Tag Archives: Big Wine

Winebits 324: WC favorites edition

Winebits 324: WC favorites edition
Will empty tables force restaurants to change the way they approach wine?

Because the things that fascinate me about wine and that consumers need to know — and which rarely include toasty and oaky — keep making news:

? Distributor clout, once again: When in doubt, they get out the checkbooks, reports an Ohio newspaper group. The state’s beer and wine wholesalers donated $146,000 to Buckeye state lawmakers around the time the Ohio legislature passed a bill — apparently, without anyone knowing — that made it illegal for the world’s biggest brewer to buy more distributorships in the state. In addition, said the story, “both Republicans and Democrats benefited from the wholesalers’ cash. And donations sometimes rose noticeably around the time a key vote was scheduled.” My favorite part of the article is the quote that says the distributors, who have a constitutionally-protected monopoly that all but guarantees them profits, were saving Ohioans from the nefarious actions of an evil multi-national beer company. Talk about the pot calling the kettle black.

? Restaurant sales still slow: The restaurant business continues to struggle, says this story from Nation’s Restaurant News, and no one is quite sure why. Is it the result of the worst winter in 40 years? Is it a hangover from the recession, which never really ended for all but the most high-end restaurants? Is it a fundamental shift in the way Americans eat? The restaurant business matters in wine, as regular visitors here know, because restaurants go out of their way to hurt wine. And the slump in restaurant sales, which has lasted more than five years, may force changes in the way restaurants deal with wine, which means better quality and lower prices. Or so some very smart analysts have told me.

? The biggest wine companies: Mike Veseth at the Wine Economist looks at disintermediation, an economic term that refers to the specialization of labor. In this case, it’s about the number of employees needed to to make a case of wine. Not surprisingly, the formula is not as simple as it sounds, and speaks to the way post-modern business works — outsourcing, contractors, and the like. Many of the biggest wine companies don’t own vineyards or even wineries; one company, Castle Rock, produced 550,000 cases with just nine employees. “With product chain disintermediation, the number of people actually employed by a winery can be surprisingly small with that tiny workforce specializing in coordinating the various firms and contractors that make up the links in the chain,” wrote Veseth. What this means for consumers? Less expensive wine, of course, since disintermediation lowers the cost of production.

Image courtesy of Berenika, via stock.xchng, using a Creative Commons license

Marketing foolishness, or ‘Yes, but what does the wine taste like?’

One of the most important developments in wine, and especially for consumers, is the upsurge in marketing. Yes, the business always marketed its product, but the approach usually focused on the wine.

No more. Today, it ?s almost all about wine as lifestyle product. If the following are any indication of what ?s to come, wine drinkers are in deep, deep trouble.

? From Trinchero Family Estates, one of the Big Six wine producers, for a new product called Fancy Pants: Fancy Pants has certainly struck a chord with consumers. It ?s a memorable brand name with a stunning package, but more than anything Fancy Pants is about bringing ?fun ? and ?fancy ? to any occasion. ?

? Also from Trinchero, for its best-selling Menage a Trois line: ?As a seductive wine, M nage Trois wines are a perfect fit to watch ?The White Queen ? series. STARZ urges viewers of ?The White Queen ? to ?choose your side, ? and at M nage a Trois, we offer our consumers the chance to ?choose your wine, ? with a portfolio that now includes 11 different varietals. ?

I was going to write something snarky about each blurb, but what ?s the point? Each is already snarky enough, and that certainly wasn ?t the intention. Sadly, the people who wrote these, like this person, probably figure they ?re award winners.

One day, perhaps, the Wine Curmudgeon will figure out why some producers treat wine drinkers like we ?re idiots. Because I sure don ?t understand it now.

Big Wine and the search for authenticity

One of the most important changes in the California wine business over the past decade has been the rise of Big Wine and the role it has played in the growth of better quality cheap wine. It ?s a story that has not been told, and why I spent a lot of time writing about it in The Cheap Wine book. Otherwise, many of us, myself included, wouldn ?t be here.

