This week’s wine news: Will the pandemic finish off premiumization? Plus, turmoil in Pennsylvania’s state wine stores and the favorite DTC grapes
• Is premiumization over? A top wine business analyst has told the industry that its drink less, but drink “better” mantra – premiumization – could be ending thanks to the coronavirus pandemic. Spiros Malandrakis, industry manager for alcoholic drinks at Euromonitor International, told the Harpers UK trade magazine that premiumization is at a crossroads: “What we saw in the recession of 2008 was that even if people that could afford more expensive wines or niche varietals, they didn’t buy them because it looked crass. The context has changed. I’m not saying the industry is over. What we know from history is that people will always continue drinking. It’s not the end of the world but it will be a different world to the one we’re used to.” In this, he’s not the first to predict premiumization’s end. But it is one more voice suggesting that the new normal in the new future could be $10 wine.
• Favorite DTC grapes: This is a contradiction that seems difficult to explain: Why is chardonnay the best selling wine grape at retail, but cabernet sauvignon is the best seller when consumers buy directly from the winery? That’s the result from a recent SOVOS/Ship Compliant study (via Wine Industry Insight), where cabernet was the best seller with 17 percent of volume, almost twice as much as chardonnay. Typically, chardonnay accounts for about 20 percent of retail sales. Any thoughts would be much appreciated.
This week’s wine news: Barefoot wine sells some 18 million cases a year, which is no doubt why Google likes it so much. Plus, a look at on-line wine sales and more news about artificial wine
• Big, big Barefoot: How much wine does Barefoot sell each year? How about 18 million cases? That would make it the fifth biggest producer in the country if it wasn’t owned by E&J Gallo, which is the biggest. In this, the various Barefoot brands could account for as much as 2 ½ percent of all the wine sold in the U.S. each year. Is it any wonder, then, that Google sends so many people who are searching for Barefoot to the blog? Or that three Barefoot items were in the top four of the most read blog posts in 2019? That Barefoot is thriving while the rest of the wine business is heading downhill speaks volumes – if anyone in wine is willing to listen.
• If Amazon can’t. … : One of the great puzzles in the wine business is Internet sales. Supermarkets in particular would love to do it, but three-tier makes it much more difficult than selling razors and mattresses, two categories that have been able to embrace e-commerce. Notes consultant Zac Brandenberg: “But neither market presents anywhere near the opportunity that beverage alcohol does. Wine alone is a $70 billion market with less than one percent commerce penetration — signaling an enormous untapped opportunity for retailers and wineries.” But how do supermarkets do that, when Amazon failed three times? Brandenberg suggests using the Internet for local delivery, just like the local Kroger, Wegman’s, and Albertson’s do for food. The cost could be enormous, but he says he expects retailers to do what needs to be done because the profits would be so immense.
This week’s wine news: Texas goes after direct to consumer wine shipping, plus has wine become a luxury and the wine glass chair
• Not so fast: The Texas Alcoholic Beverage Commission is cracking down on shipments to Texas from out of state wineries. The state agency will apparently review all of the roughly 1,600 license holders permitted to ship wine to Texas customers. And that will include a request for a voluminous amount of paperwork, including licenses, label approvals, and customer invoices, reports the ShipCompliant consultancy. Why does what Texas does matter to the rest of the country? Because the TABC often sets the example for alcohol cops in the rest of the U.S., and if they’re gong to this much trouble, other states may see the need to do the same thing. And if Texas is cracking down, the next question is why?
• Hard to believe: One of the wine critics who helped create the high-end wine world is asking: “Have you noticed how expensive wine is getting?” Yes, actually. But that Jancis Robinson, perhaps the most important European wine critic, is saying so complements the Wine Curmudgeon’s usual rants. That’s because her analysis is spot on – slowing demand yet rising prices. “Not so long ago, it seemed that prices were relatively modest initially, until reputations and/or high scores were won. But now, from where I sit, more and more wine producers dive in at the deep end, asking really quite ambitious prices from the get go.”
• Just for sitting: A Spanish interior and product designer has created a chair based on a wine glass – “The Merlot.” In one respect it doesn’t look all that different from what those of us of a certain age know as a Felix Unger chair. But the designer, Marta Del Valle, acknowledges they “aren’t ideal for tedious and work-oriented actions such as studying, working or consuming long meals. But for all you fun-loving design enthusiasts, and not to mention wine lovers out there, such a piece would only liven up any space it is placed in.”
This week’s wine news: An airline investigates wine thefts, plus the growth of direct to consumer wine shipping and a plea for more truthful wine advertising
• Missing airline wine: Employees of Cathay Pacific airlines are being investigated for stealing sparkling wine, as well as ice cream and cutlery. The story is vague about what was actually stolen, and this may be more about a labor dispute than theft, but the point is well taken. As we’ve seen on the blog many times, if you’re going to commit a crime with wine, steal the good stuff. What’s the point of swiping the wretched plonk that those of us in economy have to drink?
• Direct to consumers: Tom Mullen, writing on Forbes.com, gives a level-headed account of the history of direct-to-consumer wine sales in the U.S. – how it became possible for most of us to buy wine directly from a winery, bypassing retailers and distributors. The piece is a bit long, but any mainstream article that calls U.S. wine laws “sometimes archaic” and spends time discussing the history of Missouri wine is well worth reading.
