Wine trends 2018: The wine business prepares for a future where fewer of us drink wine, focusing on “authenticity” and making us believe smooth is good
• The search for authenticity, or, Can we scam the wine drinker? As Big Wine owns more brands, they’ll try to convince us these wines aren’t like other mass-produced consumer goods. Instead, they’ll insist that their plonk is “authentic,” part of a post-modern corporate effort to persuade us that “everyday consumerist choices — from organic heirloom tomatoes to eco-tourist yoga retreats to small-batch whiskey” will make the world a better place. So mass-produced grocery store brands that use every winemaking trick and tool possible will be described as artisan and boutique and hand-crafted – adjectives that are the opposite of what the wines are. Wine analyst Paul Mabray has written extensively about this, and we’re trying to arrange a podcast to talk about it.
• We’re stuck with smooth. The worst descriptor in the history of wine is smooth; first, because it means nothing – water is smooth – and second, because wine isn’t supposed to be smooth. It is supposed to have texture and structure and body. Nevertheless, we’ll see wine marketed as “a sumptuous, almost magical outcome of the growing season and winemaking process.” Or, even worse, have smooth in its name. Or, even worse still, cost $20 or more and be boring, alcohol-infused fruit juice that only a handpicked focus group could love.
• The continuing death spiral of restaurant wine. We’ve talked about this many times over the past 18 months, and it’s just going to get worse. One study says almost three-quarters of adults will make dinner at home at least four nights a week this year. Where does this leave restaurant wine? Getting pricier, less interesting, and in the hands of aging Baby Boomers, the only ones who can afford to buy it. I saw this at a tres chic Dallas restaurant in December. We were the only table with a bottle of wine, and I had to navigate a sad and overpriced wine list to find something drinkable. Meanwhile, there was only one glass of wine at the table of eight Millennials next to us, and one of the men was drinking Basil Hayden with dinner.
• Big Wine branches out. The biggest wine companies have been hedging their bets with craft beer and spirits for years, and will continue to do so. But they will also expand into legal weed; witness Constellation Brands’ $191 million investment in a Canadian medical marijuana company. And why not, given that U.S. wine consumption is flat? It’s worth knowing that Constellation’s most profitable business, even though it owns Meomi, Mondavi, and Kim Crawford, is beer and craft spirits.
• Winery consolidation continues, mostly among medium-sized companies. This means that your $20 California brand, once owned by a family or a small group, will become part of a larger company that owns a lot of $20 brands. These companies, like Precept Wine, Foley Family Wines, and the Crimson Wine Group, have been active for a decade or more and own some of the best-known names in U.S. wine. This is happening for two reasons: first, the original owners are ready to retire and no one in the family wants the business; and second, the U.S. wine business has evolved into a business just like anything else – becoming what one analyst has called corporatized. Which then leads to smooth and the authenticity scam.
The most important wine trends in 2017 won’t be the wine we drink, but who drinks it and how and where we buy it
• More consolidation, certainly, but more importantly, more consolidation among the country’s 10 biggest wholesalers. A senior official at one of those companies told me everyone has to get bigger, not only to keep up with the competition, but because the retailers are getting bigger. How else to service Kroger, Costco, and Total Wine, he said? This matters to wine drinkers because distributors, given the nature of the three-tier system, determine what we see on store shelves almost as much as retailers do. If they don’t like a wine or don’t think it will sell, they won’t distribute it. And if they don’t distribute it, you can’t buy it. That will make it harder to find wine not made by the biggest multinational producers.
• Three-tier reform. No, the dreaded three-tier system isn’t going to go away, but this year will see inroads made in several states to make it easier for us to buy wine. This follows last year’s surprise reforms in Colorado and Pennsylvania, which opened the wine markets in ways not seen since Prohibition ended. In Texas, for example, I’ve been told that the legislature will allow liquor retailers to open on Sunday, which hasn’t been legal for decades. Again, not big changes, but smaller changes across the country that may eventually lead to bigger changes.
• The official end of the U.S. wine boom, because younger drinkers didn’t move to wine as quickly as their elders did. One of the great shocks to the wine business was that Millennials didn’t do as they were told and start buying as much wine as the Baby Boomers. One of the top analysts in the country told me that, for the foreseeable future, U.S. wine sales would increase only as much as the growth in the drinking age population, about one percent a year. That’s a far cry from the double digit increases of the past.
• Craft beer and craft spirits replacing wine as the drink to have with dinner. Several analysts told me that there are no firm numbers on this yet, but that they have seen evidence that Millennials and Gen Xers are perfectly content to drink beer and cocktails instead of wine with dinner. That’s revolutionary: Wine’s reason for being is to drink with meals. But beer and spirits are easier to order and the diners know exactly what they’re getting in terms of flavor. A cocktail made with grapefruit vodka tastes like grapefruit in a way that sauvignon blanc doesn’t, no matter what the tasting notes say. If this happens, it will take away one of wine’s most important advantages in its fight with craft products to keep market share.
• Say it ain’t so: Freixenet, the Spanish wine giant that makes so much of the cheap wine that I buy and drink regularly, may be sold. This is almost certainly not good news for those of us who drink the Rene Barbier red and white blends, Segura Viudas cava, or the more expensive Gloria Ferrer sparkling wines from California. The German company that wants to buy Freixenet, Henkell & Co., sells very little wine in the U.S.; how interested will it be in continuing to sell those labels if it gets the company? And this doesn’t take into account the concern that any new owner usually screws up the old brands just because — right, Alaska Air? So, if any of the Ferrer family members who own the company read this (and I have met a couple of them over the years): Please, please don’t sell.
• Just more businesspeak: Want to know why so much consolidation is going on in wine? Then read this piece from the Supermarket News trade magazine. The article doesn’t address wine, but the sentiments and buzzwords used in it to talk about grocery store mergers describe what’s happening in wine — and that consolidation has nothing to do with improving products or benefiting consumers. How about “the … narrow approach to defining competition could hinder efforts to make the industry more efficient.” More efficient, of course, means firing employees and cutting costs, not providing a better product.
• Premiumize this: Aspen, Colo., where people who make industries more efficient go skiing, may have shown us the future of wine sales. And it’s not good. The city’s seven legal pot shops outsold city liquor stores in March and April last year. In April 2015, city residents and visitors bought almost $1 million worth of dope, compared to about $860,00 worth of booze. Know that weed has been legal in Aspen for less than two years, which makes that number even more amazing.