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.
“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.
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.
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.
Just six wines entered the 2020 $10 Hall of Fame, and it’s probably going to get worse
Remember how distraught I was about last year’s $10 Hall of Fame? I’m even more distraught this year; compiling the 2020 $10 Hall of Fame was an exercise in misery — and that’s even before I started worrying about tariff-induced price increases.
Just six wines entered the Hall, five dropped out, and none of the new wines were roses or from California. My notes contained so few “HoF 2020” notations that I went through almost all the wines I drank last year, just to make sure I didn’t miss anything.
I didn’t.
How did we get to this point? Premiumization, of course, as well as the dumbing down of what’s left of wine costing less than $15. Big Wine, Big Retail, and all the rest are convinced that if they make wine taste less wine-like by adding sweetness, fake oak flavors, and purple grape juice concentrate, they’ll convince people who don’t drink wine to drink it. Which, as White Claw demonstrated, doesn’t really work.
Availability, always a problem, got worse last year thanks to wholesaler consolidation. There are too many wines and not enough distributors, and the distributors that remain are so big that they prefer Big Wine products. Since most of the most interesting cheap wines are from smaller, niche producers, they can’t find a distributor (or suffer a small one with little clout) and disappear from shelves.
Meanwhile, the Trump Administration’s proposed 100 percent tariff would double the price of European wine, which means there would be almost no $10 wine worth drinking or writing about. If that happens, the 2020 $10 Hall of Fame might well be the last one.
Some good news
The six wines that entered the Hall are top-notch, as good as anything I’ve tasted in 20-some years of wine drinking. That includes the 2020 Cheap Wine of the Year, Le Coeur de la Reine Gamay; the return of the Gascon classic, Domaine Tariquet; the stunning Portuguese red and white Herdade do Esporão Alandra; the 1-liter Azul y Garanza tempranillo; and the French white blend, Little James Basket Press.
The complete 2020 $10 Wine Hall of Fame is here. You can also find it at the Hall of Fame link at the top of the page. The Hall’s selection process and eligibility rules are here. I considered wines that cost as much as $13 or $14 to take into account price creep and regional pricing differences.
You’ll be able to print the Hall as either a text file or a PDF. Look for the printer icon on the upper right hand corner of the post.
This week’s wine news: Beaujolais legend Georges Duboeuf dies, plus the Italian Wine Guy critiques wine writing, and Canada’s legal weed bubble bursts
• An icon dies: Georges Duboeuf, one of the icons of French wine, died on Saturday. He was 86. Dubouef, known as the Pope of Beaujolais, almost single-handedly made the release of Beaujolais Nouveau an international event every November. Said one of his competitors: He “was responsible for “raising the Beaujolais flag all over the world. He had a nose, an intuition, [he was] a step ahead of everyone.”
• “A pitiful thing:” Alfonso Cevola, the Italian Wine Guy, doesn’t mince words in assessing the state of wine writing: “Wine writing has become a pitiful thing. There are so many bad articles about wine, misspelled, written from a perspective that sounds more like someone is pushing a (p.r.) agenda rather than trying to educate the readers. …But real writing, real good writing?” Cevoola writes this as someone who has been around wine writing for decades, both as a retailer and wholesaler and as a successful wine writing. So his opinion is worth pondering.
• Not so fast: Legal weed in Canada was going to make everyone rich when it debuted a year ago – and the wine business was more than a little worried about how it would hurt sales. Turns out, hardly at all, reports the BBC, with Canadians sill buying pot from the “black market.” Or, as we used to say, “you know, the guy down the street, who knows your friend.” Says the story: “Statistics Canada estimates that about 75% of cannabis users still use illegal cannabis,” since the guy down the street is cheaper and more convenient. Which, in retrospect, seems quite obvious.
Damn those Europeans and their snotty wine. No self-respecting American likes that junk.
The current 25 percent European wine tariff, which may turn into a 100 percent covering all European wine, makes deciphering wine prices 2020 a sad and painful duty
Forecasting wine prices 2020 should have been easy. Combine too many grapes in California with fewer wine drinkers in the U.S. and Europe, and throw in the beginning of the end of premiumization. The result? Steady to lower wine prices, and maybe a lot lower, by the end of the year.
And then the tariffs happened.
The first, last October, seemed horrible. And then we heard about plans to impose a 100 percent tariff on all European wine, which would effectively double the price of every bottle of wine made in Europe and sold in the U.S. And suddenly, 25 percent didn’t seem so horrible.
