Tag Archives: wine trends

The WC wine business index: How much has the pandemic hurt the wine business?

wine businessThe statistics are all over the place; can we tell what’s going on in the wine business from the WC wine business index?

It’s a running joke among those of us who pay attention to the wine business that almost all the sales figures you read here and elsewhere are unreliable; the best numbers are educated guesses that have been fine tuned based on the data that is available.

There are many reasons for this, including the fact that lots and lots of wine is sold by lots and lots of independent retailers who aren’t tracked by companies like Nielsen. So why does this matter now? Because, according to one set of numbers, the wine business is in a pandemic-fueled crisis and things are going to get much worse before they get better. Or, if you believe these numbers, the past six months (as well as the past couple of years) are just a bump in the road and worrying about it is for small-minded people.

The reason for the discrepancies? Most agree that wine sales have declined since U.S. restaurants closed in March and April. What they can’t agree on is whether retail sales have made up most of the difference, so that the decline is insignifcant. Further complicating matters, based on yet more statistics, is that some insist sales are up for the year thanks to lots of foofry about the Internet, e-commerce, and wine delivery.

The WC wine business index

But no one has actually been able to figure out where we are seven months into the pandemic. Which is why the blog is unveiling the WC wine business index, where numbers aren’t the be all and end all. Instead, I’ve talked to retailers, producers, and marketers from around the country to see if I can sketch where the wine business is and what it means for consumers. Hence:

• There’s some desperate marketing going on in an attempt to boost sales. One major Texas wine event, forced to cancel, is trying to sell wine via email solicitations. Shudder. And one trade group wants you to buy its wine for the “iconic, uniquely-designed rose bottles that can be used for crafts and ingenious displays. …” Double shudder.

Producer after producer, mostly smaller but also some larger, has told me that many of the 9,000 or so wineries that make up 90 percent of the U.S. total may be in danger of closing. The pandemic has shuttered their tasting rooms, and since most of them don’t sell much, if any, at retail, they depend on tasting room sales to stay in business.

• How about an Oregon pinot noir with a suggested retail price of $12.50? That means the street price is $10.99 or $11.99, almost unheard for Oregon pinot. In fact, most Oregon pinots that used to cost that little long ago went to $15 and $18. This points to way too much wine being made in Oregon, as well as slowing sales; the wine in question may be close to being sold at cost.

• The pandemic apparently clobbered the keg wine business, which has been a bright spot over the past couple of years. Wineries were putting their wine in kegs, just like beer, to sell to restaurants. But no restaurants means no need for keg wine. So keg producers are spending time and money to repackage their wines, often in boxes.

• Big Wine, save for a few glitches, seems to be doing better than most. One reason: It sells less wine, proportionally, to restaurants and more to supermarkets, which fits the pandemic consumer profile. In addition, consumers seem to be focusing on brands they know, and that fits the Big Wine product line.

And what about consumers?

Your guess is as good as mine. Most retailers tell me we’re trading down, and that Big Wine supermarket sales are OK speaks to that. And I’ve seen signs that some high-end wines, the $100 and up kind, are clawing for new business in a way they’ve never clawed before. That implies there is some trading down, though trading down from $150 to $75 isn’t exactly the traditional definition.

In this, there is still a lot of money in the hands of aging Baby Boomers, who will continue to buy their overpriced 92-point wine despite what else is going on. And the wine business will be happy to sell it to them to paper over any other problems.

So what’s the overall impression from the WC wine business index? That we’re in a holding pattern, though likely headed down sooner rather than later. Specific parts of the wine business are already suffering, and some are suffering badly, be it smaller producers or independent retailers.

But consolidation among producers and distributors has insulated the biggest companies from the worst of the pandemic. So expect to see two levels of pain over the next year or so: Something akin to an ankle sprain among the biggest companies, compared to a broken leg (or worse) among the smaller. And the consumer will get caught in the middle, which is exactly where the wine business likes us.

Photo courtesy of Philadelphia Inquirer, using a Creative Commons license

podcast

Winecast 50: Churro, the blog’s associate editor, and why Millennials and wine don’t get along

Millennials and wine

“I know I need the computer bag, but why are you making me wear the damn hat?”

“We can pay off our student loans or we can buy wine. What do you think we’re going to do?”

