Tag Archives: wine business

Winebits 560: Wine trends, Wine Spectator lawsuit, Coke and weed

wine trendsThis week’s wine news: The Italian Wine Guy notes several disturbing wine trends, plus the Wine Spectator sues another magazine, and Coke wants in the weed business

Making money: Apparently, I’m not the only one worried about the future of the wine business. The Italian Wine Guy, who spent the last three months visiting retailers and restaurants around the country, writes that price “seems to be one of the biggest factors. It’s the economy, stupid. The wine trade has often been a race to the bottom, and these days, there is a significant concern for revenue and profit.” Consumers, he was told, are showing “high anxiety over a buying decision.” In other words, not everything is peachy-keen in the era of premiumization. And his take on the three-tier system? Intriguing and insightful for someone who used to work for the biggest distributor in the world.

It’s time for the lawyers: The Wine Spectator is suing a new marijuana magazine called the Weed Spectator for infringing its trademarks and copying its familiar 100-point rating scale for wine to rate cannabis. Reuters reports that the filing says Wine Spectator owner M. Shanken has no interest in associating Wine Spectator and the Wine Spectator marks with cannabis, a largely illegal drug. Any association of this type is likely to tarnish the reputation and goodwill that has been built up in the Wine Spectator marks and business for decades, resulting in dilution of the brand.” I’m most fascinated by the charge the weed magazine is copying the 100-point scoring system. I’d love to watch that unfold in court, given how many people use it and that the Wine Spectator didn’t invent it.

One more time: Those of us with long memories still laugh about Coca-Cola’s failure in the wine business in the late 1970s. So its foray into marijuana beverages elicits a similar chuckle. Nevertheless, reports the BBC, “the drinks giant is in talks with [Canadian] producer Aurora Cannabis about developing marijuana-infused beverages. These would not aim to intoxicate consumers but to relieve pain.” Apparently, it would be a “recovery drink,” aimed at the same market as Gatorade and Powerade. I’ll leave that straight line alone – it’s almost too easy.

One more time: The independent wine retailer is your best friend

independent wine retailer

No, this is not the selection at a quality independent retailer.

Only the independent wine retailer can save us from crappy wine and unfair pricing

The country’s pre-eminent “natural foods” grocer had two wine displays next to each other last month in a Dallas store. One wine was the kind you’d expect it to carry – Jules Taylor New Zealand sauvignon blanc, a terrific wine and especially for the $15 sale price. Next to it was mass produced schlock, a California chardonnay that uses intensive winemaking to taste sweet and buttery. It was also $15, and I saw the same wine for the same price at Target.

If a store that markets itself as carrying only the finest natural, organic, and sustainable products treats wine that way – junk next to excellence, and for the same price — how can we count on any retailer to offer quality and value?

Fortunately, that’s what the best independent wine retailers do. Because, as a wine business friend emailed the other day, “The consumer has a romantic view, with no idea of all the BS behind the curtain to sell the ocean of wine being made. And I feel the consumer is overpaying most of the time.”

The best independent wine retailers don’t do those things. They won’t sell you something like that chardonnay, where the bottle was probably the most expensive part of the product. In fact, most won’t even have it in their stores.

The best independent wine retailers understand that customer service matters, which is why they don’t carry junk. Better to sell you cases and cases of wine over the long term than six bottles of plonk and never see you again. And they price their products fairly, without the come-ons and phony discounts that dominate the marketplace. Right, Cost Plus World Market?

What makes a quality independent wine retailer?

To paraphrase from the cheap wine book:

• Does the retailer ask questions about your preferences, helping you figure out what you want – red or white, sweet or dry?

• Does the retailer let you ask questions? Do you feel comfortable asking those questions? Or do you feel you’re being humored in the way adults humor small children?

• Does the retailer answer your questions? Are the answers understandable or in winespeak? And, when you say you don’t understand what he or she means by leathery or oaky, do they explain so you do understand?

The best retailers do more than sell wine. They help you find wine that you didn’t know you would like. It’s easy to sell someone something that they already know about. What’s more difficult, and a mark of the best retailers, is to find something new – a Spanish albarino or French picpoul for an Italian pinot grigio, for example, or a fruity rose instead of a white zinfandel.

I’m lucky to have two top-notch independents in Dallas, and I have rarely been disappointed. I know if the wine is on their shelves, it’s probably worth buying. And I also know I can ask any question I want, no matter how Wine Curmudgeonly cranky, and I’ll get an intelligent answer. No one will sell me something because it’s on sale or because they get a bonus for selling it. They sell it because they want to make me happy.

And when’s the last time we could count on that in the wine business?

