Most importantly: Consumers dislike wine premiumization, no matter what the wine business wants us to believe
Last week's wine premiumization analysis ...
This week’s wine news: Fredericksburg’s Cabernet Grill honored for its commitment to Texas wine, plus trouble in legal weed land and do we really need more wine gadgets?
• True to its roots: Fredericksburg’s Cabernet Grill has been named one of “America’s 100 Best Wine Restaurants” by Wine Enthusiast magazine for the second year in a row. It’s an honor much deserved – chef-owner Ross Burtwell has had an all Texas wine list for years, and long before drink local was hip and trendy. The list has 145 wines from 45 wineries, demonstrating that local wine pairs with local food. That’s something I’ve been able to enjoy during several visits to the Hill Country.
• Trouble in legal weed land: Constellation Brands, which sold off its cheap wine brands to pursue a future selling legal weed, lost more than $800 million on its investment in the first quarter of this year. The story in the link, from Shanken News Daily, tries to put the high in that low, as trade news reporting often does, but one question remains: Does Constellation understand what it got itself into? The bizspeak in the article doesn’t help with that much, and it wouldn’t reassure me if I was a Constellation shareholder.
• No more gadgets: David Cobbold, writing on Les 5 du Vin, repeats a warning the Wine Curmudgeon has uttered many times: Buying wine instead of gadgets is the best investment almost every time. Cobbold reviews a wine aerator, and his conclusion: Buy good wine, and don’t “worry about useless and expensive gadgets like this!” It’s a sentiment marketers ignore at their own risk; the number of gadget emails I get has seemingly proliferated as wine sales flatten.
Top two teams will represent U.S. in world championships
Byanca Godwin didn’t expect much when she entered the U.S. Open wine tasting championship last year. All she wanted to do, she says, was to get a little blind tasting experience in as she prepared to take the various certification exams she had scheduled.
So how did she end up representing the United States at the 2018 World Wine Tasting Championships in France?
“I tried it just to have some fun blind tasting, instead of practicing like I usually do,” says Godwin, a wine retailer who will compete in this year’s U.S. Open on Sunday in Ventura, Calif. “I thought it might be interesting to compete. And then I finished third, which I didn’t expect.”
The Wine Curmudgeon has always thought blind tasting should be a competitive sport. Blind tasting is difficult enough, but imagine it with the pressure amped up – an audience cheering (or booing) as the contestants sniff, swirl, sip, and spit. Talk about grace under pressure.
The U.S. Open offers all of that. Two-person teams work their way through a dozen wines, getting points for correctly identifying the wine’s producer, its varietal, vintage, and region. And they have just eight minutes until another wine comes along. The top two teams will compete for the U.S. in the world championship in October in France. Belgium won the 2018 competition, followed by Finland and France.
“You really have to approach this like an athlete,” says Godwin. “When you’re competing, you have to stay focused on the wines and pay attention. You have to find the answer in the glass. Being distracted by the audience does not help your performance.”
One addition this year: Event organizer John Vilja says audience members can taste the wines as the contestants taste them in a sort of mini-competition. There’s also a blind tasting app.
Convenience store wine: Table wine sales increased 20 percent in 2018
Table wine sales in U.S. convenience stores increased 20 percent in dollar terms in 2018, the second year in a row that c-store sales outperformed the overall U.S. market. That 20 percent figure could be as much as five times the growth in the overall U.S, wine market.
And no, I don’t understand why, either.
But those are the statistics in the 2018 state of the c-store industry report, published by the National Association of Convenience Stores. Convenience store wine sales in 2018, which include sparkling wine, fortified wine, and wine coolers, totaled $1.66 billion. That’s an amazing number. Take out the wine coolers, which the wine industry numbers may not include, and it’s possible that almost 2 percent of the wine sold in the U.S. last year came from a 7-Eleven, RaceTrac, QuikTrip, Speedway, and the like.
Association spokesman Jeff Lenard says there may be several things going on to account for all of that wine:
• About one percent more convenience stores sold wine in 2018. That total is almost half of the 153,000 U.S. locations.