One reason I hired Churro as the blog’s new associate editor was his perspective – he isn’t a Baby Boomer, and brings a younger, more fresh approach to the blog. Which is the topic of this podcast: Why Millennials aren’t as interested in wine as their parents and grandparents. Our conversation included:

• Wine prices, and that wine is too expensive for many younger consumers.

• How to make wine easier by using wine apps like Vivino.

• Wine’s competition from craft beer and cocktails. As Churro noted, “they’re doing some amazing things with craft beer these days.” And, by omission, not so amazing things with wine.

• That it’s OK to sniff and swirl and spit, as long as you don’t make a production out of it.

Click here to download or stream the podcast, which is about 12 minutes long and takes up about 4 megabytes. Quality is very good to excellent.

And for the doubters in the audience: I’ve interviewed a dog before — Wishbone, the 1990s PBS TV star. In addition, dog whisperer Amanda Smith lent her much appreciated support.

The Bordeaux wine business, younger wine drinkers, and why the twain isn’t meeting

The latest Bordeaux wine marketing plan will probably fail, just as the others did, because it doesn’t understand that price is all – and Bordeaux costs too much for most of us to buy

Dear Bordeaux wine business:

I understand your current difficulties, what with the pandemic and the Trump tariff. I also understand how desperately you want to reach younger wine drinkers, since that will help with many of your current difficulties. Hence, once again, I take keyboard in hands to offer advice you don’t seem to be getting elsewhere – why Bordeaux is in such trouble with everyone under 35. Or even 40.

It’s price. Your wine costs too much, and anyone who isn’t a wealthy Baby Boomer probably isn’t going to buy it. There’s less and less quality $10 Bordeaux for sale in the U.S., and no one looks harder for these wines than I do.

And you have no one to blame but yourself. To most wine drinkers, Bordeaux means high prices and exclusivity, and you have been perfectly happy with that for years. Hence, I get offers from retailers pitching $650 bottles – on sale. And emails about academic studies touting your wine as an investment option – hardly what a 20-something wants to drink with takeout Chinese food.

But now that business is bad, you aren’t happy. But the catch is that you still don’t see price as the problem. Your new marketing campaign, aimed at young people, includes $30 wine. I rarely buy $30 wine, and I do this for a living. So why would someone else, who just wants wine because they want a glass of wine, spend $30?

Yes, yes, I know: Bordeaux makes the best wines in the world, gets the highest scores, and so on and so forth ad nauseum. Which is all well and good for wealthy Baby Boomers, but what does any of that have to do with someone who wants a half-bottle of wine for a Tuesday night dinner of leftover pizza? This is the thing you haven’t understood in years. You assume that all wine drinkers drink wine the same way – plan their meal, find the best wine for the meal, get out the corkscrew, pour the wine, and sit down and eat.

How much more Baby Boomer can you get?

Which leads us back to pricing: You already have the perfect entry level wine, the red Chateau Bonnet. It’s well-made, varietally correct, and offers an idea of what red Bordeaux is supposed to taste like. The catch? It costs as much as $18 in the U.S., which is almost twice its price not all that long ago. And the white is still $10 to $12 in this country, something that makes no sense at all. I love the red Bonnet, but it’s not worth $18.

That it costs $18 speaks to how you’ve lost touch with U.S. consumers, and why younger drinkers opt for a $6 Trader Joe private label from California – if they’re drinking wine at all. Figure out how to fix that kind of bloviated pricing, and you don’t need any fancy marketing plans to sell your wine to young people.

Hope this helps; I’m always ready to do more if need be.

Your pal,

The Wine Curmudgeon

Photo: “Bordeaux Wines at Fareham Wine Cellar” by Fareham Wine is licensed under CC BY 2.0

podcast

Winecast 49: Janie Brooks of Brooks Family Winery and enduring the pandemic

Janie Brooks

Janie Brooks: “We have to be creative, and we have to go outside the usual winery audience.”

Janie Brooks’ forecast is blunt: Small family wineries aren’t doing well and their plight could get even worse

Janie Brooks doesn’t mince words: The pandemic could force a lot of family producers out of the wine business, and anyone who expects things to get better any time soon is going to be disappointed. She paints a picture of lost sales, consumers trading down, producers skipping vintages because they can’t sell what they’ve already made, and way too many grapes in the supply chain.

In other words, Brooks told me, everyone who isn’t a big producer — which is about 90 percent of the 10,000 wineries in the U.S. — is in big trouble.

“If you’re not at sensible price points, and that’s $25 or less, your wine just isn’t moving,” she says.

