Winebits 639: Premiumization, Pennsylvania state stores, direct to consumer

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“Premiumization never really bothered me.”

This week’s wine news: Will the pandemic finish off premiumization? Plus, turmoil in Pennsylvania’s state wine stores and the favorite DTC grapes

Is premiumization over? A top wine business analyst has told the industry that its drink less, but drink “better” mantra – premiumization – could be ending thanks to the coronavirus pandemic. Spiros Malandrakis, industry manager for alcoholic drinks at Euromonitor International, told the Harpers UK trade magazine that premiumization is at a crossroads: “What we saw in the recession of 2008 was that even if people that could afford more expensive wines or niche varietals, they didn’t buy them because it looked crass. The context has changed. I’m not saying the industry is over. What we know from history is that people will always continue drinking. It’s not the end of the world but it will be a different world to the one we’re used to.” In this, he’s not the first to predict premiumization’s end. But it is one more voice suggesting that the new normal in the new future could be $10 wine.

More fun in Pennsylvania: Pennsylvania’s state liquor store system has come in for much fun on the blog. And why not, given wine vending machines? But the decision to close the state stores during the pandemic has met with serious opposition, not the least of which is the loss of state tax revenue. Even in New York, the center of the U.S pandemic, liquor stores have remained open. Apparently, the state is reconsidering its decision, and may allow limited Internet alcohol sales. April 2 update: The state did reopen its online liquor sales system, but the system will be quite limited.

Favorite DTC grapes: This is a contradiction that seems difficult to explain: Why is chardonnay the best selling wine grape at retail, but cabernet sauvignon is the best seller when consumers buy directly from the winery? That’s the result from a recent SOVOS/Ship Compliant study (via Wine Industry Insight), where cabernet was the best seller with 17 percent of volume, almost twice as much as chardonnay. Typically, chardonnay accounts for about 20 percent of retail sales. Any thoughts would be much appreciated.

4 thoughts on “Winebits 639: Premiumization, Pennsylvania state stores, direct to consumer

  • By Bill -

    Being in The wholesale wine and spirits industry for over 35 years I feel Cabernet is more prestigious and often limited in distribution to wholesalers. When buying direct consumers get a sense of getting something not available at your local wine shop. A lot of great Chardonnays are fairly accessible to most

  • By Tony Caffrey -

    On the cab/chard conundrum, we know women buy the majority of wine at retail, so I’ll guess men buy the majority online, and the average price of an online bottle greatly exceeds that of a retail bottle.

    • By Wine Curmudgeon -

      This survey was based on volume, so the price thing isn’t the answer. That’s the first thing I assumed, too. And we don’t have good numbers for DTC demographics.

  • By MrDoug -

    When you taste wine where do you start and end? What is top of mind when it comes time to buy, the last one you tasted. Most DTC sales are going to come from a in person visit vs. internet purchase.

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