Category:Wine news

2009 wine sales: Don’t expect much

The Wine Curmudgeon thought he would follow up his look at what ?s going to happen to prices and sales this year with some better numbers, courtesy of Gomberg, Fredrikson & Associates, a California company that tracks sales.

In 2008, its research found that U.S. wine sales increased less than one percent, compared to four percent in 2007. That was the smallest increase this decade. The big winner was regional wine, up 3.4 percent, and the biggest loser was imported wine. It fell nearly 3 percent, thanks to the weak dollar. Said analyst Jon Fredrikson: “Frugality suddenly has become hip as consumers face uncertain economic times.”

Actually, as I noted in my two-part series, frugality has been hip for a while. It ?s just that the people trying to sell us pricey wine didn ?t want to believe it. The more I think about this, the more I ?m convinced that the recession will give the wine business a chance to remake itself in a more consumer-friendly direction, focusing on value and quality instead of scores and bloated, overpriced wine.

It said that the multi-nationals that dominate the business, like Gallo, Constellation, and Diageo, and companies that focus on cheap wine, like Bronco, makers of Two Buck Chuck, will continue to do well. The report noted that Gallo had 10 of the top-selling 25 wine brands in the country last year.

Frederikson, who was speaking at a major wine trade show, said grocery store brands are benefiting because more of us are eating at home. We ?re buying what we see in the supermarket when we buy the ingredients for dinner. And not only are we not going out to eat as much, but we ?re not buying as much wine when we do.

Wines that have built their business on wine lists at exclusive restaurants are in trouble. Wineries selling to high-end restaurants can’t expect a quick recovery, and will probably need to find new markets for their wine, such as direct-to-consumers or at retail with deep discounts, Frederikson said: ?The (restaurant) business is not going to come back to its glory days for quite some time. ?

Tuesday wine bits 62: South African wine, leaves Michigan, cheap wine gold medal

? Good news for South African wine: And from Eric Asimov at the New York Times, no less. Asimov, who has seen many of the same problems with South African wines that the rest of us have, writes that ?I want to tell you straight out that South Africa, of all places, is one of the greatest sources for moderately priced cabernet sauvignon on the planet today. ? This is, as Asimov notes, big news, since the quality of South African wine has traditionally been spotty. He recommends the cabernets from De Trafford, Rust en Vrede, and One Stroke One.

? Direct shipping takes a hit:, the biggest Internet retailer, says it won ?t sell wine in Michigan, a result of a new state law that bans retailers from shipping wine directly to consumers and prohibits UPS and FedEx from delivering wine. In this way, Michigan retailers and distributors found a way around the Supreme Court decision that made direct shipping easier. And, though it ?s disappointing news for those of us who want direct shipping, it ?s not surprising. Michigan ?s retail and distributor lobby is powerful, and the state has some of the most draconian liquor laws in the country, including state-set prices.

? Box wine wins best of class: Corbett Canyon ?s non-vintage merlot, which comes in a three-liter box and costs about $10, won Best of Class for Merlots below $15 at the 2009 San Francisco Chronicle Wine Competition. In fact, the results were surprising in many ways, with top honors going to New Mexico and Long Island wines.

Wine trends 2009: “$10 wine is the new $100 wine”

This is the first of two parts looking at wine prices and consumption this year, and how they will affect those of us who drink cheap wine. Part II, which with my take on the situation, is here.

It isn ?t very surprising, given the economic doom and gloom around us, that wine prices and consumption will shrink this year. What is surprising is that most of the people I talked to don ?t expect wine to suffer as badly as housing, the stock market or any of the other parts of the economy that have collapsed since last summer.

Their thoughts: First, that we ?ll will drink less expensive wine, but not appreciably less expensive. This is what the business calls trading down. Second, consumption probably won ?t decrease, although sales might ? since we ?re drinking less expensive wine. Third, prices for imported wine, and especially French wine, will decrease slightly, and we should see that by the second half of the year. Fourth, there will be a shakeout among producers, mostly but not limited to Australia and California. Low-end wineries will go out of business Down Under, while we ?ll see California wineries making $35 and up wine close.

In this, so far, the numbers bear out their predictions. The Wine Market Council, an industry trade group, says sales gained 1.5 percent in 2008, compared to an earlier projection of 2.1 percent. Not bad, certainly, but is it the entire picture? Maybe, maybe not.

Consumption matters because it affects prices. If consumption drops, so will prices, as supply and demand work its magic. Consumption could drop because we ?re switching to beer, which is less expensive. It could drop because we order a glass instead of a bottle at a restaurant. Or we could eat at home more often, where many of us don ?t drink wine, instead of going out, where we do. And we could just cut back because we can ?t afford wine.

?There is not going to be a huge drop in consumption, ? says Robert Smiley, professor and director of wine studies in the UC Davis Graduate School of Management, who probably knows as much about this stuff as anyone. ?I think the $12 and up category is going to hurt a little more, because people are going to trade down and they ?re going to eat out less. But unless the economy really goes into a tailspin, there won ?t be a big drop. ?

The first casualty will be wine around $15, which has been the fastest growing price category over the past several years. We ?re already seeing anecdotal evidence of this, as my pal Alfonso Cevola has noted: ?They wanted to send palate after palate of overpriced wine into already bulging warehouses. As if they have been taking a siesta these last six months and think things are just as they have been. Business as usual. What a rude awakening they are in for. ?

And the numbers are starting to look that way, too. In December, wines priced above $11 lost dollar share, and wines priced $5-$7.99 also lost share. Boxed wine gained share along with wines priced below $5 and wines priced between $8 and $10.99. Or, as one headline put it: ?$10 wine is the new $100 wine. ?

