Tag Archives: premiumization

Premiumization be damned: $139.36 for 14 ½ bottles of cheap wine

cheap wine

Look at all those bargains at Jimmy’s just waiting for us to buy.

It’s still possible to buy quality cheap wine for $10 a bottle

So what if the cheap wine news these days is about failure? The Wine Curmudgeon, undaunted by the obstacles of premiumization, perseveres. The result? 14 ½ bottles of quality cheap wine for less than $10 a bottle.

How is this possible? I followed the blog’s cheap wine checklist. It’s even more valuable today, when $15 plonk is passed off as inexpensive. So look for wine from less pricey parts of the world, wine made with less common grapes, and shop at an independent retailer who cares about long term success and not short term markups.

The retailer was Jimmy’s, Dallas’ top-notch Italian grocer – so the wines are all Italian. Here are the highlights of what I bought for less than $140, which includes a case discount but doesn’t include sales tax.

• A couple of bottles of the Falesco Est Est Est, $10 each. This white blend used to be $7 or $8, but it’s still a value at $10.

• A 350 ml can of the Tiamo rose for $5 – hence, the half bottle in the headline. There wouldn’t be an onus about canned wine if all canned wine was this well done, . Highly recommended.

• Banfi’s Centine red Tuscan blend, $10. The Centines (there is also a white and rose) are some of the best values in the world. This vintage, the 2017, was a little softer than I like, but still well worth $10.

Principi di Butera’s Sicilian nero d’avola, $10. This was the 2016, but it was still dark and plummy and earthy, the way Sicilian nero should be. Highly recommended.

• A couple of roses – a corvina blend from Recchia, $8, and the Bertani Bertarose, a $15 wine marked down to $8. Because who is going to buy a $15 Italian rose made with molinara and merlot? They were in similar in style – fresh and clean, with varying degrees of cherry fruit.

More about buying cheap wine:
Cheap wine checklist: $82.67 for a case of wine
Once more: A case of quality wine for less than $10 a bottle
Nine bottles of wine for $96.91

Wine prices, razor blades, and premiumization

razor blads

“Dude, shaving is so old school.”

“Lower shaving frequency” is a fancy way of saying razor blades cost too much, which means men don’t shave as often

More men are apparently growing beards, costing one of the biggest companies in the world $8 billion this year. The reason? “Lower shaving frequency,” according to the financial analysts. I prefer the reason given by one of the Millennials quoted in the story in the link: Razor blades cost too much money.

In other words, men aren’t shaving as much; they’re shaving better. Sound familiar?

In this, the wine and razor businesses are eerily similar. A handful of big companies control each category, which means oligopoly pricing. A razor and two or three blades can cost more than $20, and there’s no way the actual cost of a little metal and some plastic is anywhere near that.

And razor-speak can be as indecipherable as wine-speak: “Gillette Fusion ProGlide Razor Handle with FlexBall Technology,” for example. Can anyone who doesn’t work for Gillette’s ad agency explain what that means?

The high cost of shaving

Obviously, there’s more going on here than the high cost of shaving. Most importantly, the culture has changed; the days of coats and ties and offices, where men had to shave every day, are something for TV shows like “Mad Men.” My beard dates to the late 1980s, and even then they weren’t common. And we certainly didn’t grow them to be hipsters, a common occurrence these days.

But you can’t ignore the cost of razors and blades. Says a Millennial in the MarketWatch story: “I don’t love the $5 price for a replacement blade, since it equates to a yearly expense of more than $200 — an amount equal to a good dinner at a decent restaurant, even perhaps with a bottle of wine. And trust me: I’d much rather be dining in style than shaving.”

In all, the men’s shaving products market has shrunk by more than 11 percent in the past five years. This dovetails with a recent Nielsen survey, comparing the drinking habits of Millennials, Gen Xers, and Baby Boomers.

Overall, a little more than two out of five Millennials don’t drink for health reasons and almost one-third don’t drink because it’s too expensive. Drill down, and Nielsen finds that the youngest group is 11 percent more likely to not drink because it costs too much, compared to their parents and grandparents.

High wine prices, decreased consumption. High razor blade prices, decreased use. Does anyone else see a pattern here?

Wine business history: The more things change, the more they stay the same

wine business historyIn the wine business, history repeats itself – and we know what premiumization, overpriced wine, and consolidation mean for consumers

Premiumization, overpriced wine, and consolidation are nothing new in the wine business. Go back 80 years, and wine business history is eerily familiar. In this, some of the earliest and most influential wine critics, including Leon Adams and Frank Schoonmaker, warned the industry about the mistakes it was making.

And I would be remiss if I didn’t quote Winston Churchill here: “Those who do not learn from history are doomed to repeat it.”

