Tag Archives: wine trends

wine news

Is the U.S. wine boom over?

U.S. wine boomThat’s the question that the annual Silicon Valley Bank state of the wine business report addressed last week, and the answer? It does look like the U.S. wine boom is over — for now, anyway. And though Rob McMillan, who writes the report, was optimistic that the slump may be short-lived, the fact that he cut through the usual pom poms and short skirts that pass for wine business analysis speaks volumes about how serious the situation is for anyone who loves wine.

The report predicts a decline in U.S. per capita wine consumption after more than 20 consecutive years of growth, and while overall sales in dollar terms will increase slightly, sales measured by the amount of wine sold will remain flat for the fifth year in a row. That is also the end of a two-decades-old trend; after sales bottomed out in the early 1990s, they increased annually, even through the recent recession.

McMillan points to three reasons for the change:

? The collapse in sales for wine that costs less than $6 a bottle, the boxes and jugs of Almaden and Carlo Rossi that have been some of the biggest cash cows in wine retail history. “That market is gone,” he said during the report’s webcast last week, “and it’s not coming back.” Yes, consumers are buying more expensive wine, but not as many of them are buying wine overall, and premiumization seems to stop at $15. There is little evidence that anyone is trading up higher than that.

? Competition from craft beer and spirits, which are more appealing to younger consumers. The report didn’t go into detail about why they’re more appealing, but as a 20-something woman told me the other day (and she worked in a wine shop): “Wine is such an anachronism.”

? Generational change, and McMillan said what few others in wine want to admit publicly. The Baby Boomers who powered the 20-year wine boom don’t drink as much as we used to, and we’re going to drink even less as we age. Meanwhile, the Gen Xers and Millennials aren’t making up the difference, whether because they’re drinking craft beer or can’t afford to. I talked to McMillan after the report came out, and he was blunt: “The Millennials are not going to spend the money on wine that the Baby Boomers did.”

In fact, most news reports of the study downplay that bit about the Millennials, who are supposed to be the wine business’ savior. But anyone who is clear-eyed about the economy understands that that may not be possible. First, this isn’t the 1990s, when the gross domestic product grew three to four percent a year. Second, the Millennials, for all the talk about peak earning years, don’t have access to the same high-wage jobs the Boomers did 20 years ago. And third, without those high-wage jobs, they will have even more difficulty paying off an unprecedented $1.3 trillion in college loan debt. All of which means it’s more likely they’ll buy a $5 craft beer instead of a $15 bottle of wine.

winetrends

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.

winetrends

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?

winerant

Is $15 wine the new $8 wine?

$15

“Why does this $15 wine taste a lot like that $8 pinot grigio I bought last week?”

Is $10 wine the new $100 wine?” was one of the best-read posts on the blog at the beginning of the recession, explaining why cash-strapped consumers were trading down — and that they were shocked to find that wine quality at $10 was much better than they had been led to believe. Today, as we deal with a glut of overpriced and poorly-made wine, often by reputable producers, it’s my sad duty to ask: Is $15 wine is the new $8 wine?

Over the past 18 months, I’ve tasted so much junk at $15 that even I’m surprised, and I’m the one who included a section in the cheap wine book that said that the $12 to $18 range — “the province of ‘Big Wine’ marketing — offered the least value. But what I’ve tasted since the end of 2014 has been even worse than that, $8 of value dressed up in a $15 bottle.

How has this happened?

 A determined effort by producers, mostly big but also smaller, and in regions like Lodi and the less well known parts of France, to separate what they make from the so-called “cheap wine” that we’re not supposed to be drinking. They’ve done this by creating new products with flashy labels that are made the same way as their old wines and at more or less the same cost, but retail for more money. This way, they’re creating the impression that the new wine is worth the extra money, when it’s mostly the emperor’s new clothes. Or, as a boss at Treasury Wine Estates calls it, “masstige.”

 Wretched grapes. Those of us of a certain age remember when wine was made with unripe and poor quality grapes. Unripe grapes gave the wines a green, almost crab apple quality, and poor quality grapes left the wines thin and bitter. Those grapes, which seemed to be long gone, are back and particularly in whites. I’ve tasted $15 chardonnays and pinot gris that were practically gaggable, the sort of wine you spit out and wonder what the producer was thinking.

 The increase in grocery store wine sales. This means we’re buying more wine on our own, without help from knowledgeable retailers. And that means we have to depend on the front and back labels more than is good for us. And if the front label is cute and the back says smooth and chocolate, we’re sunk, and end up paying more for the wine than it’s worth.

There is a cynicism at work here that’s more depressing than anything else, and something that wine — even when it did these sorts of things — never really enjoyed doing. But those days seem to be over.

wine news

Bogle wins 2015 cheap wine poll

cheap wine poll 2015

Bogle wins the cheap wine poll for the second time in three years.

And it wasn’t even close, with Bogle more than doubling second place Falesco Vitiano to win the 2015 cheap wine poll. This is Bogle’s second consecutive victory, and its second in the poll’s three-year history.

That Bogle did so well again speaks to not only the company’s commitment to quality, but to its availability. Bogle combines value with a huge retail presence — as one commenter wrote, “it may be the best wine one can buy in gas stations in Mineola, Texas, as well as Princeton, Maine.” Most cheap wines do only one or the other, and some don’t even do that.

Which, apparently, is the case with Two-buck Chuck. The Trader Joe’s brand has finished last every year, but I guess that it has sold more 600 million cases over the past decade is some consolation to the retailer.

The biggest surprise? That Barefoot did so poorly, finishing seventh after coming in second last year. In addition, given how many people Google sends to the blog to read about Barefoot, that the brand didn’t pick up any of those votes this year makes its performance even more shocking. Barefoot overload, perhaps?

Not surprising? That Yellow Tail and Cupcake finished eighth and ninth. I added them this year not because I thought they would do well, but to include more well-known brands. That they did so poorly speaks to why they sell — the former is cheap, and the latter is cute. Quality doesn’t have much to do with it.

This year’s results are below, and you can find the 2014 and 2013 polls here and here. The 2016 poll will return next year at this time, and I’ll include a couple of suggestions from the comments. And is it time to retire Bogle and let someone else win?
Business Lists on Ranker

winetrends

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.

winetrends

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.