Trump Administration may hold off on 100 percent tariff on French wine

wine tariffsBut still no word on whether the U.S. will delay imposing a 100 percent tariff on all European wine

U.S. officials say they will hold off on escalating a trade war and won’t impose a 100 percent tariff on French wine and Champagne, cheese and handbags. President Donald Trump had threatened the new duties to retaliate for a French tax on U.S. tech firms, including Facebook and Google.

The tech giants, despite ample evidence that the tariff would hurt U.S. companies, opted to protect their billions of dollars in profit at the expense of U.S. jobs, and supported the president’s decision. Their backing was seen as the final impetus in imposing the 100 percent duty.

The good news: The Financial Times reported yesterday that a French finance ministry official said the two sides had agreed to a “ceasefire” until the end of the year. He told the newspaper that no tariffs would come into force before then and talks would continue on digital taxation.

The bad news: CNN emphasized that there was no official word from the White House that it would delay the tariff. This approach has not been unusual in Trump’s on-going tariff broadsides with other countries over the past three years, and it wouldn’t be surprising if the U.S. changed its mind and the tariff went into place.

In addition, it’s unclear whether this compromise will delay the the proposed 100 percent tax on all European wine, part of the on-going trade dispute about unfair subsidies to European aircraft producer Airbus.

Winebits 629: Prohibition, SVB report, wine consumption

ProhibitionThis week’s wine news: It’s the 100th anniversary of the repeal of Prohibition, plus insight into the SVB wine report and why the U.S. still drinks more wine than anyone else

Happy anniversary – or not: Reports the BBC: “A century on, a small group of Americans are fighting to keep the dream of the so-called ‘noble experiment’ alive.” The story looks at those who think repeal was a mistake, and why they’re still optimistic about stopping alcohol sales in the U.S. Because, as the story also notes, “The drinking age of 21 is higher than in other nations where drinking is legal. Dry counties and dry towns – where alcohol sales are restricted or barred outright — are dotted throughout the country. And Gallup polling from last year shows that nearly one fifth of respondents said drinking alcohol was “morally wrong.”

Keep the faith, baby: Rob McMillan, whose Silicon Valley Bank wine industry report made such depressing reading last week, tells the Wine Business International trade magazine that one should not abandon hope. He says the industry needs more professional management, which is usually missing given so many family businesses; that wine needs to understand younger consumers and not assume they’re like their parents and grandparents; and that wine needs to focus on health and not premiumization.

Still No. 1: The U.S. remains the world’s biggest consumer of wine, despite all the doom and gloom. That’s the latest data from a study by International Wine and Spirit Research commissioned by Vinexpo. Intriguingly, Chinese consumers drink more red wine than anyone else, some 155 million cases. By comparison, the French drink 150 million cases of red wine. No, I have no idea what this means, save the Chinese prefer red wine.

Can Grocery Outlet spread the gospel of quality cheap wine?

Grocery OutletGrocery Outlet, the west coast discount supermarket, wants to use cheap wine to help it expand across the country

Grocery Outlet, the west coast discount supermarket, wants to expand across the country. Can it do so in this age of Walmart, Aldi, Trader Joe’s, and all the rest? And if it does, can it spread the gospel of quality cheap wine?

That’s the question I tried to answer in a freelance piece for Meininger’s Wine Business International. Grocery Outlet’s plans are ambitious: Expanding from 332 to some 4,000 stores as it moves east —  and, say company officials, with cheap wine a key to that expansion.

So why should we be so excited about wine at Grocery Outlet?

For one thing, there are 50 wines in each store that cost $5 or less. For another, those 50 wines are usually not bottom-feeders like Winking Owl. Rather, it’s branded wine from producers we’ve heard of, but that the company buys as seconds, remainders, and discounted items from wholesalers and wineries. And Grocery Outlet is famous among California wine geeks for discounting expensive wine, which it sells for as much as 50 percent off.

This isn’t a new business model for retailing, but it’s very unusual for wine. For one thing, three-tier makes it more difficult than selling overstocks of canned soup. For another, it means each store’s selection changes depending on what the chain can find to discount, so the great $5 wine that was there the last time may not be there the next time. Third, it doesn’t usually stock national brands like Barefoot or Kendall-Jackson, which isn’t the conventional wisdom.

“What we’re doing, and we’re doing it every day, is to find wine through the normal channels, but that it’s wine that we can sell at the right price,” says Cameron Wilson, Grocery Outlet’s director of wine, beer, and spirits. “But what we’re also doing is upgrading the technical quality of the wine we carry, so that everything we carry is in good shape and that it shows well.”

Which sounds like a fine reason for us to care about Grocery Outlet’s success.

Panic wine buying

panic wine buying

Panic wine buying, as the Wine Curmudgeon stocks up before a possible 100 percent European wine tariff.

The Wine Curmudgeon, faced with the prospect of a 100 percent European wine tariff, does some panic wine buying

The picture pretty much says it all. I spent an hour or so last week at Dallas’ biggest wine retailer, stocking up in case worse comes to worst. The result? 28 bottles of wine for $290. It’s good to know that the Wine Curmudgeon hasn’t lost his touch in the face of an international crisis of epic proportions.

A few thoughts after my panic wine buying:

• Lots of gaps on the shelves. Lots. I bought the last two bottles of the Chateau Bonnet white, and there wasn’t any Chateau Bonnet red or new Hall of Fame member Azul y Garanza, the $11, 1-liter Spanish tempranillo. Apparently, I’m not the only one who has panicked.

