This week’s wine news: Why a strong dollar doesn’t cut imported wine prices as much as it should, plus a rant about too commercial wine and Big Wine’s fastest growing labels
• Not so cheap: The strong dollar has finally cut the price of imported wine, but it took surprisingly long and import prices don’t seem to be as falling the way they should be. A working paper in the Journal of Wine Economics may explain why: Laura Werner of Germany’s FernUniversitat writes that as the dollar gets stronger, other pricing pressures and how the supply chain works may slow price cuts. For example, the price of wine already in the U.S. or on its way here won’t fall, so that means a delay in cheaper wine until it’s sold at the higher price. The paper is incredibly complicated for those of us who don’t speak math, but my interpreter, Suneal Chaudhary, explained it to me. In the end, he said, a 25 percent drop in the euro may only result in a 10 to 15 percent drop in retail prices here.
• Take that, crappy wine: A top Italian wine type has lashed out at wines that are too commercial, saying that “Winemakers need to gain more confidence and feel more comfortable in doing their own thing and making authentic wines that are true to themselves. Oherwise, you end up with the wine equivalent of Britney Spears and Justin Bieber – commercially focused wines made to suit the market.” That’s not the WC ranting, but Italian winemaker and consultant Alberto Antonini speaking to thedrinksbusiness magazine website. “I don’t like to make wine for the market,” he told the magazine. “I like to go out and make wine that is true to a place and then find a market for it.” Antonini was also scathing about winemakers who make what he called boring and ineffective Bordeaux knockoffs, because they don’t know what else to do.
• The big get bigger: We’ve written many times on the blog about how much of the market is controlled by Big Wine, and this chart from the Wine Industry Insight website reminds us of that once again. It lists the 10 fastest growing brands in the U.S. from 2015 to 2016 – five of which are owned by Big Wine, including the top four. How about 1,600 percent growth for Constellation’s Ravage, which seems to be something the WC would write long diatribes about, and 400 percent for E&J Gallo’s Vin Vault boxed wine?
? Cheaper imported wine? That’s the question that many people were asking last month at a major European industry trade show, ProWein in Germany. The dollar has gained more than 20 percent against the euro in the past year, and the exchange rate is near 1-1, something that hasn’t happened in decades. This change was welcomed by many foreign producers, since it would make their wine easier to sell in the U.S. Said one Spanish winery official: “Obviously, the exchange rate is helping us very much and gives us a number of opportunities at the moment.” Whether consumers will see lower wine prices on store shelves, though, remains to be seen. Distributors and importers are reluctant to cut prices, not only because it means more profit for them if they don’t, but because the industry seems committed to the idea of premiumisation, trading U.S. consumers up to more expensive bottles of wine.
? Less cheap wine? Maybe, maybe not. This story, from CNBC, is the sort of thing that makes me crazy — a reporter is given an assignment and isn’t quite sure how to do it. The story starts saying that California’s drought will make quality cheap wine more difficult to find, but soon detours into sake, wine writing, the difference between Old World and New World wines, and that drought isn’t necessarily a bad thing for grapes. Blame the editor, who was too busy or too lazy or too indifferent to offer the reporter any direction. How do I know this? The reporter quoted another reporter, which is not something you’re supposed to do. A better editor would have taken that out, with a stern warning not to do it again.
? Lots of effort to little effect? Researchers say they have discovered how to successfully price wine futures, part of a disturbing trend in wine research that focuses on wine that almost no one buys but that gets a lot of attention. It’s one thing to research the futures market in corn, wheat, and pork bellies, because that determines the price of food. But wine futures? Would it matter to anyone but the Winestream Media, very rich people, and a handful of retailers if they went away tomorrow?
? More wine: We’re continuing to drink more wine than ever in the U.S., up about 1 million cases in 2014 over the previous year, reports Shanken News Daily. The percentage increase isn’t much, just 0.3 percent. But that there is growth, despite the after-effects of the recession, shows that wine may have finally established itself in this country as something more than a niche product. As the Shanken story notes, “consumption has increased nearly 80 percent over the past two decades,” and per capita consumption has finally risen past its 1970s levels.
? Bring on the sparkling: Cava, the Spanish sparkling wine, has long been a Wine Curmudgeon favorite, but it faces intense competition from Prosecco, the similarly-priced bubbly from Italy. The latter is typically sweeter and fruitier, and the Italians have parlayed that into double-digit growth over the past several years. Freixenet, the biggest Spanish producer and the top imported sparkling in the U.S., saw sales fall four percent last year. Why does that matter? Because exports account for around two-thirds of global Cava sales. Hence concerns that competing with Prosecco on price alone could lead to what happened with Australian shiraz and Argentine malbec — lots of cheap wine of varying quality. I’m not sure that Freixenet’s plan to add more expensive wines to differentiate itself from Prosecco is any better, given that Cava quality is so good at $10 and $15 there is little reason to trade up.
? Bring on the imports: How global has the the U.S. wine consumer become? Imports account for about one-third of the wine we drink, and that figure is expected to increase over the next two decades to as much as 45 percent. In the first half of 2014, though, we drank less imported wine than in the previous year (but the dollar value of the wine we drank increased by five percent). The biggest winner in those six months was New Zealand; the biggest loser was Australia. Sales from Italy and France, the top two exporters to the U.S. were mostly flat, though the dollar amount of what they did sell increased eight and six percent.
? The Winestream Media always acts like the Winestream Media: Shanken News Daily, a news service for the wine business, ran an item last week noting that Indiana ?s Oliver Winery was taking advantage of the sweet wine trend to boost sales. What the story missed was that Oliver was selling hundreds of thousands of cases of sweet wine long before it became a national trend, and is actually one of the regional wineries that started the trend (along with Missouri ?s St. James, North Carolina ?s Duplin, and Texas ? Llano Estacado). How did Shanken get this so wrong? Because, as with all members of the Winestream Media, nothing happens unless they say it does, which is why so much wine writing, wine analysis, and wine criticism in this country is so poorly done. I once did a piece for a trade magazine owned by the same company that owns the news service, and had a fight with an editor who insisted that Texas ? liquor laws were so unbelievable that what I wrote couldn ?t be true. She just knew the way the world worked, and wasn ?t going to let the facts disturb her.
? Where ?s all that French wine? W. Blake Gray, who started out to defend the quality of Australian wine, has done yeoman work in analyzing where the imported wine comes from that most of us drink. I think even Blake was surprised to find out how popular Argentine wine, and specifically malbec, was, and how much less popular French wine was. Of course, if you read most mainstream wine criticism, you ?ll get the opposite impression, because who wants to write about $8 malbec when there ?s all that Bordeaux and Burgundy to drool over?
? The problems with regional wine: My pal Kyle Schlachter, long a defender of regional wine, is also smart enough to know that not all regional wine is created equal. This blog post, focusing on how consumers use social media to critique wineries, is pointed, excellently written, and painfully accurate in discussing how too many regional wineries don ?t understand customer service, don ?t care enough about wine quality, and don ?t want to work with anyone else to improve their business. I saw this all the time when I did Drink Local Wine, and it always made me crazy; Kyle has more patience than I do.