This week’s wine news: The feds go after unscrupulous bloggers, wine retailer speak, and bootleg liquor.
• Transparency is all: The Federal Trade Commission has decided that “consumers have the right to know when they’re looking at paid advertising” when they’re on-line; hence, crackdowns on marketers who don’t tell us when they’re paying for content. Two cases in the past year, in which the Lord & Taylor department store and film studio Warner Bros. settled with the commission over unscrupulous practices, apparently mean the feds are serious. The Warner case was particularly egregious, reports clickz.com: “Warner Bros. gave the influencers advance copies of [a] game and paid them anywhere from hundreds to tens of thousands of dollars each to promote the game to their followers with specific instructions, including ‘not to disclose any bugs or glitches they found.’ ” At least we’re not that bad in the wine business. I think.
• Retailer-speak: One of the difficulties with buying wine is that many of the the people who sell it have a completely different view of wine than consumers do. We worry about price and quality, and they care about almost everything but that. This interview, with an official at Florida’s ABC Fine Wine & Spirits, is a good example. It’s almost technical in its complexity, and the average consumer probably won’t be able to make much sense of it. But that’s how retailers think, and it’s not about what we want to buy.
• Deadly booze: Almost three dozen people have died in India over the past couple of weeks from drinking toxic liquor they bought from a local retailer. The retailer, who was arrested, was selling the booze at one-sixth the price of a name brand; some two billion liters of bootleg alcohol are sold in India every year, compared to less than three billion liters of legal liquor. In addition, 11 officials, including seven policemen, were suspended for for allowing the booze to be sold.
This week’s wine news: College students take to cheap wine, retailers fudge with scores, and U.S. wine sales will remain flat.
• Don’t slap the bag: The Wine Curmudgeon was greatly heartened to see a food website at the University of Florida offer solid advice about buying cheap wine and insisting that cheap doesn’t mean bad wine (and that it linked to my site just hows smart the author, Abigail Miller, is). Writes Miller: “The cuter the label, the simpler the wine,” something I have been preaching for years and that producers assume we’re too stupid to understand. Plus, I brushed up on current slang – “bougie,” a derivative of bourgeois, as in “drinking wine is so bougie,” and slapping the bag, a drinking game that uses the bag inside boxed wine.
• Scores and retailers: A Massachusetts TV station discovered that the scores used to sell wine on shelf talkers at liquor stores in its area were playing fast and loose with vintage – that is, the wine that got a 90 was not the vintage for sale. It was something that the TV report found in eight of 10 stores. Said one retailer: “I guess it would be good to know that the winery has won medals, but I think that the consumer needs to look at the year, because the year will make a huge difference.” Sadly, despite the retailer’s observations, I’m told this is a common practice throughout the country.
• Not much growth: The U.S. wine boom has ended, and the market will grow at just about one percent through 2020. This compares to growth of 3.3 percent before the recession, a fact the short story mentions but doesn’t try to explain. Has wine become what marketers call a mature category, where we’ve seen all the growth we’re going to have? Or is there something else going on that no one can explain? My guess, given that so few Americans drink wine compared to other countries, is the latter.
And how does a a butcher shop evolve into a a top-flight wine retailer? We talked about that, as well as Nick’s very brief time in law school; which parts of the world offer the best wine value; and the increase in interest in a Wine Curmudgeon favorite, chenin blanc. Nick also offered some of his best wine values and the best piece of advice for wine drinkers: If you want to learn about wine, you need to drink it. And don’t miss the bit about cutting red wine with water.
Finally, what makes a great wine shop? Nick’s answer is simple: It’s about selling the customer the wine that makes them happy, and not the wine that makes the retailer happy.
Click here to download or stream the podcast, which is about 13 1/2 minutes long and takes up 13 megabytes. The sound quality is good, though there are a couple of spots where it fades in and out and Skype wasn’t up to its usual standards (had to record the podcast a second time, in fact).
