2019 SVB wine report

2019 SVB wine report

SVB’s Rob McMillan: “The U.S. wine industry needs new direction and a changed focus.”

2019 SVB wine report says U.S. retail wine sales may decline this year, and the future  doesn’t look much better

Someone in the wine business may be more worried about its future than the Wine Curmudgeon. Consider these projections, from the 2019 SVB wine report that was released yesterday:

• How about a forecast that says retail wine sales in 2019, as measured by volume, could actually decline? This would be almost unprecedented in the post-1980s history of U.S. wine.

• Or that growth by value may be less than one percent, with even premiumization starting to slow?

• Or that younger wine drinkers, more interested in legal weed and paying off their student loans, aren’t showing any interest in picking up the slack left by the aging Baby Boomers?

Why does this matter to those of us who drink wine? Because Silicon Valley Bank’s Rob McMillan, the study’s author, is one of the smartest people in the wine business. How important has McMillan’s annual report become? This year, a vice president for Big Wine’s Constellation Brands participated, and the company doesn’t usually do those sorts of things.

So if McMillan says a slowdown is coming and the wine business needs to reexamine how it does business, then it had better. Or else we all suffer.

“This is probably the most important report we’ve ever put together,” McMillan said during Wednesday’s live videocast. “Starting now, wine has reached a tipping point. We’re not closing in on a tipping point, we’re feeling it.”

The videocast threw around a lot of jargon – I even heard psychographics – and several of the other panelists nitpicked about some of the conclusions.

But that didn’t change the hard news: Younger people don’t care about about wine the way their parents and grandparents did, They are focusing more on beer and spirits and legal weed, and they’re hampered by lower relative incomes and intimidated by the repeated attacks on wine drinking by the neo-Prohibitonists.

In other words, wine is too old, too Anglo, too snotty, and too out of touch with the younger consumers. So, said McMillan, “We have to look at what the wine industry is doing about it now and what can we do in the future to fix the problem.”

Also worth noting: McMillan, who invented the term premiumization to describe consumers trading up to more expensive wine, said he’s surprised to see it slow as it faces price resistance from consumers. Price resistance? What an amazing concept.

Finally, the Wine Curmudgeon’s suggestion to the wine industry: Sweetening dry wines and calling them dry ain’t going to do it. How about giving younger wine drinkers quality and value? I know — almost as revolutionary as the idea of price resistance.

Wine of the week: Line 39 Sauvignon Blanc 2017

Line 39 sauvignon blancThe Line 39 sauvingon blanc is a $10 California grocery store white that has remained dependable for years

If more grocery store wine tasted like the Line 39 sauvignon blanc, the Wine Curmudgeon wouldn’t get nearly as many emails and comments from blog visitors bemoaning availability.

This vintage of the Line 39 sauvignon blanc ($10, purchased, 13.5%) is a little more disjointed than previous efforts; that is, all of the parts don’t fit together as neastly as they have in the past, and the wine has some rough edges. Having said that, it is still California-style sauvingon blanc – a little grassy aroma, some citrus fruit (lime, perhaps, but not grapefruit), and a clean and refreshing finish.

In our California sauvignon blanc hierarchy, the Line 39 fits below Ryder and Wente – not quite as layered as either of those, but that’s OK since it’s a couple of dollars less. If it’s not quite up to the $10 Hall of Fame quality of past vintages, it’s still a fine value.

This is wine for roast chicken thighs marinated in olive oil, garlic, lemon juice, and rosemary, as well as something to drink when you get home from work and feel like a glass to soothe the rigors off the day.

Winebits 574: Restaurant wine, wine apps, mock wine cocktails

restaurant wineThis week’s wine news: One more example of restaurant wine’s inability to deal with reality, plus the failure of wine apps and wine drinkers should try booze free cocktails

Restaurant wine, yet again: That the Wine Curmudgeon can find so many of these restaurant wine pricing faux pas speaks to the problem: Those who price wine in restaurants aren’t living in the same world with the rest of us. A recent on-line story featured an up and coming sommelier bragging about his wine list: “These are my favorite things to pour for our guests: the wines that sell for $45 to $70 but completely knock it out of the park.” Given restaurant pricing, that means he looks for values among wines that cost $25 to $40 retail. Which misses the point of how much most of us actually pay for wine. A $40 bottle accounts for a couple of points of U.S. sales (if that much, depending on whose numbers you use). Hence, the sommelier is running his wine list for a tiny, tiny share of U.S. wine drinkers.

Waste of a download? Most of us use wine apps fewer than a dozen times and then discard them, writes Robert Joseph in Wine Business International. There are exceptions like Vivino, but most of us who “ downloaded the app did so because they were briefly attracted by the novelty of the technology. But that interest soon wore off; they seldom if ever feel the need to record their views of the red or white in their glass, or scan a bottle before buying it.” This matters because wine apps were supposed to making wine pricing more competitive, since consumers could compare prices on their phones. Apparently, though, that isn’t happening.

