Tag Archives: wine business

Winebits 310: Restaurant wine, wineries for sale, top grape growers

? Wine by the glass: Restaurant wine is one of the most frustrating of all the frustrating things in wine, what with high prices, poor selection, and indifferent service. And restaurant wine by the glass programs are even more frustrating. My pal Tim McNally offers an in-depth look at what’s wrong with wine by the glass and how it can be fixed: “Lack of product knowledge, lack of good business sense, lack of staff training and lack of desire to serve the customer ?s needs all play a role in failed [wine by the glass] programs. … This is not rocket science. This is common sense with a profit reward at the end of the transaction.”

? Want to buy a winery? Talk during the recession was that any number of California wineries were ready to go under, victims of what the economic slump did to sales. But none ever seemed to fold, and no one was sure if that was because their lenders didn’t want to forclose (what’s a bank going to do with a winery?), an influx of private cash, or very quiet purchases. Now, Shanken News Daily hints at what might have happened and is still going on: “But it ?s an under-the-radar market. Plenty of wineries, faced with tough finances or generational change, are looking for buyers. But they ?re not advertising the fact.” My guess is that this part of the structural change in the wine business that started during the recession and is continuing — more consolidation, the biggest multi-nationals getting bigger, and the appearance of mid-sized big companies (for lack of a better term) like Foley Family Wines, which have been formed by combining a variety of producers who needed or wanted to sell.

? The biggest grape growers: One of wine’s enduring myths is the artisanal harvest, where the grapes are picked with loving care by the people who own the winery. The truth, of course, is much different; grape harvests for most of the world are as mechanized as corn and soybeans. This was reinforced by a report in a farming trade magazine that detailed the biggest grape growers in the country; five of the top 10 wine grape farmers are cheap wine companies, led by Bronco (which makes Two-buck Chuck) at No. 1 and E&J Gallo at No. 3. That they control their grape supply, and don’t have to buy it elsehwere, is one reason why they can sell their wine for so little.

Robert Parker, Parkerization, and the judgment of history

Dear Mr. Parker:

I smiled when I read details of your recent interview with the French wine magazine Terre des Vins, where you said you didn ?t think Parkerization ? the idea that wines should be richer, riper, and more alcoholic, a practice that has become de rigueur for many high-end producers in France and California ? existed. It reminded me what Joan Baez once said: That she never wanted to be famous, just well known.

Yes, Parkerizaton exists (as even your wife has apparently noted). Why else would I get a sample of $50, 15.2 percent California pinot noir, other than to impress you? It ?s not like anyone else would want to drink it.

Frankly, denying Parkerization is too Shakespeare ? you are protesting too much. Instead, you should acknowledge the influence you had on the wine business over the past 20 years, when even the greatest French producers would accept your verdict as gospel. That ?s pretty damned impressive.

Before Ernest Hemingway, everyone wrote like Henry James. After Hemingway, everyone wrote like Hemingway. Papa reveled in that, and never tired of reminding the world that he was behind it. See the scenes with F. Scott Fitzgerald in ?A Moveable Feast ? for evidence.

My guess, and it ?s only a guess, because we ?ve never met and I don ?t know you (though I greatly respect your work) is that you were having a Baez-like moment. Could all the changes in the wine business and the way wine is made have really happened because of you? You were, all those years ago, just an attorney who loved wine. There ?s no way you, one man, could have changed so much, is there?

Afraid so, and you only have a couple of choices now. Accept your role, like Hemingway (without the looniness, hopefully). There are an almost infinite number of wine writers who wish they were in that position. Or, if you really think Parkerization is wrong, say so. Say it forcefully and often. Look back at what you wrote and see where, maybe, you opted for unctuousness (one of your favorite terms) over subtlety. And did it happen more often than you remember?

Regardless, accept that most of us would not be doing this sort of thing if not for you. I, for one, am grateful for that.


Jeff Siegel
The Wine Curmudgeon

Big Wine: 5 companies, 60 percent of sales, 200 brands

Call it serendipity. Shortly after my blog posts about Big Wine at the end of last year, a Michigan State study offered even more data about how Big Wine works and how it has changed the business.

The paper, “Concentration in the U.S. Wine Industry,” was compiled by Phil Howard, an associate professor who studies consolidation. After doing soft drinks and beer, he told me, wine was the next logical step.

“And even I was surprised by what I found,” Howard said. “Wine was much different than what I thought. If you go to the stores, it seems like you have all these choices, because the shared ownership is not very apparent. We wanted to help consumers understand what they were really buying.”

The study consists of two parts — third-party sales data and store visits from Howard and his graduate assistants. The former, displayed in some very nifty charts on the study website, paints a fascinating picture of market share as well who owns what labels. Three companies — E&J Gallo, The Wine Group, and Constellation Brands — account for more than half of wine sales in the U.S.

This is my favorite chart. For example, you can see how important Cook’s champagne is to Constellation Brands (about as much as Robert Mondavi, believe it not), and that Bronco, which makes Two-buck Chuck, has a bigger market share than much larger companies like Diageo and Altria, which owns Chateau Ste. Michelle.

