“Damn, sold out of Game of Thrones and Downton Abbey wine.”
Pop culture wines 2020 include swimsuit models, reality shows, and pro wrestling
How could I forget to update the dumbest pop culture wines list in 2019? Chalk it up to even more wine business foolishness than usual – the 25 percent European wine tariff, the grape glut but not necessarily lower wine prices, and all the rest.
So here are the dumbest pop culture wines 2020. The list is not scientific in any way or meant to be inclusive. Talk about the headache I’d get trying to do that.
Otherwise, is there really any reason for these wines to exist?
• How did we have to wait so long for a pro wrestling wine? “Dream” Sparkling and “Nighmare” GSM, a red blend, from the legendary Rhodes wrestling family. They’re apparently sold out, so fans of the squared circle are out of luck.
Consumers have gone through a lot — and I mean a lot — of empty $3 wine bottles since Two-buck Chuck debuted 18 years ago.
Does the continuing popularity of $3 wine, which isn’t all that tasty, tell us more about the wine business than the wine business wants to know?
Five times I’ve tasted $3 wine to see if wine drinkers can survive on ultra-cheap wine. Five times, the answer has been no – and the wines have tasted worse each time I have done it. So why do these wines still exist?
Welcome to the deep, dark dirty secret of the wine business — and which is rearing its ugly head this year: We buy wine on price, and if the price is low enough, nothing else much matters. Despite all of the hoopla about premiumization and trading up, $3 wine exists because people buy it. And we buy lots and lots of it.
Trader Joe’s has sold more than 83 million cases of Two-buck Chuck since the wine debuted in 2002, about 4.6 million cases a year. That would make the Charles Shaw brand the 10th biggest winery in the country by volume in 2020 if it actually existed. And, surprisingly, that total is closer to No. 9 Jackson Family and its ubiquitous Kendall Jackson chardonnay, than almost anyone could imagine.
It’s also worth noting the success of E&J Gallo’s $7 Barefoot, which is estimated to sell $1 billion worth of wine this year, about 18 million cases, That would make it the fifth biggest brand in the country if Gallo didn’t own it. And, when we parse the data, isn’t the popularity of White Claw and the rest of the hard seltzers about price? Why would someone buy flavored spritzy water with a bit of booze if it wasn’t cheap? Like Two-buck Chuck, they’re certainly not buying it for the sensual experience.
The other thing that fascinates me about $3 wine? That its adherents take it as a personal affront when I criticize it. How can you be such a snob? they ask (and not always that politely). We’ll ignore for a moment that I may be the least snobbish person in the wine business. What matters is that they need affirmation that buying on price is OK, because that’s the exact opposite of the way the wine business works.
And in this, they miss the point of my criticism. The first rule – and really the only rule – for wine is to drink what you want, but be willing to try different things. They can drink as much crappy, thin, and watery wine as they want. What does it matter what I think, as long as they enjoy it? So should the question they ask not be what I think, but if they really enjoy it?
“It’s good to know someone is still reading my stuff.”
Go figure: Some one-quarter of wine drinkers still say wine critics’ scores and reviews are highly influential
The wine world has Instagram influencers, Facebook groups, Twitter raves, and who knows what else. So where does a traditional wine critic fit into all of this in the second decade of the 21st century?
That compares to 42 percent for friends and family and 31 percent for store employees. Interestingly, tasting wine in the store ranked highest, at 60 percent, and second highest was “wine is from country or region I like,” at 45 percent. What makes those interesting? Talk to people who do store tastings, and they’ll tell you they often don’t sell that much wine. And that we buy wine from regions we know isn’t surprising; in fact, it’s one of wine’s great problems, that people won’t buy out of their comfort zones.
The other surprise? Price didn’t matter, coming in as only the seventh most influential. The question was phrased oddly, which may account for the result: “The wine is on sale for 10 percent off or more,”
And where did those Instagram influencers rank? The survey didn’t address them specifically, but this result speaks volumes for that approach to wine marketing. “Recommendation through an app” was just 8 percent, second lowest.
The survey results, not surprisingly, skewed significantly with age. Older men cared more about scores (which is why the preferences for scores didn’t bother me all that much). Meanwhile, younger wine drinkers cared more about recommendations from friends and family.
How can we have have excess supply and declining demand, and yet still see steady wine prices? Because this is the post-modern wine business.
