Tag Archives: wine sales

Wine trends 2020

wine trends 2020

I wonder: Can I fit White Claw into this gizmo?

Wine trends 2020: The wine business will ride premiumization until it dies, plus more wine-like products, more neo-Prohibitionism, and a tariff that could kill the wine business

Wine prices 2020

Premiumization will continue until it doesn’t. This approach is scarily similar to what happened to the newspaper business. In the late 1980s, many industry leaders knew that the days of throwing papers from cars at 6 a.m. were numbered. I was even told that in a meeting. But no one did anything about it, because newspapers were still obscenely profitable and the industry had so much money tied up in printing presses. The smart people in the wine business know premiumization is on its last legs, but they don’t have another plan and they’re still making money, so it’s easier not to worry about what’s next.

• More wine-like products – bourbon barrel wine, fruit-flavored wine, and the like. Because, of course, White Claw. The irony is that producers see White Claw-like products as their chance to attract younger wine drinkers, when White Claw’s success is about its cost and low alcohol. Which, of course, has nothing to do with wine. It’s also worth noting that White Claw and its ilk are hurting beer more than wine, and that not just younger people drink it.

• Neo-Prohibitionism becomes an accepted part of American life. In other words, this will be the year when we find out Dry January isn’t just a story in a woman’s magazine. The evidence has been there for a long time, not that anyone in the wine business paid much attention. But when designated drivers, mocktails, and all the rest are as common as smoking and drunk driving were when I was a teenager, then the world has changed significantly. And the wine business better figure that out, sooner rather than later.

• The tariff. Or tariffs, as the case may be, since the threat of a more inclusive 100 percent levy is hanging over our heads. I’ll go into more detail in Monday’s 2020 wine prices post. But know that as bad as the 25 percent tariff will be, the 100 percent tariff could destroy the European wine business and wreak havoc in the U.S. And, as I have noted many times before, spite is not a good enough reason to do either.

• More three-tier excitement. That’s because 2019 saw a couple of significant legal decisions, and 2020 promises even more. My best guess, after talking to attorneys who deal with this stuff, is that there is momentum for change in the way beer, wine, and spirits are sold in the U.S. So there’s a chance that Internet sales could eventually become legal. And there’s also a chance (though much smaller) that some states may eventually make it possible for wines to be sold at retail without a wholesaler. This would vastly increase choice. Having said that, those things won’t happen immediately, and what we could see in 2020 are more legal decisions that continue to chip away at three-tier.

Photo: “Modern wine tasting” by kellinahandbasket is licensed under CC BY 2.0 

Winebits 626: The Happy New Year edition

joy of cookingThis week’s wine news: The new Joy of Cooking does wine, plus bad news on the consumption front and the relationship between wine and God

The Joy of Wine: The new version of the iconic Joy of Cooking has a terrific section on wine. It’s an outstanding introductory guide to making sense of wine as it relates to cooking — simply written, without too much winespeak, and it doesn’t talk down to its readers. Plus, it strikes a blow for screwcaps. This is my third Joy, and it’s easily the best of the three when it comes to wine. And it remains an indispensable cookbook. Highly recommended..

More bad news: More of us are drinking spirits and fewer are drinking wine, and the difference between the two numbers is reaching historic levels. That’s according to a recent report by SipSource, which tracks wine and spirits sales by distributors. The report calls the difference “epic,” noting that “the divide is widening – the trend gap between wine and spirits has grown to +5.4 percent.” Even rose’s growth has slowed, something few of us expected.

In search of God? A California religious studies professor says wine may help people deepen their connection to something bigger than themselves, including God. Stephen Lloyd-Moffett’s book “The Spirit of Wine, Finding Religion in the Fruit of the Vine,” says wine is often associated with social activity, sharing, and feelings of gratitude and deep thinking — all qualities associated with religion. This is an intriguing approach, and it does help put Catholicism’s use of wine into some sort of context. But I do wonder what the neo-Prohibitionists would say.

Wine prices 2019 update: Are prices coming down despite premiumization?

wine prices 2019Way too many grapes and continuing flat demand may lead to lower wine prices 2019

At the end of the summer, I was talking to an official for one of the big grape grower trade groups. I asked what he thought wine prices would do through the end of the year, as well as into 2020.

“Wine prices are coming down,” he said. How can that be, I asked. Because, of course, premiumization — its reason for being that wine prices are never going down again.

He laughed. “That may be,” he said. “But when you have too many grapes, which we do, and flat demand, which we do, wine prices come down. There’s nothing premiumization can do about it.”

The trade group official was not alone in his take on wine prices 2019. Whenever I interview a retailer or producer, I always ask about business. And their responses over the past nine months have not been nearly as optimistic as the last couple of years – and certainly not as optimistic as the official wine business position: “Ever more wine sold at ever high prices!”

The consensus: Business may not be bad yet, but it’s certainly slowing. And, no, this isn’t a highly scientific survey process, and yes, it’s overwhelmingly anecdotal. But, like the Wine Curmudgeon Wine Sample Index, it rarely steers me wrong. Because other signs point to the same thing:

Reports one trade website: California “supply levels remain higher than ideal and therefore the market remains favourable to buyers, with wineries quoting the lowest bulk wine prices in 5 years.” In other words, lots of grapes in the supply chain, and not too many buyers, so lower grape prices.

And that’s because the 2018 harvest was record-breaking, and the 2019 harvest may be equally as gigantic.

• And we all know about flat demand. In 2018, about one-fifth of regular U.S. wine drinkers were older than 65, compared to 16 percent in 2015. But the youngest regular wine consumers, ages 21-24, are decreasing, dropping 13 percent from 2015.

