Tag Archives: wine sales

Wine trends 2019

wine trends 2019Wine trends 2019: Higher prices, less choice, more plonk, and the return of sweet pink wine

Wine prices 2019

Most of the wine trends 2019 stories on the Internet describe a wine wonderland of rare vintages, exotic tastings, and unlimited opportunity. Which is probably true for the few who live in that particular wine bubble – they don’t have to worry about how much they pay and they can get their hands on any esoteric wine they want.

For the rest of us, wine trends 2019 are not particularly encouraging. Is it any wonder I worry about the future of the wine business? Here’s what to expect this year:

• An attempt to bake higher prices into the marketplace, not because prices should be higher – a grape shortage or better quality wine – but because the oligopoly that controls wine pricing wants higher prices. It’s worth noting that consolidation, which gave us the oligopoly, is no longer a trend. It’s an everyday part of the wine business.

• More three-tier reform failure. Yes, I am well aware that every smart liquor attorney and wine analyst expects the Supreme Court to kick the three-tier system in the groin in the upcoming Tennessee retailers case. And I want them to be correct. But it ain’t going to happen. This Supreme Court, which sees the 1950s as the Golden Age of American life, isn’t going to change three-tier in any way, shape, or form.

• The return of white zinfandel. It won’t be called that, of course, but will be disguised as dry rose. One example: The Seaglass rose. The 2016 vintage was made with pinot noir, “with barely ripe strawberry fruit and surprising freshness instead of the cloying, almost sweet quality that some wines have.” So what did the 2017 vintage (apparently minus the pinot noir) taste like? Cloying and almost sweet.

Bring on the recipe

• More formula wine, as producers treat wine production like a recipe at a chain restaurant. We’ve seen a lot of this already, especially in the $10 to $15 range, but it will expand to wines costing as much as $25. Who ever thought we would see wines at that price made to focus group specifications, with residual sugar, barely any acidity, and washed out tannins? One large bulk winery owner told me last week that he has to make two styles of wine now: sweeter for the U.S. market and drier for Europe.

• Top-quality brands losing distributors and importers, further reducing consumer choice. We saw this when the French Domaine du Tariquet lost its U.S. importer in 2018, and that was just the beginning of the bad news. Last year, California’s McManis Family Vineyards, which makes 300,000 cases annually, had to sign a distribution deal with The Wine Group, the fourth biggest producer in the country. McManis couldn’t find a distributor with national scope willing to carry its wines; in the age of consolidation, 300,000 cases isn’t big enough for Big Distributor. The McManis family still owns the winery, but it has to depend on another producer’s sales force to sell its product. How screwed up is that?

• Continued flat demand here and in Europe. As one California winemaker told me recently, “No one is buying wine anymore. What’s going on?” Or, as Wall Street put it: “Shares of Constellation Brands skidded as much as 11 percent Wednesday morning. … [thanks to its] disappointing wine and spirits business. …”

• The attack of previous vintages. Flat demand, combined with increased wine production, means there is lots and lots of older wine on warehouse shelves. More retailers – and even some that are usually more scrupulous about this – are mixing the older vintages in with the current stuff in hopes you won’t notice. Or, you’ll see older wines discounted, even if they’re so old they aren’t very drinkable.

Has the next phase of the wine slowdown started?

wine slowdownToo many grapes, younger people who don’t drink alcohol, and slowing sales among all age groups are signs of a wine slowdown

Call it a tipping point if you don’t mince words or an easing of momentum if you do, but the results are the same. It looks like a major change in U.S. wine consumption is underway. Call it the post-recession wine slowdown.

Know four things:

• California wineries, faced with an oversupply of grapes from yet another bumper harvest and lagging sales, don’t seem to be buying as many grapes this year. In fact, their attempt to get out of grape-buying contracts in some parts of the state is causing controversy and bad blood.

Wines sales have slowed, so that even an industry cheerleader termed growth for this year at a “sluggish 0.2% projected pace.” These numbers, from the company that publishes the Wine Spectator, confirm what has been reported elsewhere many times – U.S. sales by volume won’t exceed the increase in the drinking age population for the foreseeable future.

• One of the world’s biggest spirits companies expects that the “low-[alcohol] and no alcohol cocktail movement will increasingly shape the bar world” in 2019. The report went on: “What is most notable, though, is the differing consumption habits of the younger demographic, with 46 percent of people under the age of 35 likely to order a mocktail (non-alcoholic cocktail), versus just 16 percent of over-35’s. “

Rob McMillan of Silicon Valley Bank, one of wine’s leading statistical gurus, says the industry is at that tipping point. McMillan says there will be more grapes than are needed to meet slowing demand, and that the industry must come up with a Plan B to sell its product in this more challenging environment.

In other words, we have too many grapes, younger people who don’t necessarily want to drink alcohol, and slowing sales among all age groups. But the industry is hellbent on selling more expensive wine as if none this was relevant – if it was still the heyday of scores and wine magazines in the 1990s and that post-recession premiumization would go on forever.