• “More than anything else,” he says, “the increase in wine sales pairs (pardon the pun) with the increase in food service and more upscale foods that more convenience stores are selling.” In other words, fresh sandwiches and salads, which have become a c-store staple over the past couple of years, lend themselves more to wine sales than Big Gulps and those rubbery, orange-ish hot dogs spinning away in a corner.
• Younger consumers (18-34) are the predominant age group for convenience stores. And those of legal drinking age tend to be less fussy about where they buy wine than Baby Boomers, says Lenard. “Younger consumers are the ones who are least likely to think about a specific channel to purchase wine. They think wine or liquor store. Or dollar store. Or online wine club. Or gas station.”
• Women, who buy most of the wine in the U.S., are slightly more likely to buy gas in the evening, he says. “So can they also pick up wine for dinner then? Absolutely.”
Photo courtesy of Monica E using a Creative Commons license
This week’s wine news: Coke and wine – is the soft drinks giant pondering the wine business again? Plus the confusing sizes of canned wine and bias in wine scores
• We’d like to teach the world to sing: The Wine Curmudgeon reports this item with a caveat – there has already been one correction made to the story, and there may be another error in it. Still, it comes from the usually reliable drinks business trade magazine: An Australian newspaper reports that the Aussie Coca-Cola bottler, Coca-Cola Amatil, wants to buy the wine brands owned by Pernod Ricard, the luxury French booze house. Its products include Chivas Regal whisky, Absolut vodka, and Beefeater gin. Pernod’s wine holdings include Jacobs Creek in Australia, Brancott Estate in New Zealand, and California’s Kenwood. Know that this isn’t exactly like Coke’s first foray into wine, which was a disaster (and which the story in the link overlooks). The Atlanta-based company lasted six years in California and New York before selling its holdings. Coca-Cola Amatil is partly owned by Coke, and there is no indication that if it buys Pernod’s wine labels that it will be like Coke actually owning wine again. This is something else the story in the link is unclear about.
• One size doesn’t fit all: Talk to anyone in the wine business about canned wine, and their first complaint is that there are three sizes for canned wine, as opposed to one for beer and soft drinks, and none of which are 12 ounces. Plus, one size can only be sold in a three- or four-pack. That’s the legacy of federal booze law, which regulates package sizes according to alcohol content. U.S. Senator Charles Schumer (D-NY) wants to change that. He’s asking the federal Tax and Trade Bureau that oversees these regulations to streamline the process and make it possible for wine to be sold in 12-ounce cans.
• The inherent bias of wine scores: The Wine Gourd’s David Morrison, who apparently dislikes scores even more than the Wine Curmudgeon does, regularly runs mathematical analyses of wine scores. His current examination, looking at scores form the Wine Advocate and the Wine Spectator : “All three datasets show that variation in wine-quality scores is substantial, and that it arises from several sources. When you combine these sources of variation, it is difficult to attribute any mathematical precision to the use of numbers for wine commentary.” It’s good to know that the math agrees with those of us who see scores as inherently biased, thanks to the flaws that are an integral part of post-modern wine criticism.
“Dude, you’re so not good for the wine business. Why are you trying to destroy it?”
This week’s wine news: The cyber-ether is ablaze in criticism of those of us, including the Wine Curmudgeon, who want people to enjoy drinking wine they can afford to buy. Because, of course, we’re up to no good.
July 3 update: Thank you for the kind words in the comments and your emails. Frankly, I was surprised, though I shouldn’t have been. The blog’s readers have always supported what I do and are the reason I keep doing it even when too many in the wine business wants me to sign off on selling $12 wine for $25.
