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Mini-reviews 69: Marchesi di Barolo, Bibi Graetz, Clos du Val, Bolla

Reviews of wines that don’t need their own post, but are worth noting for one reason or another. Look for it on the final Friday of each month. • Marchesi di Barolo Read More »

winerant

Champagne Jayne and the new censorship

Censorship used to be easy to understand. The secret police came to the door in the dark of night and you were never heard from again. Which is what makes the Champagne Read More »

winetrends

TEXSOM International Wine Awards 2015

The wine competition business is at a crossroads, with entries still not back to pre-recession levels, with wineries cutting the marketing budgets that pay entry fees, and with the reliability of competition Read More »

wineofweek

Wine of the week: Lyeth Meritage 2012

Wineries are like rock ‘n roll bands — they come and go for no particular reason, and if you write about wine or drink it, that’s something you need to understand. Just Read More »

winenews

Winebits 374: Wine snobs, wine grapes, lawsuits

• Because we’re better than you are: The Wine Spectator reports that the next big grape will be cabernet franc, mostly because of its “gossamer structure.” The Wine Curmudgeon has absolutely no Read More »

Winebits 373: Big Wine, Treasury, direct shipping

winenews

Big Wine How big is big? One of the most difficult concepts to get consumers to understand is that their wine probably isn’t made by who they think it is. As noted here, Big Wine controls a majority of the U.S. market, and Big Wine includes many companies most of us have never heard of. Case in point: Trinchero Family Estates, a 20-million case producer that wants to be a 30-million case producer. And how many of us have heard of Trinchero, a California company? It’s best known for Menage a Trois and Sutter Home, but those are only a fraction of Trinchero’s production and its three dozen brands. If Trinchero makes it to 30 million cases, it will be as big as the entire U.S. wine business was in 1965.

Now they’ve figured it out: Regular visitors may remember the Wine Curmudgeon’s attempt to cash in on Treasury Wine Estate’s financial woes, which — not surprisingly — failed. One reason, aside from my lack of financial acumen, is that the people running Treasury were a little confused about how to sell cheap wine. Luckily for the company, that seems to have changed, and its results in the U.S. are much improved. Ironically, it seems this success came from a formula that I suggested when I wrote abut Treasury’s problems last year. Not that the company needs to give me credit — I’m used to saving really rich people lots of money.

The judges like their wine: Supreme Court Justice Ruth Bader Ginsburg made a bit of news last week when she admitted she fell asleep during the State of the Union address in January because she had too much wine. This got giggles from many, but they missed the point, focusing on Ginsburg’s age, 81. Rather, it points to the real reason the court ruled in favor of direct shipping in 2005 in the landmark Granholm decision, which surprised many observers. Forget precedent and constitutional interpretation; the Supremes carved out an exception to the three-tier system because they liked wine and wanted to be able to have it shipped legally from their favorite California wineries. How else to explain that Ginsburg, Anthony Kennedy, and Antonin Scalia, all referred to in the BBC story in the first link, voted to allow direct shipping?

Are Americans going to drink more wine?

winetrends

wine market councilOver the past decade, U.S. wine consumption has set all sorts of records, and most observers expect that to continue. This year’s Silicon Valley Bank report called for a 14 percent increase in high-end wine sales, while a study commissioned by the VinExpo trade show said U.S.wine drinkers will power world growth.

But not everyone is convinced.

It’s not that I’m not optimistic, it’s that the reality of the market when you look at the hard data of total table wine sales over the past three years following the recession,” says John Gillespie, the president of the Wine Market Council, which tracks U.S. wine drinking habits. The group released its 2014 report last week, and it seemed to be at odds with what the others have been reporting.

Gillespie’s point: After more than a decade of substantial growth, in which per capita wine consumption in the U.S. finally passed that of the early 1980s, sales coming out of the recession were nothing like the previous 15 years. Perhaps, says Gillespie, this more or less flat growth is the new normal, the sign of what economists call a mature market.

Which raises two questions: Why is this happening, and what does it mean for wine drinkers? Gillespie says it’s difficult to know why consumers do what they do, but that the Wine Market Council figures suggest some of us are drinking less wine and more craft beer.

My theory isn’t as nuanced (and doesn’t have Gillespie’s experience or data to support it) and should not be surprising to regular visitors. It’s about price; consumers don’t want to pay the higher prices the industry is trying to impose, and aren’t happy with the quality they’re getting at lower prices. Hence, they’re looking for something else to drink. The Silicon Valley Bank report said producers are focusing on premiumisation, the idea that better quality wine should cost more money. In this, they want consumers to trade up from their $10 and $12 bottles to $18 and $20 bottles.

Could the flat growth that Gillespie sees be consumers rejecting premiumisation? Will we start to look elsewhere, like craft beer, for value? If so, the wine business could face problems over the next decade, since producers expect pre-recession growth. If growth is flat, we’ll have more wine, and especially more high-priced wine, than there is demand for, and prices could collapse again, just like they did during the recession.

Which may be welcome news for consumers, but hardly anything the wine business wants to hear.

More about the Wine Market Council reports:
The 2013 Wine Market Council report
The 2012 Wine Market Council report

The end of the three-tier system?

winetrends

three-tier systemPaul Mabray, who knows this stuff better than almost anyone, says the end of the three-tier system is coming. It will probably be later rather than sooner, but Mabray is convinced that technology, combined with three-tier’s built-in inefficiency, will make the system obsolete.

The Wine Curmudgeon mentions this because my views on three-tier are well known. The system, which mandates how wine is sold in every state, says consumers can’t buy wine from the producer (with some exceptions), but must buy it from a retailer, who must buy it from a distributor. Buying wine from an Internet retailer, the way we buy clothes from Overstock.com or computers from New Egg, is almost always illegal. In this, three-tier is constitutionally protected, so we’re stuck with it until the end of time or until we reform campaign finance laws, which is about the same thing.

But Mabray, the chief executive officer for VinTank, which helps wineries use the Internet and social media to market their products, sees the situation from a completely different perspective.

Market access should not be constricted by antiquated regulations, but by market choice,” he says. “Yes, there needs to be regulation to enforce a regulated product but forcing it to go through a mandated tier structure is outdated.”

Mabray said this during last month’s Silicon Valley Bank State of the Wine Industry presentation, and I was so intrigued by what he said that we talked about the subject this week. He reiterated it during our chat: Trying to stop the advance of technology with artificial barriers is almost always futile, and three-tier will eventually break itself.

How that will happen involves lots of supply chain geekiness, but Mabray is convinced that Internet technology — the same thing that has allowed Amazon to make money by selling diapers for next day delivery, unheard of a decade ago — will come to wine. Three-tier as we know it will break down because it will be too expensive and too complicated to work the way it does now. Even the distributors, who have the most to lose, will want to change it to make it more consumer-friendly.

Perhaps. One reason our views are so different (besides my crankiness) is that Mabray sees an economic model ruled by efficiency. I see an economic model ruled by state legislatures with vested interests, whose idea of a supply chain is something you tow your car with. I hope he’s right about this, but I won’t be surprised if he isn’t.

More about three-tier and direct shipping:
Could the Internet screw up direct shipping?
Amazon.com, Prohibition, and the three-tier system
The Supreme Court and retail direct shipping

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