It ?s a subject that David Michalski of the Unversity of California-Davis handles admirably in the spring issue of Boom. It ?s longish and a trifle academic in tone, but stay with it. Michalski reviews four books centered around the idea of authenticity in wine, but to get there he must explain why authenticity has become an issue. Because, before the 1980s, the very nature of wine was authenticity. French wine tasted of France, Italian of Italy, and so forth.

Then, writes Michalski, came California.

This manifesto for a new taste, one in which California figured centrally, resonated with a new generation of wine-drinkers. It was a message tailor-fit for an industry looking to reinvent itself, too, as California positioned itself in opposition to the snobbery of Old World wine. And although many of the so-called new breed wineries had close connections to the older generation, the image of California as an innovator and a challenger forever changed a trade once dominated by European markets and taste regimes. It opened wine to a wider global audience. It gave encouragement to developing wine regions across the globe. And it gave license to winemakers, even those back in Europe, to experiment with craft and science in the service of wine beauty.

This, says Michalski, is the double-edged sword of Big Wine and globalization and a result of what happened in California ? cheaper wines that make wine more accessible and democratic, but by their nature lack authenticity and the terroir that is part of authenticity.

In this, he finds a middle ground that not many others have discovered, though one I share: That globalization does not mean the end of authenticity, and that it ?s possible for Big Wine to co-exist with it. ?A fuller study of the way terroir works in today ?s economy reveals the importance of local branding within the global economy, a phenomenon scholars of consumption call glocalization, ? he writes.

Yes, a crappy word, but a concept that explains a lot. It explains how Sicilian winemakers can use modern techniques developed in California to produce high-quality wine that still tastes of Sicily. It ?s how Gascon wine, barely a consideration outside parts of France a decade ago, can be sold by large U.S. retailers who wouldn ?t carry it unless there was a demand for it. And it helps account for local wine, which wouldn ?t exist without the improvements in viticulture and enology that started in California 40 years ago.

Big Wine: 5 companies, 60 percent of sales, 200 brands

Call it serendipity. Shortly after my blog posts about Big Wine at the end of last year, a Michigan State study offered even more data about how Big Wine works and how it has changed the business.

The paper, “Concentration in the U.S. Wine Industry,” was compiled by Phil Howard, an associate professor who studies consolidation. After doing soft drinks and beer, he told me, wine was the next logical step.

“And even I was surprised by what I found,” Howard said. “Wine was much different than what I thought. If you go to the stores, it seems like you have all these choices, because the shared ownership is not very apparent. We wanted to help consumers understand what they were really buying.”

The study consists of two parts — third-party sales data and store visits from Howard and his graduate assistants. The former, displayed in some very nifty charts on the study website, paints a fascinating picture of market share as well who owns what labels. Three companies — E&J Gallo, The Wine Group, and Constellation Brands — account for more than half of wine sales in the U.S.

This is my favorite chart. For example, you can see how important Cook’s champagne is to Constellation Brands (about as much as Robert Mondavi, believe it not), and that Bronco, which makes Two-buck Chuck, has a bigger market share than much larger companies like Diageo and Altria, which owns Chateau Ste. Michelle.

The store visit results were even more fascinating. Howard and his graduate assistants counted wine at 20 Michigan retailers, where they found more than 3,600 unique varieties (where chardonnay was one variety, merlot another, and so forth). Those wines came from more than 1,000 different “companies,” although, as the study noted, the “top firms each contribute to an illusion of diverse ownership by offering dozens of brands (and hundreds of varieties), many of which do not clearly indicate the parent company on their label.”

The reason for that, said Howard, is not difficult to figure out: “A company known for producing cheap wine and not quality wine does not necessarily want to be identified with a premium, high-end brand.”

Other key points:

• The only unique varieties of wine found in more than half the retailers were Clos du Bois chardonnay, from Constellation, and Cavit pinot grigio. In other words, wine has no national brands, in the way every retailer in beer carries Bud Light and Coke and Pepsi are in every store that sells soft drinks.

