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Category Archives: Wine trends

Wine trends in 2016

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winetrendsWine trends in 2016? Expect to see consolidation continue, producers continue to aim at the consumer smooth tooth, and retailers focus even more on private label. And, not surprising given all of this, more of us move away from wine in favor of craft beer:

Distributor and importer consolidation: Big Wine will get bigger in 2016, which won’t be anything nothing new. The real news will take place among distributors and importers, as the biggest among those two groups buy smaller companies. We’ve already seen some of this, and there will be more for two reasons. First, historically low borrowing costs, which will make it possible for the biggest companies to buy more smaller companies than usual and even to overpay. Second, the graying of the family distributors and importers who started their businesses in the 1980s and 1990s and who brought us so much interesting wine. If you run a family business and you’re nearing retirement, and someone throws a ridiculous amount of money at you, wouldn’t you sell, too?

Keeping it smooth: The number of red blends and pinot noirs, which have grown like crazy over the past couple of years, will keep growing. This includes (most importantly) sweet red wine, as well as any red blend tasting of massive amounts of fruit and without much in the way of tannins. It includes pinot nor, because pinot made for less than $20 is usually blended. It also includes Prosecco, which has jumped in sales the past couple of years and is increasingly being made to fit the smooth flavor profile even if that doesn’t necessarily taste like Prosecco.

Bring on the private labels. One of the most important statistics about wine was buried in a Nielsen marketing report last year — 4,200 new wines were introduced in 2014, about 12 1/2 percent of the market. Those weren’t necessarily wines from new producers or new wines from old producers, but wines made for specific retailers, whether grocers or chain wine stores and called private label wines. They can be sold for a little less than national brands, or even the same (right, Kroger?) but reap more profit. 

Flat wine sales. Since the recession ended, annual wine sales have hardly grown at all. As wine market analyst John Gillespie has written, that could be because we’re switching to craft beer, where sales have surpassed almost everyone’s expectations. The most telling number: The craft beer market is worth $24 billion, which is two-thirds of the entire U.S. wine market. And it’s not like craft beer has been around for very long.

Call me cranky, but the first three things on this list explain the fourth. If wine is becoming boring — the same kinds of wine made by the half-dozen producers who dominate the U.S. market, why wouldn’t we look for something else to drink? Throw in that these are increasingly ordinary products, which so much private label is but  are sold for higher prices, and wine’s sales slump seems obvious.

Wine prices in 2016

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wine prices in 2016Wine prices in 2016 won’t necessarily be higher or lower; instead, they’ll be more confusing. That’s because more retailers will move to tier pricing, where each wine has two or three or even four prices, making it that much more difficult for consumers to figure out what’s going on.

This approach, which grocery stores have used successfully for the past five or six years, features a combination of sale prices, club prices, and quantity discounts, and it will become more common for a couple of reasons. First, the big chains like it — for example, BevMo, with 155 stores on the West Coast and in Arizona, offers a regular price; a cheaper, club price; and sales prices. Spec’s, with 160 stores in Texas, has cash, credit, club discounts, and sales prices. And World Market, once a bastion of fairly priced cheap wine, now has so many prices — as the photo shows — I’ve stopped shopping there. The Matua, for example, is $10 or $11 elsewhere for one bottle.

Second, it makes price comparison that much more difficult, and retailers don’t like price comparisons. Showrooming, where shoppers check prices on-line before they go into a store, makes retailers crazy. But if you’re not sure what the price in the store really is, showrooming becomes less effective. Third, tier pricing makes it seem like the product is cheaper than it is. If a bottle of wine is $12.99 list, $10.99 with your club card, and $8.99 if you buy six bottles, you’re more likely to focus on the $8.99 price, even though most of us will never buy six bottles at one time.

Fourth, no one is sure where prices will go in 2016, and tier pricing allows retailers to hedge their bets. Christian Miller of Full Glass Research in Portland, who studies wine pricing, says he expects prices to be flat between $8 and $15 even if some retailers want to raise them. That’s because the biggest distributors and retailers will keep suppliers and producers from raising prices, since the former can still make money on the smaller margins — and higher sales — that come with lower prices.

There is also evidence, says John Gillespie of the Wine Opinions research group, that the $10 to $15 range is still the most attractive price for wine drinkers, regardless of all the talk about premiumization. If that’s the case, then retailers will want to keep prices steady.

In addition, there are a couple of wild cards for wine prices in 2016:

• Several retailers I talked to, including one of the biggest in the country, said price resistance seems to be holding at $25 and up, and some high-end producers who raised prices last year were discounting their wines at the end of 2015 to get rid of excess inventory.

• Will the strong dollar, which should make imported wine cheaper, do that, or will importers and distributors keep the difference for themselves? If they do, then retailers will have more leeway on pricing for domestic wine.

• The California drought, which cut yields for some varietals in some areas in 2015. No one is quite sure what this means to pricing, either this year or next. If higher prices for grapes, thanks to the drought, force wine prices up, will consumers trade down instead of paying more?

What’s wrong with California expensive wine?

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California expensive wineNothing, actually. But what happens when one of the world’s top wine writers picks only a handful of California labels as her best expensive wines in the world for 2015? If you’re a California expensive wine devotee, it’s time to panic, and many did on Twitter and elsewhere. If you have a little more perspective, Elin McCoy’s choices speak to how much great wine is made in the world, and how even those who buy pricey wine sometimes don’t understand the need to try something different.

McCoy’s list of the 50 best wines for $50 or less in 2015 had just seven wines from California. Excluding the six Champagnes on the list, that meant 7 of 44 — just 16 percent of the best expensive wine in the world — came from California. Is it any wonder so many howled so loudly? It’s one thing when I criticize California for making such ordinary, grocery-store cheap wine. But expensive wine? That’s the Napa and Sonoma reason for being, and if those regions don’t dominate lists like this, their supporters figure something must be wrong.

But as McCoy said when I asked her about it, “Those seven wines were more than from any other place but France, so I guess I don’t feel I neglected California too much.” And, she added, the list doesn’t have any wines from Chile, Argentina, and Washington state, which also make great wine.

Hence perspective, something too many American wine drinkers lack. Because it’s not enough to have 17 percent — it must be 50 or 60 percent or even more. Because, dammit, expensive California wine is the best wine in the world. Everyone knows that. And if you don’t, you don’t know anything about wine (and no, I’m not going to link to the blog posts that say that — no need to start the new year with a flame war).

Which is that lack of perspective. I’ve written many times that California makes the best wine in the world, cheap or expensive, but only when it wants to. The rest of the time, it’s content to make wine other people think it should make, be it a focus group or the Winestream Media. And if anyone complains, we get the speech in the previous paragraph.

Or, as one noted wine competition judge told me when we discussed this, “California wines have gotten boring, for the most part. Same ole, same ole, year in, year out. … I can appreciate the box they have built for themselves. Why mess with success? But no one wants to discuss it because we are all so close to those people and that industry, but the reason I love Old World wines so much is that they are interesting, with unexpected, often delightful, surprises. And every year, they are different.”

And difference brings perspective.

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