Somehow, we’re at a point where the laws of economics don’t matter. Too many grapes and less consumer demand, as well as an uncertain economy thanks to trade wars, the U.S. election, and the coronavirus, should mean lower wine prices. We should see $15 wines cut to $12, $12 wines cut to $10, and so forth.
“Most people in the business haven’t a clue about very basic economic principles, such as supply and demand,” one mid-size California producer emailed me recently. “The $15 to $20 ‘sweet spot’ is not so sweet anymore.”
So what is going on here? Why is the wine business defying supply and demand?
First, thanks to consolidation, we have oligopoly pricing. That is, the producers, retailers, and wholesalers control such a large part of the market that they can afford to hold the line on prices. Prices may change, but they never change all that much or for all that long. One wine may be discounted, but then it’s replaced by another one, which is then replaced by another one. Case in point was a Dallas Kroger this week, when almost nothing was priced differently than normal — even previous vintage roses.
Second, we’re seeing the after-effect of premiumization combined with untenable cost structures. So many producers spent so much money establishing their brands at $15 or $20 or $25 that they can’t “afford” to lower prices. If they do, they will “ruin” their brands. In addition, production costs are so high for so many of these producers that lowering prices means they will sell at a loss, and then their bank won’t be happy.
So what will we see instead of consistently lower prices?
Lots of dumping and heavy discounting. Some of this has been going on for months, and it was one reason why Treasury Wine Estate’s stock tanked at the beginning of February. The company either threw the wine out or sold it at deep discounts, often through non-wine outlets. One Dallas dollar store was selling $8 and $10 Beringer supermarket wines for $2.99 and $3.99 at the beginning of the year. That’s the picture at the top of the post.
Also, new, less expensive one-off wines. This happened quite a bit during the recession, and it’s one way for a producer to protect a $25 brand. They’ll sell their wine to someone else, who bottles it under a different name for $10 or $12 or $15. I’ve seen this already, too. My local Aldi is selling a “reserve” pinot noir for $10. It’s almost certainly more expensive wine that has been relabeled.
So, in the end, don’t expect your local retailer to lower prices. That would make too much sense in a business that is not much connected to reality any more.
The bad news? We’re stuck with the 25 percent tariff imposed last fall until the next review, set for August.
Still, this is much more than a half empty glass. The decision seemed to reflect the wine industry’s tremendous and almost unprecedented lobbying effort against the 100 percent tariff, in which representatives from each of the three tiers testified at U.S. Trade Representative Office hearings, blitzed the old and new media, and organized public anti-tariff campaigns. In this, groups that typically disagree as often as they agree worked together for the greater good.
For example, the Wine Institute, the trade group for California producers, has been working for years to change state laws to make it easier for consumers to buy directly from wineries. This has been opposed by most of the second tier, since wholesalers have a monopoly on selling to retail and restaurants under the three-tier system and don’t want to allow any exceptions. But the two groups were side by side in opposing the tariff.
“It was one of the rare cases in the industry when everyone’s interests aligned,” says Cindy Frank, a long-time wine industry executive who has worked as an importer, wholesaler, producer, and retailer and who testified at last month hearings before the U.S. Trade Representative in opposition to the tariffs. “It’s the one issue that has worked itself all the way through the three-tier system.”
So where does this leave us?
• The tariff decision was announced on Friday afternoon. This timing, after everyone leaves for the weekend, almost always means the people announcing the news didn’t want to talk about it. Which often means they did something they didn’t want to do, and so didn’t want to have to explain their decision. Still, that aircraft tariffs were increased, when the initial dispute was about aircraft, speaks volumes. The World Trade Organization ruled in October that EU subsidies to Airbus were illegal, and that the U.S could impose tariffs in retaliation.
• Credit some of the decision to our friend, the three-tier system. Apparently, Trump Administration officials didn’t understand what three-tier was or how it worked. Their questions, said several people who testified, assumed retailers, importers, and wholesalers could easily replace European wine with imports from other parts of the world, just as they would steel or soybeans. The officials didn’t know how severely three-tier restricts how wine can be sold in the U.S.
• Economic turmoil. The wine industry lobbyists, as part of their effort, did an excellent job in showing that higher prices for imported wine would lead to job losses, bankruptcies, and lost sales up and down the U.S. supply chain, whether big or small retailers, producers, importers or distributors, says Southern Glazer’s Barkley Stuart, the chairman of the Wine & Spirits Wholesaler Association’s board of directors.
