Yes, that’s a line at an Australian liquor store as customers “stock up.”
This week’s wine news: Booze rationing, as only the Australians can do it, plus looking at restaurant closures and that pandemic-fueled spike in wine sales
• How much do you buy otherwise? Australia’s top retailers are rationing booze purchases to prevent hoarding, which seems reasonable given all that is going on. But the limits are mind-boggling: two 24 beer-cases or pre-mixed drinks, 12 bottles of wine, or two bottles of spirits. And you can buy the limit in two of those categories. Even with pandemic-related pub closures, alcohol spending Down Under increased 34 percent in the 52 weeks to March 27. I wonder what the U.S. neo-Prohibitionists would say about that. The Reuters story did note that “one in six adults drinks more than the recommended daily maximum.”
• Restaurant closures: More than one in 10 U.S. restaurants could be closed permanently by the end of the month, says a study from the National Restaurant Association. Restaurant Business reports that three percent have already closed, which translates to 30,000 locations around the country. If 11 percent close, which the study said was possible, that’s another 100,000 empty stores. Nationally, restaurant sales were down 47 percent between March 1 and March 22. “That’s a stunning decline for an industry that operates on a weak foundation of thin margins and excessive debt,” said the story.
Rob McMillan: There are going be better quality grapes in cheap wine, even as wine prices decline.
“What’s going to happen to demand? People are still going to drink”
The good news? Rob McMillan of Silicon Valley Bank, perhaps the foremost financial analyst in the wine business, says wine can survive the coronavirus pandemic. The bad news? It’s not going to be a lot of fun during the duration.
The highlights of our conversation:
• Expect to see weaker wineries fail, as well as some grape growers who don’t have producers to buy their grapes. In this, there probably won’t be bankruptcies or foreclosures as much as there will distress sales. There are always people wiling to buy wineries, says McMillan, even in a recession, and prime vineyard prices probably won’t decline all that much.
• Wine prices were expected to fall before the pandemic hit the U.S., and the stay at home orders and layoffs will only hasten the process. In this, though, since there are too many grapes, expect to see better quality grapes going into cheap wine. One rumor? That a major $3 producer snapped up Napa Valley cabernet sauvignon at bargain prices.
• Look for more producers to try to sell their wines at mass retailers and supermarkets. The loss of tasting room business needs to be made up somehow, and retail wine sales haven’t slumped as much as some thought.
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.
Details are still unclear, and it has been difficult to get anyone to talk about what has happened. I’ll update the post if I find out more.
Here’s what we know: The financial police, acting on a request from an anti-Mafia prosecutor in Trentino, seized 900 hectares of vineyards (about 2,200 acres) and several buildings at Feudo Arancio. Police say a Mafia group in Sicily was using Arancio to launder money; four people are reportedly being investigated.
Feudo Arancio’s wines aren’t as consistently good as Falesco, but they’re worth the $10 they cost more often than not. I’ve reviewed three of them over the years, and the whites seem to be more interesting.
This Italian news report (use Google translate to make sense of it) reads like a pulp novel, complete with references to “men of honor,” the Cosa Nostra, “fugitive bosses,” and “a classic of fixing.”
The charges, if true, seem quite odd. A winery doesn’t appear to be the best place to launder money. It’s not a cash business, like a casino; cash flow, again, is limited; and there are extensive legal reporting requirements because alcohol is involved. But, given the success Italian police have had over the past couple of decades in combating the Mafia, this might have been the best the Mafia could do (assuming the charges are true).
This week’s wine news: Michael Broadbent, a leading English wine writer and critic, has died at 92. Plus, is it OK to drink alone and does expensive wine offer value?
• Michael Broadbent: Broadbent, to quote his obituary on thedrinksbusiness trade site, “was a towering and influential figure in the wine trade.” He was a master of wine, wrote two books about wine that were considered standard texts, and was a wine columnist for Decanter magazine for almost 50 years. And that was after he pioneered fine wine auctions for Christie’s. The family business, Broadbent Selections, which is run by son Bartholomew, is one of the finest small importers in the U.S.
• Drinking alone? The New York Times’ Eric Asimov asks: “But what if social distancing means you are actually by yourself? Is it all right to open that bottle?” His answer? “If you do have a problem with alcohol or issues with depression, drinking alone is not the responsible choice. But otherwise, why shouldn’t we enjoy the beauty of wine, especially if it is augmenting a meal? If we are going to take the loving step of cooking for ourselves, I believe we should absolutely make the experience even better by enjoying a glass or two of wine as well.” I couldn’t have said it better myself.
