Tag Archives: wine trends

Wine prices, razor blades, and premiumization

razor blads

“Dude, shaving is so old school.”

“Lower shaving frequency” is a fancy way of saying razor blades cost too much, which means men don’t shave as often

More men are apparently growing beards, costing one of the biggest companies in the world $8 billion this year. The reason? “Lower shaving frequency,” according to the financial analysts. I prefer the reason given by one of the Millennials quoted in the story in the link: Razor blades cost too much money.

In other words, men aren’t shaving as much; they’re shaving better. Sound familiar?

In this, the wine and razor businesses are eerily similar. A handful of big companies control each category, which means oligopoly pricing. A razor and two or three blades can cost more than $20, and there’s no way the actual cost of a little metal and some plastic is anywhere near that.

And razor-speak can be as indecipherable as wine-speak: “Gillette Fusion ProGlide Razor Handle with FlexBall Technology,” for example. Can anyone who doesn’t work for Gillette’s ad agency explain what that means?

The high cost of shaving

Obviously, there’s more going on here than the high cost of shaving. Most importantly, the culture has changed; the days of coats and ties and offices, where men had to shave every day, are something for TV shows like “Mad Men.” My beard dates to the late 1980s, and even then they weren’t common. And we certainly didn’t grow them to be hipsters, a common occurrence these days.

But you can’t ignore the cost of razors and blades. Says a Millennial in the MarketWatch story: “I don’t love the $5 price for a replacement blade, since it equates to a yearly expense of more than $200 — an amount equal to a good dinner at a decent restaurant, even perhaps with a bottle of wine. And trust me: I’d much rather be dining in style than shaving.”

In all, the men’s shaving products market has shrunk by more than 11 percent in the past five years. This dovetails with a recent Nielsen survey, comparing the drinking habits of Millennials, Gen Xers, and Baby Boomers.

Overall, a little more than two out of five Millennials don’t drink for health reasons and almost one-third don’t drink because it’s too expensive. Drill down, and Nielsen finds that the youngest group is 11 percent more likely to not drink because it costs too much, compared to their parents and grandparents.

High wine prices, decreased consumption. High razor blade prices, decreased use. Does anyone else see a pattern here?

Has wine with dinner been turned into binge drinking?

binge drinking

Please, neo-Prohibitonists: Stop these people before they binge drink again.

Yet another booze study characterizes responsible behavior as binge drinking

Another studying demonizing drinking showed up last week, replete with the flaws that have come to characterize these studies. The authors cherry-picked their study group, ignored relevant statistical data, and glossed over any socio-economic and demographic explanations for their conclusion. The result? Old people! Binge drinking!! Death!!!

The other thing that struck me about the study was its definition of binge drinking: four to five drinks in one sitting. In other words, drinking wine with dinner has become just as evil as frat boys chugging Everclear and men of a certain age pounding a six-pack after work and then passing out on the sofa.

My name is the Wine Curmudgeon, and I am a binge drinker.

On Saturday night, I had five glasses of wine with dinner. We had hard-cooked eggs in mustard sauce for a first course, followed by a mock cassoulet (turkey, sausage, a duck leg/thigh, and white beans) served with rice and a cabbage salad. I opened the $10 Pigmentum Gascon white blend with the eggs, which was a terrific pairing (the wine’s citrus fruit complementing the richness of the egg). I drank the fabulous 2011 Bonny Doon Bien Nacido syrah with the cassoulet, and it was an even better pairing – dark, earthy food with a dark, earthy wine.

So how did a full dinner eaten over two or three hours with five glasses of wine turn into binge drinking?

Your guess is as good as mine. The five-drink definition (four for women) comes from the National Institute for Alcohol Abuse and Alcoholism: Binging is “a pattern of drinking that brings blood alcohol concentration (BAC) levels to 0.08 g/dL This typically occurs after 4 drinks for women and 5 drinks for men – in about 2 hours.”

Not coincidentally, that 0.08 number is the legal definition of drunk driving in 49 states. If it’s illegal to drive after five drinks, then it’s easy to call something binging. Or, conversely, let’s lower the legal blood alcohol level to 0.08 since the experts call that binge drinking.

And do not think this is an apologia for alcoholism and drunk driving. I know first-hand the horror and pain of each. Rather, it’s a plea for a measured, reasonable, and rational approach to solving the problems they cause.

That’s because drinking is not the problem. Abusing alcohol is the problem. Trying to shame responsible adults into stopping behavior that isn’t shameful won’t do much to stop alcohol abuse. Didn’t the neo-Prohibitonists learn anything from Prohibition? Hopefully, they’ll eventually figure this out. Until then, I’m happy to do my part to explain it to them.

