Category:Wine trends

Trump Administration backs off 100 percent European wine tariff

But we’re still stuck with the 25 percent wine tariff, and perhaps for at least another six months

wine tariff

Higher prices: This 1-liter bottle of French rose, about $12 before the tariff, now costs $2 more on sale at one national retailer.

The Trump Administration said Friday it would not raise its European wine tariffs to 100 percent, which would have included most of the region’s wine. That’s the good news.

The bad news? We’re stuck with the 25 percent tariff imposed last fall until the next review, set for August.

Still, this is much more than a half empty glass. The decision seemed to reflect the wine industry’s tremendous and almost unprecedented lobbying effort against the 100 percent tariff, in which representatives from each of the three tiers testified at U.S. Trade Representative Office hearings, blitzed the old and new media, and organized public anti-tariff campaigns. In this, groups that typically disagree as often as they agree worked together for the greater good.

For example, the Wine Institute, the trade group for California producers, has been working for years to change state laws to make it easier for consumers to buy directly from wineries. This has been opposed by most of the second tier, since wholesalers have a monopoly on selling to retail and restaurants under the three-tier system and don’t want to allow any exceptions. But the two groups were side by side in opposing the tariff.

“It was one of the rare cases in the industry when everyone’s interests aligned,” says Cindy Frank, a long-time wine industry executive who has worked as an importer, wholesaler, producer, and retailer and who testified at last month hearings before the U.S. Trade Representative in opposition to the tariffs. “It’s the one issue that has worked itself all the way through the three-tier system.”

So where does this leave us?

• The tariff decision was announced on Friday afternoon. This timing, after everyone leaves for the weekend, almost always means the people announcing the news didn’t want to talk about it. Which often means they did something they didn’t want to do, and so didn’t want to have to explain their decision. Still, that aircraft tariffs were increased, when the initial dispute was about aircraft, speaks volumes. The World Trade Organization ruled in October that EU subsidies to Airbus were illegal, and that the U.S could impose tariffs in retaliation.

• Credit some of the decision to our friend, the three-tier system. Apparently, Trump Administration officials didn’t understand what three-tier was or how it worked. Their questions, said several people who testified, assumed retailers, importers, and wholesalers could easily replace European wine with imports from other parts of the world, just as they would steel or soybeans. The officials didn’t know how severely three-tier restricts how wine can be sold in the U.S.

• Economic turmoil. The wine industry lobbyists, as part of their effort, did an excellent job in showing that higher prices for imported wine would lead to job losses, bankruptcies, and lost sales up and down the U.S. supply chain, whether big or small retailers, producers, importers or distributors, says Southern Glazer’s Barkley Stuart, the chairman of the Wine & Spirits Wholesaler Association’s board of directors.

• The tariff was re-examined four months after it was applied as required by U.S. law. This was a point of confusion after the October ruling, and I reported the process incorrectly in the “Does anyone have any idea what’s going on?” post (and since updated). The next tariff review, as required by law, must come by August. In addition, the WTO is expected to announce later this year that the U.S. gave Boeing illegal subsidies in retaliation for the EU subsidies to Airbus. If that happens, then there’s political cover for both sides to negotiate away the tariffs, but no one knows if or when that will happen.

• Retailers, pricing, and rose season. As reported here and elsewhere, retailers, distributors, and importers have worked together since October to minimize the 25 percent tariff’s effect on prices. But, as one Dallas retailer told me, all bets are off on holding the line on prices when rose season arrives in the next month or so.

“Crisp and fresh:” AI wine writing strikes again

ai wine writingWill AI wine writing eventually make wine tasting irrelevant?

This is a mineral-driven wine that’s crisp and fresh, with a flinty edge. It is very tangy, with zesty citrus, giving a bright character. It needs time to mature, so wait until late vintage.

That’s a review of one of my favorite $10 wines – the Chateau Bonnet Blanc, a white French Bordeaux. But I didn’t write it, and neither, technically, did any other human wine critic.

