This wine premiumization meme is for you, wine business — enjoy
The blog’s wine meme survey has looked at why young people don’t like wine, the three-tier system, and trolling the cyber-ether for people who disagree with you. So how have we missed premiumization?
Until now, that is: The ultimate wine premiumization meme.
Of all wine’s problems — and there are entirely too many to mention — premiumization may be the one that makes me the craziest. Case in point: I got an email the other day touting a $25 gruner veltliner, a white wine from Austria. Check Wine-Searcher, though, and there are dozens of gruners in Austria that cost €4 or €5. How did an everyday wine in Europe become a luxury in the U.S.?
As a friend noted the other day: “We can moan and complain about wine prices all we want, but this is what it comes down to in the end: a $25 bottle of gruner. On sale. Is it any wonder hard seltzer is all the rage?”
So this wine premiumization meme is for you, wine business. Enjoy.
Photo courtesy of OME Gear using a Creative Commons license
This week’s wine news: White Castle, home of the real slider, will offer cocktail recipes, while the illegal marijuana business shows no signs of going away and Dom Perignon’s owner is in a legal spat with Tiffany’s
• The 2 a.m. munchies: The Wine Curmudgeon spent more than his share of time at White Castle as a young reporter, what with getting off work after midnight. But no one thought to recommend a wine-related cocktail with my sliders – something now available to customers. Nation’s Restaurant News reports that the burger company’s “Cocktails and Craves” marketing campaign recommends cocktail pairings to make at home with three of its most popular items. How about the Original Slider with an Orange Afterglow, a beer and orange ginger ale concoction? Or the Cheese Slider with a Castillo Rosa Margarita made with pink lemonade? Or the Jalapeno Cheese Slider with a Midnight Merlot Punch that mixes merlot with raspberry Sprite, garnished with fruit and fresh mint. Who knew? If I had been able to come home and drink that merlot punch with my sliders, I might have started wine writing that much sooner.
• Illegal weed may still matter: Legal marijuana was supposed to force illegal weed off the market, or so thought most business analysts. But illegal weed still matters, if a recent shootout means anything. Reuters reports that seven people were killed in a suspected illicit marijuana operation in suburban Los Angeles last week. This happened even though California legalized recreational marijuana a couple of years ago, but police said the crime scene contained a several hundred plants and 1,000 pounds of weed. That’s not a huge operation, but it’s not for personal consumption, either. It’s also worth noting that one reason Canada’s legal weed sales stalled was competition from the illegal market.
• Premiummization battle? LVMH, the French multi-national that owns Dom Perignon Champagne (among other luxury brands), is being sued by high-end jeweler Tiffany’s. LVMH called off its merger with Tiffany’s, citing the tariff and the pandemic. Both have cut deeply into luxury goods sales. But Tiffany is having none of it, filing a lawsuit to force the deal to go forward and dismissing the tariff and pandemic as window dressing. Feel free to insert your comment here about two rich and powerful companies fighting over who is going to become more richer and more powerful when the world is in such a mess.
Wine premiumization may be ending, but you wouldn’t know it by reading the Winestream Media
By most measures, the end of premiumization is underway. Wine drinkers have been opting for less expensive wine over the past six months, and, depending on which expert is talking, the trend will continue and perhaps even accelerate. In other words, lower wine prices and better quality cheap wine.
But it would be difficult to know this from reading the Winestream Media.
I don’t write this to be snarky (well, maybe, just a little), but to point out how difficult it is to tell what’s going on in wine from its most important media outlets. Wine-searcher.com somehow managed to run these two stories almost at the same time – “Premium wine falls victim to the coronavirus” and “Wine sales defy doom and gloom.” And this doesn’t include the site’s regular roundup of all things high priced – “Bordeaux’s most expensive wine,” “Napa’s most expensive wine,” and (my favorite), “Brunello 2015: Another perfect vintage.”
Why is the Winestream Media treating this almost unprecedented moment in world history – and with all of the changes it looks like it will bring to wine – as just another minor sales blip?
• Because that’s what it does, and to expect more of it is expecting more than it is capable of. Yes, it may well be fiddling while Rome burns, but it doesn’t understand that Rome can burn. Rome is eternal, just like wine scores and $300 Napa cabernet.
• Because it doesn’t want to see what’s going on, as Richard Hemming, MW, explained to us last week. If wine writers write things the wine business doesn’t want written, there’s a good chance the wine writers will find themselves persona non grata. As Hemming said, there’s no reason consumers should necessarily trust wine writers.
• Because there aren’t really any good numbers to describe what’s going on, even if a wine writer wanted to write about it. We’ve noted this on the blog many times, and another example came up last week. David Morrison at the Wine Gourd has made a specialty of parsing wine industry statistics, whether sales or scores, and noted last week about one sales study: “The conclusions seem to vary from quite accurate to wildly exaggerated.”
So what’s a consumer to do? Buy wine you like, be willing to try something else, and wait to see what prices will do. We’ll almost certainly see prices drop before the Winestream Media discovers most of us aren’t all that interested in $40 California gamay.
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: 1 Wine Dude’s Joe Roberts takes on premiumization, plus the grape glut worsens and the Wine Advocate is sold
• “Impending hangover?” Joe Roberts, who writes the 1 Dude Blog, doesn’t mince words: “It seems that, in focusing on selling higher and higher priced wine to a dwindling set of older consumers, the U.S. wine business has painted [itself] into a corner. …” I asked Joe about the piece, which rips the wine business as few others have, and he pointed out he has been warning the wine business about its follies for as long as I have. Maybe we can beat this premiumization thing after all.
