Category:Wine rants

Five things the Wine Curmudgeon learned from last week’s wine premiumization post

wine premiumizationMost importantly: Consumers dislike wine premiumization, no matter what the wine business wants us to believe

Last week’s wine premiumization analysis kicked up more than a little dust in the cyber-ether – it was the most visited post on the blog in almost 2 ½ years. The comments and emails covered the spectrum, from people blaming me for wine’s problems (and that there wouldn’t be any if not for people like me) to those who offered their take on premiumization (pro and con) to those who thought I was spot on.

In all of this, I learned five things after writing the wine premiumization post:

1. Consumers dislike premiumization, no matter how much the industry insists otherwise. I wasn’t sure about this until I saw the reaction to the post, since all the data suggests we’re paying more for wine. So if we’re paying more, then we’re happy, right? But since fewer of us are buying wine, and those of us who still buy wine are buying less, how happy can we be?

2. Talking about wine prices is even more taboo today than it was when I started writing about wine in the late 1990s. There was a sense then that pricing was not to be questioned. Because, wine. I’ve never understood this, and my emphasis on cost vs. value has always annoyed people in the wine business. It annoys them even more today – and some are way past annoyance.

3. The economics of the post-modern wine business stink for almost everyone who isn’t Big Wine. I sympathize with those producers, and have agonized over their plight many times. But overpriced wine is overpriced wine, regardless of the reason why. Is any bottle of wine really worth $80 or $100? Or, as hard as it is to believe, thousands of dollars?

4. I taste thousands of wines a year, at all prices and from all over the world. My friends also taste thousands of wines a year, and we talk about what we taste. So how am I not qualified to say that wine quality is not what it was before the recession? One friend, a well-known wine judge and critic, will start his pinot noir rant without one nudge from me. Yes, technically the wines are OK — not oxidized, not tainted with VA and so forth — but are they interesting to drink? Are they fun to drink? Unfortunately, not nearly as many of them as in the past.

5. Wine writing, even in the second decade of the 21st century, is still expected to be positive and to sell wine. I had hoped the Internet would change that. I was wrong.

Photo courtesy of IWA wine blog using a Creative Commons license

Wine premiumization, wine prices, and quality

Wine premiumization
The Wine Curmudgeon Wine Sample Index and the wine slowdown

Wine premiumization: Prices keep going up, quality keeps going down, and fewer people are drinking wine. Am I the only one who thinks that’s not a coincidence?

This is how deeply premiumization has upended the wine business: A reader emailed me to say I shouldn’t use the prices I paid for wine in my reviews. Instead, I should use the prices on an industry website, which are typically more than what I pay.

What twisted wine universe do we now live in? Is premiumization so deeply ingrained in the system that cheap wine should not exist, even if it actually does?

Premiumization is the idea that consumers are trading up, that we’re willing to pay more money for a better quality bottle. In theory, this makes perfect sense. Of course I will pay $15 for wine if I know it’s going to be appreciably better than a $10 bottle.

But theory, to paraphrase the economist John Maynard Keynes, is for dead people. The wine business, in its dedication to short-term profit at the expense of long-term growth, is selling us more expensive wine that isn’t appreciably better. It just costs more money, and we’re supposed to accept that as the natural order of things.

I got a sample of an Italian white wine this summer, which came in a flowery bottle with an even more flowery name. My tasting note? “Very nicely done $10 blend (chardonnay, pinot bianco) with a little lemon, minerality, and crispness. For some reason, the suggested retail price is $20, making it one of the most overpriced wines I have ever tasted.”

It’s not just me

A friend of mine, who has been selling quality wine at Dallas’ best retailer for more than 30 years, told me he no longer understands how wine is priced. He cited two examples: Spanish albarino, once $10 and $12 and delicious, is now $18 and $20 and not very albarino-like, while French picpoul, “which should cost $8, costs $16.” These are wines that people in Spain and France drink daily; in the U.S., they’re priced for special occasions.

Or, as a review of a $24 wine on Wine Industry Insight put it recently: “Thin, acidic, and lacking fruit.” How far has wine fallen when $24, which used to be enough to buy something fabulous, now only pays for thin and acidic?

