This week’s wine news: Beaujolais legend Georges Duboeuf dies, plus the Italian Wine Guy critiques wine writing, and Canada’s legal weed bubble bursts
• An icon dies: Georges Duboeuf, one of the icons of French wine, died on Saturday. He was 86. Dubouef, known as the Pope of Beaujolais, almost single-handedly made the release of Beaujolais Nouveau an international event every November. Said one of his competitors: He “was responsible for “raising the Beaujolais flag all over the world. He had a nose, an intuition, [he was] a step ahead of everyone.”
• “A pitiful thing:” Alfonso Cevola, the Italian Wine Guy, doesn’t mince words in assessing the state of wine writing: “Wine writing has become a pitiful thing. There are so many bad articles about wine, misspelled, written from a perspective that sounds more like someone is pushing a (p.r.) agenda rather than trying to educate the readers. …But real writing, real good writing?” Cevoola writes this as someone who has been around wine writing for decades, both as a retailer and wholesaler and as a successful wine writing. So his opinion is worth pondering.
• Not so fast: Legal weed in Canada was going to make everyone rich when it debuted a year ago – and the wine business was more than a little worried about how it would hurt sales. Turns out, hardly at all, reports the BBC, with Canadians sill buying pot from the “black market.” Or, as we used to say, “you know, the guy down the street, who knows your friend.” Says the story: “Statistics Canada estimates that about 75% of cannabis users still use illegal cannabis,” since the guy down the street is cheaper and more convenient. Which, in retrospect, seems quite obvious.
Damn those Europeans and their snotty wine. No self-respecting American likes that junk.
The current 25 percent European wine tariff, which may turn into a 100 percent covering all European wine, makes deciphering wine prices 2020 a sad and painful duty
Forecasting wine prices 2020 should have been easy. Combine too many grapes in California with fewer wine drinkers in the U.S. and Europe, and throw in the beginning of the end of premiumization. The result? Steady to lower wine prices, and maybe a lot lower, by the end of the year.
Tariffs artificially raise prices, and economic theory says consumers then switch to cheaper, similar domestic products. But the similar products are not as cheap as the original, so the consumer is paying to prop up a domestic industry. Which pretty much explains the popularity of tariffs on goods like steel.
But there are very few $13 California wines that are similar to $10 French or Spanish wines. Wine isn’t finished steel. So in my search for a cheaper product, economic theory says I could well move from wine to something even cheaper, like beer or White Claw — especially if I’m buying wine on price. Which is the dark, dirty secret of the wine business.
In this, the tariff will push wine prices 2020 up, until demand weakens so much that no one will buy wine at the tariff-inflated prices. Then we will have shelves full of wine, including domestic, way too many grapes, and even weaker demand than before. How much fun will that be?
In this, the 100 percent tariff would come close to destroying the European wine business while wreaking havoc on U.S. wine retailing, distribution, and importing. That’s because the U.S. is the EUs biggest wine market, accounting for more than one-quarter of its exports. The tariff would all but eliminate the market for European wine in this country; who’s going to pay $30 for a $15 bottle? It would also lead to bankruptcies, layoffs, and business closings among retailers, importers, and distributors. That includes the largest wholesalers, who, I’m told, are just as worried about the end of the French wine market in the U.S. as their smallest competitors.
The 100 percent tariff is nothing but spite, a finger in the eye of the EU for no legitimate reason by a Trump administration that apparently has no understanding of economics or tariffs. For it, it’s easier to tweet trade war bravado than to understand the implications of the Smoot-Hawley tariff in the 1930s. That U.S. citizens will suffer far more from the tariff than U.S. aircraft companies will benefit is beyond their comprehension.
And it’s not like U.S. aircraft companies need the help. Boeing, the focus of the original World Trade Organization ruling that led to the 25 percent levy, had $10.5 billion profit in 2018. That’s larger than the gross domestic product of 30 countries, and that’s just Boeing’s profit. Its revenue was $101 billion, which would make it the 177th biggest country in the world by GDP.
But Boeing gets a boost, while many U.S. wine retailers will get to go out of business. That seems fair, yes? The owner of a small wine shop in the Dallas area, with a wife and child, can ponder his fate (as well as ousted Boeing CEO Dennis Muilenburg’s $62 million farewell package) while he looks for work.