• The tariff was re-examined four months after it was applied as required by U.S. law. This was a point of confusion after the October ruling, and I reported the process incorrectly in the “Does anyone have any idea what’s going on?” post (and since updated). The next tariff review, as required by law, must come by August. In addition, the WTO is expected to announce later this year that the U.S. gave Boeing illegal subsidies in retaliation for the EU subsidies to Airbus. If that happens, then there’s political cover for both sides to negotiate away the tariffs, but no one knows if or when that will happen.
• Retailers, pricing, and rose season. As reported here and elsewhere, retailers, distributors, and importers have worked together since October to minimize the 25 percent tariff’s effect on prices. But, as one Dallas retailer told me, all bets are off on holding the line on prices when rose season arrives in the next month or so.
Brill left a comment about last week’s blog post about the future of AI wine writing. That led to our phone conversation this week, where Brill said improved technology has made it possible to create the Chateau Bonnet review with a minimal amount of human programming. All you need, he said, is a database of wine terms, wine regions, grape varieties, and so forth. That information, combined with advances in neural network research that have helped scientists better understand how to program machines to “think,” led to the review software and to the Bonnet review.
In this, Brill said, a machine’s ability to “write” longer and more coherent sentences has improved tremendously. Before, he explained, an AI story might be half readable and half nonsense, and the most it could create was a 10-word sentence. Today, those numbers are 90 and 10 percent, and it can write a readable 10-sentence paragraph.
How the machine does this, needless to say, is incredibly complicated. It makes predictions about what comes next in a sentence based on the words that came before, a process that is much more like writing than previous AI efforts; those were more like filling in a template. Here, the AI has “learned” that a mineral-driven wine is crisp and fresh, and not oaky and flabby, so it picks the former phrase to follow mineral-driven instead of the latter.
Which is why the Chateau Bonnet Blanc effort is not a bad tasting note. It’s mostly accurate (save for the bit about aging) and it conforms to the rules of grammar and the sensibilities of wine. That the machine wrote the review without tasting the wine is impressive, and knowing only the cost and some characteristics, is impressive. And more than a little spooky.
And not just because an AI is cheaper to hire than I am. Brill said advances in machine writing could eventually make product reviews useless. Some of that happens today on Amazon, where it’s not uncommon to see badly written AI reviews praising a product. But the situation could get even worse as AI writing improves.
A top-notch AI could flood Amazon with machine-generated positive (or even negative) reviews, with the resulting effect on sales. Or it might be possible for one restaurant to force another out of business with an AI-written campaign on Yelp.
No thanks: Three tablespoons of this aren’t as appealing as a glass of wine.
The power of nutrition labels: A glass of wine has the same number of calories as three servings of strawberry fruit spread
The biggest surprise during last month’s Silicon Valley Bank State of the Wine Industry report was not the sad state of wine in the U.S. Rather, it was that Rob McMillan, the report’s author, said it was time for wine to acknowledge the need for ingredient and nutrition labels on its bottles.
This was revolutionary. Previously, only a couple of consumer groups, a handful of progressive wineries, and cranks like the Wine Curmudgeon wanted to see the labels. To the rest of wine, the labels were a waste of time – confusing, costly, and bottle clutter. Wine drinkers don’t need to be bothered with what was in their wine, and that was was that. And stop bothering us.
But McMillan’s argument turned that reasoning on its head. Wine, he said, is the most natural of products – grapes and yeast. Why, when younger consumers care more than ever about what’s in their food, should the wine business hide that?
“We can’t be more plant-based than wine – you put it in a tub and squish it and it turns into something else,” he said. “Yet we’ve got to this point where spiked seltzers are seen as a more healthful choice because of the clarity and transparency of the ingredients.”
Which, of course, is what some of us have been arguing for years. I was reminded of the good sense of this approach when I looked at the fact label on a bottle of Smucker’s Natural Strawberry Fruit Spread, where the front label puts the emphasis on “natural” and adds “No High Fructose Corn Syrup.”
A serving is one tablespoon, and there are 40 calories per serving of this “natural” product. In other words, I can drink a glass of wine, which has about 120 calories, or I can have three tablespoons of something called natural strawberry fruit spread. What do you think most consumers would choose?
And how has the wine business missed this connection all these years?