Photo: “company dinner” by Rivard is licensed under CC BY-ND 2.0 

More about neo-Prohibitionists, booze studies, and wine drinking:
Cigarettes, wine, and cancer
Drinking, scientific doom and gloom, and perspective
The CDC alcohol death study

Wine business history: The more things change, the more they stay the same

wine business historyIn the wine business, history repeats itself – and we know what premiumization, overpriced wine, and consolidation mean for consumers

Premiumization, overpriced wine, and consolidation are nothing new in the wine business. Go back 80 years, and wine business history is eerily familiar. In this, some of the earliest and most influential wine critics, including Leon Adams and Frank Schoonmaker, warned the industry about the mistakes it was making.

And I would be remiss if I didn’t quote Winston Churchill here: “Those who do not learn from history are doomed to repeat it.”

Premiumization

Schoonmaker was a wine importer and wine writer whose 1930s’ “The Complete Wine Book” might have been the first attempt to explain wine to the U.S. consumer. In 1947, in a piece for Gourmet magazine, Schoonmaker lamented what sounds a lot like what we’re seeing now:

And in the past five years we have hardly seen any real vin ordinaire (by which I mean a common, inexpensive table wine) sold in America. The humble gallon jug virtually disappeared in 1943 from our wine merchants’ shelves; instead, the undistinguished reds and whites from the mass production areas of California appeared in fancy dress at a fancy price, and elaborate advertising campaigns were launched to convince us that bottles which we used to buy reluctantly for 60 cents were suddenly worth $1.50 and were being sold us as a special favor.

In other words, $15 wine is the new $8 wine.

Overpriced wine

Adams was perhaps even more influential in his time (the end of Prohibition to the 1960s or so) than Robert Parker was in his heyday. He is usually given credit for pushing the California wine business into the 20th century; he advocated for regional wine long before there was much of it; he helped start the Wine Institute; and he wrote several of the most important wine books in U.S. history.

He also had no use for over-priced wine, and regularly urged California producers to make wine that most of us could afford:

They should be as cheap as milk. High price wines are not for daily consumption with meals. Real wine drinkers know this; most Americans still don’t.

How spooky is that quote, that it’s still so relevant today?

Consolidation

Adams also saw the dangers of too few wineries producing too much of the country’s wine, something he first warned about shortly after World War II. He explained this in a 1974 interview:

The point was mine, and I think it has stuck to this day, that the little wineries should be encouraged to exist. The larger the number of small wineries that operate in the United States, the safer the big wineries are from attack, legislative attack in particular. If the wine industry ever fell into the hands of only a few major factors, the wine industry and the whole cause of wine would be in trouble. It would be endangered. … The big wineries have never agreed with me about the need to foster the small wineries. … My purpose is to encourage the use of wine, to introduce the use of table wine, which local wineries can do. Moreover, it’s especially to the advantage of California to thus expand the wine market, because with the ideal grape-growing climate of this state, California wines will always be the best buys.”

I wonder: How many of the biggest California producers have ever read that?

Photo courtesy of Sedimentality blog using a Creative Commons license

podcast

Winecast 37: Steve McIntosh, Winethropology

Steve McIntosh

Steve McIntosh

Steve McIntosh of Winethropology offers rare perspective on three of the of the most controversial developments in wine today.

Steve McIntosh’s view of the wine world comes from the middle of the country, which offers rare perspective. How many wine writers make do in a state when wine is not allowed to go on sale? His decade-old Winethropology blog offers solid reviews and incisive commentary about what’s going on these days.

We talked about three of the most controversial developments of the current wine business: the Tennessee Supreme Court case, and whether it will really upend the the three-tier system; premiumization and the role Big Wine and consolidation have played in foisting it on us; and whether the rose boom will turn into a permanent part of wine. Steve is a lot more cynical about rose’s future than I am.

Click here to download or stream the podcast, which is about 11 minutes long and takes up 4.3 megabytes. The sound quality is almost excellent; I’ve finally figured out most of the quirks in Skype’s new recording feature.

What’s next for three-tier after the Supreme Court’s Tennessee retailer decision?

Tennessee retailer decisionDon’t make too many bets three-tier will open up after the Tennessee retailer decision; we’ve been down that road before

The cyber-ether has been awash with confident pronouncements since the U.S. Supreme Court’s Tennessee retailer decision, which struck down a law that limited who could own a liquor store in that state. Many predicted the beginning of the end of the antiquated and restrictive three-tier system that regulates alcohol sales in the U.S.: “Consumers could benefit from Supreme Court ruling,” “Supreme Court hands retailers a big win,” and so on. One of the smartest people in the wine business even said we should see these pro-consumer changes quickly.

Don’t bet on it.

I’ve spent the three weeks since the Tennessee retailer decision interviewing attorneys who practice liquor law, analysts, and other knowledgeable people. And their consensus, almost to the syllable: The Tennessee retailer decision may be a big deal at the moment, but don’t expect much to change about three-tier — and it’s not going to get easier for us to buy wine.

