Tag Archives: wine sales

Six things you probably don’t know about wine

There are so many misconceptions about wine in the United States — often perpetuated by the industry itself — that the Wine Curmudgeon sometimes wonders how we can enjoy wine at all. Let’s clear up six of the most common.

1. What’s the average price of a bottle of wine sold in the U.S.? $6.22, reports Nielsen, tracking sales from March 2010 to March 2011. In fact, one out of every four bottles of wine sold costs less than $3. That percentage has fallen by about half over the past 20 years, but we are still — overwhelmingly — a country that appreciates cheap wine. Nine out of 10 bottles of wine sold in the U.S. cost less than $12.

2. How many Americans drink wine? Not enough. About 40 percent of Americans say they don’t drink, a figure that has remained remarkably consistent for years. Meanwhile, 20 percent of Americans drink 91 percent of the wine sold in the U.S.

3. Where does the U.S. rank in per capita consumption of wine? 57th. Through 2009, Vatican City was first at 70 liters per person, which is about 8 cases. France, at 45 liters per person, is the leading major country. The U.S. is at 9 liters per person, about 12 bottles a year — a number that has not changed much since 1980. More of us enjoy wine, but most of us, despite the hype over the last couple of years, aren’t all that interested. Even though French consumption has fallen by a quarter over the past decade, the average Frenchman still drinks five times more wine than we do.

4. What’s the most popular wine in the U.S.? Chardonnay, by about 5 to 3, over cabernet sauvignon, says the same Nielsen study. One out of every five bottles of wine sold in the U.S. is chardonnay. However, this is marked changed from the last decade, when chardonnay outsold cabernet by as much as 2 to 1. Merlot is third, pinot grigio is fourth, and white zinfandel is fifth.

5. How long does the average American keep a bottle of wine? Not very long at all. As much as 90 percent of the wine bought in the U.S. is drunk within 24 hours, even though the Wine Magazines make it seem like buying wine to age is quite common. And, depending on the study, some 95 percent of all wine purchased in the U.S. is consumed within a week.

6. How important are the biggest wine companies? Hugely important. Fewer than two percent of U.S. wineries account for 84 percent of all wine production. Most wineries, whether in California or not, are small — about six in 10 make less than 4,200 cases a year. The company that owns Kendall-Jackson, on the other hand, makes more than 5 million cases a year. And it’s not even the biggest.

The photo is from Microstock Photography, via stock.xchng, using a Creative Commons license

Shocking news: We’re buying less expensive wine

This just in from the Los Angeles Times: People are spending less money on a bottle of wine!

Patrick J. Comiskey, a big deal in the Winestream Media (he’s a former sommelier and writes for Wine & Spirits magazine) reports in the Times that consumers aren’t spending $40 for a bottle of wine anymore. They aren’t even spending $25. They’re — wait for it — spending $15.

Writes Comiskey: “For many, $15 to $20 might be the new $25.”

Sigh. More, after the jump.

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What we’re drinking: 2010’s 30 hottest brands

And it should come as no surprise to regular visitors here that almost all of the 30 brands in the Symphony IRI Group study are cheap, that almost none of them get big scores from the Wine Magazines, and that the wines are mostly ignored by the Winestream Media.

The sixth annual study measures not necessarily the best-selling brands, but what it calls 2010's hottest performers, as measured by 10 factors like dollar and volume sales, sales growth, and market share. The top brand using those criteria was Cupcake, which replaced Menage a Trois in the No. 1 spot. The latter dropped to No. 2. E&J Gallo's Barefoot, long popular with blog readers, was third, while Rex Goliath was fourth, and Bogle, long popular with the Wine Curmudgeon, was fifth. All, of course, cost $10 or less. In all, 23 of the hot 30 cost $10.99 or less, and 14 of the 30 cost $8 or less.

Doug Goodwin, Symphony IRI vice president of client insights for beer, wine and spirits, said turnover from year to year, given the nature of the study, is not unusual. But if one thing stood out in 2010, it was that consumers were looking for value, and that producers were willing to discount on price to give consumers that value. More, after the jump:

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Restaurant wine sales in 2010

There are a lot of interesting numbers to parse in Wine & Spirits magazine's 22nd annual restaurant wine poll, which covers 2010.

The restaurants surveyed reported that wine sales have increased after a two-year slump, and that consumers seem to be buying more expensive wines than they did in the past couple of years.

But it doesn't look like the old, "let's spend crazy money on wine" ways have returned, says Wine & Spirits editor and publisher Joshua Greene: "… [W]hether buying low end or high, most diners were looking to get the most out of their wine-buying dollars: They weren't spending on trophy labels. Sommeliers describe a savvier wine-buying public as we come out of the recession."

This is significant, because the poll tracked wine sales using the Zagat guide's most popular restaurants in the country. These restaurants, given Zagat's methodology, attract more affluent and upscale consumers who eat out more often than the rest of us and spend more money when they do. So if they have embraced the New Normal, imagine how little the rest of us are spending.

Also significant: The average price for the most popular wines in these restaurants was $62 — about what it has been for the past five years. Which is a damned odd statistic, given the sales slump during the recession, and I'm not quite sure what it means (besides that restaurant wine is overpriced). Most likely, according to what respondents said about their wine pricing, it means that restaurants didn't cut prices during the recession, which kept the average price up even as sales declined. Why they didn't cut prices is a question for another day.

The complete survey is in the magazine, which requires a subscription. But there are more highlights after the jump:

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Wine and grocery stores

The wine selection in grocery stores has never been better, and we’re just not talking about high-end and specialty grocers like Whole Foods and Trader Joe’s. Many of the biggest national chains have beefed up their wine departments over the past several years, using wine to better compete with warehouse clubs like Sam’s and Costco.

