Category:Wine trends

Four 2020 wine trends that you don’t need to worry about

Pass the piquette, please.

These four 2020 wine trends are more click bait than anything else

The Wine Curmudgeon is constantly on the alert for wine foolishness and silliness, since those things usually mean someone is after your money. So when several experts posted their 2020 wine trends, my hooey meter went into overdrive.

Hence, four 2020 wine trends you don’t have to worry about:

Cannabis-infused wine. Yes, legal weed is still it its infancy and it may yet prove to be the next big thing. But so far, it has been a disaster. How big a disaster? Just ask Constellation Brands, which dumped more than two dozen wine brands this spring to focus on cannabis. Along the way, the company has invested at least US$4 billion in Canadian weed producer Canopy, and Canopy has yet to turn a profit.

Pop-up wine bars. Apparently, the experts didn’t consider liquor laws or the three-tier system, which would make this almost impossible in most of the U.S.

Piquette. Lots and lots of websites and experts ask sommeliers about the hippest trends, since they figure sommeliers are hipper than the rest of us. Thus, piquette. This isn’t exactly wine, but is fizzy and has low alcohol, which do seem to be legitimate trends. The catch? Piquette is made by just a handful of small producers on the East Coast, which means that no one will be able to buy it unless they visit a bar or restaurant which has a very hip sommelier.

Organic wine. This was going to be huge when I started writing about wine 20-some years ago, and it still shows up regularly on trends lists. But organic wine has never caught on in the U.S, and shows no signs of catching on now. Organic wine, organically-made wine, and biodynamic wine have a tiny part of the U.S. wine market, probably in the single digits.

One week in: The 25 percent European wine tariff

European wine tariff

The WC feels like Don Quixote in the wake of the European wine tariffs — chasing the windmills of cheap wine.

Where we are with the 25 percent European wine tariff, and where we may be going

A few thoughts after talking to a couple of dozen people – importers, distributors, retailers, and producers – about the 25 percent European wine tariff (and most asked not to be named, citing the nature of the dispute):

• How long will the tariffs last? Almost all I talked to were pessimistic – one official at an important New York importer said he was an optimist, which meant 12 to 18 months. “And that’s because I’m an optimist,” he said. “Others are telling me the tariffs will be here forever, because who lowers taxes once they’re imposed?” In this, he told me, the tariffs will almost certainly change the way Americans buy wine. This was echoed by an employee of one of the biggest distributors in the country and a prestigious Dallas retailer. If $15 French and Spanish wine suddenly costs $20, who will buy it? They’ll just switch to another $15 wine

• Will anyone “win” this part of the U.S.-E.U. trade war? If winning is scoring political points, then the Trump Administration is having a victory party. And I have no doubt Jackson Family Wines is celebrating, as short sighted as that might be. But if winning is solving a problem, then no one has won and almost no one will win. As a former newspaper colleague of mine, a respected South Carolina political writer, said recently: “Tariffs are a mug’s game.” These were imposed as punishment for something that happened 14 years ago, and it’s difficult to see how taxing British wine will solve an aircraft parts dispute.

• When will prices go up? The tariff only affects wine imported after Oct. 18, so if it’s already in the country, we’re probably safe. The New York importer said his company will raise prices on wine brought in after Oct. 18 in the next 30 to 60 days. On the other hand, a Dallas retailer told me his very large chain is trying to figure out a way to absorb some of the increase for less expensive wines, since it doesn’t want to see them priced out of existence. He said large retailers, thanks to economies of scale, might be able to work around some of the the tariff’s effects.

• What’s the Wine Curmudgeon doing? Trying not to panic. The blog’s reason for being is cheap wine, and much of the world’s most interesting cheap wine comes from France and Spain. Price that out of reach, and I don’t have much to write about, do I? I can still count on Italy, and I’ve spent considerable time in local retailers looking for wine from countries not affected by the tariff. The good news is that I stumbled on a $10 Chilean pinot noir and a $10 South African white blend. The bad news? That doesn’t make 52 wines of the week. And availability is almost certainly going to become even more uneven than it is now, and we know how uneven it is now.

More about the 25 percent European wine tariff:
• Preparing for the 25 percent wine tariff
• Do new U.S. wine tariffs mean the end of most $10 European wine?
25 percent European wine tariff went into effect today

Drawing: “Don Quichotte” by Manu_H is licensed under CC BY 2.0

Coconut chardonnay: One more reason why I worry about the future of the wine business

A company called Fun Friends Wine sees the future of wine, and it involves coconut chardonnay

The commercial at the top of the post is just one part of the marketing campaign for something called Friends Fun Wine, whose flavors include coconut chardonnay. Is it any reason I worry about the future of the wine business?

As near as I can tell, Friends Fun Wine isn’t exactly wine, but more of a wine cooler — what the trade calls an RTD (for ready to drink). It’s low alcohol, costs $6 for a 750 ml bottle and $2 for a 250 ml can. It’s mainly sold in convenience stores and restaurants.