Consumers – and that includes most wine drinkers – vote with their debit cards. You can only sell overpriced and lower-quality wine for so long before they put their debit cards away. If that is happening now, and I think it is, then we have a wine industry selling something fewer people want to buy. And that is not a recipe for success.

Go figure: Convenience stores are selling more wine than ever

convenience store wine

Who knew 7-Eleven and its competitors had become wine destinations?

Convenience store wine sales increased five percent last year, more than the overall wine market

Convenience stores are selling more wine than ever – and no, no one quite knows why.

Wine sales in convenience stores increased five percent in dollar terms in 2017, according to the National Association of Convenience Stores. That’s an amazing figure, given that overall wine sales in the U.S. have been mostly flat for the past couple of years.

“If anything, it’s a 10-year overnight success story,” says Jeff Leonard of the convenience store association. “It has taken a sustained effort by retailers to believe in the category to the point where consumers largely expect to be able to find wine – and the kind they want – at convenience stores.”

In this, convenience stores are likely taking wine sales away from supermarkets, but given the convoluted way wine statistics work, no one is quite sure. It’s also worth noting that wine sales grew almost five times as much as bottled water, a convenience store staple (albeit from a small base).

So what’s going on? Why are more of us buying wine at 7-Eleven, QuikTrip, Circle K, and the like:

• Better selection, as Leonard notes. It’s not just private label wine from 7-Eleven, but high-end wines – you can spend $50 for a bottle of Napa’s Stag’s Leap. Thank Big Wine for that. As the the biggest producers buy more companies, they need more retail outlets, so why not convenience stores?

• Younger consumers don’t see convenience stores the same way the Baby Boomers do. We associate convenience stores with Thunderbird and 4-liter boxes of sweet wine, which was about all you could buy there 30 years ago. They grew up with more and better choices.

• One-stop shopping. Says Leonard: “If consumers can go to one place to get gas, food and wine at one stop, that is more attractive than three stops.”

SVB wine forecast 2018

SVB wine forecast 2018SVB wine forecast 2018: This will be a good year for the U.S. wine business. But what the wine business does next could determine the health and success of wine in the U.S.

The first thing that Rob McMillan said at yesterday’s videocast for the SVB 2018 wine industry report was a warning. How seriously the ostriches in the wine business take his prediction could determine the fate of the U.S. wine business over the next decade.

“I look at the horizon, what’s going to happen,” said McMillan, Silicon Valley Bank executive vice president and the founder of its wine division. “Some people would say that’s a negative way to look at it, because business is good, and 2018 will be a good year. But what’s on the horizon?”

And the answer to that question, as I have written many times, may not be what the wine business wants to hear. It has focused on short-term growth, premiumization, consolidation, and wringing out profits at the expense of value and quality. And guess what McMillan said consumers, including and especially Millennials, are looking for in the wake of those developments?

“Value,” he said, “even at premium prices. It’s what I call the frugal hedonist.”

Where have we heard this before?

In other words, unless the wine business once again embraces value, trouble is looming. Here are some of the numbers in the SVB wine forecast 2018 that led to this perspective:

• Sales growth in the U.S., measured by volume, has been flat since 2013. This has not happened since the early 1990s.

• The high-powered growth rate for wine costing more than $9, which has been the highlight of premiumization, is starting to slow. This is especially true for wines between $9 and $15, which has been among the fastest growing price ranges.

• The bank’s clients, many coming from California’s top wine regions, have seen sales stall after a string of 10 percent annual bumps almost since the end of the recession. This is especially worrying, said McMillan, and nothing like this has happened since the early 1990s.

• Consolidation among distributors, which has been on hyper-drive for the past 18 months, seems to have hurt retail sales, funneling more business toward the biggest retailers.

• Traffic to tasting rooms in Napa, Sonoma, and Washington state has declined. Which, frankly, is inconceivable to anyone who came of age drinking California wine.

Finally, one bit of good news: Drink local seems to have become an established part of wine, said Mary Jo Dale, the marketing director, Americas, for Vinventions/Nomacorc, and one of the videocast’s panelists.

Winebits 503: U.S. wine sales, wine trends, writer’s block

wine sales

Maybe a glass of wine will you finish that story more quickly, Kolchak.

This week’s wine news: U.S. wine sales have been flat for two years, plus current wine trends and wine as a cure for writer’s block

No gains: Wine sales in the U.S., as measured by dollars and volume, have been stagnant for the past two years. That’s not my ranting, but Nielsen numbers, and if you can’t trust Nielsen, then we all need to go home and find something else to do with our lives. I mention this for a couple of reasons: First, because of the suspicion that this would happen given premiumizaton; and second, because I have been getting such criticism for suggesting that it might happen or could be happening. Again, wine is not immune from the basic laws of economics. As prices go up, consumption doesn’t. Why the wine business doesn’t understand this is beyond me.

