Nevertheless, Miller Lite came up with this commercial, which says that women should take its product to a chardonnay event. My guess is that wine is seen as a Millennial drink, and someone found a study that said Millennials are forgoing Big Beer for wine. Perhaps one of our visitors with ad agency experience can explain why chardonnay is a target, given that old white guys drink Miller Lite.
• Not so fast, Big Wine: A group of Australian family producers, angered by Big Wine companies who market their “family” roots, have issued a furious denunciation of the practice. “I’m really sick of the latest trend for corporate misuse of the term ‘family’ when promoting wine brands that were sold by the family founders eons ago and conning wine loving consumers and trade alike,” Robert Hill-Smith, the fifth-generation vigneron at Australia’s oldest family-owned winery, Yalumba, told the The Weekend Australian newspaper. Hill-Smith said Big Wine subsidiaries portraying themselves as family companies undermined the validity of family-owned businesses actually owned by families. This is a fascinating story; wineries never air this sort of thing in public, though they say it in private all the time. It also speaks to Big Wine’s need not to be seen as big, something that never seems to bother General Foods or Procter & Gamble. Why that is I’ll leave to the experts.
• Score one for the Italians: The Wine Curmudgeon regularly bemoans the lack of wine education in the U.S., which is why this Italian proposal is so impressive: Children 6 to 13 would spend one hour a week learning about Italy’s wine industry as part of the national education curriculum. “We’re not trying to teach kids to drink – although even if we were it wouldn’t be so bad,” said the sponsor of the legislation. “It’s been shown that knowledge creates responsible drinkers. But this is just an extra subject that will enrich the education of our students. We make children study music in school without expecting them to become musicians.” Hopefully, the various neo-Prohibitionists who are trying to roll back U.S. drinking laws will note this and pause for a moment.
• Won’t they ever learn? A website called Elite Daily, with 2.8 million Facebook likes, ran a piece about how to buy wine in a restaurant and impress your date in the process. The story, supposedly written with advice from a top wine retailer, repeats almost every misconception about restaurant wine I have lamented since the blog started. Gruner veltliner! Plus, it recommends buying white wine from France’s Loire, which is a wonderful idea save for the fact that many wine lists, and especially those at mid-priced restaurants, have little, if any, white Loire. Or we should buy cabernet franc from Spain, which hardly exists. Or we should buy a wine called Rhone Rangers, which is not a wine, but a group of producers in California who make wines with Rhone grapes. Maybe we can enroll the people at Elite Daily in the Italian school wine educations classes.
“It seemed really counterproductive to be competing against each other since we already dominate the market, most of our wines taste exactly alike, and consumers don’t know the difference anyway,” said a spokeswoman for the new company, which will close all of its facilities but one and fire all of its employees except those a personnel review deems “absolutely necessary.” In fact, the spokeswoman used the words “synergies” and “cost savings efficiences” 173 times during the news conference that announced the merger.
The new CalConTreas Group will revolutionize wine production by taking advantage of those synergies and cost savings efficiencies, said the spokewoman. For example, instead of the thousands and thousands of tanks and barrels each producer uses, the single The GalConTreas Group winery will have just one, factory sized, with thousands of separate spigots for each brand the new company produces.
Said the spokeswoman: “Red, white, varietal character? Does the average consumer really care? Or understand any of that wine writer foolishness? Of course not. All they want is smooth and fruity wine, and baby, that’s what we’re going to give them. And we’re going to premiumize it!”
Reaction to the announcement:
• The U.S. Justice Department and Federal Trade Commission immediately approved the merger. Their only concern? That it included just four of the biggest companies, instead of the eight biggest and their 60 percent market share. “Because, if you’re going to create a monopoly, what’s the point of not doing it right?” asked a Justice attorney.
• Fred Franzia, whose Bronco Wine is the fifth biggest producer in the country, announced Bronco would merge with itself. “If those people think they can get away with this without taking Fred Franzia into account, they’ve got another thing coming,” he said.
• The Wine Spectator said it would produce a special section in upcoming magazines featuring The CalConTreas Group wines, and that each of the new company’s wines would get 92 points.
• The eight biggest distributors in the country, which control two-thirds of the market, said they would merge into one company to better serve The GalConTreas Group, and used the words “synergies” and “cost savings efficiencies” 342 times in their announcement.
Nevertheless, Miller Lite came up with this commercial, which says that women should take its product to a chardonnay event. Perhaps one of our visitors with ad agency experience can explain why chardonnay is a target, given that old white guys drink Miller Lite.
Three sets of numbers — two public, one passed to me by my source in Big Wine — show just how dominant Big Wine continues to be, and how Big Wine growth will affect everything we drink.
The first public chart, reproduced here, was compiled by Lew Perdue at Wine Industry Insight, and shows that the three biggest companies — E&J Gallo, Constellation, and The Wine Group — control almost half of the U.S. wine market. In this, the eight biggest companies sell 60 percent of the wine in this country, which leaves more than 7,500 wineries to fight over the other 40 percent.