The store visit results were even more fascinating. Howard and his graduate assistants counted wine at 20 Michigan retailers, where they found more than 3,600 unique varieties (where chardonnay was one variety, merlot another, and so forth). Those wines came from more than 1,000 different “companies,” although, as the study noted, the “top firms each contribute to an illusion of diverse ownership by offering dozens of brands (and hundreds of varieties), many of which do not clearly indicate the parent company on their label.”

The reason for that, said Howard, is not difficult to figure out: “A company known for producing cheap wine and not quality wine does not necessarily want to be identified with a premium, high-end brand.”

Other key points:

• The only unique varieties of wine found in more than half the retailers were Clos du Bois chardonnay, from Constellation, and Cavit pinot grigio. In other words, wine has no national brands, in the way every retailer in beer carries Bud Light and Coke and Pepsi are in every store that sells soft drinks.

• Half of the stores carried the same six varieties — Blackstone merlot, Ravenswood zinfandel, and Woodbridge chardonnay, all from Constellation, and Apothic red, Barefoot chardonnay, and Ecco Domani pinot grigio, all from Gallo. What this says about retailer selection, customer preference, and distributor clout is worth a second study.

• The top six wine companies in the U.S. accounted for more than one-fifth of the varieties found in the stores. That it isn’t higher speaks to retailer determination to carry other brands, something else not seen in soft drinks or beer.

• Howard said that the variety and number of wines, as impressive as it is, would probably be even more impressive in states that are less regulated than Michigan, which has one of the tightest three-tier systems in the country.

Finally, though Big Wine isn’t as top-heavy as Big Beer, it may be headed that way, said Howard. He said the wine business resembles the beer business in the 1950s, when 30 companies dominated the market. Today, just two beer producers — AB InBev and Molson Coors — account for three-quarters of all sales.

Five years, and the five biggest changes in the wine business

Five years, five changes in the wine business

Even Eddie G. is surprised by the changes in the wine business over the past five years.

The blog turns five next week, a period that has given the Wine Curmudgeon a cyber-eye view of some significant changes in the way we drink wine in the U.S. It ?s not the same score-driven, pay as much as you can business that it was when I did newspaper wine writing in the two decades before the recession.

The biggest change? That consumers discovered that they can drink cheap wine without worrying about quality or what wine snobs think. This shift in drinking habits has been well documented, though rarely discussed in the Winestream Media. Head in the sand, I suppose.

But everyone I ask says the same thing (and I ask everyone I talk to). We ?re selling more wine than ever before, they say, but we ?re making less money because we ?re selling cheaper wine and cheaper wine is less profitable. One importer was practically rueful; she said she had never seen anything like it in all her years in the wine business.

The other changes: The multi-national wine producers ? growth and increasing domination of the wine business; the return of sweet wine; the decline and fall of Australia; and the idea of local wine.

1. The rise of cheap wine. In the early part of this century, there was no Two-buck Chuck, no Barefoot, and no Cupcake. There wasn ?t even a sense of cheap wine. Instead, the perception was that there was good wine, which was expensive, and bad wine, which wasn ?t. Two-buck Chuck, the first competently and consistently made cheap wine, started the idea of cheap wine as something that wasn’t junk, and recession-weary consumers embraced it. Wine drinkers who had been taught they needed to pay $15 or more for a decent bottle of wine for dinner discovered they could pay $7 — and they didn ?t notice a difference in quality (because, of course, the wine business never bothered to explain the difference). This process is called trading down, and it looks like it ?s here to stay.

2. The multi-nationals take over. Wine was supposed to be multi-national proof, and even Coca-Cola couldn ?t make it work during its wine foray in the 1980s. That has all changed, and in a huge way. Not only do a handful of wineries make as much as 90 percent of the wine in the U.S., but they are also the most profitable and growing faster than everyone else. This is why so much of the reporting about wine pricing is so wrong. It doesn ?t take into account the ability of these Wine-zillas to set prices regardless of the grape supply. Their economies of scale are one reason, but they can also afford to make less profit on each bottle of wine, hence keeping prices low and retaining market share.

3. The return of sweet wine. In 2007, white zinfandel accounted for almost 10 percent of U.S wine sales, as measured by bottles sold. Four years later, it was just 7 percent. This trend started sometime in the early 2000s, and it looked like white zinfandel ? once the wine that drove ?serious ? wine drinkers crazy because it was sweet ? was fading slowly away. Which may happen, and which may be irrelevant. The wine business has embraced the new sweet wines in a way it never did white zinfandel ? new brands, clever marketing, and the respect that comes from a new cash cow. Even more unbelievable is the rush to sweet red wine, which accounted for 1 percent of wine sales in 2011, as much as malbec.

4. The sun sets on the Aussies. A decade ago, the hip wine was shiraz, Yellow Tail had spawned what seemed like a million critter labels from Down Under, and Australia was the next big wine region. Today, the Australian wine industry is a mess, and retailers tell me they can ?t give shiraz away. How bad is it? The Australian Bureau of Statistics reported earlier this year that the country ?s wine sales declined 2.4 percent in the most recent fiscal year — the first decline ever. The Aussies were clobbered by a doubling in the value of their currency against the U.S. dollar; an almost Wall Street-like feeding frenzy in which the country ?s big producers merged, merged again, and then collapsed; and government policies that encouraged production and produced an almost unimaginable over-supply of grapes.

