Tag Archives: wine sales

Winebits 375: Grocery store wine edition

grocery store wineThis week, how grocery stores are changing the wine business:

? Suing the state: Texas doesn’t allow non-residents to own more than five liquor stores, unless the owners are related to each other. This “just us kinfolk” exception (as a lawyer friend of mine calls it) has allowed Texas-owned chains like Spec’s and Twin Liquors to put together hundreds-store operations. It’s also why Walmart is suing the state to overturn the kinfolk law and why it and Kroger are pushing two bills in the state legislature to eliminate the exception. Neither are likely to go anywhere — courts have traditionally ruled in favor of these kinds of laws, citing three-tier and its constitutional protections, and the legislature almost always avoids offending the big Texas liquor chains. Still, that Walmart and Kroger are willing to spend the money on a seemingly hopeless cause speaks volumes about how they think the world is changing. Starting now may give them a chance later to reform beer, wine, and spirits retail sales in Texas.

? Stopping at the supermarket: Nielsen reports that U.S. grocery stores (including Walmart, Costco, and their ilk) sold $8.6 billion in wine in 2014, which accounted for about 42 percent of the country ?s store-purchased wine. In other words, almost half of the wine sold in 2014 came from a grocer. Imagine what that number would be if Pennsylvania and New York allowed grocery store wine sales. We can write about Robert Parker all we want, but that’s not the news in the wine business. The real news, the development that wine writers should be paying attention to, is that most of our readers have no idea (and don’t care) who Parker is, and they want to know what wine to buy at their Walmart or Kroger. Which is why a grad student named Mark Thornton may be the next Parker.

? One more time: Speaking of Pennsylvania, its state house has approved a bill to end the state’s liquor store monopoly. This is apparently as much a tradition in the Keystone State as Punxsutawney Phil, and makes as much difference in changing the law as groundhogs do in forecasting weather. Still, the debate is fun. Said one lawmaker: ?The other side is talking about the No. 1 drug, alcohol, like it ?s milk and bread. We ?ve got to have more of it, more convenience, for the No. 1 drug in our communities.” The other side, that wants to reform the system, didn’t miss a beat, either: “Even Russia and China have given up on the idea of a state-run monopoly.” So you’re a commie if you oppose reform, and a crack dealer if you support it. Politics is a grand business, no?

Are Americans going to drink more wine?

wine market councilOver the past decade, U.S. wine consumption has set all sorts of records, and most observers expect that to continue. This year’s Silicon Valley Bank report called for a 14 percent increase in high-end wine sales, while a study commissioned by the VinExpo trade show said U.S.wine drinkers will power world growth.

But not everyone is convinced.

It ?s not that I ?m not optimistic, it ?s that the reality of the market when you look at the hard data of total table wine sales over the past three years following the recession,” says John Gillespie, the president of the Wine Market Council, which tracks U.S. wine drinking habits. The group released its 2014 report last week, and it seemed to be at odds with what the others have been reporting.

Gillespie’s point: After more than a decade of substantial growth, in which per capita wine consumption in the U.S. finally passed that of the early 1980s, sales coming out of the recession were nothing like the previous 15 years. Perhaps, says Gillespie, this more or less flat growth is the new normal, the sign of what economists call a mature market.

Which raises two questions: Why is this happening, and what does it mean for wine drinkers? Gillespie says it’s difficult to know why consumers do what they do, but that the Wine Market Council figures suggest some of us are drinking less wine and more craft beer.

My theory isn’t as nuanced (and doesn’t have Gillespie’s experience or data to support it) and should not be surprising to regular visitors. It’s about price; consumers don’t want to pay the higher prices the industry is trying to impose, and aren’t happy with the quality they’re getting at lower prices. Hence, they’re looking for something else to drink. The Silicon Valley Bank report said producers are focusing on premiumisation, the idea that better quality wine should cost more money. In this, they want consumers to trade up from their $10 and $12 bottles to $18 and $20 bottles.

Could the flat growth that Gillespie sees be consumers rejecting premiumisation? Will we start to look elsewhere, like craft beer, for value? If so, the wine business could face problems over the next decade, since producers expect pre-recession growth. If growth is flat, we’ll have more wine, and especially more high-priced wine, than there is demand for, and prices could collapse again, just like they did during the recession.

Which may be welcome news for consumers, but hardly anything the wine business wants to hear.

