been essentially flat for the past three years?

In this, what is happening with wine sales shows again the divide that has developed between the top end of the market and the wine that most of us drink. The Winestream Media and the analysts can talk all they want about the growth of wine that costs $15 or more, but that they continue to ignore what’s happening at $10 speaks to their wishful thinking. Barefoot, at $5.59 a bottle, is the best-selling wine in the country, selling almost 10 million cases last year, according to these sales figures. That would make it the seventh biggest winery in the U.S. if it wasn’t part of E&J Gallo; how can analysts continually dismiss this as the exception that proves the rule?

Also big sellers: Black Box, the boxed wine that is the equivalent of four bottles, up 18 percent at $5.01 a bottle; my beloved Bogle, up 14 percent at $9.49 a bottle; and 14 Hands, up 14 percent at $9.79 a bottle.

So why the $10 wine blind spot?

? Too many wine writers are snobs about cheap wine, and look for sales data that supports their bias. So if sales at $15 and more are growing more quickly, even if it’s from a smaller base that was depressed during the recession, it’s evidence that the stuff they think is beneath them is going away.

? Let’s hop on the Millennial bandwagon, because they are going to spend more money on wine than their parents did. This is about as wishful as it gets, as Rob McMillan at Silicon Valley Bank has shown, but it still gets recited as gospel.

? These are grocery store wines, and grocery store wines don’t count. Would I buy most of the wines on the top 20 list? No, but that doesn’t mean there isn’t quality for the price, including Bogle, 14 Hands, and Chateau Ste. Michelle.

Yes, wine that costs $5 and less is seeing sales declines, some significant, but this has less to do with price than with demographics. The audience for those wines is aging and doesn’t buy as much as it used to, in the same way the big beer brands are seeing significant sales declines as their audience drinks less. My guess is that the Millennials are buying Black Box instead of their elders’ Franzia, and it’s probably not a coincidence that a craft beer costs about as much as a Black Box bottle. But who in wine wants to believe that?

More about wine sales trends:
? Big wine growth 2016
? Is the U.S. wine boom over?
? Wine prices in 2016

winetrends

Does organic wine taste better?

organic wineDoes eco-friendly wine — organic wine, wine made with organic grapes, or made with grapes farmed sustainably — taste better than conventional wine? Apparently so, says a recent study, and those results are quite surprising given the history of green wine.

Magali Delmas, an environmental scientist at UCLA who has studied eco-friendly wine over the past decade, was almost surprised at the answer. Her most recent study — “Does organic wine taste better?” (written with Olivier Gergaud of the KEDGE Business School in Bordeaux and UCLA’s Jinghui Lim) comes to the conclusion that it does.

That’s news to many of us, myself included, who see green wine as costing more without necessarily tasting any better. Yes, we understand that the extra cost is a good thing, in the way that green production methods are usually a good thing. But few see the extra cost as better quality, in the way that a more expensive organic tomato tastes better. In fact, says Delmas, that perception is so common in wine that two-thirds of producers who do eco-friendly wine don’t label it as such on the bottle.

Nevertheless, she says, there does seem to be a quality difference that can be measured statistically (and allowing for the fact that scores are the only way to measure quality statistically). Delmas and her colleagues used ratings from the Wine Advocate, Wine Enthusiast, and Wine Spectator for 74,148 California wines made between 1998 and 2009; the result, after using sophisticated math to allow for vintage differences, the age of the wines, and critical bias (actually one of the most interesting parts of the study): “eco-certification is associated with a statistically significant increase in wine quality rating” by about one-half point.

So why hasn’t anyone figured this out? Delmas cites the confusion inherent in green wine, where an organic wine is different from a wine made with organic grapes, and which isn’t the case for organic tomatoes. In addition, does sustainably farmed really mean anything? And where does biodynamic fit? In addition, growing an organic tomato is straightforward compared to making a green wine, which further confuses the issue.

My guess? That most green wines are made with better quality grapes by better winemakers, and would likely score higher even if they weren’t green. Generally, cheap wine isn’t green, and the added cost of going green works against the process in which cheap wine is made to hit a certain price and not to taste a certain way.

winetrends

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).