• “A steep decline?” California’s grape glut continues to get, well, gluttier. The Napa Valley Register, the industry’s hometown newspaper, reports that “2019 has been a year where it’s tough to sell grapes and bulk wine.” In fact, even Napa Valley cabernet sauvignon – the epicenter of premiumization – has plummeted in price. Quality cabernet, says one broker, has been selling for one-quarter to one-third the price of past years. This almost certainly points to lower wine California wine prices – if not in the next six to eight months, then by the end of next year.
• So much for that strategy: In 2012, Robert Parker sold the Wine Advocate to a group of Singapore inventors. The goal, the company said at the time, was to expand the reach of perhaps the most influential magazine in the history of wine to China. So the news that France’s Michelin Guide has bought the 60 percent that it didn’t buy in 2017 probably speaks to the end of the strategy. The story in the link is mostly a puff piece that really doesn’t explain what’s going on, but there’s a sense that Michelin’s need to expand its food and wine review business trumped whatever plans an independent Advocate had or could afford.
You keep a stiff upper lip, try to ignore the frustrations and complications, and soldier on – because quality cheap wine is worth it
How do you write about quality cheap wine when the wine industry and the federal government have gone out of their way to make quality cheap wine an anachronism?
Because, as we celebrate the blog’s 12th birthday, that’s the situation I find myself in. Premiumization and the 25 percent European wine tariff have made it all but impossible to find the kind of $10 and $12 wine that’s worth writing about. I feel like a character in one of those British Raj movies where the garrison is stranded in a fort on a remote hilltop and we’re being picked off one by one and we know the relief column isn’t going to arrive in time.
Yes, there is still plenty of cheap wine on store shelves, but just because a wine is cheap doesn’t mean it’s worth drinking.
The irony here is that I seriously considered ending the blog after this final birthday week post (with a Hall of Fame wrap-up in January). And if I had known about the wine tariff when I was pondering the blog’s fate this summer, it would have been that much easier to close it after 12 years.
Changing my mind
But two things happened to make me change my mind: First, and most practically, the site’s hosting company charged me for another year in August. So, if I closed the blog with this post, I would have been stuck paying for nine months of service I didn’t use. Second, four people whose opinions I admire and respect pointed out that if I didn’t keep doing this, who would? And that despite my frustration with the blog, there is and will be a need for it.
For the frustrations have been endless. These days, it’s not just about paying homage to our overlords at Google or dealing with out-of-touch producers and distributors and too many incompetent marketers. Or fending off the sponsored content and the fluff pieces that so many others in the wine writing business have turned to in an attempt to make money at something where there is little money to be made.
These days, it’s about making sense of a business that is divorced from reality. Which, frankly, makes me feel like I’m using a croquet mallet to comb my hair.
Am I missing something here? Aren’t declining sales a bad thing? Shouldn’t an industry do something to reverse the decline, instead of furthering it by raising prices?
But not, apparently, if it’s the wine business in the second decade of the 21st century. Because, of course, premiumization. I’ve probably written entirely too much about the subject, but mostly because I can’t believe anyone in wine still takes it seriously. Though, and this is welcome news, there are others who are beginning to question its validity. Damien Wilson, PhD, who chairs the wine business program at Sonoma State University, is blunt: Premiumization can be a path to ruin, since sales decline and higher prices scare off new wine drinkers.
The less said about the tariff the better. It’s as counterproductive as premiumization, and its adherents are blinded by politics to economic reality. That the tariff could forever wreak havoc on U.S. wine consumption is beyond their comprehension.
So let me shepherd my ammunition, keep my head low, and hope against hope that the relief column gets through. And keep a very stiff upper lip.
This week’s wine news: Another expert says premiumization is hurting wine, plus wine for world leaders and U.S. alcohol consumption
• “Doom loop:” Who knew a big-time market analyst would agree with the Wine Curmudgeon? Sonoma State’s Damien Wilson says premiumization “can be a path to ruin.” He even has charts and statistics to prove his point. Wilson, writing for Wine Business International, says “European wine market history shows that failing to recruit new wine consumers is the last thing the U.S. wine sector should be doing right now. As the number of wine consumers in the U.S. has stalled in recent years, the local wine sector should avoid profiteering in favour of new market investment. Here is where the US wine sector’s global leadership in business practices can come to the fore.” In other words, higher prices for the sake of higher prices scare off new wine drinkers and then demand slows. And we’re where we are today – flat growth and overpriced wine.
• World power wine: What does one serve the president of France and the Chinese premier at a leading international trade show? High-end French wine, of course. France’s Emmanuel Macron and China’s Xi Jinping sampled three amazing bottles – Louis Latour’s Corton Grancey Grand Cru 2010, Gérard Bertrand’s Château L’Hospitalet 2016, and the Cheval Blanc 2006. That’s about $900 worth of wine, though the Bertrand is a comparatively inexpensive $35.
• U.S. booze consumption: The typical U.S. resident drinks the equivalent of about a case of wine a year, according to the OECD, an international group that tracks a variety of economic indicators. The agency’s 2019 report on beer, wine, and spirits consumption shows that the U.S. is not only exactly average for the 36 countries in the survey, but that consumption is almost unchanged from 2007. So it becomes even less clear what the neo-Prohibitionists are complaining about.
Photo: “Modern wine tasting” by kellinahandbasket is licensed under CC BY 2.0