Category:Wine trends

The tariff’s damage to the U.S. wine business

BoeigtnPeople are losing jobs and taking salary cuts to protect a company whose stock price has soared almost two-thirds in five years

We can quantify the tariff’s damage to the wine business with one sentence: U.S. companies are paying the tariff – how much sense does that make if the tariff is supposed to be punishing European companies?

I was reminded of this during a recent chat with Patrick Mata of Ole & Obrigado, one of the best Spanish wine importers in the world. You can hear the entire conversation as a podcast next week; what’s worth noting here is Mata’s analysis of the tariff: His company’s sales were down 20 percent in 2020 because of the tariff (and, of course, the pandemic). How is that punishing Europe for subsidizing airline manufacturing?

It’s not, and it’s one reason why we’re still talking about this foolishness almost 18 months after it started. Because, as one trade group executive noted, “The only link between aircraft and beverage alcohol is the fact you can purchase a drink on your flight.”

In this, take one look at any of the numbers, and you’ll be able to see the wreckage – not in phony, sound-bite geopolitical terms, but in human terms – and in the middle of the worst world health crisis in decades:

• One family-owned New York City importer has had to pay more than $2 million in tariffs, so it’s in a hiring freeze. Another had to cut salaries by 20 percent for family members.

The Commerce Department reported that bottled table wine imports fell almost nine percent in 2020 by volume, and a whopping 21 percent in value. Those numbers, and especially the latter, are almost unprecedented.

• France has been especially hard hit. Bottled table wine shipments to the U.S. had recorded 10 consecutive years of volume growth prior to 2020, when they fell by volume and dollars – almost one-quarter of the latter.

So this is where I mention Boeing’s stock price, the company that the tariffs are protecting: It’s about two-thirds higher than it was five years ago. If that’s failing, the blog should fail so badly.

Supermarket wine sales during the pandemic

supermarket wine
I need more Barefoot, Josh Cellars, Bota Box, and Stella Rosa!

We’re probably buying more supermarket wine during the pandemic, though we have less to choose from – and we’re likely drinking it with a home-cooked dinner

Supermarket wine seems to be thriving during the pandemic, as we make fewer trips and buy more items – including wine – at one store instead of splitting the trip into two or three stops.

Why seems? Because, as with so many things wine, there are few reliable statistics. As one of the country’s leading supermarket analysts told me, “I’ve heard that’s true, and a lot of people are talking about it, but I haven’t actually seen any numbers about it.”

So what do we know?

• Sales appear to increasing. Kroger reported in December that sauvignon blanc was its fourth most popular purchase in 2020, ahead of bags of chocolate candies and burger patties. In addition, noted the annual Wine Business Monthly study, four supermarket brands — Josh Cellars, Barefoot, Stella Rosa, and Bota — grew significantly in 2020. Stella Rosa, a sweet red, was up almost 108 percent.

• We could buying more private label supermarket wine, according to  the Wine Business Monthly study. This ties into a 2020 food industry report that “three in 10 shoppers said they were buying more store brands than before the pandemic,” and while the report doesn’t mention wine, it does talk about increased demand for all private label products.

• Because price still matters, despite premiumization. The New York Times reported in September that “shoppers are being more economical,” and if it’s true for beans and laundry detergent, it may well be true for wine. That’s my sense, anyway, and especially as I struggle to find cheap wine regularly stocked on store shelves. My Aldi, for example, is regularly sold out of my favorite cheap wines.

• We’re cooking more at home, and it looks like this will continue after the pandemic winds down. And that almost certainly means more supermarket wine sales, as shoppers pick up wine to go with dinner. I was skeptical when I saw this report about home cooking this fall, but more analysts say it looks to be the case. Kroger’s chairman told the Times: “People are moving on to more complex cooking, and we don’t see that going away.”

• Fewer wines to choose from when we do buy in a supermarket, by almost five percent, according to Nielsen. This is part of a larger trend, as retailers cut back on inventory in all departments. Interestingly, that five percent was one of the smallest decreases among the 13 categories in the survey. Is this is another hint at wine’s importance to supermarkets during the pandemic?

