Tag Archives: wine trends

Big Wine is dumping cheap wine brands – first Ruinite and Constellation; is a Yellow Tail sale next?

yellow tail sale

Will the roo have to find a new job if there is a Yellow Tail sale?

What does a Yellow Tail sale say about the future of cheap wine in the U.S.?

This year’s unprecedented cheap wine sell-off might include an even bigger shocker — a Yellow Tail sale. The $7 Australian supermarket wine is the biggest imported wine in the U.S., but the company acknowledged last week that it had been approached by several prospective buyers. This came after an Aussie financial newspaper reported that the Casellas, the family that owns Yellow Tail, had hired an investment bank to help them sort through the offers.

The Yellow Tail sale news comes on the heels of Banfi ending its 52-year partnership in March with Riunite, the $5 Italian sweet red, plus the Constellation Brands fire sale in April. That’s when it sent most of its $10 wines to E&J Gallo.

Know that almost all of the wine brands in these deals are profitable, and some immensely so. In fact, Yellow Tail is the fifth best-selling brand in the U.S., while Banfi’s marketing agreement with Ruinite helped it sell 2 million cases a year. And Constellation was so eager to rid itself of its cheap wines that it sold them at a tremendous discount and included Black Box, the sixth best seller in the U.S.

Does any of this make any sense? Not really, if this was 1999. But it’s 2019, and the wine business is obsessed with premiumization, and that trumps all. There was an odd and meandering story on wine-searcher.com last week, which asked if popular wine brands could be successful. This seemed, at first glance, like asking if rain was wet. How could something like the 20-million case Barefoot not be successful?

Because, said the article, size doesn’t matter. And, given the perspective of premiumization, that makes perfect financial sense. Whether it’s good business is a post for another day.

Hence, it’s not enough to sell millions of cases of wine anymore, like Yellow Tail, Ruinite, and Black Box. In this, Yellow Tail seems to be a private equity takeover target, just like any other business with cash flow and a well-known brand. The new owners would buy the company with cheap borrowed company, cut costs, strip Yellow Tail of its least profitable assets, goose up the bottom line, and then re-sell it.

Banfi’s CEO admitted it was too difficult to sell cheap wine given premiumization, and that the company would focus on its “premium and luxury offerings.”  In other words, wine for the one percent. What a terrifying thought for those of us love wine and who are part of the 99 percent.

Do consumers need to start worrying about flat sparkling wine?

flat sparkling wine

Bubbles here, but not everywhere.

Flat sparkling wine seems more common than ever – or is it just my imagination?

Why have so many bottles of sparkling wine – including pricey Champagne – been flat when I’ve opened them? As many as one-half of the bottles I’ve tasted over the past nine months have opened with little more than a sigh, and the bubbles disappeared from the glass after the initial burst of foam.

Yes, this is a small sample size, no more than a couple of dozen bottles. But when I was going through my notes to find a sparkling wine to use for the Mother’s Day post last month, I kept seeing the word “flat” in my notes. One entry even said, “tastes like cava should taste, assuming it was supposed to be flat.”

And I don’t remember a streak like this in the 20-some years I’ve been tasting sparkling wine professionally. And it’s just not cheap bottles or bottles from mass retailers; this has happened with bottles from some prestigious regions and well-known retailers – $40 wine, even, as well as samples, which should be as fresh as can be.

The blog’s official sparkling wine winemaker told me it probably isn’t a production flaw. That’s possible, he said, but the chances are remote. Sparkling techniques have improved tremendously over the past decade, so quality control in the winery isn’t the problem it used to be.

Either I’m having a run of bad luck, he emailed me, or it’s the supply chain – too much sparkling wine sitting on warehouse shelves getting old, or being stored in less than optimal conditions in supermarket supply rooms.

Which is the scary part. Is there so much sparkling wine on the market that it isn’t selling quickly enough to remain fresh? This makes sense, given the slowdown in wine sales over the past couple of years. In addition, the increase in mass-produced bubbly like Barefoot and La Marca means there is not only more product on store shelves, but more product made to begin with. And, as we’ve talked about before, it’s more difficult t0 monitor quality when you’re making 1 million cases than if you’re making 10,000.

So is this my imagination? Or is this a problem, but one that that is going unrecognized because most of us don’t drink enough bubbly to notice it?

Photo “Blanc de blanc” by Marcus Hansson is licensed under CC BY 2.0

TV wine ad survey: Hochtaler box wine – even Canadians miss the point

Hochtaler box wine uses a “Cabaret” knockoff ad to sell its sweet white wine, which probably isn’t what the film had in mind

Film buffs know the social, cultural, and political significance of “Cabaret,” the 1972 musical starring Liza Minelli, Michael York, and Joel Grey. So why did Canada’s Hochtaler box wine use a “Cabaret”-themed ad to sell its products in the early 1980s?