Winebits 517: Big Distributor, Big Wine, Wine.com

Big DisributorThis week’s wine news: Two of the biggest distributors in the country merge, plus Coke considers the wine business and Wine.com adds pick-up

The big get bigger: This spring, the 10 biggest distributors in the U.S. controlled almost three-quarters of the second tier of the U.S. wine business. That means that a handful of companies touched three-quarters of every bottle of wine we drank, adding another layer of bureaucracy and cost to a system that exists nowhere else in the world. Last week, the big got bigger, when No.2 RNDC announced it would merge with No. 3 Breakthru Beverage. That means, since Breakthru bought a smaller company in July, that the top eight companies will control 73.3 percent of the second tier. And, if that’s not enough concentration, the two biggest – Southern Glazer’s and the combined RNDC – will control 55.4 percent of the U.S. wholesale market. How anyone can claim this is beneficial to anyone but the distributors is beyond me. It will reduce competition, never good for consumers, and limit choice. That’s because fewer distributors mean the ones remaining will distribute fewer wines; can someone explain to me how that helps wine drinkers?

Is Coke returning to wine? One of the most famous failures in the wine business is Coca-Cola’s effort in the 1970s. Its brands included Sterling, but the company had little success and got out in 1984. So is Coke ready to try again? The company’s CEO said probably not, but that “Philosophically, I never say never about most things. …” Intriguingly, that company that bottles Coke in Australia is partners with the company that owns Yellow Tail, the best selling imported wine to the U.S., in the beer business.

Let me pick it up: Wine.com, the biggest on-line wine retailer in the U.S., has tripled the number of pickup locations to more than 10,000 across the country. This includes nearly 1,000 in California and more than 500 in New York. If you order from Wine.com, you don’t have to wait for it arrive at your house; you can get it FedEx Office locations, selected Walgreens and Duane Reades, plus some Safeway, Shaws, Jewel-Osco, Albertsons, and Fred Meyer grocery stores.

10 years writing about cheap wine on the Internet: Haven’t we gotten rid of you yet?

cheap wineWine is once again about scores, overpriced wine that doesn’t deliver value, and winespeak – and haven’t we gotten rid of you yet?

This week marks the blog’s 10th anniversary – I’ve been writing about cheap wine, the wine business, and all that entails since November 2007. That I’m still here is amazing, given this is a one-man operation among the behemoths that control the post-modern cyber-ether.

But it’s even more amazing because I’m telling a story that the wine business prefers wine drinkers not know. That has been the constant over the past decade – it is once again business as usual, and the wine business’ message has remained consistently infuriating: We know best, drink what you’re told, and anyone who says differently isn’t important enough to bother with.

In other words, it’s still about scores, overpriced wine that doesn’t deliver value, and winespeak. And haven’t we gotten rid of you yet?

More, after the jump: Continue reading

Winebits 514: Millennials and wine, investment wine, beer breasts

Millennials and wineThis week’s wine news: Millennials are not the wine business’ savior, plus some silly bits about investing in wine and breasts as a side effect of beer

No thanks: Tim Carl writes in the wine business’ hometown newspaper that Millennials, the 20-somethings who are supposed to save the wine business, won’t: “[N]o business should expect them to be frivolous or willing to pay excessively high prices for anything they buy.” Which, of course, is the opposite of what almost every wine seer, expert, and prognosticator has been telling us since Millennials became a demographic. But Carl explains why that isn’t the case, and adds that he is tired of “many in the same generation that caused the unprecedented mess for the younger generation chastising them for their delayed ‘adulting.’ ” Couldn’t have said it better myself. Which I have, and it’s good to see someone else reject the blather we’ve been reading for so long.

But what if I want to drink it? The Wine Enthusiast has published its list of the top 100 investment wines of 2017, and you’ll be glad to know that half the wines costs less than $100. In fact, notes the magazine, “In recent years, wine has shown to be a more stable investment than classic cars, rare art and jewelry, and has outpaced the competition in price growth.” Which makes the Wine Curmudgeon wonder why anyone would pay hundreds of dollars for a wine but not want to drink it. Still, it happens. A very good friend reports that he knew someone who had an “investment-grade” collection, but would never let anyone drink any of the wines. And, said my friend, the guy said he had no intention of drinking them – those wines were there for showing off.

Man breasts: This is the kind of story that defines the New York Post. It warns beer drinkers that the “hops used in your favorite drink could be giving you man boobs. That’s because hops contain a high amount of phytoestrogen — a plant-derived chemical that is similar to the female sex hormone estrogen.” Who knew? I always thought it was all the empty calories, plus sitting on the sofa while drinking multiple six-packs, watching TV, and gorging on chips and pizza.