More about the Wine Market Council reports:
? The 2013 Wine Market Council report
? The 2012 Wine Market Council report

Winebits 362: Wine sales, Cava, imported wine

u.s. wine sales ? More wine: We’re continuing to drink more wine than ever in the U.S., up about 1 million cases in 2014 over the previous year, reports Shanken News Daily. The percentage increase isn’t much, just 0.3 percent. But that there is growth, despite the after-effects of the recession, shows that wine may have finally established itself in this country as something more than a niche product. As the Shanken story notes, “consumption has increased nearly 80 percent over the past two decades,” and per capita consumption has finally risen past its 1970s levels.

? Bring on the sparkling: Cava, the Spanish sparkling wine, has long been a Wine Curmudgeon favorite, but it faces intense competition from Prosecco, the similarly-priced bubbly from Italy. The latter is typically sweeter and fruitier, and the Italians have parlayed that into double-digit growth over the past several years. Freixenet, the biggest Spanish producer and the top imported sparkling in the U.S., saw sales fall four percent last year. Why does that matter? Because exports account for around two-thirds of global Cava sales. Hence concerns that competing with Prosecco on price alone could lead to what happened with Australian shiraz and Argentine malbec — lots of cheap wine of varying quality. I’m not sure that Freixenet’s plan to add more expensive wines to differentiate itself from Prosecco is any better, given that Cava quality is so good at $10 and $15 there is little reason to trade up.

? Bring on the imports: How global has the the U.S. wine consumer become? Imports account for about one-third of the wine we drink, and that figure is expected to increase over the next two decades to as much as 45 percent. In the first half of 2014, though, we drank less imported wine than in the previous year (but the dollar value of the wine we drank increased by five percent). The biggest winner in those six months was New Zealand; the biggest loser was Australia. Sales from Italy and France, the top two exporters to the U.S. were mostly flat, though the dollar amount of what they did sell increased eight and six percent.

Ask the WC 6: Box wine, wine closeouts, open wine

wine questionsBecause the customers always have wine questions, and the Wine Curmudgeon has answers in this irregular feature. Ask me a wine-related question .

Wine Curmudgeon:
Are there any box wines that you would find acceptable for someone who can’t afford $15 or $20 for wine every night ? I have been buying several of the Almaden wines and find them quite good. Are they, or is it just my unsophisticated taste buds? Could I be getting a better taste for my buck?
Bottles aren’t necessary

Dear Bottles:
Box wine comes in varying degrees of quality, just like wine in bottles. Many are of higher quality than the Alamaden, though they won’t be as sweet. You can try Bota Box, Black Box, Bandit/Three Thieves, and Big House, for example. But realize you don’t have to spend $15 or $20 for a bottle; check out the $10 Hall of Fame or the $10 wine link at the top of the page.

?

Curmudgeonly one:
How do wineries get rid of excess inventory, if they make too much and have to sell it off? Can you find good deals on wine this way?
Looking for a bargain

Dear Looking:
It’s difficult to do thanks to our friend, three-tier. Can’t have a warehouse sale, since it’s illegal, and it’s rare to find a wine retailer that specializes in closeouts and discontinued items like Big Lots because the process is so difficult. Some retailers buy excess wine and discount it, but there isn’t much rhyme or reason to how they do it. You need to find a good retailer and ask them to let you know when they have that kind of sale. In fact, most excess wine sits in a distributor warehouse until it is sold, returned, or destroyed (which is what multi-national Treasury did in 2013).

?

Wine Curmudgeon:
How long will an open bottle of wine stay good? Is there anything I can do to make it last longer?
Can’t drink a bottle in one sitting

Dear Can’t drink:
The answer to this used to be simple — if you didn’t finish an open bottle within 24 hours, it oxidized and tasted like bad brandy. Hence, closures like the VacuVin. But improvements in winemaking have complicated the issue, and I’ve had wine, including cheap wine, that stayed drinkable for a couple of days after it had been opened. My suggestion? Put it in the refrigerator and hope for the best if it’s there longer than 36 hours.

More Ask the Wine Curmudgeon:
? Ask the WC 4: Green wine, screwcaps, mold
? Ask the WC 3: Availability, prices, headaches
? Ask the WC 2: Health, food pairings, weddings

The wine business has much to answer for

wine edcuation

Whatever you do, don’t help me make an informed decision about what to buy.

It was bad enough that the woman, standing in the Texas winery tasting room, proclaimed that Texas wine wasn’t any good, and that she suspected the Texas wine she was drinking came from California. What was worse was when she told the tasting room employee that she only drank cabernet sauvignon and malbec, and that she wasn’t going to drink this red blend because she wouldn’t like it.

What struck me, as I watched this scene unfold over Labor Day weekend, was that it was so wine ? the woman’s dead certainty she was correct, despite knowing nothing about what she was talking about; the refusal to try something different, because it was different; and the sense that the winery was trying to put something over on her.

