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?
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?
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?
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.
We dodged one 100 percent tariff, but will there be another one? And what about the 25 percent tariff?
How confusing is the current wine tariff situation? An editor, sharp and smart, was completely baffled when I wrote that there was a chance the Trump Administration would raise the current 25 percent tariff to 100 percent and expand it to include all European wines.
“Wait a minute,” she emailed me. “I don’t know about that. Didn’t they just decide to hold off on the 100 percent tariff?”
Yes, they did. But that was a 100 percent tariff on luxury goods, including Champagne, to punish the French. That’s because they had the temerity to suggest that U.S. tech giants like Google and Facebook should pay taxes on their French revenue. The French and U.S. governments announced this week that they would continue negotiations over France’s proposed digital tax, and that the 100 percent Champagne tariff is on hold.
My editor wasn’t the only one befuddled. “I honestly have a hard time keeping track of what’s going on,” one U.S. importer told me this week, and it’s her job to know what’s going on. “No one is really covering the issue, not even the New York Times. So it’s hard to know what’s happening, even if it has already happened.”
Your wine tariff update primer
Which, of course, is why the Wine Curmudgeon is here. Consider the following your wine tariff update primer:
• Nevertheless, imports from three of those countries have dropped dramatically since the tariff was imposed. The U.S. Census Bureau reported that Spanish shipments to the U.S. declined almost 17 percent in dollar terms from October to November 2019, while German shipments fell 40 percent over the same period. The monthly totals were the lowest for Spain since 2006, and the least since 2002 for Germany. French wine imports, meanwhile, fell by almost two-thirds in dollar volume over the October-November period, and the total was the least since 2008.
• Prices have not always increased the full 25 percent. The same importer told me that some European producers, importers, and distributors have cut margins on some wines they consider essential to the U.S. market to keep increases to a minimum. But all bets are off when the 2018 roses and whites are released in the spring.
• The next key date is the middle of February, when U.S. trade officials must review the original decision. They can keep the tariffs, impose new ones, or rescind them. In addition, the World Trade Organization is expected to announce later this year the U.S. gave Boeing illegal subsidies in retaliation for EU subsidies to Boeing competitor Airbus. That’s because this entire mess started when the WTO ruled in October that those EU subsidies were illegal, and the Trump Administration responded with the 25 percent levy and threats of the 100 percent tariff. Many of the people I talked to this week hope that the WTO decision against Boeing will give the U.S. political cover to withdraw the 100 percent threat and rescind the 25 percent tariff.
No one is quite sure. President Trump’s business background is in the hospitality business, which sells wine, and his family owns a winery in Virginia. So a tariff would seem contradictory. On the other hand, say a variety of wine industry officials, wine is seen as especially European, and the president’s trade agenda has targeted the European Union almost as much as China.
And one Midwest retailer told me the tariff is surprisingly popular among wine-drinking Trump supporters. This no doubt explains the steady trickle of blog subscription cancellations over the past couple of weeks, since I have made it quite clear I oppose the tariffs. And no doubt this post will lead to more cancellations.
Ironically, there seems to be little enthusiasm for bringing in more wine from countries not included in the tariff, including South Africa, Chile, and Argentina. The problem, says one importer, is the complexity of adding new producers to the wine supply chain – first, finding a producer who fits the niche the importer needs, and then finding enough distributors in the US to handle the new wines. And this doesn’t include the paperwork and bureaucracy to add the wines
Grocery Outlet, the west coast discount supermarket, wants to use cheap wine to help it expand across the country
Grocery Outlet, the west coast discount supermarket, wants to expand across the country. Can it do so in this age of Walmart, Aldi, Trader Joe’s, and all the rest? And if it does, can it spread the gospel of quality cheap wine?
So why should we be so excited about wine at Grocery Outlet?
For one thing, there are 50 wines in each store that cost $5 or less. For another, those 50 wines are usually not bottom-feeders like Winking Owl. Rather, it’s branded wine from producers we’ve heard of, but that the company buys as seconds, remainders, and discounted items from wholesalers and wineries. And Grocery Outlet is famous among California wine geeks for discounting expensive wine, which it sells for as much as 50 percent off.
This isn’t a new business model for retailing, but it’s very unusual for wine. For one thing, three-tier makes it more difficult than selling overstocks of canned soup. For another, it means each store’s selection changes depending on what the chain can find to discount, so the great $5 wine that was there the last time may not be there the next time. Third, it doesn’t usually stock national brands like Barefoot or Kendall-Jackson, which isn’t the conventional wisdom.
“What we’re doing, and we’re doing it every day, is to find wine through the normal channels, but that it’s wine that we can sell at the right price,” says Cameron Wilson, Grocery Outlet’s director of wine, beer, and spirits. “But what we’re also doing is upgrading the technical quality of the wine we carry, so that everything we carry is in good shape and that it shows well.”
Which sounds like a fine reason for us to care about Grocery Outlet’s success.
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.