You can comment on the proposed 100 percent tariff — go to www.regulations.gov, enter docket number “USTR-2019-0003” and click search. Then, click “comment now” and explain why this is not a good idea. Comments are open until Jan. 13.
And those of you who disagree with me – you’re more than welcome to pay $20 for $10 wine. Enjoy the privilege.
• Premiumization will continue until it doesn’t. This approach is scarily similar to what happened to the newspaper business. In the late 1980s, many industry leaders knew that the days of throwing papers from cars at 6 a.m. were numbered. I was even told that in a meeting. But no one did anything about it, because newspapers were still obscenely profitable and the industry had so much money tied up in printing presses. The smart people in the wine business know premiumization is on its last legs, but they don’t have another plan and they’re still making money, so it’s easier not to worry about what’s next.
• More wine-like products – bourbon barrel wine, fruit-flavored wine, and the like. Because, of course, White Claw. The irony is that producers see White Claw-like products as their chance to attract younger wine drinkers, when White Claw’s success is about its cost and low alcohol. Which, of course, has nothing to do with wine. It’s also worth noting that White Claw and its ilk are hurting beer more than wine, and that not just younger people drink it.
• Neo-Prohibitionism becomes an accepted part of American life. In other words, this will be the year when we find out Dry January isn’t just a story in a woman’s magazine. The evidence has been there for a long time, not that anyone in the wine business paid much attention. But when designated drivers, mocktails, and all the rest are as common as smoking and drunk driving were when I was a teenager, then the world has changed significantly. And the wine business better figure that out, sooner rather than later.
• The tariff. Or tariffs, as the case may be, since the threat of a more inclusive 100 percent levy is hanging over our heads. I’ll go into more detail in Monday’s 2020 wine prices post. But know that as bad as the 25 percent tariff will be, the 100 percent tariff could destroy the European wine business and wreak havoc in the U.S. And, as I have noted many times before, spite is not a good enough reason to do either.
• More three-tier excitement. That’s because 2019 saw a couple of significant legal decisions, and 2020 promises even more. My best guess, after talking to attorneys who deal with this stuff, is that there is momentum for change in the way beer, wine, and spirits are sold in the U.S. So there’s a chance that Internet sales could eventually become legal. And there’s also a chance (though much smaller) that some states may eventually make it possible for wines to be sold at retail without a wholesaler. This would vastly increase choice. Having said that, those things won’t happen immediately, and what we could see in 2020 are more legal decisions that continue to chip away at three-tier.
Thanks to everyone who left comments and sent emails with suggestions for the Hall of Fame. This year’s Hall has been among the most difficult ever to compile — not just because of the continuing decline in quality cheap wine, but because the tariff has wreaked havoc with price and availability.
The blog is off today for New Year’s, but will return tomorrow with our usual features. We’ll announce the third annual Wine Curmudgeon Cheap Wine of the Year a week from Thursday and the 2020 $10 Hall of Fame will post a week from from Friday.
Today, take 5 1/2 minutes out of your holiday for the legendary Buddy Guy, “Skin Deep,” and Playing for Change. I can’t think of too many better ways to start the year. (Video courtesy of Playing for Change).
This week’s wine news: The new Joy of Cooking does wine, plus bad news on the consumption front and the relationship between wine and God
• The Joy of Wine: The new version of the iconic Joy of Cooking has a terrific section on wine. It’s an outstanding introductory guide to making sense of wine as it relates to cooking — simply written, without too much winespeak, and it doesn’t talk down to its readers. Plus, it strikes a blow for screwcaps. This is my third Joy, and it’s easily the best of the three when it comes to wine. And it remains an indispensable cookbook. Highly recommended..
• More bad news: More of us are drinking spirits and fewer are drinking wine, and the difference between the two numbers is reaching historic levels. That’s according to a recent report by SipSource, which tracks wine and spirits sales by distributors. The report calls the difference “epic,” noting that “the divide is widening – the trend gap between wine and spirits has grown to +5.4 percent.” Even rose’s growth has slowed, something few of us expected.
• In search of God? A California religious studies professor says wine may help people deepen their connection to something bigger than themselves, including God. Stephen Lloyd-Moffett’s book “The Spirit of Wine, Finding Religion in the Fruit of the Vine,” says wine is often associated with social activity, sharing, and feelings of gratitude and deep thinking — all qualities associated with religion. This is an intriguing approach, and it does help put Catholicism’s use of wine into some sort of context. But I do wonder what the neo-Prohibitionists would say.