• Half of the stores carried the same six varieties — Blackstone merlot, Ravenswood zinfandel, and Woodbridge chardonnay, all from Constellation, and Apothic red, Barefoot chardonnay, and Ecco Domani pinot grigio, all from Gallo. What this says about retailer selection, customer preference, and distributor clout is worth a second study.

• The top six wine companies in the U.S. accounted for more than one-fifth of the varieties found in the stores. That it isn’t higher speaks to retailer determination to carry other brands, something else not seen in soft drinks or beer.

• Howard said that the variety and number of wines, as impressive as it is, would probably be even more impressive in states that are less regulated than Michigan, which has one of the tightest three-tier systems in the country.

Finally, though Big Wine isn’t as top-heavy as Big Beer, it may be headed that way, said Howard. He said the wine business resembles the beer business in the 1950s, when 30 companies dominated the market. Today, just two beer producers — AB InBev and Molson Coors — account for three-quarters of all sales.

Big wine companies and wine quality, part II

Big-CompaniesThis is the second of two parts looking at consolidation in the wine business and the rise of the giant producer — a handful of which dominate the U.S. wine business. Today, advice on how to tell which multi-national made the wine you drink. The first part, which ran on Dec. 13, looked at company size and why it matters.

What do the Barefoot, Cupcake and Two-buck Chuck wines have in common? Each are labels owned by one of the largest wine companies in the country, but you can’t tell that by looking at the label.

Nowhere does it say that E&J Gallo owns Barefoot, perhaps the best-selling wine in the U.S. Or that The Wine Group makes Cupcake through its Underdog division. Or that Two-buck Chuck, the Charles Shaw wine sold at Trader Joe’s, is one of dozens of labels produced by Bronco.

That’s because there is no legal requirement to do so, and most wine companies aren’t interested in that sort of thing. So what ?s a curious consumer to do? Googling the wine while standing in the store aisle isn’t the most efficient use of time. Rather, look for clues on the back label.

Look for something like “Produced and bottled,”  “Vinted and bottled,” or “Imported and bottled.” The location that follows usually identifies the parent company, so that almost all Gallo-owned brands say Modesto, Calif. In addition, the “imported” line may have a company name similar to the name of the multi-national that owns the brand, so that CWUS is part of Constellation Brands, the second-largest U.S. wine company.

The following list is far from complete, given that wine companies acquire and sell brands the way baseball teams trade players. And not everyone uses these pointers. But it should get you started — and I welcome additions to it:

Gallo: More best-sellers than you can imagine, like Apothic and Dancing Bull, and most say Modesto.

The Wine Group, whose brands include Cupcake, Big House, Fish Eye and Flip-Flop: Look for Livermore or Ripon, Calif., on the back label. There may also be a reference to the Underdog division.

Jackson Family, which makes not only its trademark Kendall Jackson, but Murphy-Goode, Cambria and Freemark Abbey, often has Santa Rosa, Calif., on the back label.

 Accolade Wines, which owns Geyser Peak and Atlas Peak, as well as Aussie labels Banrock and Hardys. may have Healdsburg, Calif., on some older bottles (the company has since moved to Napa).

Bronco: Two-buck Chuck’s parent has Ceres or Napa for location; its brands include Salmon Creek, Forrest Glen, and Napa Ridge..

Constellation: The CWUS identifies imported labels like Kim Crawford, while some imports, like Monkey Bay, will say Madera, Calif. Domestic wines will say Woodbridge or Acampo (and a tip o’ the Curmudgeon’s fedora to blog visitor Russ Winton for this).

Chateau Ste. Michelle: Look for Woodinville, Wash., as well as Patterson, Wash. for secondary brands like Columbia-Crest and 14 Hands.

Treasury: This Australian company identifies its imported wines, like Rosemount, Penfolds and Lindeman ?s, with the initials TWE. It ?s more difficult to tell its U.S. brands, like Beringer and Meridian.

Diageo: Its U.S. division, Diageo Chateau Estate Wines, owns Beaulieu, Sterling, and Rosenblum. Look for Sonoma, which isn’t much help, or some form of the initials DCEW.