• Value for money? David Morrison at the Wine Gourd blog looks at the Wine Spectator’s annual top 100 list, which has few inexpensive wines, to find out if it offers value for money. The result? Mostly, though his analysis does rely on points: “yes, good value-for-money can be found in this Top 100 list — go for the highest-scoring wine at $20, or the cheapest wine at your favorite score.” The finding that most interests me is that the best price for value is around $20, since those are among the least expensive wines on the Spectator list. And, as Morrison notes, there is “some very poor value-for-money, but in those cases you are getting vinous excitement, instead.” I’ll settle for the value, thank you.
This week’s wine news: Is the plastic PET bottle the future of wine? Plus, Coronavirus wine humor and Utah may let residents bring wine into the state legally
• Is plastic the future? One analyst, noting that most wine produced today is made in bulk and to drink immediately, says recycled PET is “a realistic alternative” to glass bottles. Emilie Steckenborn, writing for the Beverage Daily website, says the plastic bottles are much better than the traditional glass bottle – lighter, more cost effective to ship and store, and infinitely more environmentally friendly. In this, the piece is surprisingly frank about the inefficiencies of the traditional bottle, and she sounds more like a certain curmudgeon than a member of the Winestream Media.
• Coronavirus wine? Let me apologize for this item first, but I couldn’t resist: A Dallas wine shop says it has “Coronavirus vaccine sold here: bubbly, white, red available.” As the article notes, it’s a refreshing change from the toilet paper hording stories that are dominating the news and even – dare we say – a reason to smile? Also, please note the difference between this and the hucksters and scam artists flooding the market with fake cures and testing kits.
• Finally, Utah? Regular visitors here know the WC enjoys poking fun at Utah, whose liquor laws are some of the most restrictive – and silliest – in the country. Well, there may be one less reason to poke fun: the state is about to let the state’s residents join wine clubs and bring wine in from another state without committing a crime. The Salt Lake Tribune reports that the bill just needs the governor’s signature. Fortunately, the new law is very Utah – no home delivery for wine club members, who would have to pick the wine up at a liquor store and pay the state’s 88 percent markup in addition to the cost of the wine.
This week’s wine news: Beard award semifinalists feature drink local, while three-tier wins a court victory and wine clubs lose
• Beard award semifinalists: Seven wineries, including four regional producers, are among the semifinalists for the 2020 James Beard Award for outstanding beer, wine, or spirits producer. The three are some of the top Drink Local winemakers in the country: Texas’ Kim McPherson of McPherson Cellars; Vermont’s Deirdre Heekin of La Garagista Farm + Winery; New York’s Nancy Irelan and Mike Schnelle of Red Tail Ridge Winery; and Virginia’s Rutger de Vink, of RdV Vineyards. The Beard Awards are the restaurant business’ version of the Oscars, so this is a big deal. In addition, given the way the final voting often turns out, earning semifinalist honors is the equivalent of winning for someone not on the East Coast or in a major media market. The finalists will be announced March 25.
• Score another for three-tier: A Mississippi court has ruled that out-of-state retailers can’t sell wine in that state, in a decision that left a couple of legal scholars scratching their heads. The decision itself isn’t surprising, given the way the three-tier system works to prevent an out of state retailer from doing that. What is odd, wrote the Alcohol Law Review, is that “this unanimous decision reverses the trial court’s decision. … This case served as a reminder of first year law school’s Civil Procedure class and examination of when personal jurisdiction kicks in. The opinion does not really address alcohol laws in depth.” But, as the blog’s liquor law expert has said many times, since when does three-tier have anything to do with alcohol law?
• Score one for wine drinkers: The blog has written extensively about problems associated with third-party wine clubs – those not run by wineries. Now, a lawsuit has agreed with us. Two national wine clubs have settled lawsuits alleging they broke California law by not notifying customers that their memberships would be renewed automatically. Direct Wines and Wine Awesomeness did not admit wrongdoing, but agreed to change their policy and pay $350,000 and $15,000, respectively, in penalties and costs. From now on, each will have tell a customer when their membership is being renewed, and can’t hide the policy in fine print or on an Internet link.