Tag Archives: Big Wine

Winebits 643: Wine archaeology, consolidation, periods and spaces

wine archaelogyThis week’s (mostly) wine news: Archaeologists recover centuries-old wine bottles, plus impending wine industry consolidation and whether a period at the end of a sentence gets two spaces or one

Old wine bottles: Regular visitors here know how excited the Wine Curmudgeon gets about wine archaeology. So there’s this: Scottish researchers have uncovered a massive mid-18th century glass factory whose cone furnaces once towered over the port district of Leith and supplied wine and whisky bottles to all corners of the British Empire. The Wine Spectator reports that the factory, near Edinburgh, may have produced as many as 1 million bottles a week. The factory’s downfall? The American Revolution, which cost the factory most of its business with the newly-independent United States.

More consolidation on the way? The Wine Economist tells us to expect consolidation among wineries and wholesalers sooner rather than later, thanks to the coronavirus pandemic. Writes Mike Veseth: “Although much is lost in generalization, there is a tendency for larger distributors to focus their value chain on bigger retailers and larger wine producers.  Scale matches scale matches scale. This pattern magnifies an on-going movement to a two-speed wine market with those in the middle range (both domestic and imports) squeezed in the process.” This is not good news for consumers in wine business, which is already top heavy: the five biggest wineries make more than three-quarters of the wine sold in the U.S., while the three biggest distributors control more than half of the market. Fewer and bigger companies will restrict our choices even more.

Periods and spaces: This item, courtesy of Lifehacker, has nothing to do with wine. But it’s a welcome respite from wine and the coronavirus – a discussion dealing with a significant post-modern writerly conundrum: How many spaces follow a period at the end of a sentence? The answer, of course, is one. The confusion comes from typewriter days, when we used two spaces – period, space bar, space bar – to set the new sentence off from the old. But post-modern word processors don’t need our help to set the new off from the old. Still, the argument comes up every once in a while, and the Wine Curmudgeon is always happy to remind younger consumers how much silliness their elders get into.

Photo: “Wine” by CyberMacs is licensed under CC BY-NC-SA 2.0 

Winebits 641: The “Big Wine makes mega-deals” edition

international styleThis week’s wine news: Constellation Brands and E&J Gallo finalize their cheap wine blockbuster, plus Geyser Peak is sold again and Treasury wants to set Penfolds free

Finally done? Constellation Brands’ $1.1 billion sale of its low-price wine labels to E. & J. Gallo is expected to close by the end of June, despite the coronavirus pandemic, reports the Press-Democrat website. The deal will send almost all of Constellation’s $10 wines to Gallo, including Black Box, Ravenswood, Clos du Bois, and Mark West, as well as vineyards and wineries in California and New York. The original April 2019 deal, worth $1.7 billion, had to be revised after U.S. regulators objected.

Poor Geyser Peak: When I started writing the blog, Geyser Peak’s $10 sauvigngon blanc was one of the most dependable cheap wines on the market. But that was also several owners ago, and quality has never been the same. So it’s not necessarily bad news that the brand has been sold once again. The current owner, Australia’s Accolade Wines, will sell Geyser Peak, Atlas Peak, XYZin and Outlot to something called 2 Bears LLC. No word on who is behind 2 Bears.

Whither Penfolds? Australia’s Treasury Wine Estates, one of the two or three largest producers in the world, has been feuding with stock analysts for the past year or so, defending what the analysts have been calling the company’s poor performance. So Treasury may spin off Penfolds, one of the world’s great wine brands and home to the legendary Penfolds Grange (which I’ve been lucky enough to taste and so can attest to its greatness). Whether this pleases anyone in the shadow boxing world of financial analysis is anyone’s guess, but it points to the pressures Treasury faces in a world where people drink less wine and Big Wine companies are being urged to shed brands.

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

ancient rome

Ancient Rome and its surprisingly sophisticated wine business

ancient romeAncient Rome, and how its wine business dealt with natural disasters, mass production, and wine critics

Does the following sound familiar?

They refined production by using barrels and cultivation techniques that allowed them to make more for less cost. … experts estimate that a bottle was being consumed each day for every citizen.

No, this isn’t a description of Big Wine and the U.S. wine boom that lasted from the 1980s to the beginning of the 21st century. It’s the role of wine during the Roman Empire, about 1,800 years before any European had ever heard of Napa or Sonoma.

The more things change, right?

In fact, the parallels between Roman culture and 21st century California wine business are more than spooky:

• The Roman Empire’s version of Napa Valley, perhaps in and around Pompeii. The city, near what is now Naples on the Mediterranean, was a key Roman wine center. When it was wiped out in 79 when the Mount Vesuvius volcano erupted, “the vineyards were destroyed, and the cost rose so rapidly that only the rich could afford it.”

• High land values. In 92, Emperor Domitian banned new vineyards in Rome and ordered the uprooting of half of the vineyards in use so grain could be grown. Farmers had been planting vines and taking out grain to replace the vineyards lost in Pompeii. Because, of course, vineyard land had become more valuable.

• Their own Winestream Media. Pliny the Elder, who was killed in Pompeii, was among the most important Roman wine critics, and not just because he wrote: “In vino veritas (in wine there is truth).” Book 14 of his 37-volume Naturalis Historia covered wine, which included a ranking of Rome’s top vineyards. Book 17 discussed viticulture and defended the notion of terroir. And Roman critics, as I discussed in the cheap wine book, were notorious for their disdain for the wine most people could afford to buy.

Slider photo courtesy of Aveine, using a Creative Commons license

More about ancient wine:
Ancient Hebrews: “If there is any wine send it”
A brief history of wine, wine writing, and the wine business