Tariffs artificially raise prices, and economic theory says consumers then switch to cheaper, similar domestic products. But the similar products are not as cheap as the original, so the consumer is paying to prop up a domestic industry. Which pretty much explains the popularity of tariffs on goods like steel.
But there are very few $13 California wines that are similar to $10 French or Spanish wines. Wine isn’t finished steel. So in my search for a cheaper product, economic theory says I could well move from wine to something even cheaper, like beer or White Claw — especially if I’m buying wine on price. Which is the dark, dirty secret of the wine business.
In this, the tariff will push wine prices 2020 up, until demand weakens so much that no one will buy wine at the tariff-inflated prices. Then we will have shelves full of wine, including domestic, way too many grapes, and even weaker demand than before. How much fun will that be?
And, among all this mayhem, there would be little point to the blog. Somehow, I don’t think that’s supposed to be the result of a political dispute about aircraft parts.
Havoc and destruction
In this, the 100 percent tariff would come close to destroying the European wine business while wreaking havoc on U.S. wine retailing, distribution, and importing. That’s because the U.S. is the EUs biggest wine market, accounting for more than one-quarter of its exports. The tariff would all but eliminate the market for European wine in this country; who’s going to pay $30 for a $15 bottle? It would also lead to bankruptcies, layoffs, and business closings among retailers, importers, and distributors. That includes the largest wholesalers, who, I’m told, are just as worried about the end of the French wine market in the U.S. as their smallest competitors.
The 100 percent tariff is nothing but spite, a finger in the eye of the EU for no legitimate reason by a Trump administration that apparently has no understanding of economics or tariffs. For it, it’s easier to tweet trade war bravado than to understand the implications of the Smoot-Hawley tariff in the 1930s. That U.S. citizens will suffer far more from the tariff than U.S. aircraft companies will benefit is beyond their comprehension.
And it’s not like U.S. aircraft companies need the help. Boeing, the focus of the original World Trade Organization ruling that led to the 25 percent levy, had $10.5 billion profit in 2018. That’s larger than the gross domestic product of 30 countries, and that’s just Boeing’s profit. Its revenue was $101 billion, which would make it the 177th biggest country in the world by GDP.
But Boeing gets a boost, while many U.S. wine retailers will get to go out of business. That seems fair, yes? The owner of a small wine shop in the Dallas area, with a wife and child, can ponder his fate (as well as ousted Boeing CEO Dennis Muilenburg’s $62 million farewell package) while he looks for work.
You can comment on the proposed 100 percent tariff — go to www.regulations.gov, enter docket number “USTR-2019-0003” and click search. Then, click “comment now” and explain why this is not a good idea. Comments are open until Jan. 13.
And those of you who disagree with me – you’re more than welcome to pay $20 for $10 wine. Enjoy the privilege.
This week’s wine news: The new Joy of Cooking does wine, plus bad news on the consumption front and the relationship between wine and God
• The Joy of Wine: The new version of the iconic Joy of Cooking has a terrific section on wine. It’s an outstanding introductory guide to making sense of wine as it relates to cooking — simply written, without too much winespeak, and it doesn’t talk down to its readers. Plus, it strikes a blow for screwcaps. This is my third Joy, and it’s easily the best of the three when it comes to wine. And it remains an indispensable cookbook. Highly recommended..
• More bad news: More of us are drinking spirits and fewer are drinking wine, and the difference between the two numbers is reaching historic levels. That’s according to a recent report by SipSource, which tracks wine and spirits sales by distributors. The report calls the difference “epic,” noting that “the divide is widening – the trend gap between wine and spirits has grown to +5.4 percent.” Even rose’s growth has slowed, something few of us expected.
• In search of God? A California religious studies professor says wine may help people deepen their connection to something bigger than themselves, including God. Stephen Lloyd-Moffett’s book “The Spirit of Wine, Finding Religion in the Fruit of the Vine,” says wine is often associated with social activity, sharing, and feelings of gratitude and deep thinking — all qualities associated with religion. This is an intriguing approach, and it does help put Catholicism’s use of wine into some sort of context. But I do wonder what the neo-Prohibitionists would say.
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by Wine Curmudgeon Posted On 
Just six wines entered the 2020 $10 Hall of Fame, and it’s probably going to get worse
This week’s wine news: The new Joy of Cooking does wine, plus bad news on the consumption front and the relationship between wine and God