• Take that, Curmudgeon: Dwight Furrow, writing on the Food and Wine Aesthetics website, wants to know where people like me get off offering wine advice. After all, all we want to do is destroy wine and make money in the process. He links to the Jamie Goode post I wrote about earlier this year, and agrees with Goode that people like me are part of some vast conspiracy that has it in for “wine experts.” We’ll ignore for a moment that I am incapable of evil mustache twirling and that the only conspiracy I believe in is that Microsoft tried to destroy Linux. What Furrow misses, as Goode did, is that wine criticism is seriously flawed, and that responsible, legitimate critics who aren’t so-called cheap wine slime like me (Eric Asimov, for one) think so. So let’s figure out a way to fix the problem instead of pronouncing judgment on everyone else.
• And this, too: I’ve been writing about wine and the three-tier system for more than 20 years, but I’ve never seen anything like a recent post in something called Alcohol Law Review. Apparently, those of us who oppose the three-tier system are lying scum who want to make money off the deaths of others. As near as I can tell, if we change the three-tier system in any way, we’ll end up with tourists dying after drinking tainted booze, as happened recently in the Dominican Republic. The enemy here is the same one as in Furrow’s post: “Various economic interests” who want to overthrow the system so they can get fat and rich. Who knew? I thought I just wanted to buy cheap wine more easily.
• And don’t forget this one, either: Jamie Goode is back at it, reminding those of us who like cheap that we’re not only wrecking the environment, but that our greed ruins the wine business: “The race to the bottom in terms of price points sucks life out of the wine category. It also sucks out all the profit.” I would argue that the £5 wines he’s talking about are Barefoot and their ilk in the U.S., and the last time I checked, Barefoot owner E&J Gallo was one of the richest and most profitable companies in wine. But what do I know? I’m trying to ruin the wine business and feather my already fat and corrupt nest.
Supreme Court overturns Tennessee residency law – does that mean all of three-tier is in trouble?
Did the Fourth of July come a week early for wine drinkers yesterday? That’s when the Supreme Court struck down a Tennessee residency law that limited who could open a liquor store in the state. As such, a host of legal and alcohol experts from around the country have predicted the beginning of the end of the three-tier system – the series of laws that restricts how we buy alcohol in the U.S. – if the court did just that.
I talked to a couple of attorneys who practice liquor law and they weren’t quite ready to pronounce three-tier dead. Said Lou Bright, the former executive counsel of the Texas Alcoholic Beverage Commission, the state’s liquor cops: “There will be lots and lots and lots of screaming and arguing about this in the coming weeks and months and years. You might consider just reporting the facts of the case with a ‘stand by for further screaming.’ ”
Still, the 7-2 decision seemed unequivocal: Since the residency requirement “has little relationship to public health and safety, it is unconstitutional,” Justice Samuel Alito wrote in the majority opinion.
The key phrase in the decision is “relationship to public health and safety,” which has been the bedrock of three-tier since the end of Prohibition. Every part of three-tier rests on the assumption that each state can regulate alcohol as it sees fit, since it’s protecting the public health and safety. Hence, every restriction in how we buy wine, beer, and spirits in the U.S., no matter how foolish or outdated or left over from the days when Al Capone controlled the liquor business, has been defended in court.
Because public health and safety
• Can’t buy wine on the Internet? That’s the various states protecting our health and safety.
• Can’t buy discounted wine where you live? That’s the various states protecting our health and safety.
• Can’t buy wine in a grocery store where you live? That’s the various state’s protecting our health and safety.
• Can’t buy wine directly from the winery where you live? That’s the various states protecting our health and safety.
• Can’t by a wine where you live even though it’s sold in a neighboring state? That’s the various states protecting our health and safely,
And Justice Alito’s majority opinion seems to turn all of that on its head. He invoked the Commerce Clause of the Constitution, which says states can’t favor their residents ahead of anyone else. That has been the law for more than 200 years, though exceptions had often been made for alcohol laws.
In fact, that was the defendant’s argument in asking the court to uphold the residency law, which made it all but impossible for anyone not from Tennessee to open a liquor store. The defendants said that the state, by essentially outlawing out-of-state chains like Total Wine, was protecting the public health and safety. Resident owners, because they were residents, would sell alcohol more responsibly than anyone else.
