This week’s wine news: It’s the 100th anniversary of the repeal of Prohibition, plus insight into the SVB wine report and why the U.S. still drinks more wine than anyone else
• Happy anniversary – or not: Reports the BBC: “A century on, a small group of Americans are fighting to keep the dream of the so-called ‘noble experiment’ alive.” The story looks at those who think repeal was a mistake, and why they’re still optimistic about stopping alcohol sales in the U.S. Because, as the story also notes, “The drinking age of 21 is higher than in other nations where drinking is legal. Dry counties and dry towns – where alcohol sales are restricted or barred outright — are dotted throughout the country. And Gallup polling from last year shows that nearly one fifth of respondents said drinking alcohol was “morally wrong.”
• Keep the faith, baby: Rob McMillan, whose Silicon Valley Bank wine industry report made such depressing reading last week, tells the Wine Business International trade magazine that one should not abandon hope. He says the industry needs more professional management, which is usually missing given so many family businesses; that wine needs to understand younger consumers and not assume they’re like their parents and grandparents; and that wine needs to focus on health and not premiumization.
• Still No. 1: The U.S. remains the world’s biggest consumer of wine, despite all the doom and gloom. That’s the latest data from a study by International Wine and Spirit Research commissioned by Vinexpo. Intriguingly, Chinese consumers drink more red wine than anyone else, some 155 million cases. By comparison, the French drink 150 million cases of red wine. No, I have no idea what this means, save the Chinese prefer red wine.
This edition of Ask the WC: European wine consumption, and why they’re drinking less; plus, wine refrigerators and how much wine the WC tastes a year.
Because the customers always have questions, and the Wine Curmudgeon has answers in this irregular feature. You can Ask the Wine Curmudgeon a wine-related question by clicking here.
You recently wrote that “European producers keep pulling out vines in the wake of reduced wine consumption in France, Spain, and Italy.” Why is that? Why are they drinking less?
European wine consumption has been steadily declining for years, thanks to stricter drunk driving laws, the aging of the population, and younger drinkers turning away from wine. Sound familiar? Having said that, Europeans still drink more wine per capita than we do — about one bottle a month for Americans compared to four bottles per person in France.
Oh Cheap Wine One:
I’m thinking about buying a wine refrigerator. Do I need one?
Probably not, unless you’re buying wine that needs to age. And most wine doesn’t. The usual figure is that 90 percent of the wine in the world is made to drink within a couple of years of its vintage. In which case, use the fridge — take a cold white wine out about 20 minutes before you want to drink it, and chill a red for 20 or 30 minutes before opening.
Hello, Wine Curmudgeon:
You must write hundreds of wine reviews a year. Do you really taste that much wine? How much do you taste a year?
I write about 200 reviews of some sort on the blog each year (which doesn’t include reviews and the like for my freelance work). All told, I probably taste a couple of thousand wines a year between trade tastings, competitions, and drinking at home. It’s like my pal Dave McINtyre says: “It’s not so much that my palate is better is yoursd. I just drink a lot more wine than you do.”
More Ask the Wine Curmudgeon:
• Ask the WC 14: The wine availability edition
• Ask the WC 13: California chardonnay, grip, affordable wine
• Ask the WC 12: $5 wine, varietal character, negative reviews
The number of of us who prefer wine over beer and spirits is at a 14-year low
Unwelcome news for those of us who care about wine: The number of Americans who say they prefer wine over beer and spirits is at a 14-year low.
A July Gallup poll found that 40 percent of us who drink alcohol prefer beer, while 30 percent prefer wine and 26 percent like spirits best. The 30 percent figure is the lowest since 2003, and approaches the historical lows of the 1990s. The trend has continued downward since its peak of 39 percent in 2005, when wine passed beer as the most popular alcoholic beverage in the U.S.
So what’s causing this?
• Premiumization, in which we’re paying more for wine that isn’t especially better. Higher prices almost always have something to do with how we decide what we buy. The downward trend, which started in 2009, almost exactly coincides with premiumization.
• The decline in restaurant wine sales, again thanks to higher prices. Those of us who might have a glass or two when we eat out may have given that up to save money.