SVB wine industry report 2017

SVB wine industry reportDoes the SVB wine industry report show the next stage in the evolution of the U.S. wine business?

Are we watching the next phase in the evolution of the U.S. wine business? Perhaps, if Rob McMillan is spot on with his analysis in the annual SVB wine industry report.

As he usually is.

“Why is growth slowing?” McMillan asked during the report’s webcast on Wednesday. “It’s changing consumer demographics and patterns.”

In this, the Baby Boomers – who have fueled the unprecedented growth in the U.S. wine business over the past four decades – are officially on the wane. Though they still control some 40 percent of the U.S. market, their clout is being passed to the two younger generations. Both Gen X and Millennials are showing market share increases, and their 50 percent total has passed the Boomers (though, in wonderful irony, the vaunted Millenials drink about half as much wine as the Gen Xers). That’s the chart at the top of the post; click on it to make it bigger.

And they don’t drink the same things that their parents and grandparents do, focusing on red blends and, surprisingly, sauvignon blanc, as opposed to the traditional varietals. The red blends, which I’ve written about extensively, were the subject of much discussion and consternation during the webcast; no one was quite sure whether these younger wine drinkers would stay with red blends or switch to the traditional varietals.

The report also outlined:

• The continued bifurcation of the U.S. wine market, with the annual decline in sales for wines costing less than $9 and growth in wine costing more than $12. The study expects significant growth in U.S. wine costing more than $15.

• Increasing costs for U.S. producers – land, certainly, but also labor. How this will affect the business remains unclear, although it is one of the factors driving the bifurcation. Producers with more expensive wines can better afford to deal with higher costs.

• Increased competition for wine from craft beer and legal marijuana, and especially among younger drinkers.

• The increasing popularity of low-priced imports, and not just because of the stronger dollar. For example, there is little $10 California rose, mostly because of higher costs, but lots and lots of $10 French and Spanish rose.

Hanging over the entire discussion during the webcast was where Big Wine fits into California’s future. The report expects winery mergers to continue (and the chart in on page 39 detailing winery mergers was as depressing as it was lengthy), but didn’t go much further than that. The webcast’s participants, including several comments from the audience, seemed to imply that Big Wine would define trends in style and that it was up to smaller producers to fill in the areas that were too small or too expensive for Big Wine to worry about. Which is also depressing — letting multi-national companies decided what wine would be made.

Kunde Family Winery: Selling less wine to be more successful

Kunde Family Winery

Jeff Kunde

Want to know how much the wine business has changed and how much angst that change has caused? Look no further than Sonoma’s Kunde Family Winery, a quality producer that has long made some top $10 wines, but has decided to cut production by one-third to be more competitive.

Call it addition by subtraction, thanks to distributor and retail consolidation.

The goal, says Jeff Kunde, the fourth of the five generations of his family to run the winery, is to go from more than 100,000 cases to 70,000. That’s because 100,000 cases isn’t big enough to be big any more, but it’s still too big to be small enough to be the artisan- or craft-style producer that distributors prefer if you don’t make one-half million cases.

At 70,000 cases, Kunde says, the winery doesn’t have to worry about being in every grocery and chain in the country and fighting money-losing price wars to keep shelf space. Plus, the change will allow Kunde to focus on the more profitable parts of wine, like its tasting room sales, and direct shipping.

“Consumers are not as loyal as they used to be,” says Kunde, who was in Dallas last month to visit his distributor and make the rounds of retailers and consumers. “They don’t see the wine they buy, as much much as the see the $9.99 price. And it hurts us when that happens.”

Cutting production should also allow the winery to make better wine for more or less the same price, since it won’t need as many quality grapes. In addition, says Kunde, it wants to let consumers know about its 100-year history, that it’s a smaller, family-run business and that it’s part of “the idea that people know where their wine comes from,” says Kunde. All of this will help it do better financially by making less wine.

The wines we tasted were up to the Kunde standard. The 2014 chardonnay ($12, sample, 13.8%) was lightly oaked but with enough vanilla to be California, balanced by fresh, tart pear. The 2014 sauvignon blanc ($12, sample, 13.8%) was grassy and lemony, with a softer finish than I expected. These wines remain excellent values, and are well worth buying.

The higher-end 2014 Reserve Century Vines Zinfandel ($40, sample, 14.8%) is loaded with sweet black fruit, but it’s not cloying or overly jammy, as so many post-modern zinfandels are. In this, it’s a nice balance between the current style and wine that you get actually drink and enjoy.