Brooks perspective is clear, sharp, and national. Not only does she run her family’s self-named, 20,000 case winery in Oregon’s Willamette Valley, but she is the board chair for Wine America, a winery trade group that includes producers across the U.S.

We talked about how consumers can help family wineries, as well the wine business’ need to do something other than market to the same old aging Baby Boomers. This is a subject Brooks is smart and passionate about. Her vision includes cross-marketing, something the wine business has mostly ignored for 20 years. In cross marketing, producers reach potential customers by sharing information with companies that make similar products; in this case, beverages like coffee and sustainable and green products.

Click here to download or stream the podcast, which is about 13 minutes long and takes up almost 9 megabytes. Quality is very good to excellent; in fact, would that my interviewing skills were up to the subject.

wine terms

Wine terms: Smooth

smooth

This hardwood floor is smooth. Is that what wine should taste like?

The increasing use of the word smooth to describe wine – which is not supposed to be smooth – is one more reason why I worry about the future of the wine business

What does the word smooth mean? The absence of something rough — a definition that includes synonyms like bland, flat and mild.

So why has smooth become increasingly popular as a wine descriptor? Do we want wine that is bland, flat, and mild? Water is smooth – do we want wine that tastes like water?

I hope not. Wine is supposed to be balanced, where the various bits that make up a wine’s structure play off each other. Hence, the acidity and the alcohol and the tannins and the fruit and the oak and the mouthfeel and the minerality and everything else should be in proportion. Each bit has a part to play within that equation, and, best yet, the equation is never the same. Balance is going to differ given grapes and regions, so that balance for cabernet sauvignon from California will be different from balance for cabernet from France, just as balance for cabernet in general will be different from balance for chardonnay.

Now, things don’t always work out that way, but that’s the goal – not smooth. So why smooth?

Blame consolidation

The answer, I think, has its roots in the consolidation in the wine business. As more of the wine we drink is made by fewer companies, the logical, business-sensible thing to do is to develop a company style. That way, wine is easier to make, to market, and to sell. If a focus group likes a wine made in a certain style – say, bereft of tannins and acidity, with lots of ripe fruit – then the path of least resistance is to make all the wines in that style.

Or, as I write it in my tasting notes when I’m feeling especially curmudgeonly, smooooothhhhhhhhh.

That’s one reason why so many wines are so sweet these says, even when they’re supposed to be dry. A bit of sugar, usually in the form of white grape juice concentrate, flattens out all those rough edges. You can see this yourself with vinaigrette: Make one that’s a touch too tart, and then add a smidgen of sugar. The sugar brings the tartness into balance. But add too much sugar, and the vinaigrette turns smooth.

The irony about smooth?

Flavor, not smoothness, jump started the U.S. wine boom in the late 1970s. That’s when California introduced the “fighting varietals,” wines labeled as chardonnay, merlot and so forth. They tasted like their varietals and were fruitier and more flavorful than the blends that had dominated the market before that. I just finished a freelance story for American Demographics magazine that looks at the history of beer, wine, and spirits consumption in the U.S., and found that the success of the fighting varietals more or less coincided with the appearance of light beer, which made beer taste bland, flat, and mild.

Or, dare we say, smooth?

So it’s no surprise, said the experts I interviewed for the story, that Americans started drinking more wine, which wasn’t bland, flat, and mild. This is a trend that continued for almost 40 years, and it’s also why craft beer has been such a success – no one has ever accused a hoppy IPA of being smooth.

I wonder – is there a lesson to be learned here? When beer became smooth, people looked for something else that had flavor. Now that wine is smooth, should we be surprised that people are looking elsewhere for flavor?

Clean wine: Has the Winestream Media finally figured out why we need nutrition and ingredient labels?

“Quick — bring the wine in so we can get it through the rinse cycle before anyone notices.”

The clean wine uproar in the cyber-ether has been led by the Winestream Media, which usually doesn’t much care about things like that

The recent uproar in the cyber-eher about clean wine, and that it isn’t necessarily clean, may turn out to be a key moment in dragging the wine business into the 21st century. For the first time, a host of wine writers who usually spend their time talking about toasty and oaky and hip and cool are discovering the need for transparency in wine ingredients.

Who knew it would only take 12 years for them to get to this point?