Instead, it was written by an artificial intelligence – the Wine Review Generator created by long-time wine industry executive Michael Brill. Brill, who also does tech, software, and AI consulting, wanted to find out if he could “teach” a machine to write tasting notes.

And, for the most part, that’s what he did.

Brill left a comment about last week’s blog post about the future of AI wine writing. That led to our phone conversation this week, where Brill said improved technology has made it possible to create the Chateau Bonnet review with a minimal amount of human programming. All you need, he said, is a database of wine terms, wine regions, grape varieties, and so forth. That information, combined with advances in neural network research that have helped scientists better understand how to program machines to “think,” led to the review software and to the Bonnet review.

In this, Brill said, a machine’s ability to “write” longer and more coherent sentences has improved tremendously. Before, he explained, an AI story might be half readable and half nonsense, and the most it could create was a 10-word sentence. Today, those numbers are 90 and 10 percent, and it can write a readable 10-sentence paragraph.

How the machine does this, needless to say, is incredibly complicated. It makes predictions about what comes next in a sentence based on the words that came before, a process that is much more like writing than previous AI efforts; those were more like filling in a template. Here, the AI has “learned” that a mineral-driven wine is crisp and fresh, and not oaky and flabby, so it picks the former phrase to follow mineral-driven instead of the latter.

Which is why the Chateau Bonnet Blanc effort is not a bad tasting note. It’s mostly accurate (save for the bit about aging) and it conforms to the rules of grammar and the sensibilities of wine. That the machine wrote the review without tasting the wine is impressive, and knowing only the cost and some characteristics, is impressive. And more than a little spooky.

And not just because an AI is cheaper to hire than I am. Brill said advances in machine writing could eventually make product reviews useless. Some of that happens today on Amazon, where it’s not uncommon to see badly written AI reviews praising a product. But the situation could get even worse as AI writing improves.

A top-notch AI could flood Amazon with machine-generated positive (or even negative) reviews, with the resulting effect on sales. Or it might be possible for one restaurant to force another out of business with an AI-written campaign on Yelp.

And who would know the difference?

AI wine writing: Maybe it’s not around the corner after all

AI wine writing

This AI’s wine notes may not be as good as those written by a human — so how bad would they be?

AI wine writing technology needs to advance past copying a formula, even for something as simple as a tasting note

Will software replace wine writing? We’ve worried about this on the blog, where every advance in artificial intelligence made AI wine writing seem that much more likely. It became especially terrifying after noted journalist Barbara Ehrenreich wrote in the New York Times that some writing “could itself be automated and possibly improved by computers.”

Scores are bad enough, but artificial intelligence scores?

Not to worry, though. Two recent reports found that no matter how far artificial intelligence writing has come, it hasn’t come quite far enough, even for AI wine writing.

The New Yorker’s John Seabrook offered the most complete story about AI writing I’ve seen. “Each time I clicked the refresh button,” he wrote, “the prose that the machine generated became more random; after three or four tries, the writing had drifted far from the original prompt. … [I]n a way that reminded me of Hal, the superintelligent computer in ‘2001: A Space Odyssey,’ when the astronauts begin to disconnect its mainframe-size artificial brain.”

That’s more or less the conclusion, too, of the Johnson column in The Economist working off of Seabrook’s essay: “Don’t fear the Writernator,” Johnson said, and so it looks like human wine writing has been saved – for the time being, anyway.

Why was I so worried? Because there have been so many advances in AI writing that it seemed inevitable that something as formulaic as what we do would be turned over to an AI. How difficult would it be to write an algorithm that would parse wine grapes, wine regions, and descriptors to give us what we see all the time in every Wine Magazine? How much cheaper would it be to dispose of wine writers? After all, it’s not like writing a tasting note-style wine review is like writing for the New Yorker.

