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Category Archives: Wine news

Winebits 391: Wine snobs edition

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wine snobsBecause, sadly, wine snobs have been dominating the wine news lately:

Defending wine: Alder Yarrow, one of the most respected wine writers in the U.S., writes forcefully about the recent spate of anti-wine sentiment on the Internet, lamenting the fact that so many are so hateful about wine. He seems surprised by the venom, unable to understand why people write things like “Americans who drink wine do so because they think they are living in a BBC adaptation of a Jane Austen novel.” In this, Yarrow doesn’t see the forest for the trees, despite his skill, influence, and popularity. People hate wine because too many wine drinkers and too many people who write about wine want wine to be that way. Remind me to tell the story sometime about the editor who said I couldn’t write for her because wine drinkers weren’t interested in what I wrote about. Or, as a student in my wine class asked me: “Will I be successful in the restaurant industry if all I drink is sweet wine? Won’t they hold it against me?” And I didn’t have an answer for her, other than to say people like me were trying to change that.

You can always count on the Wine Spectator: Matt Kramer, writing about local wine, asks “Should restaurant wine lists feature local wines?” Could it be? Was one of the high priests of the Winestream Media advocating local wine? Would the Wine Curmudgeon have to welcome the Spectator into the regional wine movement? Of course not. This is the Spectator. In 819 words, Kramer comes to this conclusion: “Should restaurant wine lists showcase and champion local wines? Do restaurants have any such obligation? Is it even desirable? I leave it to you to decide.” Which, I suppose, is how you get to be a high priest of the Winestream Media.

Money, money, money: I wonder if Yarrow saw this study, which says rich people are buying wine not to drink, but “as a wealth store – providing a hedge against inflation, protection against low interest rates and currency fluctuations.” How wonderful it must be to be rich, to buy wine instead of gold or real estate. “Wine, Katie Scarlett. Why wine is the only thing in the world worth workin’ for, worth fightin’ for, worth dyin’ for, because it’s the only thing that lasts.” The Wine Curmudgeon, whose lack of business acumen is legendary, has never been able to appreciate this. I buy wine to drink, because drinking wine gives me pleasure. Who knew the rich got as much pleasure from just looking at it?

Winebits 390: Restaurant wine, retailing, consolidation

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Restaurant wineLess and less: The share of wine that consumers buy in restaurants, compared to what they buy in stores, has fallen by some 10 percent since the start of the recession, according to figures compiled by Beverage Information Group. In 2014, restaurants accounted for 42.2 percent of all wine sales as measured in dollars, down from 47 percent in 2008. By itself, this isn’t doesn’t necessarily mean that restaurant wine is becoming increasingly irrelevant, given that the recession was so long and so powerful. But given the recovery in the retail side of the wine business, it’s another indication that consumers, fed up with the poor quality and high prices on so many restaurant wine lists, aren’t buying wine anymore. It also speaks to what might be a significant change in consumer dining habits, that they’re eating at home more often and buying wine when they do.

Honesty is the best policy: Shocking news, but a British on-line retailer says too many of his competitors artificially inflate their prices so they can offer lower “angel” discounts on wines that consumers can’t buy anywhere else, leaving the consumer with overpriced, lower quality wine. It would be better, says the managing director of WineTrust, to price honestly, the way his company does it. This is a not a problem unique to Britain, as anyone who has ever tried to understand U.S. grocery store pricing knows, but it is interesting that a retailer is calling out other companies for the practice. I can’t imagine that ever happening in the U.S., where price confusion is a key part of retailing.

Getting even bigger: This is how crazy consolidation in the wine business is becoming. A buyout specialist is apparently thinking about taking over Diageo, the British  wine, beer, and spirits company, in a deal worth more than $70 billion. To put that number in perspective, 170 countries have a smaller gross domestic product. Diageo, though wine is the smallest part of its business, is still among the top dozen or so biggest U.S. producers, with brands that include Rosenblum, Sterling, and Dom Perignon. There’s substantial doubt whether a deal gets done, not least because it’s so expensive. But that anyone is even considering it points to the mania for consolidation in the world today.

 

Big Wine strikes again

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Big Wine

“Who do we want to buy next?”

That E&J Gallo bought J Vineyards, the highly-regarded California sparkling wine producer, last month was shocking, but it did make business sense. Gallo, for all its vastness, doesn’t make high-end bubbly and doesn’t have many successful restaurant wine brands, and J does and is. Plus, J owned 90 acres of prime Sonoma vineyards, making the deal even sweeter for Gallo.

So how to explain this week’s news that The Wine Group, second-biggest to Gallo among U.S. producers and with even less of a critical reputation, bought the fiercely independent and much beloved Benzinger Family Winery? The Wine Group has never shown any desire to make wine not sold in grocery stores, and its two biggest brands are Franzia and Almaden, the five-liter box cash cows.

Call it one more step in the Big Wine-ing of America:

The increasing consolidation in the U.S. wine business, something I wrote about at the beginning of the year. It is getting harder and harder for wineries that make less than one-half million cases to find distributors and space on store shelves. Benziger makes less than 200,000 cases a year, which wouldn’t even make it the biggest producer in Texas, and J sells only about one-third of that. Said the owner of a leading California independent: “My guess is that a winery really needs to be above 200,000 cases to really get the attention of a distributor. But maybe 500,000 is the new 200,000?” A distributor told me: “There are too many labels fighting for too few spots on the shelf or wine list. It’s crazy.”

• Family and independence, two hallmarks of the California wine business since the 1980s, aren’t enough anymore. These are just the latest sales involving long-time family wineries, which saw an opportunity to cash out to avoid succession problems, solve family disputes over winery operations, or to take advantage of Big Wine’s deep pockets. Sale prices weren’t disclosed, but one report said the J deal may have been worth as much as $90 million, which would make the Benziger price well into the hundreds of millions of dollars. Even of the sale price was half of that for each, which is probably more accurate, that’s a winning payout.

• It’s all about the land. Benziger, with sales of less than $10 million, is so small compared to the multi-billion dollar Wine Group that there is almost no way it could affect the parent’s financial performance. This makes the deal even more baffling, unless it was for the 200 or so acres of quality Sonoma vineyards that were part of the sale.

Will Big Wine run their new companies successfully? Certainly, if success is defined by profit. Otherwise, expect the new owners to do what new owners always do, despite best intentions and protests to the contrary — cut costs, eliminate unnecessary products (so say good bye to J’s lovely pinot gris), and “rationalize” operations. Gallo and The Wine Group won’t ruin J and Benziger the way Sears destroyed mail-order clothing retailer Lands’ End, but they won’t be the same wineries they were before the sale. That’s something we’ll have to learn to live with, because consolidation is going to be with us for a very long time.

More about Big Wine:
How to buy wine at the grocery store
Downton Abbey claret — wine merchandising for dummies
Big wine tightened its grip on the U.S. wine market in 2013

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