Hochtaler, writes the blog’s official Canadian correspondent, has long been famous in Canada – call it the Franzia of the Great White North, boxed wine for cat ladies who say “eh.” In this, Hochtaler is local, made with Canadian grapes by a Canadian producer.

“It’s very sweet,” writes our correspondent. “I’m guessing it was a hit with young people new to wine and older wine drinkers who like the name, which sounds European, and how sweet it is.”

Nevertheless, the ad features a nightclub scene with a chanteuse doing her best Liza Minnelli, complete with German accent, top hat, and tails. It hardly seems appropriate for this kind of wine, but the ads were apparently quite popular.

And you can still buy Hochtaler – C$14.95 for a 1.5-liter bottle at your local Ontario provincial store.

Video courtesy of robatsea2009 via YouTube, using a Creative Commons license

More about TV wine ads:
TV wine ads: Almost 40 years of awful
TV wine ad survey: Richards Wild Irish Rose
TV wine ad survey: 1970s Boone’s Farm Wild Mountain

Are the neo-Prohibitionists winning the debate about drinking?

neo-ProhibitionistsNew data shows neo-Prohibitionists campaign against drinking may be making headway

Are the neo-Prohibitionists winning the debate about drinking? New data, including a study about world alcohol consumption, shows fewer of us are drinking. Does this mean more people believe their argument that all booze is evil?

Worldwide alcohol consumption declined 1.6 percent in 2018, according to a report from IWSR, a London consultancy. And wine, which had increased in consumption globally the past several years, also declined 1.6 percent in 2018. That included leading markets like China, Italy, France, Germany and Spain; the U.S. market was flat.

In addition, reported IWSR, “Low- and no-alcohol brands are showing significant growth in key markets as consumers increasingly seek better-for-you products, and explore ways to reduce their alcohol intake.” Growth of no-alcohol wine is forecast at 13.5 percent, with low-alcohol wine at 5.6 percent. Those are impressive numbers to begin with, even acknowledging the small base, and it’s even more impressive given how few no- and low-alcohol wine products exist today.

Meanwhile, Australians – usually regarded as some of the world’s great drinkers – have cut their alcohol consumption significantly since 2014. No one was more surprised than the CEO of the research institute that did the study, who noted that booze is seen as having “a central role” in Australian life. But no more?

What’s going on here? Know that the IWSR study includes a variety of caveats about why consumption declined, and that it expects drinking to return to growth over the next several years. But when the study identifies Ethiopia as one of the top 10 growth markets in the world, something is much different than we’re used to.

In this, it’s almost certainly the idea that any kind of drinking is bad for us. The IWSR study hints at this, with the growth in no- and low-alcohol products, but so does something else. In the U.S. we’ve always faced a religious backlash against drinking, and it’s the main reason why so much of the country was dry until the 1990s.

But that backlash seems to have ended. A May 2019 Gallup poll found that 79 percent of Americans found drinking morally acceptable; only 19 percent said it was a sin. That makes booze as acceptable as divorce and more acceptable than non-marital sex, says Gallup.

So if more of us are drinking less, and that seems to be the case, then the neo-Prohibitionists’ scare tactics seem to be working. Hopefully, the wine business will eventually take notice and offer a compelling argument in favor of moderation. Its current hear no evil, see no evil, premiumization is the answer to everything policy might work in the short run, but doesn’t offer much for the future of wine drinking in the U.S.

More about the neo-Prohibitionists and drinking:
Health alert: Does the CDC know how dangerous Starbucks’ pumpkin spice latte is?
Cigarettes, wine, and cancer
The federal government’s three drink limit

Nutrition labels: What wine can learn from two packages of frozen onion rings

nutrition labelsIf wine doesn’t have nutrition labels, how will younger consumers know it’s not going to kill them?

Every time the Wine Curmudgeon writes about wine nutrition and ingredient labels, people cancel their email subscriptions to the blog. So get ready to press the cancel button, because you’re really not going to like this post: How nutrition and ingredient labels save us from making stupid food decisions, and what wine can learn from a package of onion rings.

Consider two packages of frozen onion rings – one traditional and one made with onions, cauliflower, and beans. Which do you think is the healthiest choice?

And you’d be wrong.

In fact, the faux rings, Farmrise veggie rings, have 220 calories per serving, with 15 percent of the USDA daily allowance of fat and 8 percent of the allowance of sodium. The onion rings, the Kroger house brand, have 180 calories, 10 percent of fat, and 7 percent of sodium. Plus, the real onion rings are about half the price. Click on each link and you’ll see the nutrition label for each product.

The difference in nutrition? The faux rings need the extra fat and salt because cauliflower has no flavor; the fat and salt goose up the Farmrise so it won’t taste like industrially steamed cauliflower. And the difference in price? That’s the healthy option premium, in which we’re supposed to pay more for stuff that’s better for us, even when it isn’t. Check out a can of so-called “healthy” soup, and the only difference between it and Campbell’s may be the price – each has massive amounts of sodium.