• More on-line wine sales. Combine better supermarket technology with relaxed state laws, and supermarket on-line sales probably increased, too. I can buy via Instacart or directly from the retailer’s at half a dozen Dallas grocers. In 2019, there were maybe a couple.

TV wine ads: Deciphering the Menage a Trois holiday ad

Is the Menage a Trois ad really clever or sort of soft core porn?

The blog has been parsing TV wine ads for more than five years, but I’ve never come across anything like this Menage a Trois ad, released for the holidays last year. Is it so well done that I don’t understand it at all, or is it just a soft core porn variation of the usual silliness?

Because it does seem to do what it should do to sell this line of supermarket wines, which are simple, sort of sweet, and play off the double entendre in the brand’s name. The dancing figures on the front label are intriguing but not completely tasteless, and the corny soundtrack isn’t completely corny.

On the other hand, I can’t shake the feeling that the ad is an agency wise guy’s snicker and giggle, a wink and a nod at something like “Fifty Shades of Grey.” Because what does the ad have to do with the wine, other than to tart it up? Are sales actually going to increase because of it? Will consumers actually like it more or remember it the next time they’re standing in from of the supermarket Great Wall of wine?

Your guess is as good as mine.

Still, it’s probably a step up from most of the TV wine ads surveyed over the years, and I know it didn’t make my brain hurt the the way the Roo did. Which is something, I suppose.

More about TV wine ads:
TV wine ads: Does Stella Rosa’s sweet fizzy red commercial do what Big Wine can’t?
TV wine ads: Mateus rose — “it’s like a trip to Portugal”
Wine business: Watch this beer spot to see how TV wine ads should be done

Video courtesy of Menage a Trois Wines via YouTube

Big Wine 2021

big wine 2021Big Wine 2021 growth may have slowed, but the biggest companies still control U.S. wine production

A funny thing happened to Big Wine during the pandemic. It probably didn’t get that much bigger.

That’s one of the most interesting parts in Wine Business Monthly’s 17th annual wine industry survey, which tracks the ups and downs of the U.S. wine business and ranks the 50 biggest producers in this country. In the 2020 report, the top 50 produces of accounted for 90 percent of domestic wine sales, as they have done for years. But the 2021 number is about the same – despite early indications that that the percentage could be higher.

And it could be. Cyril Penn, the magazine’s editor, says the pandemic made it more difficult to gather data, both from producers and from trade groups that track wine sales.

But Big Wine remains dominant, even though there are some 11,000 wineries in the U.S.:

• E&J Gallo is still the behemoth of world wine production, accounting for 88 million cases last year. That’s more than the second and third biggest companies combined. In other words, at least one out of every four bottles of wine sold in the U.S. is a Gallo product (such as Barefoot, Apothic, and Louis Martini), and it could be as many as one out of three.

• The top three producers – Gallo, The Wine Group (Franzia boxes, Cupcake), and Constellation Brands (Mondavi) – totaled 158 million cases, about half of U.S. production. The top 10 accounted for about three-quarters, which is more or less the same as 2020.

• The biggest growth, save for Gallo, likely came in the middle tiers — 15 to 30 or so. A variety of producers in that range have been snapping up smaller companies over the past several years, furthering consolidation in the 1 million case range.

• Box wine soared during the pandemic, led by Bota Box – up almost 50 percent in 2020.

• National brands excelled, since consumers focused on supermarket labels during the panddemic. Josh Cellars’ sales increased 43 percent and Barefoot was up 18 percent. The latter is especially telling, since Barefoot growth has slowed in recent years. And, allowing for the statistical caveat mentioned above, Barefoot could account for as much as five percent of the sales of domestic wine — all by itself.

More about Big Wine:
Big Wine 2020
Big Wine 2019
Big Wine 2018

“Curated” wine clubs, and why they don’t seem to be the answer

curated wine clubs
Do you have any curated chardonnay that is rich and opulent in texture?