The idea, apparently, is to push the product to younger consumers who normally drink cocktails. The website is even more focused on that, featuring some of the best looking men and women I’ve ever seen in wine marketing. It’s all beaches and bikinis and hanging out, about as far from traditional wine as possible. In fact, these are the kinds of models that appear in fashion magazines, not on websites plugging flavored wine.

And this begs the question of why the product is called Friends Fun Wine, since it goes out of its way to be everything that “real” wine isn’t – younger, very informal, and featuring flavors like coconut chardonnay. My guess? That as beleaguered as the wine category is these days, there is still a certain cachet to it. And the company behind Friends Fun Wine wants to take advantage of that cachet: “Look, here is fun wine you can drink that tastes good but isn’t that old fashioned stuff that your parents like.”

The point here is not that people shouldn’t drink coconut chardonnay wine. The only rule in wine is to drink what you want, but to be willing to try something else. Rather, why isn’t the traditional wine business marketing wine to younger consumers, using the same – but coconut chardonnay-less – approach? That wine can be fun, and that it isn’t necessarily old fashioned.

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

The problems that come with running an internationally known wine blog

wine blog

“Which one of you is going to write the sponsored post for the .. cough.. cough.. escort agency?”

Where else would one have to fend off payola, college term paper scammers, and whores?

Running an internationally known wine blog may not bring much in the way of fortune, but it does demonstrate the perils of fame – even the limited sort of fame that comes with writing about cheap wine.

In the past couple of weeks, I’ve been barraged (well, sort of) with requests to “partner with” a variety of not inexpensive products. This happens because the blog’s demographics, despite its subject matter, are mostly as upscale as the wine blogs and websites that don’t write about cheap wine. Plus, my visitors seem to be a little younger than the other sites, and we all know how desperate the wine business is to get younger.

For example:

• A company that makes wine refrigerators wanted to give me one of their products. The catch? I had to write nice things about the $700 unit and include various links to make sure Google got the hint. I thought this might work as a giveaway for Birthday Week next month – the company would get its blog post, one of the blog’s readers would get the fridge, and I wouldn’t have to worry about ethics. Not surprisingly, the company wasn’t interested.

• A bunch of spammers wanted the blog’s readers to buy college term papers, essays, and assignments written by someone other than the students – what the New York Times has called “Cheating, Inc.” I assume, given the recent college pay to play scandals, that the spammers figured the blog’s demographics translated into parents and grandparents willing to shell out the hundreds of dollars these papers cost. Ah, plagiarism as a growth industry. …

• My favorite pitch? For whores. Who knew I spent all those years honing my craft so a “content development specialist” at a “California-based premium escort agency that caters to all your needs” could ask to write a guest post? I even had topics to choose from, including “10 Reasons Business Men Hire Escorts.” Why do I think I know the reasons, that there aren’t 10, and that we don’t need to run a guest post to figure that out?

Photo courtesy of Greentech Media, using a Creative Commons license

Preparing for the 25 percent wine tariff

wine tariffFive ways to save money if and when the 25 percent wine tariff for France and Spain takes effect

So far, there’s been no sign that the 25 percent tariff on French and Spanish wine won’t go into effect at the end of the week. So those of us who are rightfully worried about all that quality $10 wine going away should act now:

• Stock up before prices increase. Last week, I bought what might have been the last seven bottles of Chateau Bonnet Blanc in Dallas, and also bought most of what was on the shelf of the Azul y Garanza tempranillo. The Bonnet, of course, is one of the all-time great cheap wines, but it almost certainly won’t be $10 after Oct. 18. The Azul, $11 for a 1-liter bottle, is not just a terrific value, but a quality wine as well – Spanish tempranillo that tastes like Spanish tempranillo.

• Look for closeouts and sales before Oct. 18. Central Market, the Texas version of Whole Foods, did a 20 percent French wine sale last week. So I bought a case of assorted $10 French rose for $8 a bottle; hopefully I can hold out for the first six weeks or so of the tariff.

• There is always Italy. The good news is that Italian wine was excluded from the tariff (though not its olive oil and some of its cheeses). The bad news is that this means that very ordinary $9 pinot grigio will become an even bigger attraction as retailers drop similarly-priced French and Spanish wine. But $10 Sicilian wines will still offer value, while regions in the middle part of the country like Umbria and Montepulciano d’Abruzzo have long been famous for price and quality.

• Sparkling is safe. One would have thought that if the U.S. really wanted to punish France, it would have taxed Champagne. Hence there should still be value in $12 to $15 cava, the Spanish sparkling wine.

• Think South Africa. South African wines haven’t been popular in the U.S. for almost 20 years, but this could be their time to shine, says James McFadyen, a long-time retailer and distributor on both sides of the Atlantic. Producers like Ken Forrester and Mulderbosch offer quality and fair prices for both red and white; the catch has been availability.

Wine prices 2019 update: Are prices coming down despite premiumization?

wine prices 2019Way too many grapes and continuing flat demand may lead to lower wine prices 2019

At the end of the summer, I was talking to an official for one of the big grape grower trade groups. I asked what he thought wine prices would do through the end of the year, as well as into 2020.

