This week’s wine news: Will wine bottles soon have a cigarette-like cancer warning? Plus teaching legal weed in college and the future of craft beer
• Wine causes cancer? The cyber-ether was ablaze last week with the news that federal authorities may soon add a cigarette-like cancer warning to wine bottles. “More likely, [the health warning] will include a warning with the word cancer – no matter how weak the link is between cancer and moderate wine consumption.” Which, has been noted here many times, is so weak as to be almost no link at all. The wine business, if this happens, will have no one to blame but itself. It’s so preoccupied with selling overpriced wine to aging baby boomers than it hasn’t paid attention to anything else.
• Call them budtenders: What do colleges in legal weed states do? Offer marijuana classes similar to the wine classes I taught at two colleges in the Dallas area, of course. Oakton College in suburban Chicago offers one of the classes, teaching its 100 students about molecular biology, drug laws and treating terminal illness. Says a student: “This is pretty intense.”
• The future of craft beer: And it’s not necessarily bright, says Imbibe magazine. Craft beer evolved in response to Big Beer, but as it has grown in popularity, it has become more Big Beer-like, and many craft brands are now part of the biggest booze companies in the world. The article is long and little inside baseball, but it makes the point we’ve learned in wine. Consumers are fickle. Do something they don’t like, and they’ll go somewhere else.
• 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.
• 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.
Because a cranky ex-newspaperman still gets a kick out of silly headlines.
? I’m a teetotaler: The latest Centers for Disease Control edict about drinking, that women who want to get pregnant and aren’t on birth control should not drink, surprised even me, and I didn’t think the Neo-Prohibitionists could surprise me any more. Check out this headline: “Millions of women risk exposing unborn children to alcohol.” That would stop me from drinking, and I can’t get pregnant. The problem, though, is that you’re telling someone not to do something because it might affect something that might happen to them years in the future. Which is neither practical nor good medicine. But it is very scary, which was probably the point.
? Drink the damn wine: Each year, people much smarter than the Wine Curmudgeon tell us that we’re not smart enough because we didn’t buy the correct wines. And it doesn’t even mean we’re drinking the wrong ones, despite this effort: “10 wines you should have bought a year ago.” We didn’t buy the right ones to invest in, and I kept slapping my head as I read it. How could I not buy the 2006 Opus One, which appreciated in value 35.9 percent to almost $4,200 a bottle? No wonder I’m still working for a living.
? They just don’t like each other: In “Bull Durham,” Kevin Costner’s character teaches Tim Robbins’ character how to talk in cliches. I still laugh when I see it, because it’s spot on. As is this headline, if you’re looking for cliches: “The battle between Big Beer and craft brewers is getting ugly.” No kidding? You mean they really don’t like each other? (Another phrase that used to make us groan on the copy desk when we had had to edit it out.) I think, as the story details, that the relationship between Big Beer and craft beer is past ugly when they start cursing at each other on Twitter.
? Drink local: Our old pal Andrew Stover, one of the world’s leading proponents of local wine, has a message for Thanksgiving: Think less California and more Texas, Missouri, Michigan, and Virginia. Best yet, Stover puts his money where his mouth is, importing local wines as a distributor to the Washington, D.C., area. I’ve known Stover since our first Drink Local Wine conference, and he has never wavered from the cause. He has done such a good job, in fact, that some of my favorite Texas wines sell out in D.C.
? Billions and billions of dollars: It’s actually one bullion, but who’s counting? Constellation Brands, one of the biggest wine companies in the word, paid $1 billion — almost 10 times earnings, a startling number — for the trendy craft beer producer Ballast Point last week. This is incredible on so many levels that I don’t even know where to start, but does speak to how craft beer has become part of the mainstream and makes me wonder: How much longer will it remain crafty?
? Waiting until 2018: Lidl, the other German discount grocer famous for cheap wine, will open its first stores in the U.S. in 2018, with 50 locations in Virginia, North Carolina, South Carolina, Maryland, and Washington D.C. Said the company’s CEO: “The United States are a strategic market for us.” Should I start a countdown clock?
? 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.
? YellowTail growth resumes: Remember all those stories about how the strong Australian dollar and YellowTail’s financial problems were going to mean the end of an era for Aussie wine? Not true, apparently. The biggest imported brand in the U.S. expects 2 1/2 percent gorwth this year, reaching almost 9 million cases. Driving that growth are the brand’s two sweet red labels, including a sangria. That YellowTail has rebounded from its problems says much about its marketing skill, but also speaks about its clout with retailers. How many other brands could have slumped the way YellowTail did, but not lose shelf space and even added space for two more wines? In this respect, Big Wine is becoming more and more like other consumer goods, be they ketchup or detergent, with all the means — good and bad — for the consumer.
? Is craft beer headed for a bust? This matters to wine not only because craft beer competes for drinkers with wine, especially in the younger demographics, but because the growth in craft beer (“But even such a healthy rise in consumer demand won’t be enough to sustain the many new breweries jumping into the marketplace“) has similarities to what happened in California with “boutique” wineries heading into the recession and with the unprecedented growth in moscato and sweet red over the past couple of years. What’s interesting is that someone in craft beer has noticed what ?s going on, while almost everyone in wine was in denial before the recession and during the moscato and sweet red boom.
? If you can sell wine on-line. ..: You can sell a lot of it. That was the experience of the British supermarket chain Tesco, which doesn’t face the three-tier restrictions that U.S. retailers face in this country. The story, on the drinks business trade magazine site, says sales may have gone up as much as 51 percent over the same period last year, and offers all the reasons why that is so. Contrast this with Amazon’s wine marketplace, which after nine months still can’t sell wine in all 50 states.