Wine trends in 2015

wine trends in 2015Wine trends in 2015 will be similar to wine trends in 2014 — wine drinkers will see more wines they’ve never heard of and we’ll be able to buy those wines at more places than ever before, including and especially grocery stores. Along the way, Big Wine will continue to get bigger, and even wine writing could see significant changes, as those of us who don’t have money behind us will stop doing it.

? More private labels. Retailers love private labels, like Trader Joe’s Two-buck Chuck or Costco’s Kirkland, because it gives them a product no one else has and because they make more money than with national brands. Case in point: The Total Wine chain sells many national brands at its cost, and makes its money on its Winery Direct private labels. We’ll see more private labels because retailers are desperate to boost margins at a time when they can’t, for whatever reason, raise prices. Nielsen reports (and I’m going to write more about this later this month) that private label wine sales were up 11 percent last year, compared to 3.5 percent for all wine.

? More chains. There has never been a national wine retailer, which has made perfect sense given three-tier and that there are 50 booze laws for 50 states, including some that don’t allow chains. But these companies are expanding despite the legal obstacles. Total Wine expects to double its sales to $3 billion by 2019, opening 12 to 15 stores a year, and Canadian retailer Liquor Stores N.A. wants to add to stores and states to the 36 locations it has in Kentucky and Alaska. My guess? That the chains will slowly move into as many states as possible, changing the laws when necessary. Theu’ll offer better prices and force independents to get better, which is what happened in the pet business. Petco and PetSmart didn’t crush the independents when they opened 20 years ago; in fact, independents still account for about 90 percent of all pet stores, though only about one-third of sales.

? More grocery stores selling wine. This will change the wine business as we know it, despite repeated failures to get grocery store sales in Pennsylvania and New York. Supermarkets want wine because it’s more expensive than most of what they sell, and it helps them offer one-stop shopping. Plus, they have the financial clout to change laws in states that forbid grocery store sales, most recently in Tennessee. Again, this will pressure independents, who won’t be able to compete on price and will have to redouble efforts to offer quality service.

? Consolidation. Big Wine will continue to buy smaller companies and increase its market share, with deals like this. In this, it will solidify its hold on retailer shelves, making it more difficult for smaller wineries with limited distribution to be sold in all but the most progressive independents. I’d guess that as many as three-quarters of the wines in a typical grocery store come from the six biggest wine companies, and that percentage will only get bigger.

? Internet wine writing shakeout. Last fall’s news that Vinous bought Stephen Tanzer’s International Wine Cellar is the biggest development in wine writing since the Internet. It means someone has figured out that the only way to make money with wine writing on the Internet is to target the five percent of Americans who buy wine that costs more than $20 and that the only way to target them is to get big to compete with the Wine Spectator and the Wine Advocate. That’s not good news for those of us who don’t target that audience and don’t have the deep pockets to get big. Think of it as the wine writing equivalent of what Big Wine is doing, and wonder how many independents who are on the Wine Web Power Index will be there in five years.

One thought on “Wine trends in 2015

  • By LagunaSomm - Reply

    I disagree slightly with you on one or two points, or at least see the mechanics and numbers story quite differently… from the retail trade insider point of view. Large chains in California and elsewhere import and make wine locally and the sell their own “fictitious” brands of wine to make far larger (read HUGE) profit margins per bottle sold. They buy directly from winemakers and producers thereby eliminating the large middleman distributor profit margin (charged by companies such as Youngs, Southern, Henrys and others like them).

    Some chains contract with grocery distribution and logistics chains to get their wines from bottling and storage facilities to retail markets as cheaply as possible. Margins on these wines range quite widely, but on a lot of lower priced wines, they buy at 3 – 5 bucks a bottle and sell them for 15 – 25 at retail. Margins like these on basic but quite OK wines are entirely new and unprecedented in modern industry and business times.

    This higher level of profitability permits both rapid expansion of numbers of retail stores while high profits are continually delivered at the expense of the price/value naive and somewhat lazy shopper/consumer.

    Numerous chains, including supermarkets have hiked their wine prices by large amounts over the last five years, in order to offer bigger and bigger discounts off more elevated retail prices. This is largely the case, while lower to mid-priced brands such as Bogle, Cline, and Mc Manis and dozens like them with much higher quality product (than retail chain-owned high margin own brands) have seen their prices remain virtually unchanged in the $7-12 market since the 2008 recession. They work through the consumer direct and standard three tier, producer/distributor/retailer system and have seem both margin erosion and lacklustre sales growth that is quite out of line with US consumption and unit sales growth.

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