“Curated” wine clubs are supposed to use science or experts to find wine you like. But they keep recommending oaky California chardonnay to the Wine Curmudgeon

Know two things about a host of “curated” wine clubs making the rounds these days, companies like Sippd, Bright Cellars, and SommSelect. First, they’re supposed to use science or an expert to take the confusion out of buying wine. Or, as Sippd claims, “Sippd uses AI to provide you highly personalized wine recommendations.” Second, they really don’t work, and certainly not any better than asking the woman at your local wine shop what’s on sale that you might like.

I pointed and clicked through a variety of those websites last week and used three for this post (a tip o’ the WC’s fedora to regular blog visitor Wiseguy for setting me off on this adventure). The results were past discouraging.

I found pricing to be mysterious. Bright Cellars offers “$20” wines discounted to $15. In fact, a quick check on wine-searcher showed that many Bright Cellar wines seemed to be labels developed for Bright Cellars, so no telling what the true price is since you can’t buy them elsewhere. Meanwhile, SommSelect charged $68 for a bottle of French sauvignon blanc that cost $52 on much of the East Coast.

In this, the SommSelect wines were almost all high-end and not aimed at ordinary wine drinkers, even though many reviews for the site say otherwise. How about “A wine club may, on average, cost a little bit more than pulling your ten-buck bottle of wine off the shelf in the store. But, by signing up for a wine club, you aren’t simply buying one or more bottles of wine, you’re buying years of experience from sommeliers. …”

This was depressing in and of itself; how much longer will the wine business perpetuate the myth that only sommeliers are worthy of finding wine worth drinking?

Even more depressing. …

The science, algorithms, and artificial intelligence on Sippd and Bright Cellars were about as effective as letting Churro, the blog’s associate editor, pick wine the way he picks his chew toys. The algorithm sites ask a series of questions about wines and flavors that you like, and then the algorithm magically and mysteriously finds similar wines. Not surprisingly, they don’t ask about price.

Sigh.

Sippd, which sells its wines through Wine.com, gave me an 83 percent “taste match” for E&J Gallo’s La Marca Prosecco, which is pretty funny since I don’t really like Prosecco. And it offered a 92 percent “taste match” for a $129 red Bordeaux, which is even funnier since I’ve never bought a $129 bottle in my life.

And Bright Cellars recommended five wines, all from the U.S. when I buy mostly imports. Even worse, they included two California chardonnays (“Rich and opulent in texture. … rich and creamy. …”) and a couple of reds that claimed to contain some kind of chocolate something or other. Regular visitors here know that those are the kinds of focus group wines I regularly rant about.

Maybe you’ll have better luck with these sites than I did. I hope so. No one should be as miserable as I was after I finished — once again worrying about the future of the wine business.

Photo: “_MG_5551 2” by Yahoo Inc is licensed under CC BY 2.0

More about wine clubs:
Wine Insiders wine club, and why more people don’t drink wine
Update: Third-party wine clubs and their experts
Blue Apron wine: Disappointing and depressing

The Bad Spaniels dog toy and wine criticism

A court ruling in favor of the Bad Spaniels dog toy means honest wine criticism has survived another day

What does a Supreme Court ruling in favor of the Bad Spaniels dog toy have to do with wine criticism? Plenty, which speaks to the dangerous ledge that wine criticism lives on these days.

Earlier this month, the court declined to hear an appeal from Jack Daniels whiskey against a parody dog toy called Bad Spaniels, which looks like the Daniels bottle. The whiskey company had sued the toy company, claiming it had infringed on Jack Daniels’ intellectual property and had hurt the company’s brand. Its suit had had been filed despite long-entrenched and well-established First Amendment protection for parody and satire.

But, as noted on the Libation Law blog, that doesn’t matter to Big Spirits, Big Wine, and Big Beer these days. Stomp on the First Amendment? Why not? We’ve got money to make. There’s a quote on the Internet from an intellectual property attorney which makes it sound as if this toy will cause as much destruction to the republic as armed protesters storming the U.S. Capitol. And, of course, I’m not linking to his quote – if these people sue companies, you can imagine how they would view me.