Premiumization

Schoonmaker was a wine importer and wine writer whose 1930s’ “The Complete Wine Book” might have been the first attempt to explain wine to the U.S. consumer. In 1947, in a piece for Gourmet magazine, Schoonmaker lamented what sounds a lot like what we’re seeing now:

And in the past five years we have hardly seen any real vin ordinaire (by which I mean a common, inexpensive table wine) sold in America. The humble gallon jug virtually disappeared in 1943 from our wine merchants’ shelves; instead, the undistinguished reds and whites from the mass production areas of California appeared in fancy dress at a fancy price, and elaborate advertising campaigns were launched to convince us that bottles which we used to buy reluctantly for 60 cents were suddenly worth $1.50 and were being sold us as a special favor.

In other words, $15 wine is the new $8 wine.

Overpriced wine

Adams was perhaps even more influential in his time (the end of Prohibition to the 1960s or so) than Robert Parker was in his heyday. He is usually given credit for pushing the California wine business into the 20th century; he advocated for regional wine long before there was much of it; he helped start the Wine Institute; and he wrote several of the most important wine books in U.S. history.

He also had no use for over-priced wine, and regularly urged California producers to make wine that most of us could afford:

They should be as cheap as milk. High price wines are not for daily consumption with meals. Real wine drinkers know this; most Americans still don’t.

How spooky is that quote, that it’s still so relevant today?

Consolidation

Adams also saw the dangers of too few wineries producing too much of the country’s wine, something he first warned about shortly after World War II. He explained this in a 1974 interview:

The point was mine, and I think it has stuck to this day, that the little wineries should be encouraged to exist. The larger the number of small wineries that operate in the United States, the safer the big wineries are from attack, legislative attack in particular. If the wine industry ever fell into the hands of only a few major factors, the wine industry and the whole cause of wine would be in trouble. It would be endangered. … The big wineries have never agreed with me about the need to foster the small wineries. … My purpose is to encourage the use of wine, to introduce the use of table wine, which local wineries can do. Moreover, it’s especially to the advantage of California to thus expand the wine market, because with the ideal grape-growing climate of this state, California wines will always be the best buys.”

I wonder: How many of the biggest California producers have ever read that?

Photo courtesy of Sedimentality blog using a Creative Commons license

Has the next phase of the wine slowdown started?

wine slowdownToo many grapes, younger people who don’t drink alcohol, and slowing sales among all age groups are signs of a wine slowdown

Call it a tipping point if you don’t mince words or an easing of momentum if you do, but the results are the same. It looks like a major change in U.S. wine consumption is underway. Call it the post-recession wine slowdown.

Know four things:

• California wineries, faced with an oversupply of grapes from yet another bumper harvest and lagging sales, don’t seem to be buying as many grapes this year. In fact, their attempt to get out of grape-buying contracts in some parts of the state is causing controversy and bad blood.

Wines sales have slowed, so that even an industry cheerleader termed growth for this year at a “sluggish 0.2% projected pace.” These numbers, from the company that publishes the Wine Spectator, confirm what has been reported elsewhere many times – U.S. sales by volume won’t exceed the increase in the drinking age population for the foreseeable future.

• One of the world’s biggest spirits companies expects that the “low-[alcohol] and no alcohol cocktail movement will increasingly shape the bar world” in 2019. The report went on: “What is most notable, though, is the differing consumption habits of the younger demographic, with 46 percent of people under the age of 35 likely to order a mocktail (non-alcoholic cocktail), versus just 16 percent of over-35’s. “

Rob McMillan of Silicon Valley Bank, one of wine’s leading statistical gurus, says the industry is at that tipping point. McMillan says there will be more grapes than are needed to meet slowing demand, and that the industry must come up with a Plan B to sell its product in this more challenging environment.

In other words, we have too many grapes, younger people who don’t necessarily want to drink alcohol, and slowing sales among all age groups. But the industry is hellbent on selling more expensive wine as if none this was relevant – if it was still the heyday of scores and wine magazines in the 1990s and that post-recession premiumization would go on forever.

Consumers – and that includes most wine drinkers – vote with their debit cards. You can only sell overpriced and lower-quality wine for so long before they put their debit cards away. If that is happening now, and I think it is, then we have a wine industry selling something fewer people want to buy. And that is not a recipe for success.

Four things to know about the rose boom (and that don’t have anything to do with Instagram or memes)

rose boomThe rose boom isn’t about Instagram and memes; it’s about quality wine at a fair price

Listen to the wine wise guys, and the rose boom is about “rose all day” and Instagram posts. Of course, these are the same people who didn’t catch on to pink wine until it was already a hit. Given that, why should we believe anything they say?

So here are are four things to know about the rose boom that don’t have anything to do with Instagram or memes – but show that wine drinkers know value when they see one. Which explains rose’s continuing popularity more than all the hype and the glitter in the Hampton’s.

Consider:

• There’s so much demand for rose that some retailers and distributors are trying to sell old, worn out junk, figuring we’re not smart enough to know the difference. I’m seeing more and more of this, with pink wines as old as 2013 and 2014 finding their way to store shelves. Remember, if a rose is more than 18 months old, it’s probably not worth drinking.