And this doesn’t include the other foolishness I’ve seen this fall, like the woman at a Kroger Great Wall of Wine with $50 worth of beef in her cart who was agonizing over $10 cabernet sauvigon and who couldn’t have been more confused if she had been trying to read the Iliad in the original Greek. Or the bartender at a chi chi Dallas wine bar who treated me like I was an idiot because I wanted to talk about Texas wine and cheap wine.

Does that happen with any other consumer good? Only wine, and for that we have the wine business to thank. More, after the jump:
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Winebits 352: Red wine, wine brands, three-tier

wine news red wine ? Bring on the red wine: Americans, apparently, drink more red wine than white. This is not news, though for some reason a writer at the Washington Post who doesn’t write about wine (and there seem to be so many of them) thinks it is. Red wine has traditionally outsold white, but a white, chardonnay, remains the best selling wine in the U.S. The people at the Post have one of the best wine writers in the world working for them; I don’t know why they insist on pretending to be experts when there is a real expert at hand. One other thing, as long as I’m being cranky: Given that online retailing accounts for just 5 percent of U.S. wine sales, is a survey from an on-line retailer a better source than Nielsen or the Wine Institute?

? Bring on the new brands: One of the great mysteries in the wine business is how many wines actually exist. It’s also a mystery why it’s a mystery, since wine is regulated and this should not be difficult to determine. But it is, and the best guess has been about 15,000, which includes different varietals but not different vintages. Turns out that may be just a fraction of the total, according to Ship Compliant, a company that helps wineries through the maze of regulation. It found that the federal government approved 93,000 labels in 2013. However, since that could include changes to old labels or old wine given a new name, as well as wines that were proposed but never made it to market, there probably aren’t 93,000 wines available for sale. Which, given the size of the Great Wall of Wine, is no doubt a good thing.

? Bring on the lawyers: The Wine Curmudgeon notes this item not because he expects anyone to understand it unless they are a liquor law attorney with a large staff, but to remind the world, again, of the pointlessness of the three-tier system unless you are a distributor or attorney. It details a court case in which a distributor is suing a producer even though the producer followed the letter of the law. Or something like that. Regardless of the outcome, it will make no difference to anyone who buys wine. Incidentally, this is a jury trial. I can only shake my head in sympathy for those poor jurors, and hope they have lots of wine at home for afterwards. Update: Hours — literally — after I posted this, the suit was settled. No doubt they were terrified the jury would laugh at them, go home, and open a beer.

Image courtesy of Houston Press food blog, using a Creative Commons license

Why grocery stores love wine

grocery store wine salesBecause they sell so much of it — and a lot more than most of us realize. Hence the reason for the Great Wall of Wine.

Wine was the seventh biggest category by dollar amount for supermarkets in the 52 weeks ending June 15, recording $6.9 billion in sales. That’s up 3.7 percent from the same period a year ago, and works out to an average of $9.27 a bottle. The figures come from a study by the IRI marketing consultancy and published in the Supermarket News trade magazine.

How impressive are those numbers?

? They don’t include wine sales in New York or Pennsylvania, two huge markets that don’t allow supermarkets to sell wine. Yet, even without those two states, grocers account for about 20 percent of U.S. wine sales.

? They don’t include wine sales at Target, Walmart, and Costco. Throw those in, and that 20 percent total should increase by more than a few points.

? Wine was bigger than a host of established items, including cereal, coffee, bottled water, cookies, and soup. Some of that was because wine is more expensive; we bought three times more cans of soup than bottles of wine. Even so, it’s an impressive total, given the restrictions on wine sales. In Texas, for example, we can buy soup as long as the store is open, but we can’t buy wine on Sunday until noon.

? Wine’s growth was bigger than soft drinks, which lost 3.9 percent, as well as cereal (down 4.3 percent), ice cream (down 0.3 percent), frozen pizza (unchanged), and toilet paper (-0.2 percent). I can’t even pretend to make sense of that. Since when did we need wine more than toilet paper?

These numbers, more than anything else, explain why there is so much opposition to supermarket wine sales in the 19 states where it’s still prohibited. We’re not buying jug wine at the grocery store. That $9 average price means we’re buying many of the same wines we’d buy at wine shops and liquor stores, and small retailers don’t want the competition.

The irony is that, as has been noted on the blog, small retailers may prosper competing with grocers, since they offer something supermarkets can’t — someone to answer questions. The Great Wall of Wine has nothing to do with service.

Photo courtesy of Houston Press food blog, using a Creative Commons license