And, in fact, tremendous progress has been made with tasting note-style writing. As I reported last summer, it’s possible to use basic Python programming skills to come up with formulaic writing like tasting notes thanks to advances in neural network research and how to mimic what the human brain does. I wasn’t able to write reviews for the blog, as I had hoped; my Python skills are too rudimentary. But those more advanced are apparently doing it.

But both Seabrook and the Johnson writer argue that even that simple kind of writing is still a ways off. It’s one thing to teach a machine how to route rush hour traffic, but it’s something completely different to teach it how to write. Mimicking a formula is not writing.

“What eludes computers is creativity,” said Johnson. “By virtue of having been trained on past compositions, they can only be derivative. Furthermore, they cannot conceive a topic or goal on their own, much less plan how to get there with logic and style.”

Which makes me feel a lot better.

More about AI wine writing:
Winecast 30: Arty, the first artificial intelligence wine writer
Let the computer write the wine reviews
Do we really need wine writers?

Wine, strawberry fruit spread, and nutrition labels

nutrition labels

No thanks: Three tablespoons of this aren’t as appealing as a glass of wine.

The power of nutrition labels: A glass of wine has the same number of calories as three servings of strawberry fruit spread

The biggest surprise during last month’s Silicon Valley Bank State of the Wine Industry report was not the sad state of wine in the U.S. Rather, it was that Rob McMillan, the report’s author, said it was time for wine to acknowledge the need for ingredient and nutrition labels on its bottles.

This was revolutionary. Previously, only a couple of consumer groups, a handful of progressive wineries, and cranks like the Wine Curmudgeon wanted to see the labels. To the rest of wine, the labels were a waste of time – confusing, costly, and bottle clutter. Wine drinkers don’t need to be bothered with what was in their wine, and that was was that. And stop bothering us.

But McMillan’s argument turned that reasoning on its head. Wine, he said, is the most natural of products – grapes and yeast. Why, when younger consumers care more than ever about what’s in their food, should the wine business hide that?

“We can’t be more plant-based than wine – you put it in a tub and squish it and it turns into something else,” he said. “Yet we’ve got to this point where spiked seltzers are seen as a more healthful choice because of the clarity and transparency of the ingredients.”

Which, of course, is what some of us have been arguing for years. I was reminded of the good sense of this approach when I looked at the fact label on a bottle of Smucker’s Natural Strawberry Fruit Spread, where the front label puts the emphasis on “natural” and adds “No High Fructose Corn Syrup.”

A serving is one tablespoon, and there are 40 calories per serving of this “natural” product. In other words, I can drink a glass of wine, which has about 120 calories, or I can have three tablespoons of something called natural strawberry fruit spread. What do you think most consumers would choose?

And how has the wine business missed this connection all these years?

More about wine nutrition labels:
Nutrition labels: What wine can learn from two packages of frozen onion rings
The final “nutrition and ingredient labels for wine are a good thing” post
Wine falls further behind in nutrition and ingredient labels

Big Wine 2020

Big wine

Big Wine isn’t enough for a healthy U.S. wine business these days.

Big Wine 2020: Just being big doesn’t seem to be enough to reinvigorate wine in the U.S.

We need some sexy brands at $7 or $8 per bottle, and I’m not sure how many people in the industry want to try and do sexy things with $7 or $8 a bottle.
— Wine analyst Jon Moramarco

That quote tells you pretty much everything you need to know about the 16th annual Wine Business News magazine survey, which tracks the yearly ups and downs of the U.S. wine business and ranks the 50 biggest producers in this country. In this, it’s the second consecutive year that the trade magazine has painted a Wine Curmudgeonly-future of wine in the U.S.

How big is Big Wine 2020? There are more than 10,000 wineries in the U.S., and the top 50 account for some 90 percent of production. But that’s just the beginning of how top-heavy the U.S. wine business is. Almost one out of every four bottles of wine made in the U.S. comes from E&J Gallo, the world’s biggest producer. The top 3 companies account for 52 percent, and the top 5 account for 77 percent.

So if we need someone to ask about what’s gone wrong, we know who, don’t we?