Those are almost the same numbers in the second public study, the annual Wine Business Monthly top 30 producers list, which are similar to the finding in the magazine’s 2014 report, when Gallo, Constellation, and The Wine Group controlled half the U.S. market. Meanwhile, the top 30 companies in the 2016 report accounted for 74 percent of all the wine sold in the U.S. Interestingly, that’s less than they reported in 2014, when the top 30 sold 90 percent of the wine; chalk that up to bigger companies, like Diageo, selling their brands to smaller companies.
It’s important to understand how big big is. First, the Wine Business Monthly top 30 total just .04 percent of all U.S. wineries, which makes the infamous One Percent look like an all-inclusive kumbaya sing-along. Second, Jackson Family, which makes Kendall Jackson and is about as close to a national brand as wine has, isn’t one of the half-dozen biggest producers in the U.S. It’s eighth in the Wine Industry Insight chart and ninth in Wine Business Monthly’s rankings with almost six million cases. That’s still big, but the biggest companies are so gigantic that even some of their brands, like Gallo’s Barefoot, sell more than all of the Jackson Family portfolio.
In other words, every time we buy wine, the odds are better than not that we’re buying a Big Wine product even if we don’t want to. My colleagues in the Winestream Media pooh pooh this whenever I write it, arguing that wine drinkers have more choice than that. What about those other 7,500 wineries? The catch, and what they don’t understand, is that most of us don’t shop in places that sell wine from the other 7,500. We shop at Costco and Walmart and grocery stores, and those retailers account for almost half the wine sold in the U.S.
Case in point: Sales statistics for 2015 that my source in Big Wine passed to me for 10 U.S. states (none of which are California), and where Big Wine (defined as a company that appears in either the Howard study or the Wine Business Monthly top 30) dominates at all prices:
? 9 of the 15 best-selling wines between $15 and $20 are from Big Wine, including La Crema (Jackson Family), Louis Martini (Gallo), and Meomi (Constellation).
? 12 of the 20 best-selling wines between $12 and $15 are from Big Wine, including Wild Horse (Constellation), Kendall Jackson (Jackson Family), and Chateau Ste. Michelle (Altria). And I didn’t include Hess and Rodney Strong, both on the Wine Business Monthly Top 30 list but family run.
? All of the 20 best-selling wines between $9 and $12 are from Big Wine, including Menage a Trois (Trinchero), Cupcake (The Wine Group), and Apothic (Gallo).
? Treasury gets Diageo wine: Get ready for more Big Wine news in the wake of Diageo selling its handful of wine brands to Australia’s Treasury Wine Estates. The $351 million deal gives Treasury four million cases worth of wine in the U.S., which may move it into the top five of U.S. producers. The key is what Treasury will do with the brands, which include Sterling: Will it keep all of them, or sell some it sees as too cheap for its new focus on wine costing more than $10? Also, the purchase was as much about getting Diageo’s infrastructure in the U.S., including its bottling lines. Finally, there is this great quote from Treasury boss Michael Clark: “We remain committed to our strategic road map of transitioning our business from an order-taking agricultural company to a brand-led and capital-light marketing organization.” If anyone can explain what that means, I’ll send you a copy of the cheap wine book.
? It’s all about Italy: We can argue about what wine consumers want, but we can’t argue with the numbers. Hence, Italy’s continued success in selling wine in the U.S., accounting for one-third of all imported wine in dollar terms the first six months of this year. The big losers? Australia, still, as well as Chile and Argentina. Americans want pinot grigio and Prosecco, and Italy is happy to give it to us at mostly cheap prices. The Aussies, on the other hand have little that anyone wants, as sales fell seven percent in dollars and six percent in volume. How the mighty have fallen.
? The French are drinking again: Decanter reports that a government survey found a six percent increase in “occasional wine drinkers,” who accounted for half of the respondents. This is important news in a country where wine consumption has declined steadily for decades. This group included younger drinkers and women, who say they were more likely to have one or two glasses of wine a week. To put this in perspective, that one or two glasses of wine a week is more than bottle a month, which means an occasional wine drinker in France drinks more than the average adult in the U.S.
? This is how hip rose has become: California winemaker Dave Phinney’s Locations wines are huge critical and popular hits — wines made in different parts of the world (even Texas) with top-notch winemakers under Phinney’s supervision. They’re known for the big country initial on the label — F from France, I for Italy, and so forth, and as huge, alcoholic fruit bombs — not something I especially enjoy. So what’s the newest Locations wine? A 15 percent French Locations rose, because if the hipsters want brose, Phinney is going to give it to them. The wine lists for $17; given the price and the high alcohol, I couldn’t bring myself to buy it for a review. Even the Wine Curmudgeon has his limits. But if someone wants to write a review, I’ll be happy to run it on the blog, even if you like the wine.
? The big get bigger — or something: Diageo, one of the biggest drinks companies in the world, has decided that wine isn’t big enough for them, and will probably sell the the handful of wine companies that it owns. That these are huge brands, like Sterling and Rosenblum, makes the decision even more intriguing, since Diageo is a top 10 wine company in the U.S. But Diageo, based in Britain, wants to boost its stock price and, as the financial types like to say, “reassure investors” that it wants to make more money. This has always baffled me; what company doesn’t want to make more money? If this happens, look for Sterling and its Diageo brethren to go to some sort of leveraged buyout company, which will cut costs and take the brands private.