“I think the decision made it more difficult for states to use residency laws to regulate alcohol sales as part of three-tier,” Lewis said Wednesday afternoon. “But I’m not so sure it will affect more than residency laws. The idea that it may change other parts of three-tier, I just don’t see that.”
So the Tennessee decision may make it possible for supermarkets to sell spirits in Texas, which they can ‘t do currently because state law says only residents can get a license to sell whiskey, gin, and so forth. But it probably won’t help consumers in Michigan and Connecticut, where state law mandates minimum wine prices and forbids discounts, 20 percent off sales, and the like. And it won’t help consumers in New York, who can’t buy potato chips in a liquor store (perhaps my favorite part of three-tier’s vast and bizarre grip on the country).
And it almost certainly won’t do anything to loosen the stranglehold that distributors have over the wine, beer, and spirits supply chain. That’s the most fundamental tenet of three-tier, that consumers must buy directly from the retailer and restaurant, and that the retailer and restaurant must buy from a distributor. Only the distributor can buy from the producer (with minor exceptions like direct shipping), something that exists in almost no other consumer goods category. And if a wine doesn’t have a distributor in your state, you can’t buy it – something that will become even more common now that the top three distributors control 60 percent of the market.
Imagine not buying being able to buy a computer from Dell because the state is protecting the public health and safety – and then wonder why we have to endure that in wine.
This week’s wine news: Tom Wark asks how distributor consolidation fits into the legal framework that guides three-tier, plus wine discounter Grocery Outlet goes public and the role of wine in the battle of Agincourt
• Distributor consolidation: Wine marketer Tom Wark’s take on the recent RNDC-Young’s Market merger is well worth reading. “It has long been a near unbreakable tenet and motivation of state alcohol regulation that no single company be allowed to control too great a portion of the market,” he writes. So Wark wants to know: What will regulators do about the merger, since it means three companies will control more than 60 percent of wine and spirits distribution in the U.S.? In this, he forces the regulators’ favorite argument in favor of three-tier on its head. Regulators have insisted for more than 80 years that we need three-tier to protect us from the abuses of one company controlling too much of the market (also known as Al Capone during Prohibition). Some of the post is inside baseball, but Wark’s point is well taken – distributors and regulators can’t have it both ways.
• Bring on the cheap wine: Grocery Outlet, the supermarket discounter that’s all but worshiped on the West Coast for its cheap wine deals, went public last week. Shares traded at almost double the initial estimate, which means I’m not the only one excited about the chain’s expansion plans. The company’s president said Grocery Outlet wants to move off its California base, opening 32 stores this year, 2,000 in the near term and as many as 4,800 stores nationwide over the long term.
• Lots and lots of wine: Ever wonder how much wine a medieval army needed when it went on campaign? England’s Henry V, in his invasion of France in 1415 (memorialized in Shakespeare’s “Henry V,” which includes “Once more unto the breach, dear friends“) took 4,000 casks of wine. Rupert Miller, writing in the drinks business trade magazine, says no one is quite sure how much wine was in a cask, but notes that Henry had to provision a 12,000-man army (plus servants). So it was probably a lot. The piece is very history geeky (which is why I liked it), but does offer some perspective on wine’s role in the pre-industrial world, when water wasn’t safe to drink.
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This week’s wine news: Fredericksburg’s Cabernet Grill honored for its commitment to Texas wine, plus trouble in legal weed land and do we really need more wine gadgets?
This week’s wine news: Fredericksburg’s Cabernet Grill honored for its commitment to Texas wine, plus trouble in legal weed land and do we really need more wine gadgets?
Convenience store wine: Table wine sales increased 20 percent in 2018
This week’s wine news: Coke and wine – is the soft drinks giant pondering the wine business again? Plus the confusing sizes of canned wine and bias in wine scores
Supreme Court overturns Tennessee residency law – does that mean all of three-tier is in trouble?
This week’s wine news: Tom Wark asks how distributor consolidation fits into the legal framework that guides three-tier, plus wine discounter Grocery Outlet goes public and the role of wine in the battle of Agincourt