In this, the national grocers are taking advantage of the recession to offer brands that used to be sold only in wine and liquor stores. Producers and distributors, faced with reduced demand from their traditional retail and restaurant customers, have lots of wine to sell, and so are selling it to supermarkets that they never would have sold to before.

In addition, grocers have noticed two things abut wine: Its increasing popularity among the U.S. public in general, and that many wine drinkers come from an upscale demographic that they want to attract. Hence, the national chains are adding shelf space, holding wine tastings, and even putting in wine rooms with $100 wines in their stores.

“Actually, it makes perfect sense for grocery stores to do this,” says Dan Graham, who works for Dechert-Hampe in San Juan Capistrano, Calif., a consumer products and services consultancy and knows both the wine and grocery businesses. “What is it that grocery stores sell? Food. And what goes with food? Wine. Food and wine pairings are a big deal, and grocery stores should offer that. And if you look at what grocery stores are doing with offering more local food and organic food, then improving their wine selection is doing the same thing.”

Walk through your local national chain, and you’ll see what Graham means. Wine has its own aisle — or more — now, and the selection is two or three times what it used to be. There are shelf-talkers and special displays, and in many cases, the grocery store aisle looks like a mini-wine store.

All this effort is what the experts call a “point of differentiation” — you’re more likely to shop your local Kroger or Safeway if it has something you can’t get at the warehouse store. Warehouse stores do a great job selling cases of wine (and even expensive cases of wine), but they can’t do as a good a job as a local grocer in selling wine to go with dinner, especially when the other ingredients for dinner are in the next aisle.

One caveat: Not every supermarket location, even within the same chain, has made the same investment in wine (and local law prohibits many grocers from selling wine). Typically, the upgraded wine stores are in urban, more affluent and more wine-centric markets. That’s why my Kroger, near one of Dallas’ priciest suburbs, has better wine offerings than another Kroger a couple of miles away, which is in a more working class neighborhood.

“The challenge for grocery stores is that they sell such a variety of categories they inevitably will open stores in areas that do not have great wine potential,” says Graham. “It may still be a good store, but the consumers are just not that interested in wine — they want other things in the store. So the challenge becomes how to have a comprehensive wine program when you have stores that have far different potential to sell wine.”

Still, Graham thinks grocers, despite the progress they’ve made, can do a better job with wine. He sees social media and the social media generations — the two groups younger than the Baby Boomers — as the key. These demographics use Facebook, Twitter, and the like, to make purchasing decisions in a way the Boomers don’t. In addition, they see grocery stores as more legitimate wine retailers than older consumers, who still tend to think of supermarkets as where old ladies with cats buy pink boxed wine.

So supermarkets should use social media to educate and inform, bypassing the traditional sources of wine information, he says.

“That is where the opportunity to talk directly to consumers through social media could have real power,” says Graham. “Much more effective targeting is possible, and if you ?re smart about fulfillment, you can have centralized inventory and just ship to the stores for pickup. The model of ordering online and picking up in store is gaining traction in other categories, so why not wine?”

Winebits 158: Wine salaries, wine sales, wine bootlegging

? Salaries decrease: Unless, of course, you were a big shot. Wine Business Monthly's 2010 Salary Survey Report found that wine industry salaries increased 3.3 percent this year, fueled by bonus payouts that averaged 24.5 percent. Without the the bonuses, overall salaries decreased 1.3 percent over 2009. Bonus pay between 2009 and 2010 increased 29.8 percent for executives, although winemakers saw their salaries fall 1 percent and vineyard managers saw a 4 percent decrease. Is it any wonder the wine business is in trouble?

? Sales up: Consumers seem to be buying more wine, according to figures compiled by Wines & Vines magazine. Domestic table wine, as measured by dollar sales, increased 6 percent between October 2009 and October 2010. Wine that cost $20 or more saw 22 percent growth over the past year, but also saw the average price go down almost a dollar a bottle. In other words, consumers who traded down are may be starting to trade back up — if the prices are cheap enough. In addition, sales finally look have recovered to 2008 levels. Did all those executives who got bonuses figure on that?

? British bootleg wine: Yet another example of why there will always be an England. The UK Border Agency says it seized thousands of liters of wine from smugglers. Among the contraband: nearly 13,000 liters of Spanish wine (about 1450 cases), described as "car parts." And the story gets better. The confiscated wine will be turned into fertilizer, and the bottles recycled. Well done.

“Consumer-friendly” wine prices

I’ve been digging around for the last couple of months, trying to get a sense of where wine prices are headed in 2011. My gut feeling is that we’re in for at least another year of oversupply and lower prices, with lots and lots of previous vintages still clogging winery back rooms and distributor warehouses. The recession may have officially ended, but the wine business is far from recovering.

And that seems to fit with the anecdotal evidence I’ve seen — news stories, talking to retailers and distributors, and walking around grocery and liquor stores and comparing prices. I saw Perrier Jouet, a $40 bottle of Champagne, going for $25 in an ordinary, national chain grocery store. Three years ago, the producer would have refused to allow its wine near the store, let alone be sold there or discounted.

The best description of where we’re going? It came from a Dallas retailer whose family has been selling wine for about as long as it has been legal to sell wine in Dallas. “I call it consumer-friendly,” he said. “Pricing will be beneficial to the consumer. There’s still a lot of wine out there, and there are still a lot of deals to be found. I’m buying them whenever I can.”

So, for at least another year, $10 is still the new normal.