Bring on the mocktail: Do wine drinkers want to try booze-fee cocktails? Yes, says one of the leaders in devising mocktails that mimic their alcohol counterparts. “While it seems this may be only about soft cocktail recipes, the bigger picture is that it’s about connection, community, inclusion and taking good care of people,” she says. One suggestion for wine drinkers: spice mulled “wine,” made with apple cider and cranberry juice.

The wine retailer’s New Year’s resolutions 2019

wine retailer’s New Year’s resolutionsFive wine retailer’s New Year’s resolutions for 2019

The Wine Curmudgeon has long supported the independent wine retailer, both here and in the cheap wine book. The best independent retailers are the wine drinker’s best friend – someone more concerned about making the customer happy than selling them plonk because it seems like a good idea at the time.

In addition, those of us who care about quality and value have fewer and fewer options in a wine world of ever more gigantic producers, ever more massive distributors, and ever more mega retailers. This makes the quality independent wine store more important than ever.

Hence, these five wine retailer’s News Year’s resolutions, because we’re all in this together:

• The customer is not your enemy. This seems obvious, but I am always reminded of the pizza restaurant owner I once interviewed. Yes, he said, the pizza business would be a lot of fun if not for the customers – always complaining about tardy deliveries, cold food, and incorrect orders. Retailers, caught up in the day-to-day aggravations of small business, can lose sight of why they’re in business. Once that happens, it’s not too long until you’re as irrelevant as Montgomery Ward.

• The employee isn’t your enemy, either. That same pizza operator disliked his employees almost as much as his customers – how dare they ask for a raise or time off? I don’t think it’s a coincidence that the two best independent wine retailers in Dallas respect their employees and are rewarded with minimal turnover and top-notch efforts.

• The customer is not stupid. This is an especially irritating 21st century development, in which we’re treated as if we’re sheep ripe for shearing. How else to explain things like World Market’s phony pricing? Treat the customer with the same respect as your employees, and that’s most of the battle.

• Sell wine for a reason, not because you think you know best. I wrote a trade magazine story this month, asking long-time wine industry types about their biggest mistakes. One told me that he always goofed up when he thought he knew more than the customer did. This was not necessarily about wine knowledge, he said, but that he thought he knew what they should drink instead of helping them find what they wanted to drink. The best independent retailers always do the latter.

• Keep showing why you’re different from everyone else. Walk into any grocery store, regardless of who owns it or where it is, and the wine department looks exactly the same – the same Big Wine labels, the same deceptive pricing, the same stupid shelf talkers promising wine quality that only a marketer could believe in. That’s why there’s room for someone who offers interesting wine af fair prices, and why so many small wine shops continue to thrive.

Wine trends 2019

wine trends 2019Wine trends 2019: Higher prices, less choice, more plonk, and the return of sweet pink wine

Wine prices 2019

Most of the wine trends 2019 stories on the Internet describe a wine wonderland of rare vintages, exotic tastings, and unlimited opportunity. Which is probably true for the few who live in that particular wine bubble – they don’t have to worry about how much they pay and they can get their hands on any esoteric wine they want.

For the rest of us, wine trends 2019 are not particularly encouraging. Is it any wonder I worry about the future of the wine business? Here’s what to expect this year:

• An attempt to bake higher prices into the marketplace, not because prices should be higher – a grape shortage or better quality wine – but because the oligopoly that controls wine pricing wants higher prices. It’s worth noting that consolidation, which gave us the oligopoly, is no longer a trend. It’s an everyday part of the wine business.

• More three-tier reform failure. Yes, I am well aware that every smart liquor attorney and wine analyst expects the Supreme Court to kick the three-tier system in the groin in the upcoming Tennessee retailers case. And I want them to be correct. But it ain’t going to happen. This Supreme Court, which sees the 1950s as the Golden Age of American life, isn’t going to change three-tier in any way, shape, or form.

• The return of white zinfandel. It won’t be called that, of course, but will be disguised as dry rose. One example: The Seaglass rose. The 2016 vintage was made with pinot noir, “with barely ripe strawberry fruit and surprising freshness instead of the cloying, almost sweet quality that some wines have.” So what did the 2017 vintage (apparently minus the pinot noir) taste like? Cloying and almost sweet.

Bring on the recipe

• More formula wine, as producers treat wine production like a recipe at a chain restaurant. We’ve seen a lot of this already, especially in the $10 to $15 range, but it will expand to wines costing as much as $25. Who ever thought we would see wines at that price made to focus group specifications, with residual sugar, barely any acidity, and washed out tannins? One large bulk winery owner told me last week that he has to make two styles of wine now: sweeter for the U.S. market and drier for Europe.