“Wine prices are coming down,” he said. How can that be, I asked. Because, of course, premiumization — its reason for being that wine prices are never going down again.

He laughed. “That may be,” he said. “But when you have too many grapes, which we do, and flat demand, which we do, wine prices come down. There’s nothing premiumization can do about it.”

The trade group official was not alone in his take on wine prices 2019. Whenever I interview a retailer or producer, I always ask about business. And their responses over the past nine months have not been nearly as optimistic as the last couple of years – and certainly not as optimistic as the official wine business position: “Ever more wine sold at ever high prices!”

The consensus: Business may not be bad yet, but it’s certainly slowing. And, no, this isn’t a highly scientific survey process, and yes, it’s overwhelmingly anecdotal. But, like the Wine Curmudgeon Wine Sample Index, it rarely steers me wrong. Because other signs point to the same thing:

Reports one trade website: California “supply levels remain higher than ideal and therefore the market remains favourable to buyers, with wineries quoting the lowest bulk wine prices in 5 years.” In other words, lots of grapes in the supply chain, and not too many buyers, so lower grape prices.

And that’s because the 2018 harvest was record-breaking, and the 2019 harvest may be equally as gigantic.

• And we all know about flat demand. In 2018, about one-fifth of regular U.S. wine drinkers were older than 65, compared to 16 percent in 2015. But the youngest regular wine consumers, ages 21-24, are decreasing, dropping 13 percent from 2015.

• Canceled grape contracts. Large producers are refusing to buy grapes they agreed to buy, ostensibly because of smoke damage from the 2018 wine country wildfires. But there’s a suspicion that the wildfires had nothing to do with the cancellations; rather, it’s because the producers already have too many grapes and don’t need any more.

• Wholesale alcohol inventories, measured in dollars, are at an all-time high, according to the U.S. Census Bureau. This could be nothing more than a side effect of premiumization – the same amount of wine in warehouses, but since it costs more, its value is setting records. Or it could mean there is a lot of wine stacking up because no one wants to buy it.

Last week’s tariff news should only make things worse, since it will raise prices for many European wines, while most cheaper French and Spanish wines could disappear from U.S. shelves. Which will further cut demand and increase the overall supply.

If, in fact, wine prices are coming down, will it happen in time for the holidays? Probably not, though I’m willing to bet we could find terrific deals as producers, distributors, and wholesalers try to get rid of select wines they have too much of.

The real selloff may come at the beginning of next year, and especially if the holiday season is as slow as it looks like it will be. And then, finally, we could be able to see the beginning of the end of premiumization.

More abut wine prices 2019:
Wine prices 2019
2019 SVB wine report
The biggest factor in California wine prices

Photo: “Wine section of a supermarket” by piropiro3 is licensed under CC BY 2.0 

Higher wine prices, retailer margins, and premiumization

wine pricesWine price data may show that retailers are absorbing some of the higher prices that come with premiumization

The theory behind premiumization is that wine has become more expensive – not necessarily because wine prices have increased, but because we’re buying more expensive wine. Yes, it’s a fine distinction, but it’s one that the experts insist on.

And there may be some evidence to back that up.

What I’ve found, with expert guidance from Tarek Abdallah, PhD, an assistant professor of operations management at Northwestern University’s Kellogg School of Management in Evanston, Ill., is that retailers haven’t been raising prices as much as wholesalers have. In fact, says Abdallah, the numbers show that retailers have been getting squeezed since the end of the recession.

Since 2009, wholesalers have raised the prices they charge retailers by an average of 2.25 percent a year. But retailers have only increased the prices they charge consumers by three-quarters of that amount, about 1.84 percent annually. In other words, retailers are absorbing some of the price increases.

Abdallah points to two sets of data compiled by the federal government to demonstrate this: First, the consumer price index for alcoholic beverages, a derivative of the better known overall consumer price index, the standard measure of U.S. inflation. Second, the wholesaler producer price index for alcoholic beverages, which measures what the second tier charges for its products.

What’s the catch?

The caveat here: Neither index breaks out wine; rather, each tracks combined sales of beer, spirits, and wine. So we can’t be certain that wine prices by themselves are acting this way. But, says Abdallah, the data is broad enough and consistent enough so that we can be reasonably certain.

Which brings us back to the idea that wine price increases aren’t the most important part of premiumization. How can they be if retailers are working to minimize those increases?

This plays into the sense that producers, rather than raising prices for existing products, are bringing new, more expensive products to market. They want us to buy their new $15 wine instead of the old $10 wine, marketing the new wine as better than the old wine because it costs more – even if it isn’t necessarily better.

And retailers seem to be hedging their bets and not charging the full $15 for the new wine — and maybe for just that reason.

More about premiumization:
Premiumization be damned: $139.36 for 14 ½ bottles of cheap wine
Wine prices, razor blades, and premiumization
“Reasonably priced at $40:” Wine premiumization is out of control