The key for producers, says Bill Terlato, the president and CEO of Terlato Wine Group and Terlato Wines International, is not to panic. He says some cult wines, which never had a reason to exist other to get high scores, will disappear. They ?ll be victims of consumers trading down and their own finances, which were based on getting $100 a bottle for their product.

Terlato says he is already seeing some high-end producers dumping their product to generate cash. And some analysts are warning high-end producers and growers to prepare for up to 18 months of bad times, with fewer lenders lenders willing to finance cult efforts.

Two other points for those of us who care about cheap wine: First, Terlato says we will see better prices for imports, and especially French wine, later this year. It will take about six months to work through the inventory that was bought with weaker dollars. Second, Smiley says to expect dull, unimaginative wine lists as long as the recession lasts. Restaurateurs, facing a cutback in wine consumption and traffic, will stick with wines they know people will buy and won ?t take any chances.

Part II: Is this all, or will there be more serious ramifications?

Tuesday wine bits 61: $100 inauguration wine, crummy restaurant wine service, U.S. wine consumption

? A new direction for White House wine? Mike Steinberger at Slate takes the Bushes to task for serving uninteresting and too expensive wine, which was good to see. But Steinberger ? like too many wine writers ? is hung up on serving California wine when we have other options. How he can suggest that the White House serve Chinese wine without mentioning the quality wine available in the rest of the U.S? And doesn ?t Steinberger realize, in suggesting that Obama serve the 1996 Ch teau Montelena (certainly a nice wine) that most of us consider $100 a lot of money to pay for a bottle?

? Restaurants don ?t know how to sell wine: This is not a surprise to the Wine Curmudgeon, but a new survey has found that most people think restaurant bottle prices are too high and that wine service is lousy. The study, by Women & Wine, found that 70 percent of wine drinkers 29 to 44 thought restaurants overcharged for a bottle and just 17 percent said the server actually listed the name of the wines by the glass or offered assistance on wine selection. What ?s even more interesting about this study is that most restaurants say this age group is the focus for their wine efforts. And that ?s the best they can do?

? We ?re drinking more wine: U.S. wine consumption increased in 2008, despite the recession, say figures from the Wine Market Council trade group. It was up 1.5 percent,down from original estimates, but not bad. A couple of other points: 16 percent of us drink 91 percent of the wine in the U.S., and those of us who fit in that group drink more wine at home, buy mostly wine that costs between $6 and $20, drink red and white evenly, prefer domestic over imports two to one. Coming Friday: My take on what will happen to wine consumption and wine prices in 2009.

Presidential inauguration wine

The wine world has been atwitter with rumors and gossip about the wines that will be served at Barack Obama ?s various presidential inauguration festivities next week. Sad, isn ?t it, that those are the kinds of things that get us excited? Even sadder, no one asked the Wine Curmudgeon what to serve.

After the jump, a look at what will be served and my thoughts about what should be served:

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Tuesday tidbits 60: Cost Plus World Market, Gourmet magazine, high alcohol beer

? Cost Plus closes 26 stores: Which is very bad news for those of us who love cheap wine, since Cost Plus has some of the best prices in the country. Sometimes, the prices look like they ?re just a couple of percentage points over cost. The retailer is pulling out of eight markets, including Memphis, Fort Lauderdale and Minneapolis. I have a friend in the marketing business, who follows these things, and she says that by the time the recessions is over, Cost Plus won ?t be the only major retailer that does this.

? Gourmet to fold? Hard to believe, but this report says ?Gourmet will probably not see the end of the year. Its parent company, Conde Nast, can no longer rely on the huge profits of the newspaper portion of the Newhouse family business. The magazine operation needs to go on a diet. ? It ?s not so much that Gourmet does a great job writing about wine; the magazine doesn ?t do much at all. But its demographic is more or less the same as those of the Wine Magazines. And if Gourmet is in trouble, and it has deeper pockets and a deeper readership, what does that mean for the Wine Magazines?

? How does 18 percent beer grab you? By the throat, and even the man who makes it admits it ?s not for everyone. Too bad more people in the wine business don ?t feel that way. ?I don ?t find it pleasant to drink, ? he says. ?I find it unbalanced and shrieking. ?

Tuesday tidbits 59: Texas wine at the White House, wine packaging, iPod breathalyzer

? A big-time Texas recommendation: Lettie Teague, the executive wine editor at Food and Wine, told a California newspaper that president-elect Barack Obama needs to add some regional wine to the White House list. "As a New Yorker, I'd like to see some New York wines represented — we were a huge state for him," she said with a laugh, suggesting a sauvignon blanc or cabernet from the North Fork region or a Finger Lakes Riesling. Other picks: a Washington state merlot, "because I feel they really do that grape well," a hearty California zinfandel and "to show that he is an all-inclusive sort, I would throw in a viognier from Texas." Nicely done. Can the Wine Curmudgeon suggest the Becker, McPherson and Brennan viogniers? And maybe we should recruit Teague for

? Boxes instead of bottles: Glen Ellen and Fish Eye will replace its four-packs of 187-milliliter bottles with a more environmentally-friendly four-pack of 250-milliliter Tetra Paks.This, by itself, is not that big a deal. Glen, Ellen, for example, probably sells most of its wine in 1.5-liter bottles, and these represent just a small portion of its sales. Plus, since the packages are bigger, they ?ll cost more. But it is indicative of a trend that is apparently hear to stay. My pal John Palazzo, who is a packaging expert, discusses this here.

? Blow into your iPod, please: Attach this gizmo, called the iBreath, to the bottom of your iPod and you can tell if you ?re too drunk to drive. There ?s also a timer to remind you to check your blood alcohol level to see if it has gone down. And, believe it or not, the iBreath doubles as an FM transmitter. The cost is $79.