We’re buying $10 rose, no matter that our betters are telling us we’re supposed to spend more. In the 52 weeks between April 2017 and April 2018, we bought five times as much $10 rose as we did $20 rose. In fact, rose costing $10 or less accounted for almost 60 percent of sales over that period. Suck on that, premiumization.

• Overall, reports the same study, U.S. wine sales remain flat. But rose sales increased 53 percent from 2017 to 2018. So consumers, given the choice between buying quality $10 rose or overpriced $18 wine, are buying quality $10 rose. Why isn’t anyone noticing this?

Millennials don’t drink the most rose; it’s still the province of older wine drinkers, according to the Wine Market Council. This makes perfect sense if you look at overall wine consumption, where Millennials are generally at the bottom of the list. But wine industry hype rarely makes perfect sense or any sense at all.

July update: Wine prices in 2018

Wine prices in 2018Wine prices in 2018 aren’t necessarily going up, while premiumization may be taking a huge hit

Is premiumization – the idea that we’ll buy expensive wine just because it’s more expensive – wearing out its welcome? That may be the case after looking at what’s going on with wine prices in 2018.

In fact, higher wine prices in 2018 (as well as next year) don’t seem nearly as certain as they did six months ago. That’s when I wrote: “Look for wine prices 2018 to head upward, and not just because of premiumization.” No one is happier than I am that I might be wrong.

What has happened to change all of this?

• Continuing flat wine sales. Every time I see the numbers, I’m reminded of the Wine.com study that says everything that needs to be said: “With little to no organic industry growth, it’s all about battling competitors for market share. Brands swap from one wholesaler to another, and wineries and wholesalers have been consolidating through [mergers]. But these moves are largely just shuffling the deck, rather than growing the total pie, and do very little for the long-term health of our industry.”

• Trouble for Big Wine. How about this bombshell from Constellation Brands, the second-biggest wine company in the world? Its growth in volume for the previous 52 weeks through July was higher than its growth in dollars – the exact opposite of premiumization. Is this a sign consumers are cutting back? Note, too, that neither of the increases was impressive, and the dollar increase was a whopping 0.6 percent.

• Surprising consumer reluctance to spend money on more expensive wine. I see this every time I shop for wine, whether grocery store, wine shop or liquor store. Consider this the other day, from a Dallas Aldi. A man was buying six bottles of the chain’s knockoff, $8 Prosecco, and not the $12 La Marca you can get at the Walmart down the street. Meanwhile, the woman in line in front of me had organic chicken, a couple of organic dairy products, and three bottles of $3 Winking Owl. What does it say that she was spending a substantial premium for food but doing the opposite for wine? Yes, a small sample size, but I see it over and over.

Something is going on, and despite other pressures – inflation, the weak euro – consumers are holding the line on their wine purchases. Will the industry recognize this and adjust accordingly with lower prices?

Disconnected from reality: How the wine world thrives on hyperbole, assumption, and exaggeration

Napa Valley wine

If it’s expensive, then it must make me a better person.

Most of us will never drink pricey Napa Valley wine, but that doesn’t stop us from assuming that expensive wine is the only kind that matters

Two recent postings in the cyber-ether show how disconnected the wine world is from reality: First, a comment on the blog last week asking how California could have a record grape harvest this year given the Napa Valley wine fires in 2017. Second, an article on Wine-Searcher.com declaring: “The simple truth is that if you don’t have Napa on your label people just aren’t that into you, and winemakers would be forgiven for throwing their hand in and becoming whiskey makers instead.”

The fact everyone is overlooking here? Napa Valley wine accounts for less than five percent of California’s production.

This is not to denigrate Napa’s product, which is some of the best in the world. Rather, it’s to note how hyperbole, assumption, and exaggeration continue to power the U.S. wine business. Most wine drinkers in this country will probably never taste a Napa Valley wine. First, Napa prices are two and three times the national average, so cost eliminates all but the most devoted. Second, the majority of the grocery store Great Wall of Wine, where as much as three-quarters of wine is sold in some states, is not from Napa. So we couldn’t buy it even if we wanted to.

But there are wine drinkers, and then there are wine drinkers.

That’s because, as the two Napa items demonstrate, only expensive wine matters. This has always been a problem, and explains how I got started doing this. But it has become more prevalent given premiumization. I did a tasting several years ago where a 40-something man refused to drink anything that didn’t cost at least $20 because he knew it was awful. And how did he know that? Because the Winestream Media told him anything cheaper than $20 was awful, saving him the trouble of tasting it himself.

Second is the idea that people who drink expensive wine are somehow better than the rest of us. You can see this in the comments on the blog’s Barefoot posts. This attitude baffles me. I vote, I pay my taxes, I’m nice to my dog. Why does my choice of wine speak to my quality as a human being? What difference can it possibly make to someone else that I don’t drink the same wine they drink?

Those are also two reasons why cheap wine quality has fallen so far since the end of the recession. What’s the point of making decent wine for someone who doesn’t deserve it? After all, as the Wine-Searcher article said, none of the wines we drink matter. Hence, the increasing difficulty in finding quality and value for less than $15.