I write all of this in the shadow of the end of the wine boom: Flat sales, more young people who see wine as something for their parents and grandparents, and experts who say drinking will kill us as surely as cigarettes. It’s what Rob McMillan of Silicon Valley Bank calls the new normal – that wine consumption won’t return to what the industry wants. Instead, he writes, “don’t be surprised if young consumers drink less alcohol tomorrow, and those who do drink continue to embrace craft spirits and beer instead of wine.”

Given all of this, shouldn’t it be time for the industry to put an end to the premiumization that gives us $8 worth of wine for $15? If wine is in a fight for its future, shouldn’t it focus on selling well-made and affordable products in response to the competition from craft beer and spirits?

That makes perfect sense

But I long ago stopped expecting that sort of wisdom from wine. In this, I thought I saw the end to wine premiumization several times over the past couple of years, and I’m not the only one who did. But just when you think it has run its course and this foolishness can’t go on forever, it does a Freddy Kreuger. How else to explain when the man who runs Jackson Family Wines wants the federal government to eliminate his competition with a tariff wall?

All of which leads me to wonder how far we are from something that wine economist Mike Veseth has predicted for several years: That wine will become like opera, which was once mass entertainment but is now reserved for a wealthy elite.

That’s a new normal that won’t make anyone happy.

Photo “tokyoWeek1 047” by nate_uri is licensed under CC BY-NC-SA 2.0 

More about wine premiumization:
“Reasonably priced at $40:” Wine premiumization is out of control
The premiumization backlash
Has premiumization damaged wine’s popularity?

Big Wine is dumping cheap wine brands – first Ruinite and Constellation; is a Yellow Tail sale next?

yellow tail sale

Will the roo have to find a new job if there is a Yellow Tail sale?

What does a Yellow Tail sale say about the future of cheap wine in the U.S.?

This year’s unprecedented cheap wine sell-off might include an even bigger shocker — a Yellow Tail sale. The $7 Australian supermarket wine is the biggest imported wine in the U.S., but the company acknowledged last week that it had been approached by several prospective buyers. This came after an Aussie financial newspaper reported that the Casellas, the family that owns Yellow Tail, had hired an investment bank to help them sort through the offers.

The Yellow Tail sale news comes on the heels of Banfi ending its 52-year partnership in March with Riunite, the $5 Italian sweet red, plus the Constellation Brands fire sale in April. That’s when it sent most of its $10 wines to E&J Gallo.

Know that almost all of the wine brands in these deals are profitable, and some immensely so. In fact, Yellow Tail is the fifth best-selling brand in the U.S., while Banfi’s marketing agreement with Ruinite helped it sell 2 million cases a year. And Constellation was so eager to rid itself of its cheap wines that it sold them at a tremendous discount and included Black Box, the sixth best seller in the U.S.

Does any of this make any sense? Not really, if this was 1999. But it’s 2019, and the wine business is obsessed with premiumization, and that trumps all. There was an odd and meandering story on wine-searcher.com last week, which asked if popular wine brands could be successful. This seemed, at first glance, like asking if rain was wet. How could something like the 20-million case Barefoot not be successful?

Because, said the article, size doesn’t matter. And, given the perspective of premiumization, that makes perfect financial sense. Whether it’s good business is a post for another day.

Hence, it’s not enough to sell millions of cases of wine anymore, like Yellow Tail, Ruinite, and Black Box. In this, Yellow Tail seems to be a private equity takeover target, just like any other business with cash flow and a well-known brand. The new owners would buy the company with cheap borrowed company, cut costs, strip Yellow Tail of its least profitable assets, goose up the bottom line, and then re-sell it.

Banfi’s CEO admitted it was too difficult to sell cheap wine given premiumization, and that the company would focus on its “premium and luxury offerings.”  In other words, wine for the one percent. What a terrifying thought for those of us love wine and who are part of the 99 percent.

TV wine ad survey: Hochtaler box wine – even Canadians miss the point

Hochtaler box wine uses a “Cabaret” knockoff ad to sell its sweet white wine, which probably isn’t what the film had in mind

Film buffs know the social, cultural, and political significance of “Cabaret,” the 1972 musical starring Liza Minelli, Michael York, and Joel Grey. So why did Canada’s Hochtaler box wine use a “Cabaret”-themed ad to sell its products in the early 1980s?