? Winery consolidation continues: The wine cyber-ether was full of pontificating and prognosticating last week after Constellation Brands, third on the U.S. Big Wine list, bought pinot noir maker Meiomi Wines for $351 million. Most of the commentators were baffled by the sale price, which seemed like a lot of money for the winery, especially since it didn’t include any vineyard land. Still, it wasn’t that surprising, given that Constellation paid $160 million for Mark West, the $10 pinot noir, in 2012, in a deal that also didn’t include vineyards. Meiomi is on track to sell three-quarters of a million cases in 2015, making it the $20 version of Mark West (marked down to $17.99), and as such seems like a perfect fit for the strategy that most Big Wine companies are following. They’ll sell you an entry level product, and then they’ll sell you the next wine when you trade up, and they’ll make sure you will be able to buy both wines in a grocery store. In this, it’s no different than E&J Gallo buying J and The Wine Group buying Benziger — business as usual for Big Wine in the 21st century.
? Retailers and grocers: This otherwise run-of-the-mill post about a Florida liquor chain adding a couple of stores explained the expansion thusly: “[I]n a bid to keep the ever-expanding grocery store channel at bay.” Which means the owners behind Florida’s ABC Fine Wine & Spirits understand what’s going on, even if most wine writers don’t. Interestingly the chain is up to 140 stores, which is still 60 less than it had 15 years ago, and speaks to the power supermarkets have today in selling wine. One national wine retailer told me that grocers thrive on competition, which explains much of their success, and aren’t scared of it the way so many regional and local liquor chains are.
? Restaurant price gouging: One would not expect the New York Post, home to the legendary Page Six gossip extravaganza and headlines like “Four sex scandals rock one hanky-panky high school” to commiserate with anyone who buys restaurant wine. But reviewer Steve Cuozzo, in a story headlined “Restaurants overprice wine because they know you have no idea the pain” spared no punches. Restaurant prices “… can drive you to drink ? anything but wine, that is.” He does an excellent job of explaining the contradictions and discrepancies in restaurant prices, and you can almost hear a bit of sympathy. Almost, of course, because the piece ends with a restaurant charging $100 for a very ordinary $25 retail Bordeaux.
? I’m so tired of that:Amanda Chatel at the Bustle lifestyle website says she’s tired of being picked on by beer drinkers, noting that it’s a scientific fact that cheap wine tastes better than cheap beer. She posts 21 questions about wine she doesn’t want to be asked anymore, and if some of them aren’t especially clever, her heart is in the right place, and especially with screwcaps. And because it’s a lifestyle site, there’s a picture of “Scandal’s” Olivia Pope with the post, and the site has 127,000 Facebook likes. Which is something for wine sites to ponder.
? Corporate buyouts: One of the world’s great cheap wine retailers, Cost Plus World Market, could get a new owner this year, if analyst speculation is worth anything. They think World Market’s parent, Bed Bath & Beyond, may be in play since it has underperformed the market. Don’t worry if you don’t understand that sentence; financialspeak can be as obtuse as winespeak. Know that the companies that do leveraged buyouts think they can make money buying Bed Bath & Beyond, stripping its assets and cutting costs, and then selling it again. Which usually means that the company becomes a shell of itself and underperforms the market again, setting itself up for another leveraged buyout. In this, World Market could suffer as well, a cheap wine horror too terrible to contemplate. Hopefully, the analyst speculation isn’t worth anything.
? $40 million, anyone? Those of us who wonder why cheap wine doesn’t get enough respect always overlook the economics of cult wines. California’s Kosta Browne, among the cultiest, was sold for what reports are saying is more than $40 million. Which is a nice return for a 20,000-case winery that makes mostly pinot noir and owns just 20 acres of vineyards. Which means that he deal was almost all about the brand, demonstrating how powerful the allure is for a cult producer. That’s a lot of money for a name, but in the high-end wine business, name is all.