What does this have to do with wine? Wine refuses to join the 21st century by making this nutrition information easily available; it has been fighting labels with down to the last bullet determination for more than a decade. But that also means that the same younger consumers who would spot the onion ring contradiction in a second will continue to think wine has something to hide. This is opposed to their parents and grandparents, wine drinkers all, who trust in cauliflower and Big Food.

Because, to the younger consumer’s post-modern way of thinking, wine would have these labels unless there was something fishy going on (or eggy or sugary or industrial adhesive-y or any of the other 60-some ingredients legally allowed in wine that aren’t grapes).

And, as we are reminded here and elsewhere, and reminded over and over, younger consumers aren’t drinking wine the way their parents and grandparents did. Maybe this could be one of the reasons?

More about wine nutrition labels:
The final “nutrition and ingredient labels for wine are a good thing” post
Are we making progress in adding ingredient labels to wine?
Nutritional labels for booze

Land, Kendall Jackson, land: The biggest factor in California wine prices

California wine prices

Jackson Family Estates doesn’t want to make $10 wine, but there it is.

Real estate, not foreign tariffs, determines California wine prices

Consider two wines: Both white Rhone-style blends, both from respected wineries, both speaking to varietal character and terroir, both well-made and enjoyable. One costs $24; the other costs $12. So what’s the difference?

Vineyard land prices in California. The $24 wine is Eberle’s Cotes de Robles Blanc from Paso Robles, where land goes for $30,000 to $35,000 an acre. The $12 wine is McPherson’s Les Copains White from Texas’ High Plains, where land goes for less than $5,000 an acre. Otherwise, save for a fancier screwcap on the Eberle, the wines are the same – mostly the same grapes, the same style, and the same flavors (some lime and stone fruit, very clean and crisp).

We’ve spent a lot of time on the blog over the past couple of weeks discussing the Jackson Family Estates proposal to raise a tariff wall to keep cheap imports out of the U.S. What we haven’t discussed is the role that the cost of California land plays in all of this.

More than anything, that’s why California wine prices are as high as they are. The land – even in the less famous regions like Paso Robles – can be some of the most expensive in the world. Equally as important, a lot of vineyard land in Europe — even quality land — was paid for decades ago, so the price of a bottle may not include the cost of the loan to buy the land. In some parts of California, the cost of the mortgage is the difference between a $50 and $60 bottle of wine.

And the more demand for California wine that there is, the more money people will pay for California vineyards. And higher land prices in California mean more expensive grapes and more expensive grapes mean more expensive wine. It’s that simple.

That’s because all else is mostly equal: The cost of labor, the cost of the bottle, the cost of shipping, and it doesn’t matter whether you’re in Texas, California, or France. In fact, California might have a slight edge in some production costs, since it’s the center of the U.S. wine business. So, in the end, the price of the land in determines California wine prices.

Jackson Family, like other big California producers, likes high land prices. High prices make the company more valuable. So when it says it can’t afford to make $10 wine, it’s being honest – but it’s also crying crocodile tears. It has decided premiumization is the future of wine, and it doesn’t want to make $10 wine. Smaller producers, faced with the same land price constraints, aren’t nearly as sanguine. Many have told me they see their wines being squeezed out of the market by companies like Jackson Family, who can work on smaller profit margins on an $18 bottle and undercut the smaller producers.

The irony? There’s plenty of cheap land in California to make $10 wine, which is where Barefoot, Two-buck Chuck, and much of the state’s cheap wine comes from. It’s in the Central Valley, where a ton of grapes can cost as little as $300, one-sixteenth of the price in Napa. And, in another irony, premiumization has made this land even cheaper – so cheap, in fact, that some farmers are replacing grape vines with almonds, which offer higher profits.

In other words, Jackson Family Estates could do what E&J Gallo (Barefoot), The Wine Group (Franzia), and Bronco (Two-buck Chuck) do – use Central Valley grapes to make $10 wine. But it’s easier to ask for a tariff wall and punish U.S. wine drinkers. Which should demonstrate exactly where Jackson’s interests lie, and it’s not with the wine drinkers.

r

Rose celebration 2019 begins on Tuesday

rose celebration 2019Win four Luminarc wine glasses during the blog’s rose celebration 2019

The blog’s 12th annual rose extravaganza begins on Tuesday — rose celebration 2019. This is the third consecutive year we’ll devote most of the week to celebrate rose, perhaps the last bastion of great cheap wine.

Plus, of course, a giveaway — four Luminarc wine glasses on Thursday when I list the the best roses available this season. Plus, two more days of rose reviews, as well as rose news on Tuesday.