• Lots of cheap wine I haven’t seen before. It looked like the retailer had done some buying, too, stocking up on inexpensive European wine before the 25 percent tariff raised its prices. I bought some of these new wines, and will report back as the situation warrants.

• I even bought California wines. This included the always dependable McManis as well as the Shannon Wrangler red blend, which was the wine of the week 4 ½ years ago. Oddly enough, the wine cost $2 less this time.

SVB wine report 2020

svb wine report 2020

“I know those younger consumers are down here somewhere.”

SVB wine report 2020: The wine business is hurting, and things are going to get worse before they get better

How upside down is the wine world? This week, during the annual Silicon Valley Bank state of the wine industry webcast, one of the panelists said something that was almost unprecedented:

“We need to pay better attention to consumer demand.”

Which, as regular visitors here know, is the opposite of what we’ve heard for decades, and especially since the end of the recession and the growth of premiumization. The wine business knew best, and sold us what it said we needed, and not necessarily what we wanted.

Because that’s how we ended up where we are today, with decreasing wine sales, decreasing demand, and decreasing interest in wine among younger consumers. Which, not surprisingly, was the theme during this year’s wine industry webcast. Rob McMillan, the executive vice president and founder of the Silicon Valley Bank wine division, put it bluntly on Tuesday morning: The wine industry has to change the way it does business and focus on what makes wine worthwhile. It can no longer assume that consumers will drink wine because they always have.

And, reinforcing just how different things are from where they were just a couple of years ago, McMillan said it was time for wine to reconsider its objection to nutrition and ingredient labels. Because, of course, that’s what consumers want.

We ain’t in Kansas anymore, are we?

The rest of the webcast was depressingly familiar for anyone who has been paying attention to something other than wine scores and premiumization for the past decade:

• A price bubble exists for California’s best quality grapes, as prices continue to increase while demand doesn’t.

• Retail wine sales, measured by volume, have declined to where they were in spring 2015.

• The amount of bulk wine on the market is at record levels, which is a key gauge of wine industry health. More bulk wine means less demand, which means lower wine prices, which means wineries make less money.

Will the wine business take its head out of the sand and act on the report? McMillan isn’t necessarily optimistic. I talked to him this week, and he said that there is still tremendous denial among producers, save for the very biggest. Big Wine, he says, “is looking for ways to change the industry,” but it’s about the only ones.

Wine of the week: Cantina di Casteggio Barbera 2016

Cantina di Casteggio Barbera

The Cantina di Casteggio Barbera offers much more than $9 worth of value in a tart, leathery style

Barbera grapes produce some of Italy’s best known and best expensive wines. So what’s a barbera doing as a wine of the week?

Because the Wine Curmudgeon can find value even in a grape that produces $80, $90, and $100 wines. The Cantina di Casteggio Barbera is the kind of wine that reminds us that one of Italian wine’s reasons for being is to produce affordable wine to drink with dinner.

The Cantina di Casteggio Barbera ($9, purchased, 13%) is wine for a cold winter night, a fire place, and a house full of rich tomato sauce aromas accentuated with a hint of garlic and the beef braising in the tomatoes. In this, it’s leathery, fruity (black cherry?), agreeably tart, and very Italian – and much more than $9 worth of wine for anyone who appreciates this style.

In fact, it needs food, and would be be a bit off putting without it, being so tart and leathery. But not to worry – it will also work in the summer with barbecue.

Pricing note: All prices are suggested retail or actual purchase price before the October 2019 tariff unless noted

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Winebits 628: Randall Grahm, Walmart booze, health news

randall grahm

Randall Grahm

This week’s wine news: Randall Grahm sells Bonny Doon, Walmart booze plan in Texas suffers setback, and why there’s no health news on the blog

Boony Doon is sold: Randall Grahm has sold his Boony Doon Vineyard, marking the end of one of the most unique and iconoclastic wine operations in the U.S.  The new owner is WarRoom Ventures, a marketing company that owns California’s Lapis Luna Wines. No sales price was disclosed. Grahm, who pretty much invented the non-traditional wine label and pioneered screwcaps and ingredient labels, will become a partner in the new venture and oversee winemaking. The new Bonny Doon will make just four wines, and not its current 15 — its outstanding rose, a picpoul, and its flagship red and white Rhone blends. Boony Doon, regardless of whether the new company is successful, will be missed. For one thing, I will have less reason to talk to Grahm, who is always a treat, and I won’t be able to buy his standouts syrahs, some of my favorite wines in the world.

Banging head against wall: The U.S. Fifth Circuit Court of Appeals has refused to re-examine Walmart’s attempt to open liquor stores in Texas. The ruling means the retailer can try to appeal to the Supreme Court or give up on its plan, which seemed quite possible after it won on the district level in 2018. But the Fifth Circuit has twice refused to hear the Walmart suit questioning the constitutionality of a Texas law that prohibits publicly-held companies from getting a retail liquor license. Its reasoning? That Texas law discriminates equally against in-state and out-of-state publicly held companies. Cue the three-tier meme. The only good news from this? If Walmart appeals and the Supremes agree to hear the case, it could be one more chip in the wall of three-tier.

More of the same: The Wine Curmudgeon banned health news from the blog years ago, since most of it was stupid or foolish or both. So here comes one more story to remind us why the ban is in place: Coffee may help people lost weight. Someone, somewhere, got money to do what appears to be legitimate academic research to discover the same thing that companies that make over the counter diet pills already know. Caffeine is a stimulant. Stimulants are diet aids. Coffee has caffeine. Sigh. And I once had an academic impugn the integrity of this research. Had only I known….