Wine trends: American wine drinkers are drinking sparkling, getting younger, aren’t fussy about the corks vs. screwcaps debate, and are looking for lower alcohol options. Those are the conclusions of on old pal, Katie Myers, writing for the Padilla PR firm Buzzbin site. I think she is mostly spot on, though I’m still not sure the world is ready for wine in cans. And how could I argue with this? Younger wine drinkers are “frugal consumers – demanding quality at an affordable price point. …”

Who is kidding who? Austrian researchers claim that wine will help cure writer’s block, reports Decanter, the British wine magazine. This, no matter how much science is supposed to be behind it, is a foolish conclusion. We’ll ignore for the moment the alcoholism that has bedeviled so many of my colleagues over the years, famous and not so famous. What is important, and this comes from someone who has been known to run around the house wailing because he can’t write, is that wine makes me want to do everything but write. So I’m not sure how a glass or two will get me to the keyboard to work.

Amazon can revolutionize grocery stores, but it still can’t sell wine


Nary a wine bottle in sight, because even Amazon can’t solve the three-tier system.

Amazon has invented a cash register-less supermarket, but it can’t beat the three-tier system

Amazon says it will open convenience stores that are actually convenient by eliminating the checkout process, using technology to make shopping quicker and easier.

The grocery store business is agog with the news; the blog’s grocery store consultant told me “The idea is not new, but I think the technological advances are what make it possible now. Getting rid of the most hated part of the shopping experience is brilliant.”

Perhaps, but the irony is not lost on the Wine Curmudgeon. Some seven years ago, Amazon killed a program to sell wine over the Internet. The pilot, called AmazonWine, would have allowed consumers to buy wine like we buy everything else from the Internet giant. Search, click, and wait for it to show up at the door – and likely with free delivery for Prime customers.

So consider this: The world’s largest Internet retailer, whose technology, efficiency, and clout have changed the way we shop, says it can open a store without an employee working a cash register. Which is mind boggling. But it has never been able to figure out how to sell wine given the antiquated, decades-old regulatory system that governs alcohol sales in the U.S. — 50 laws for 50 states, and the requirement that almost every bottle of wine pass through a distributor licensed to sell wine in that state.

Ain’t three-tier grand?

Amazon “sells” wine today, but it’s a tiny part of its business and is nothing more than a way for wineries to sell directly to consumers. All Amazon does is charge wineries a fee to appear on the Amazon website, and the wineries do the rest of the work, just like they do when selling directly from their own websites.

And, because I do appreciate irony so much, one last thought. Not only did Amazon give up trying to sell wine, it apparently never made an effort to change the laws. What does it say about three-tier is when it’s easier to invent a store without a cash register using technology that didn’t exist a decade ago than it is to change laws that are almost a century old and mostly obsolete?

California wine trends: Is merlot in its death throes?

California wine trendsPinot noir isn’t necessarily the reason; how about sweet red blends?

Eight percent of the wine produced in California in 2013 was merlot, up from four percent in 1993. So why does it look like merlot may be on its way out as a varietal?

Think sweet red blends, the hottest California wine trend. There was no red blend category in 1993; in 2013, one out of every 7.4 bottles of California wine was a red blend, about 13.5 percent. That’s a staggering statistic, and speaks to the industry’s ability to give consumers new products on the turn of a dime. Who would have thought that about the tradition-bound wine business?

One can argue that I’m over-reacting, and that merlot is no worse off than cabernet sauvignon, whose share increased just two points in 20 years. But cabernet remains the most popular red varietal and the second most popular overall, and its U.S. sales (including imports) remain strong.

In fact, merlot trailed every category in 2013, including white zinfandel, which the industry gave up for dead years ago. The chart (click on it to enlarge) was compiled by Lew Perdue at the Wine Industry Insight website from information at this year’s Wine Industry Financial Symposium. It’s a revelation:

• Chardonnay, long the most popular California varietal, fell from one of every three bottles to one of every four.

• Chardonnay almost certainly lost market share to pinot grigio (13.1 percent) and moscato (9.8%), neither of which were in the 1993 numbers. Would anyone have thought 20 years ago that California would make more of those than merlot?

• Pinot noir, once thought to be nearly impossible to grow in California, was almost as popular as the red blends. This isn’t so much the infamous “Sideways” affect as it is to the way inexpensive California pinot noir is made – fruity and more like a red blend.

• The “other”category accounted for more than one-quarter of the wine produced in 2015, also staggering. Is our chardonnay and cabernet world changing so quickly that we aren’t noticing? The varietals included in the other category aren’t listed, but I assume it includes rose. In which case, the numbers may not be quite so surprising.

Much of this has to do with the change from the smaller and more traditional producers who dominated the market in 1993 to Big Wine’s control of production today. But that’s a post for a different time.