• More truth, less artisan: “I see far too many industrial brands calling themselves ‘artisanal,’ ‘family-owned’ or claiming their wines are ‘hand-crafted’ when they are anything but.” No, that’s not the WC ranting, but Dwight Furrow in Edible Arts. His argument is passionate but logical: The “issue isn’t whether there is an exact cut off point for what counts as artisanal. What is obvious is that wineries with annual case production levels over 50,000—enough to supply large retail stores—are unlikely to use artisanal methods. To claim they do is just false advertising.” His point matters more than ever as younger people, who are more sophisticated about advertising than their parents and grandparents, may be turning away from wine because they see those claims as hooey.
This week’s wine news: Captain Obvious strikes again – a study says customer service matters in selling wine. Plus, the end of a Texas wine era and a victory for direct shipping
• Believe it or not: A new study has discovered that customer service is more important than anything else in selling wine from winery tasting rooms. Or, as Paul Mabray, who probably knows more about winery tasting room sales than anyone put it, “File under nothing could be more obvious.” In other words, we have one more wine-related study that does nothing to help the wine business adapt to the 21st century. My grandfather, who sold blue jeans to farmers in central Ohio, knew about customer service 80 years ago. Then again, he didn’t have to publish or perish.
• The end of an era: The WC didn’t talk about Texas wine over the weekend; the Kerrville Fall Folk Festival and its annual Texas wine panel is no more. I will miss the event, and not just because I got to promote Drink Local. Kerrville was an adventure in and of itself. There is irony, too, since local wine has become a Winestream Media darling, and one of the events that helped it achieve that status is gone. Yes, a Texas wine panel was added to the Memorial Day festival, but it’s not the same thing.
• Hooray for Mississippi: A judge threw out an attempt by Mississippi’s liquor cops to stop residents from receiving wine from out-of-state retailers and wine clubs. It’s a ruling that could be significant in the continuing fight over three-tier reform. The Associated Press reports that a Rankin County judge dismissed the state’s lawsuit, though his written ruling offered few details. It’s another blow to state attempts, says the story, in restricting direct to consumer wine sales.
This week’s wine news: Dave McIntyre of the Washington Post takes on efforts to halt direct shipping, plus saving the kids from getting drunk and a baseball wine item
• Direct shipping clampdown: Dave McIntyre of the Washington Post takes on efforts to stop consumers from ordering wine out of state retailers, describing it as “The three-tier system that favors big producers and big wholesalers is fighting back. …Over time, the way we shop has changed, and wine lovers demand more freedom to buy wines that don’t reach local shelves through the traditional system.” The piece is worth reading – well thought, concise, and sensisible, and even discuss possible solutions.
• Striking back: The Texas Package Stores Association, which just had a federal judge call one of its favorite state laws arbitrary and irrational, is taking another tack to keep Walmart out of the state. From a post on its Facebook page: “Since the United Kingdom has deregulated its three-tier system, alcohol-related crime, bar intoxication, and alcohol-related deaths have increased.” Which, of course, has noting to do with the court decision invalidating the law that gave the association’s members a virtual monopoly on spirit sales in Texas. But when in doubt, always bring up public drunkenness and teenagers.
This week’s wines: Distributors lavish campaign contributions, plus direct shipping and Mississippi stays true to form
• Big, big money: Distributors – the second tier in the three-tier system – contributed $107 million to state political campaigns over the past five election cycles, according to a report from the National Association of Wine Retailers. Two things to know about this study: First, the group that did it is the sworn enemy of the wholesalers, and second, that doesn’t affect the results. Anyone can find the same numbers, using sites from the The National Institute on Money in State Politics (which this report used), the Federal Election Commission, or Open Secrets. The distributors spend heavily to protect constitutionally guaranteed monopoly, which prevents us from buying wine over the Internet from places like Amazon, in grocery stores in New York, and on sale in Michigan. The distributors’ $107 million “dwarfed the combined contributions of all other sectors of the alcohol industry.” Said association executive director Tom Wark: “It should be no surprise that this ‘middle tier’ of the alcohol beverage industry pays huge sums to lawmakers to keep their competitive advantage in place.”
• Direct shipping update: Five states still don’t allow their residents to buy wine directly from out of state wineries – but that’s the good news, reports the Napa Valley Register. Just 20 years ago, 44 states didn’t allow the practice. But “There’s been a lot of progress made over a long period of time,” says Jeremy Benson, who heads the Free the Grapes! Lobbying group. “But I think the No. 1 reason why this works is that [the industry groups] got together and they realized they needed a lobbying plus litigation plus PR strategy and that’s been really what has made this entire campaign.”
• Only in Mississippi: Mississippi officials are suing four mail-order wine sellers, saying they illegally shipped wine and liquor into the state. It’s one of a handful of states that don’t allow wine to be shipped to someone’s house for any reason. All wine and liquor is supposed to go through the Madison County warehouse operated by the Revenue Department’s Alcoholic Beverage Control division. Because, Mississippi. And, of course, the three-tier system.