The light bulb moment for me came last week, when Erica Duecy wrote a post for the popular VinePair site, headlined: “The Industry Set Itself Up for a ‘Clean Wine’ Reckoning.” Duecy didn’t mince words: “You might think this would be a wake-up call for wine companies, that they would lean into the problem, looking to engage millennials where they’re at (reading product labels and online), with the messages they want to hear (nutrition and product information). Yet that’s not what’s happening.”

Harsh charges. But what matters is not that Duecy wrote the post or even what she wrote, but that it appeared on VinePair. The site offers lifestyle-oriented wine, beer, and spirits coverage for younger consumers similar to what the Wine Spectator and Wine Advocate offer for their parents and grandparents – and that’s not necessarily Consumer Reports-like insight. Six recent VinePair posts: Cocktail influencers, an interview with a bourbon executive about “drinks innovations,” whether beer tastes better if it’s ”poured correctly,” Thai “moonshine,” and something called West Texas “ranch water” – which, apparently, we’re all drinking.

That VinePair took on the foolishness that is clean wine speaks volumes about where wine reporting may be heading.

Journalism, anyone?

For clean wine is foolish, as the story in the first link in this post documents (full disclosure – it was written by my editor at Meininger’s Wine Business International). Ostensibly, clean wine is made with nothing but grapes, yeast, and pure intentions, but clean wine producers aren’t especially forthcoming about what’s in their wine or how the grapes are grown. They can get away with this because ingredient labels are optional, and there’s no legal definition of clean wine anyway. So wine marketed as clean, a form of greenwashing, could have used the same additives and the same pesticides (or even more of each) as my $10 stuff.

And make no mistake, clean wine is all about marketing. Using the term may allow some producers to charge a one-third premium for their products, even if they aren’t all that different from “un-clean” wine.

In fact, I wasn’t going to write anything about clean wine. My first nutrition and ingredient labels post ran in 2008, about the time the federal government first broached the subject. I’ve been covering it regularly since then: So why irritate myself by pointing out – yet again – that it’s the wine business’ fault that clean wine exists, since it’s opposed to the nutrition and ingredient labels that would show clean wine for the marketing flummery that it is?

But then I saw the VinePair post, and figured I should add my voice. What’s the point of a little irritation if we can actually change something?

Photo: “Hand washing machine and trough National Trust for Jersey” by Man vyi is licensed under CC BY-SA 2.0

More about nutrition and ingredient labels:

The final “nutrition and ingredient labels for wine are a good thing” post
Update: Nutrition labels and what the wine business doesn’t understand
Nutrition labels for booze

Winebits 658: Wine sales, NBA wine, Wine.com

wine salesThis week’s wine news: One of the wine industry’s top analysts says sales could drop 12 percent in value this year. Meanwhile, one NBA player has turned his hotel room into a wine cellar and Wine.com says its worth $1 billion.

• Premiumization’s death knell? The pandemic could mean a 12 percent drop in the value of wine sold in the U.S., says analyst Jon Moramarco, editor with Gomberg, Fredrikson & Associates. His numbers are among the best in the country, so the wine business pays attention. Moramarco told an on-line seminar that he expects total U.S. wine sales to end the year down 12.5 percent in value, an almost unheard of decline, though volume will be up 1.3 percent. The reason, of course, is the loss of the restaurant and bar business during the pandemic. He told the audience that some of those numbers were evident in the first half of this year: Volume was up 5.7 percent from 2019, but value was down 6.5 percent. In other words, we’re buying more, cheaper wine than we have in years – maybe even sine the recession.

How cold is it? Portland Trail Blazers guard CJ McCollum, a noted wine lover, has converted his entire hotel room into a wine cellar during the NBA’s pandemic playoffs. McCollum cranks up the air conditioning so the room stays between 50 and 60 degrees – which, as we all know, is the ideal temperature for storing wine. The New York Post reports that McCollum does raise the temperature slightly when he’s in the room, but otherwise the goal is protecting his 84 bottles of wine (mostly Oregon pinot noir). Frankly, the Wine Curmudgeon is impressed. I love wine, but I don’t know that even I would do that.

Really? $1 billion? Wine.com, the on-line retailer, has valued itself at $1 billion, as it looks for to borrow money to expand. Bloomberg.com reported that Wine.com wants to raise around $50 to to $75 million, part of a process that could include become a public company through a stock offering. Needless to say, the pandemic has boosted the retailer’s business; sales were up 79 percent over the past 12 months and its CEO said, “The last quarter has fundamentally changed our growth trajectory.”