• Top-quality brands losing distributors and importers, further reducing consumer choice. We saw this when the French Domaine du Tariquet lost its U.S. importer in 2018, and that was just the beginning of the bad news. Last year, California’s McManis Family Vineyards, which makes 300,000 cases annually, had to sign a distribution deal with The Wine Group, the fourth biggest producer in the country. McManis couldn’t find a distributor with national scope willing to carry its wines; in the age of consolidation, 300,000 cases isn’t big enough for Big Distributor. The McManis family still owns the winery, but it has to depend on another producer’s sales force to sell its product. How screwed up is that?

• Continued flat demand here and in Europe. As one California winemaker told me recently, “No one is buying wine anymore. What’s going on?” Or, as Wall Street put it: “Shares of Constellation Brands skidded as much as 11 percent Wednesday morning. … [thanks to its] disappointing wine and spirits business. …”

• The attack of previous vintages. Flat demand, combined with increased wine production, means there is lots and lots of older wine on warehouse shelves. More retailers – and even some that are usually more scrupulous about this – are mixing the older vintages in with the current stuff in hopes you won’t notice. Or, you’ll see older wines discounted, even if they’re so old they aren’t very drinkable.

Wine prices 2019

wine prices 2019Big Wine and Big Distributor will push for higher wine prices 2019, but may run into resistance from flat demand, an abundant grape supply, and a wobbly economy

Wine trends 2019

We’re at a crossroads as we approach wine prices 2019. On the one hand, the worldwide grape supply is abundant, especially in California, while demand is flat in the U.S. and continues to decline in Europe. All of this, given the law of supply and demand, should lead to lower prices.

On the other hand, the oligopoly of producers and distributors that controls pricing in this country sees higher prices as part of the natural order of things, and the three-tier system gives them more control over pricing than they would have in a less regulated marketplace.

Further complicating the issue: the U.S. economy and the stock market, which is wobbling one day and then doing something different the next. What happens if we get a recession in late spring or early summer?

Given all of those contradictions, how do we approach wine prices 2019? My guess: Big Wine and its allies will try to push prices higher, but with the understanding that significant and regular discounting by retailers will be necessary as flat demand runs into higher prices. Hence, we need to buy when we can take advantage of all that discounting.

Consider the following:

• First, tremendous discrepancies in prices – not just between retailers (more about that in the next item), but between the same product in the same store. In other words, a wine could be $10 one day and $16 the next, and there is no way to tell what’s going to happen. I’ve paid four different prices for Spy Valley sauvignon blanc at Kroger in the past 12 months, ranging from $12 to $16.

• The price differences between big and small retailers will continue to grow, as Big Wine and Big Distributor give their biggest retail customers even better deals. Part of this isn’t new, since bigger customers have always received better prices; volume discounts and all of that. What’s different now is there are more huge companies. As one small Texas retailer has told me, he has to sell a $10 wine for $13 and $14 because he can’t get the same pricing that the big chains get.

• Even more indecipherable discounting. Look for more retailers to adapt grocery store-style pricing, where the same wine could have three or four prices depending on how much you buy, whether you’re a club member, and so forth. A Dallas Whole Foods sold something called Troublemaker Red (“velvety smooth”) for $14.99, but with a 10 percent discount for six bottles and a 20 percent discount for a case. This dovetails with the idea of higher prices, but then allows for discounting to move product that is stuck on the shelf because prices are too high.

• Finally, nothing will change with restaurant wine pricing, as the restaurant business sticks with its failing pricing model. Because, of course, if restaurateurs understood what was happening, they would have fixed the problem long ago.

Wine of the week: Marchesi di Barolo Maràia 2016

Marchesi di Barolo MaràiaThe Marchesi di Barolo Maràia may not be as well known as its nebbiolo-based cousins, but it offers much in value and quality

One of the advantages of the quality independent retailer? That you can pick almost anything off the shelf, even if you don’t know much about the wine, and figure you have more than a decent chance of buying something you’ll enjoy. Which is exactly how I bought the Marchesi di Barolo Maràia.

Italian wine is probably the most difficult to understand in the world, what with an almost infinite number of grapes (many of which have different names in different parts of the country), a dizzying array of regions, and a mostly incomprehensible appellation system. So, when there is no one to ask (and on this day there wasn’t), even those of us who make our living from wine have to take potluck.

Which is how I found the Marchesi di Barolo Maràia ($10, purchased, 13.5%). This red, made with the barbera grape, is from the Monferrato region in Piedmont. That combination means it’s not as pricey or as respected as the nebbiolo wines from Piedmont’s Barolo and Barbaresco regions. (I told you this was complicated, didn’t I?)

But it doesn’t mean it’s not a quality bottle. Barbera makes bright, almost tart, red cherryish wines. The Maraia is more supple than that, and it wasn’t as taut as I expected. Still, the fresh fruit was there (more black cherry than red) and balanced with Italian-style acidity and soft tannins. In all, well made and enjoyable.

Drink this with winter roasts and stews, as well as sausage and red sauce.

Imported by Frederick Wildman & Sons