5. Local does mean wine. The number of regional wineries in the U.S. increased 44 percent between 2005 and 2010, from 1,550 to 2,765, according to the Wine America trade group, We can argue all we want about the quality of local wine or about whether there is a need for it, but that doesn ?t change the fact that it exists, and that it isn ?t going away. There are two generations of wine drinkers younger than the Baby Boomers who have grown up with regional wine, and think that it ?s perfectly normal in the same way Boomers thought TV was normal and didn ?t understand why anyone would want to listen to the radio every evening.

Winebits 224: Craft beer, wine bloggers, wine snakes

Listen up, wine business: Jules Van Cruysen's article in Palate Press, "What the wine idustry can learn from craft beer," is nothing short of brilliant. He points out why craft beer does so well with the same people that the wine business has so much trouble reaching, and "The answer is simple ? they have mobilized their consumers around a set of shared principles to advocate on their behalf ? not only to drink craft beer, but to demand it at restaurants, bars and liquor stores and to force it into the hands of family and friends." You mean that works better than elitist and unintelligible wine reviews and point scores? Hard to believe, isn't it?

? Most influential wine bloggers: And the Wine Curmudgeon didn't make the list (which isn't suprising, is it, Groucho?) The nine names includes some surprises, no women, and someone who doesn't blog any more. It comes from the respected Paul Mabry at the Vintank consultancy in Napa, who I'm not quite sure expected the reaction to the post (if one feels like wading through the comments). One of the nine was our pal Lenn Thompson at New York Cork Report, who does yeoman work with regional wine. 

? Remember the wine fridge snakes? They were rescued from a construction project in suburban Chicago in February, when their habitat was destroyed, and placed in a wine refrigerator to finish hibernating. Turns out, reports the Chicago Tribune, that all is well. The 82 snakes were released last week into a new, specially designed snake den in a state park. No word yet on what the wine fridge will be used for next.

“Wine writers — donkeys that most of them are”

As long as we’re on the subject of wine writing and its various deficiencies, consider this video. It pretty much puts everyone in the wine business in their place, from consumers to wine writers to retailers to restaurants to producers. Congratulations to VinnyFi1 at YouTube, who certainly knows how to cork a bottle.

The section about wine writers is priceless. The quote in the headline is from the video, and there are a couple of others that are almost as good, whether it’s calling the Wine Spectator the Wine Dictator or discussing how to hoodwink those 30-something wine types who want to be famous more than they want to know about wine. And calling restaurants burglars for their pricing strategies isn’t bad, either. Don’t know who VinnyFi1 is (and this is his only video), but the Wine Cumudgeon is jealous that he didn’t think of this first.

I’d also like to recommend a video called “96 points,” from Dalforno, also from YouTube, which pretty much says everthing that needs to be said about the 100-point scoring system. It includes the classic exchange: “What does a 96-point wine taste like? Between a 95-point wine and a 97-point wine.” Be warned, though, that the language is reminisicent of my days working on newspaper copy desks; if that’s a problem, you’ll probably want to skip it.

Winebits 207: Wine sales, Gruet, wine names

? What wine companies think: We spend a lot of time on the blog talking about why wine producers do what they do, but we rarely get an inside look as revealing as this, an interview with the man who runs the company that owns Seghesio and Pine Ridge, among others. Says Erle Martin of Crimson Wine Group: "The recession has given consumers an opportunity to explore outside their comfort zone. If they used to fill the cart with $50 Napa Cabernet, now Argentine Malbecs are looking good, or Garnacha from Spain, or other full-bodied alternatives retailing at $10 or lower." The business jargon might slow the piece down a bit, but if you stay with it, you'll get a good sense of how these guys think and why they make the decisions they do.

? Gruet off the hook: A judge has ruled that New Mexico's Gruet Winery can't be included in the lawsuit to recover money from the the 2010 Cap*Rock bankruptcy auction debacle. That's when Laurent Gruet, whose family owns the winery, bid money he didn't have and won the auction to buy Cap*Rock. Walt Nett in the Lubbock Avalanche-Journal reports that the judge said the winery didn't actually participate in the auction and didn't give Laurent permission to bid on its behalf. The trial for damages is supposed to start Dec. 21. Who knew bankruptcy could be this much fun?

? Wine names and labels: An odd story in the New York Times detailing the trend towards cute wine labels and names, including several wines called Bitch. Why odd? Because this has been a trend for at least a decade, and there's nothing in the Times story that is especially new. And it fails to mention Randall Grahm, who pretty much invented this sort of thing. It's one of those stories that one reads and wonders why it was written; nothing in it is especially new. The cranky ex-newspaperman in me wonders if someone from the Times was wandering through a liquor store, saw a wine labeled Bitch, and thought it would make a good story — not knowing that it has been a good story for a long time.