This week’s wine news: Coronavirus wine sales trends, more Pennsylvania legal foolishness, and virtual wine tasting samples
• What comes next? Noted wine business analyst Christian Miller, a long-time friend of the blog, tells Forbes’ Liza Zimmerman that the coronavirus pandemic could finally slow wine sales later this spring, and the slowdown could last through 2021. The good news, he says, is that “Demand for wine is not going to dry up, or even diminish much, once the initial shocks are ridden out.” He also sees significant changes in the three-tier system as it struggles to cope with the pandemic. The former is pretty much what SVB’s Rob McMillan told the blog a couple of weeks ago, and the latter is something I wrote about last week.
• More fun in Pennsylvania: Remember Pennsylvania closing its state-owned liquor stores? Remember state residents being asked to leave neighboring New Jersey and Delaware when they came in search of booze? Well, now the state is being sued by two wholesalers, who say the state is violating its own laws by refusing to let the wholesalers sell directly to retailers and restaurants. The details, not surprisingly since it’s Pennsylvania, are quite confusing. But it’s enough to know that the state’s liquor control board says it doesn’t have to obey that particular law because it is still studying it.
• Bring on the samples! The Wine Curmudgeon knows that many of you in the cyber-ether have been worried that I would not be able to receive wine samples for virtual tastings during the duration. But have no fear. The federal agency that oversees that sort of thing said last week that not only wine writers, but consumers would be able to receive “small containers of wine” for virtual tasting. There’s lots of fine print, depending on which state you live in, but this is one more example of the pandemic pushing the three-tier system to the side.
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: Very ancient wine, about 5,000 yeas old from Italy, plus on-line wine sales run into more snags
• Older than before: Italians may have been drinking wine since the fourth millennium BC – more than 5,000 years earlier than previously thought. Researchers found large storage jars in a cave in Monte Kronio in Sicily that date to the Copper Age that tested positive for wine residue. No word yet on whether the wine was red or white; further tests are planned to figure that out.
• Only in Pennsylvania: The blog has followed the hilarity and hi-jinks of the state store system in Pennsylvania – grocery store wine vending machines! – and this story fits in nicely. State law currently allows consumers to buy directly from distributors, which is illegal in most of the country. The only catch is that consumers can’t have it shipped to their house, but have to pick the wine up at a state store. However, once the state liquor bosses and the distributors realized what was going on, they immediately made changes to the program to make it impractical for consumers. The state wants to raise the price of a bottle of a wine to include shipping, so that a $15 bottle could cost $30, while the distributors will start to limit wines that can be sold to consumers. Not to worry, also, if this seems too convoluted for those of us who aren’t liquor law attorneys. It’s probably confusing to most in Pennsylvania, too.
This week’s wine news features our old pal the three-tier system, but it’s mostly good news – including some of the biggest changes in state liquor laws since Prohibition.
• Well done, Pennsylvania: Pennsylvania wine drinkers, who have suffered for years at the hands of the Pennsylvania Liquor Control Board and its infamous state stores, will soon be able to buy wine at a retailer not owned by the state. Somehow, despite years of political impasse, the legislature passed a bill that the governor signed that will allow hundreds of restaurants, hotels, and grocery and convenience stores that sell take-out beer to sell bottles of wine. As the story notes, passage was almost anti-climactic given how bitter the debate has been for years.
• Wine in N.Y. supermarkets? Perhaps, reports the MPNNow website in the heart of New York’s Finger Lakes wine country. New York remains the biggest market where grocery stores can’t sell wine in the U.S., and attempts to allow it have failed for decades. The impetus this time? Pennsylvania’s new law that allows grocers to sell wine, and which not only may send New York residents across the border to buy wine, but reduce the number of Pennsylvanians going to New York to shop in its liquor stores and visit its wineries. The story is well written, and hints at the contentious debate that will ensue if the issue makes it to the state legislature.
• Colorado signs up, too: Expect to see wine in Colorado supermarkets, as well, after legislators agreed to a law that allows grocers, Walmart, and Target to compete directly with liquor stores and allows each to expand sales to 20 locations in phases over 20 years. Current law limits each chain to sales at one location in the state. The bill, a compromise, faces a court fight from those who want to eliminate all restrictions and allow groceries to sell wine, beer, and spirits in all locations immediately.
? Constellation exits Australia: The world's biggest wine company has sold its Australian labels as it continues to retrench in the wake of the recession. Constellation Brands is selling its 80 percent stake in a venture that includes Hardys and Banrock Station to an Australian private equity firm for about $230 million. After the sale, it will no longer be the biggest wine company in the world; that honor will go to E&J Gallo. The other catch? Constellation paid $1.1 billion for the Aussie brands when it bought them in 2003, and its timing was perfect — the Australian wine business was entering a slump which has only gotten worse. Which leads the Wine Curmudgeon to wonder: How does a company stay in business after it sells something for only 20 percent of what it paid for it?
? Tainted Chinese wine: Six people have been detained, several wineries shut down and bottles pulled from shelves in China after authorities found wine containing several chemical additives. An expose broadcast by state television found that that wineries were doctoring their products with sugar water, coloring agents and artificial flavorings, and then falsely using famous brand names. No wonder Chinese collectors are paying so much for high-end Bordeaux — at least it's really wine.
? Pennsylvania de-regulating booze? Pennsylvania is a control state, which means all alcohol is sold through state-owned stores and nowhere else. It's the poster child for the control system — but all that may be about to change. Says Philly.com: "But 2011 may usher in a different outcome for the state Liquor Control Board and the 620 wine and spirits stores it runs: Gov.-elect Tom Corbett appears committed to yanking state government out of the business of selling alcohol once and for all." We talk a lot here about government regulation and where it's headed, and there have been big doings over the past couple of years. But Pennsylvania getting out of the booze business? That would be the biggest news yet.