“I don’t see this ruling going much farther,” says Tucker Herndon, an attorney in Nashville who is the office managing partner of Burr & Forman LLP. “I don’t think it’s going to open the floodgates, and I don’t think it’s going to give us a regulatory system without a lot of limitations.”

The Supreme Court ruling said Tennessee couldn’t impose a residency requirement on liquor store owners because such a requirement didn’t promote the public health and safety. All it did, said the ruling, was shield local retailers from competition from national and regional chains. In fact, residency laws are common in in the retail booze business for just that reason, and we’ve had one in Texas in one form or another for years.

The 21st Amendment, which repealed Prohibition, allows the states to regulate alcohol sales as long as the states are promoting the public health and safety. Hence, the Tennessee law ran afoul of the Constitution’s Commerce Clause, which says states can’t favor their residents ahead of people from other states unless there is a very good reason, like public health and safety.

Nothing new about this test

Hence, what seems to a litmus test for the three-tier system. But the attorneys I talked to said that public health and safety has always been a litmus test, and it’s a long way from the Tennessee retailer decision to Internet wine sales. That’s what many analysts are predicting in the wake of the decision: That we will be able to buy wine from any retailer anywhere in the country with the click of a computer mouse.

The attorneys and analysts cited three reasons for their pessimism:

First, the decision didn’t really do anything but overturn a bad law that even the state of Tennessee didn’t think much of. The state attorney general didn’t appeal the lower court ruling; the state’s liquor retailer trade group did because the attorney general didn’t think the law was defensible.

Second, says Herndon, the decision is about retailer residency – nothing more. That someone doesn’t need to be a Tennessee resident to get a retail liquor license to open a store in Tennessee doesn’t mean that someone who doesn’t live in Tennessee can get a license to open a store outside of Tennessee. It’s a subtle difference, perhaps, but an important one. He says the state can almost certainly show that it’s protecting the public health and safety by requiring anyone who has a Tennessee retail license to use that license for a store in Tennessee.

Third, says Lou Bright, the former generral counsel for the Texas Alcoholic Beverage Commission, it’s a long legal journey from this ruling to Internet wine sales. Three-tier mandates that consumers can only buy from retailers and restaurants, while retailers and restaurants must buy from wholesalers and they can’t buy from producers. And producers must, save for one small exception, sell only to wholesalers.

Bright says Tennessee was about who can get a retail license, and not about retailers selling wine directly to consumers. When the court carved out the small, direct shipping exception in 2005, it didn’t address the mechanics of the three-tier system and the role of wholesalers. And, he says, this ruling didn’t, either.

Photo: “Moot Courtroom” by College of William & Mary Law Library is licensed under CC BY-NC-ND 2.0 

Five things the Wine Curmudgeon learned from last week’s wine premiumization post

wine premiumizationMost importantly: Consumers dislike wine premiumization, no matter what the wine business wants us to believe

Last week’s wine premiumization analysis kicked up more than a little dust in the cyber-ether – it was the most visited post on the blog in almost 2 ½ years. The comments and emails covered the spectrum, from people blaming me for wine’s problems (and that there wouldn’t be any if not for people like me) to those who offered their take on premiumization (pro and con) to those who thought I was spot on.

In all of this, I learned five things after writing the wine premiumization post:

1. Consumers dislike premiumization, no matter how much the industry insists otherwise. I wasn’t sure about this until I saw the reaction to the post, since all the data suggests we’re paying more for wine. So if we’re paying more, then we’re happy, right? But since fewer of us are buying wine, and those of us who still buy wine are buying less, how happy can we be?

2. Talking about wine prices is even more taboo today than it was when I started writing about wine in the late 1990s. There was a sense then that pricing was not to be questioned. Because, wine. I’ve never understood this, and my emphasis on cost vs. value has always annoyed people in the wine business. It annoys them even more today – and some are way past annoyance.

3. The economics of the post-modern wine business stink for almost everyone who isn’t Big Wine. I sympathize with those producers, and have agonized over their plight many times. But overpriced wine is overpriced wine, regardless of the reason why. Is any bottle of wine really worth $80 or $100? Or, as hard as it is to believe, thousands of dollars?

4. I taste thousands of wines a year, at all prices and from all over the world. My friends also taste thousands of wines a year, and we talk about what we taste. So how am I not qualified to say that wine quality is not what it was before the recession? One friend, a well-known wine judge and critic, will start his pinot noir rant without one nudge from me. Yes, technically the wines are OK — not oxidized, not tainted with VA and so forth — but are they interesting to drink? Are they fun to drink? Unfortunately, not nearly as many of them as in the past.

5. Wine writing, even in the second decade of the 21st century, is still expected to be positive and to sell wine. I had hoped the Internet would change that. I was wrong.

Photo courtesy of IWA wine blog using a Creative Commons license

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