The Supreme Court’s decision means a lower court ruling will stand in favor of the dog toy. That reiterates the right of the dog toy company to parody Jack Daniels, something that has been part of First Amendment law for at least 70 years. In this, it’s the second important First Amendment decision to bolster wine criticism in the last year, reinforcing the rights of those of us who take the subject seriously and see it as more than scores, tasting notes.and schmoozing the wine industry.

More protection

The first came in August, when a federal district court ruled that wine bloggers likely have the same protections as traditional media. That meant that a producer, unhappy with one of my reviews, probably wouldn’t win if they sued me for libel or defamation. The Bad Spaniels decision, though not exactly the same, means that I’m protected if I write a post parodying the Wine Spectator or the California wine industry. Without the Bad Daniels ruling, either could have sued me, saying that my post diluted the value of their product and that I was liable for damages to make up for the dilution.

Gulp.

That would send me scurrying to scores and tasting notes, yes?

The other question no one has answered: When did we get to the point where a dog chew toy making fun of a whiskey company would become the subject of a constitutionally significant lawsuit? What possible fear could Jack Daniels have – or anyone else in Big Beer, Big Wine, or Big Spirits – that a toy would hurt their business?

Churro, the blog’s associate editor, contributed to this post — and he really likes the toy.

Wine trends 2021

wine trends 2021
Will I be able to buy wine over the Internet after 2021 — but not in January, of course?

Look for Dry January, “healthy” wine, the pandemic, and legal maneuvers to mark wine trends 2021

This is the second of two parts looking at wine prices and wine trends in 2021. Today, Part II: Wine trends 2021. Part I: Wine prices 2021.

Anyone in the wine business who says Dry January doesn’t matter must also believe the Trump wine tariff is good for business, young people are flocking to buy $100 wine, and I think scores are the future of wine criticism.

But there it is, as we look at wine trends 2021: Any number of experts who say Dry January and the neo-Prohibitionists don’t matter. Or, as one magazine editor asked me, “What’s Dry January? Why is that in your story?”

I should have pointed him to this story. Or this one. Or this one.

In fact, I spent much of the past couple of years writing trade magazine stories about the growth in no-alcohol, low-alcohol, and “healthy” wines. And I wasn’t talking to one-off startups, but executives at some of the biggest wine companies in the world. So any discussion of wine trends 2021 must start with Dry January and that it’s OK to say you don’t drink – cool, even.

What we don’t know is exactly how Dry January will change the wine world. But it will change wine in 2021, as will these:

• “Healthy” wine. If you haven’t heard of FitVine yet, you will. It markets itself as “less sugar, fewer sulfites, and no flavor additives for a cleaner wine” – all for $15. And it’s not alone. There are products like The Wine Group’s Cupcake Light Hearted; Trinchero’s Mind & Body; and Constellation’s Kim Crawford Illuminate, which promise fewer calories, less sugar, less alcohol, and say they are gluten free and vegan. The idea is to sell wine to younger consumers who supposedly prefer a healthier lifestyle and who may not be drinking wine now. One estimate: this market will grow 34 percent over the next four years.

• Shortages and supply chain problems will continue. The longer the pandemic lasts, the more we’ll see retailers and wholesalers have a difficult time keeping popular wines on shelves. It doesn’t mean the wines will disappear; rather, they’ll be there, sell out, and not return for a week or more.

• Wine tourism on the brink. If the vaccines do their job, and if life returns to normal by the fall, then all should start to improve. But if we go through another year of travel and public place restrictions, then questions must emerge about the future of wine tourism. The 90 percent of U.S. wineries that don’t make 90 percent of the wine survive on wine tourism. How will they survive if there isn’t any?

• Three-tier reform, but slowly and incrementally. That’s because the Supreme Court won’t hear a key three-tier case, so no Internet wine sales anytime soon. Still, we will see alcohol delivery continue to expand, thanks to the pandemic. In Texas, the legislature is expected to make cocktails-to-go permanent this year, a development that is so unprecedented as to be almost indescribable. And Illinois is set to legalize retail booze delivery throughout the state, also difficult to believe.

• The Trump tariff, and how soon we can get rid of it. Change here requires compromise, good will, and good faith from the U.S. and the European Union. Sadly, all have been in short supply.