Hochtaler, writes the blog’s official Canadian correspondent, has long been famous in Canada – call it the Franzia of the Great White North, boxed wine for cat ladies who say “eh.” In this, Hochtaler is local, made with Canadian grapes by a Canadian producer.

“It’s very sweet,” writes our correspondent. “I’m guessing it was a hit with young people new to wine and older wine drinkers who like the name, which sounds European, and how sweet it is.”

Nevertheless, the ad features a nightclub scene with a chanteuse doing her best Liza Minnelli, complete with German accent, top hat, and tails. It hardly seems appropriate for this kind of wine, but the ads were apparently quite popular.

And you can still buy Hochtaler – C$14.95 for a 1.5-liter bottle at your local Ontario provincial store.

Video courtesy of robatsea2009 via YouTube, using a Creative Commons license

More about TV wine ads:
TV wine ads: Almost 40 years of awful
TV wine ad survey: Richards Wild Irish Rose
TV wine ad survey: 1970s Boone’s Farm Wild Mountain

Can the cat wine demographic save the wine business?

The cat wine demographic is untapped and oh so 21st century, with memes, Instagram and even influencers

Dear wine business:

The Wine Curmudgeon has long been worried about the downturn in U.S. wine sales, what with the Baby Boomers cutting back as they age and the apparent lack of interest among younger consumers.

But I think I’ve found a solution: Cats.

This is an untapped market, save for a few novelty products, and it’s huge – almost 40 million U.S. households have cats. Better yet, cats are hip, with it, and oh so 21st century. How about cat memes? Or the cat channel on Instagram with 10.3 million followers (30 times the number of Wine Spectator followers)?

And there are even cat influencers – Grumpy Cat, called “the Internet’s most famous cat,” received worldwide publicity when he died last month. That included an obituary in the New York Times, and we know how snooty the Times can be.

Plus, the three-tier system is a natural for selling wine to cats. The pet drug supply chain isn’t all that different from three-tier, so vets would understand how to work with all of its legal complications. Why not a wine section next to the fancy collars and upscale treats at the local animal hospital?

And premiumization is spot on for cats. The “pets as part of the family” trend started a decade ago, and it’s still going strong. They get birthday and Christmas presents, they stay at pricey resorts, and they eat like never before. How about cat food made with organic braised chicken or wild-caught salmon? Both are a far cry from the tuna can junk cats used to eat. Given all this, how much trouble could it be to sell a cat a $50 bottle of Napa chardonnay to pair with the salmon? Or even a $75 bottle?

Now I can hear your objections. Cats don’t drink wine. Which is where you’re wrong, and why you should be glad that the Wine Curmudgeon is looking out for your interests.

As the video at the top of the post demonstrates, cats do drink wine. They just need a little encouragement to get them to drink more and to trade up from the box wine in the video. So let the marketing department loose — Cat Nips, a 4-pack of 375 ml cans to take advantage of the canned wine craze. Or, best yet,  an Instagram video featuring a cat influencer like Grumpy Cat sipping a cult Napa cab while lounging on a porch overlooking the winery’s vineyards. Can’t miss, can it?

Remember, if you ever need any more big ideas, I’m always here to help.

Your pal,

The Wine Curmudgeon

Video courtesy of Herman, via YouTube

 

Are the neo-Prohibitionists winning the debate about drinking?

neo-ProhibitionistsNew data shows neo-Prohibitionists campaign against drinking may be making headway

Are the neo-Prohibitionists winning the debate about drinking? New data, including a study about world alcohol consumption, shows fewer of us are drinking. Does this mean more people believe their argument that all booze is evil?

Worldwide alcohol consumption declined 1.6 percent in 2018, according to a report from IWSR, a London consultancy. And wine, which had increased in consumption globally the past several years, also declined 1.6 percent in 2018. That included leading markets like China, Italy, France, Germany and Spain; the U.S. market was flat.