Among the highlights

• Sales by volume may actually have declined last year, depending on whose numbers you believe. Nielsen said sales dropped 1 percent as 2019 drew to a close, but Gomberg, Fredrikson & Associates estimated that volume could end 2019 up one-half to one percent. Regardless, it’s a far cry from the 3.5 percent annual growth rate during the wine boom, and it’s not enough to keep pace with the increase in the U.S. drinking age population.

• Even premiumization slowed. Sales by dollar volume were up just 1.7 percent in 2019; that compares to a 5 percent increase last year. Interestingly, several industry types quoted in the story insisted that cheaper wine was not the answer, since consumers don’t want to pay less.

• The average price of a bottle of wine sold at retail in 2019 was about $11. That’s more or less what it has been for the past several years, taking into account the various statistics used to calculate the cost.

• Gallo’s share of the U.S. wine market increased from 17 percent last year, even though its sales remained flat. Go figure.

• The share of the three biggest producers – Gallo, The Wine Group, and Constellation Brands – fell three points from last year and eight points from in 2017. In addition, the share of the top 10 companies declined for the fourth year in a row, from 84 percent in 2016 to 81 percent in 2017 to 78 percent in 2018 to 77 percent in 2019. That sounds awfully damn ominous, doesn’t it?

More about Big Wine:
• Big Wine 2019
• Big Wine 2018
• Big Wine 2017

TV wine ads: San Giuseppe Wines, because you can never have too much bare skin in a wine ad

This 2016 ad for Sam Giuseppe Wines reminds us that when in doubt, flash some skin

One constant throughout the Wine Curmudgeon’s TV wine ad survey has been model-quality men and women baring their skin. Which is exactly the case with this ad for San Giuseppe Wines, an Italian label that sells for about $12. How much longer could the shot last when the guy pulls himself out of the water?

My guess, since the ad is for pinot grigio, is that the swimmer is supposed to appeal to the pinot grigio demographic — the infamous women of a certain age who buy almost all the pinot grigio in the U.S.  The ad’s goal? Get them all hot and bothered so they will race to the store to buy San Giuseppe.

In this, it’s not necessarily any worse than any of the others in our TV wine ad survey. It’s just more of the same. Is it any wonder I worry about the future of the wine business?

Video courtesy of QUE Productions via YouTube

More about TV wine ads:
TV wine ad survey: Hochtaler box wine – even Canadians miss the point?
TV wine ad survey: 1980s Richards Wild Irish Rose
One more example why TV wine ads are so awful

Will wine ever move past the 750 ml bottle and cork?

750 ml bottle and cork

Why change? We’re talking 17th century cutting technology here, aren’t we?

The 750 ml bottle and cork – why is it still with us, and will we ever move past it?

Those are the two questions I look at in a free-lance article for the Spirited trade magazine. The answer to the first question is rooted in wine history, tradition, and even innovation. As wine marketer Paul Tincknell points out, the cork and bottle was cutting edge technology in the 17th century.

The answer to the second question, refreshingly, is yes — and perhaps sooner than we think.

Daniel Tripolitano, director strategy, innovation and insights, global marketing for Treasury Wine Estates, says a change is going to come. He isn’t quite sure when or what the change will be. But in an era when consumers are less enamored of romance and tradition and more concerned about convenience and sustainability, something different is almost inevitable.

Also worth noting: As baby boomers give way to younger wine drinkers, dinner becomes less important as an occasion. The bottle-and-cork isn’t as well suited to a picnic, boating, or day at the beach as is a can, box, or PET bottle. And what happens if you forget the corkscrew?

“That’s where the disruption is going to come,” says Tripolitano. “That’s the compelling proposition that’s going to drive [a change in packaging].”

And a tip o’ the Curmudgeon’s fedora to Spirited editor Alexandra Russell, who bought the story. She understands that trade magazine journalism doesn’t have to be dull and boring.

Photo: “_6271259” by pianowow is licensed under CC BY-NC-SA 2.0