• The craft beer movement, as well Big Beer’s panic-fueled marketing to regain the favor of U.S. drinkers.
• An uptick in the number of Americans who say they don’t drink, at around 38 percent from 35 percent in 2005. My guess is that many of these people are wine drinkers who drink only on birthdays, anniversaries and holidays, but have given up alcohol for health or pricing reasons.
The end of the U.S. wine boom will change the wine business, and consumers almost certainly won’t be the better for it
I’ve written about this before on the blog, but usually in bits and pieces – that the 40-year U.S. wine boom may have ended. But this story, which I wrote for the trade magazine Wine Business International, goes into all the grisly details. There’s a lot of math involved, and the last quarter of the piece is business-oriented, but still worth reading for those of us who love wine.
That’s because the end of the wine boom will change the wine we are able to buy, how we are able to buy it, and who makes our wine – and not necessarily for the better. Consider:
• The growth that made the U.S. the biggest wine consuming country in the world has ended. Instead of the 5 to 10 percent annual increases that weren’t unusual during the four-decade run-up, look for wine consumption to grow only as much as the increase in the country’s drinking-age population, about one percent.
• Prices could well remain flat, since more and more wines will be chasing the same number of wine drinkers. By one analyst’s estimate, there are about 125,000 wine labels on U.S. shelves in any one year, but the high frequency wine drinker buys only about 75 bottles a year. Who is going to buy the rest?
• Flat prices are good news for the consumer, but the bad news? Consolidation among retailers, distributors and producers, which shows no sign of ending, could make it more difficult for all but the biggest producers to make an impact on wine drinkers. Who else will have the money to market wine in that glutted a market? And the wines they’ll be marketing will almost certainly be boring, focus-group driven, and all taste the same. In other words, red blends run amuck.
Those three things may also offer an explanation for premiumization. If you can’t sell more wine, and prices are flat for the wine you can’t sell anyway, then invent new, more expensive wine to sell. Which sees to be what has happened since the recession started in 2007 – the value of the wine sold in the U.S., as measured in dollars, has increased more than the amount of wine sold, 25 percent to 21 percent.
Finally, the trade magazine post has generated a fair amount of buzz on the cyber-ether, and Forbes even picked it up (though the piece misspelled my name). Which is all well and good, but why didn’t anyone notice this before? Were we too busy focusing on toasty and oaky to see what was going on?
Photo courtesy of Peachridge Glass, using a Creative Commons license
? Treasury gets Diageo wine: Get ready for more Big Wine news in the wake of Diageo selling its handful of wine brands to Australia’s Treasury Wine Estates. The $351 million deal gives Treasury four million cases worth of wine in the U.S., which may move it into the top five of U.S. producers. The key is what Treasury will do with the brands, which include Sterling: Will it keep all of them, or sell some it sees as too cheap for its new focus on wine costing more than $10? Also, the purchase was as much about getting Diageo’s infrastructure in the U.S., including its bottling lines. Finally, there is this great quote from Treasury boss Michael Clark: “We remain committed to our strategic road map of transitioning our business from an order-taking agricultural company to a brand-led and capital-light marketing organization.” If anyone can explain what that means, I’ll send you a copy of the cheap wine book.
? It’s all about Italy: We can argue about what wine consumers want, but we can’t argue with the numbers. Hence, Italy’s continued success in selling wine in the U.S., accounting for one-third of all imported wine in dollar terms the first six months of this year. The big losers? Australia, still, as well as Chile and Argentina. Americans want pinot grigio and Prosecco, and Italy is happy to give it to us at mostly cheap prices. The Aussies, on the other hand have little that anyone wants, as sales fell seven percent in dollars and six percent in volume. How the mighty have fallen.
? The French are drinking again: Decanter reports that a government survey found a six percent increase in “occasional wine drinkers,” who accounted for half of the respondents. This is important news in a country where wine consumption has declined steadily for decades. This group included younger drinkers and women, who say they were more likely to have one or two glasses of wine a week. To put this in perspective, that one or two glasses of wine a week is more than bottle a month, which means an occasional wine drinker in France drinks more than the average adult in the U.S.