In addition, reported IWSR, “Low- and no-alcohol brands are showing significant growth in key markets as consumers increasingly seek better-for-you products, and explore ways to reduce their alcohol intake.” Growth of no-alcohol wine is forecast at 13.5 percent, with low-alcohol wine at 5.6 percent. Those are impressive numbers to begin with, even acknowledging the small base, and it’s even more impressive given how few no- and low-alcohol wine products exist today.

Meanwhile, Australians – usually regarded as some of the world’s great drinkers – have cut their alcohol consumption significantly since 2014. No one was more surprised than the CEO of the research institute that did the study, who noted that booze is seen as having “a central role” in Australian life. But no more?

What’s going on here? Know that the IWSR study includes a variety of caveats about why consumption declined, and that it expects drinking to return to growth over the next several years. But when the study identifies Ethiopia as one of the top 10 growth markets in the world, something is much different than we’re used to.

In this, it’s almost certainly the idea that any kind of drinking is bad for us. The IWSR study hints at this, with the growth in no- and low-alcohol products, but so does something else. In the U.S. we’ve always faced a religious backlash against drinking, and it’s the main reason why so much of the country was dry until the 1990s.

But that backlash seems to have ended. A May 2019 Gallup poll found that 79 percent of Americans found drinking morally acceptable; only 19 percent said it was a sin. That makes booze as acceptable as divorce and more acceptable than non-marital sex, says Gallup.

So if more of us are drinking less, and that seems to be the case, then the neo-Prohibitionists’ scare tactics seem to be working. Hopefully, the wine business will eventually take notice and offer a compelling argument in favor of moderation. Its current hear no evil, see no evil, premiumization is the answer to everything policy might work in the short run, but doesn’t offer much for the future of wine drinking in the U.S.

More about the neo-Prohibitionists and drinking:
Health alert: Does the CDC know how dangerous Starbucks’ pumpkin spice latte is?
Cigarettes, wine, and cancer
The federal government’s three drink limit

Nutrition labels: What wine can learn from two packages of frozen onion rings

nutrition labelsIf wine doesn’t have nutrition labels, how will younger consumers know it’s not going to kill them?

Every time the Wine Curmudgeon writes about wine nutrition and ingredient labels, people cancel their email subscriptions to the blog. So get ready to press the cancel button, because you’re really not going to like this post: How nutrition and ingredient labels save us from making stupid food decisions, and what wine can learn from a package of onion rings.

Consider two packages of frozen onion rings – one traditional and one made with onions, cauliflower, and beans. Which do you think is the healthiest choice?

And you’d be wrong.

In fact, the faux rings, Farmrise veggie rings, have 220 calories per serving, with 15 percent of the USDA daily allowance of fat and 8 percent of the allowance of sodium. The onion rings, the Kroger house brand, have 180 calories, 10 percent of fat, and 7 percent of sodium. Plus, the real onion rings are about half the price. Click on each link and you’ll see the nutrition label for each product.

The difference in nutrition? The faux rings need the extra fat and salt because cauliflower has no flavor; the fat and salt goose up the Farmrise so it won’t taste like industrially steamed cauliflower. And the difference in price? That’s the healthy option premium, in which we’re supposed to pay more for stuff that’s better for us, even when it isn’t. Check out a can of so-called “healthy” soup, and the only difference between it and Campbell’s may be the price – each has massive amounts of sodium.

What does this have to do with wine? Wine refuses to join the 21st century by making this nutrition information easily available; it has been fighting labels with down to the last bullet determination for more than a decade. But that also means that the same younger consumers who would spot the onion ring contradiction in a second will continue to think wine has something to hide. This is opposed to their parents and grandparents, wine drinkers all, who trust in cauliflower and Big Food.

Because, to the younger consumer’s post-modern way of thinking, wine would have these labels unless there was something fishy going on (or eggy or sugary or industrial adhesive-y or any of the other 60-some ingredients legally allowed in wine that aren’t grapes).

And, as we are reminded here and elsewhere, and reminded over and over, younger consumers aren’t drinking wine the way their parents and grandparents did. Maybe this could be one of the reasons?

More about wine nutrition labels:
The final “nutrition and ingredient labels for wine are a good thing” post
Are we making progress in adding ingredient labels to wine?
Nutritional labels for booze