• Canceled grape contracts. Large producers are refusing to buy grapes they agreed to buy, ostensibly because of smoke damage from the 2018 wine country wildfires. But there’s a suspicion that the wildfires had nothing to do with the cancellations; rather, it’s because the producers already have too many grapes and don’t need any more.

• Wholesale alcohol inventories, measured in dollars, are at an all-time high, according to the U.S. Census Bureau. This could be nothing more than a side effect of premiumization – the same amount of wine in warehouses, but since it costs more, its value is setting records. Or it could mean there is a lot of wine stacking up because no one wants to buy it.

Last week’s tariff news should only make things worse, since it will raise prices for many European wines, while most cheaper French and Spanish wines could disappear from U.S. shelves. Which will further cut demand and increase the overall supply.

If, in fact, wine prices are coming down, will it happen in time for the holidays? Probably not, though I’m willing to bet we could find terrific deals as producers, distributors, and wholesalers try to get rid of select wines they have too much of.

The real selloff may come at the beginning of next year, and especially if the holiday season is as slow as it looks like it will be. And then, finally, we could be able to see the beginning of the end of premiumization.

More abut wine prices 2019:
Wine prices 2019
2019 SVB wine report
The biggest factor in California wine prices

Photo: “Wine section of a supermarket” by piropiro3 is licensed under CC BY 2.0 

No need to worry about U.S. wine sales – convenience store wine will save us

Convenience store wine: Table wine sales increased 20 percent in 2018

Table wine sales in U.S. convenience stores increased 20 percent in dollar terms in 2018, the second year in a row that c-store sales outperformed the overall U.S. market. That 20 percent figure could be as much as five times the growth in the overall U.S, wine market.

And no, I don’t understand why, either.

But those are the statistics in the 2018 state of the c-store industry report, published by the National Association of Convenience Stores. Convenience store wine sales in 2018, which include sparkling wine, fortified wine, and wine coolers, totaled $1.66 billion. That’s an amazing number. Take out the wine coolers, which the wine industry numbers may not include, and it’s possible that almost 2 percent of the wine sold in the U.S. last year came from a 7-Eleven, RaceTrac, QuikTrip, Speedway, and the like.

Association spokesman Jeff Lenard says there may be several things going on to account for all of that wine:

• About one percent more convenience stores sold wine in 2018. That total is almost half of the 153,000 U.S. locations.

• “More than anything else,” he says, “the increase in wine sales pairs (pardon the pun) with the increase in food service and more upscale foods that more convenience stores are selling.” In other words, fresh sandwiches and salads, which have become a c-store staple over the past couple of years, lend themselves more to wine sales than Big Gulps and those rubbery, orange-ish hot dogs spinning away in a corner.

• Younger consumers (18-34) are the predominant age group for convenience stores. And those of legal drinking age tend to be less fussy about where they buy wine than Baby Boomers, says Lenard. “Younger consumers are the ones who are least likely to think about a specific channel to purchase wine. They think wine or liquor store. Or dollar store. Or online wine club. Or gas station.”

• Women, who buy most of the wine in the U.S., are slightly more likely to buy gas in the evening, he says. “So can they also pick up wine for dinner then? Absolutely.”

Photo courtesy of Monica E using a Creative Commons license

Wine Curmudgeon Wine Sample Index: Heavy weather ahead for the wine business?

wine sample indexPremiumization’s role in the wine slowdown

It’s not scientific, but the Wine Curmudgeon Wine Sample Index indicates that the wine slowdown is here

The wine slowdown, much written about and much discussed, has officially arrived. How do I know this? The Wine Curmudgeon Wine Sample Index.

The wine sample index is my highly anecdotal and decidedly un-mathematical system for gauging the health of the wine business. When business is good, and no one needs a cranky ex-newspaperman to review their wines, I get fewer samples. When business isn’t good, then I get more samples – including bottles from high-end producers who usually dismiss me as not worth their time.

And this spring and early summer, I have received more samples than I’ve gotten since the recession, maybe three or four times the usual amount.

As noted, this is highly anecdotal and decidedly un-mathematical, and I’m not sure the blog’s official statistician would approve. But the pattern has been there since the blog started in 2007. During the recession, I got more wine than I could drink, including $100 bottles. But the samples dried up in the couple of years after the recession ended, when wine sales recovered and premiumization took hold. I don’t write about the kind of wine that has dominated the market since then, so why send me something to review?

But now, apparently, they need me. I’m getting samples from producers who haven’t contacted me in years, and they’re sending wines that cost $25 and more.  Just the other day, in fact, an email me offered a case of wine, only one of which cost less than $24 and five of which cost more than $30. Hasn’t the marketer ever read the blog?

Also intriguing

More samples are coming from people who want me to write about their wines in the hope that my review will generate retailer interest as opposed to sales. They want to use a good review to place the wines in more stores in more parts of the country. That also happens more often when wines sales are slow.

In other words, any port in a storm, and this storm is beginning to look particularly intense. Know that samples are an expensive form of marketing – not just the cost of the bottles, but the cost of shipping, which can run as high as $100 a package. But wine sales are so flat and so many people are so worried that spending all that money to send me samples looks like a better investment than letting the bottles languish on a warehouse shelf.

Will this storm turn into a category 5, Hurricane Wine Recession? The sample index can’t tell me that. One sign of optimism: I still don’t get asked to attend trade tastings, where producers and distributors show off their wines for writers, retailers, and the like. Those invitations ended after the recession, too. So if trade tasting emails start to arrive, then maybe it is time to batten down the hatches.

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.