Tag Archives: Big Wine

Winebits 403: Big Wine, wine scores, wine regions


big wineThe big get bigger? An industry analyst says Diageo, one of the biggest wine producers in the U.S., should merge with beer giant SABMiller to increase profits as the global drinks business slows down. Talk about Big Wine: the combined company would total $8 billion in sales, and its products would include Miller beer, Johnnie Walker scotch, and Rosenblum and Sterling wines. How do we know the speculation is more than gossip? The news story included the word synergies, as in the combined company would save money because it had them. As regular visitors here know, synergies — which, like unicorns and wood nymphs — exist only in the minds of those who believe in them, and are always given as an excuse for a multi-national merger. Because, otherwise, what’s the point?

A wine snob temper tantrum: The Italian Wine Guy, who knows more about Italian wine than almost anyone else in the world, recounts his experience with a wine drinker, and it’s not pretty. The customer wanted a 100-point Robert Parker Brunello, and he wasn’t going to suffer anything as foolish as advice from one of the most knowledgeable Italian wine people in the world. What’s worse is that the customer was rude about it, treating the Italian Wine Guy as if he was some idiot foisted on the customer by an inept store owner. This is the harm in scores, regardless of anything else: If all we do is buy wine by scores, we cheat ourselves of all wine has to offer. It’s snobbishness of the worst degree, as bad as the snobs who make fun of people who drink sweet wine.

Calling wine by its regional name: The U.S. and the European Union have been arguing for some 20 years about strengthening the international agreement that prohibits U.S. producers from calling their sparkling wine Champagne and stops French companies from calling their potatoes Idaho. Now, though, the two sides may be close to an agreement, thanks to a U.S. compromise. The article, from the Conversation.com website, is long and little legalish, but it does a good job of explaining why these trade laws exist, why the U.S. traditionally didn’t care for them, and what might happen next. Who knew Feta cheese was a deal-breaker?

Why Big Wine will keep getting bigger


Big WineThink this year’s wave of Big Wine buyouts was impressive? Just wait. Big Wine is only getting started.

The wine industry is going through unprecedented consolidation, and even I’m surprised — and I’m the one who predicted it. That’s because three things have made this the perfect time for companies like E&J Gallo, Constellation, and The Wine Group to snap up smaller producers the same way a small child attacks Chicken McNuggets. This is a mixed blessing for the consumer, who will get increased access to well-made wine, but at the cost of much of the wine tasting the same regardless of where it’s from and who made it:

• Cheap money. Interest rates are not just at historical lows, but have been there for almost 10 years. That makes the cost of borrowing to buy a winery so low that even those of us who aren’t M&A geniuses understand how much sense it makes. Plus, rumors of an interest rate hike this fall may have spurred this summer’s wave of buying, so that Big Wine could lock in all that cheap money.

• The biggest wine companies are preparing for a world where we buy most of our wine at grocery stores, warehouse stores like Costco, and large chains like Total Wine. This will happen sooner rather than later (if it hasn’t already), and anyone who doesn’t understand how important this is is missing the biggest change in the wine business since the end of Prohibition. Big Wine wants product to fill all those store shelves, and the easiest way to do that is to buy another winery. Could the local wine shop, with someone who waits on you, become as quaint as the corner drug store and gas stations with attendants who clean your windshield?

• The end of the family winery era in California, which started in the 1980s and did much to make California wine some of the best in the world. But wine is not immune to the laws of family business, which say that any family business that lasts past the first generation is the exception. And most of the family wineries that have been sold in the past couple of years are first- and second-generation companies. As one banker told me, there are more wineries that want to sell than anyone can imagine.

The other thing about all these buyouts? That wine, despite what so many think, is no different from any other industry, and the same kind of consolidation that has transformed U.S. business since the beginning of the century — Heinz buying Kraft, for example — will transform wine. This is a change many don’t like and even more don’t understand, but it seems inevitable.


Winebits 385: Whole Foods, Big Wine, Cameron Hughes


whole foodsA new format: Whole Foods, the word’s most powerful natural grocery store chain, said last week it would launch a second, less expensive version aimed at 20-somethings who can’t afford to shop at the grocer. This is mind boggling, if only because no one has ever attempted it — like Walmart doing an upscale grocer to attract aging urban Baby Boomers who think Walmart is beneath them. It also probably won’t work, or else it would get a separate post, because Whole Foods Jr. could wreak havoc with the wine business. That’s because, assuming wine will be as important to Whole Foods Jr. as it is to the parent, the chain will have to stock cheaper wines without the noxious markups it currently uses, like Chateau Bonnet for $16. That means private label wine on the scale of Trader Joe’s, which Whole Foods Jr. sounds suspiciously like. And if that’s the case, all the gloom and doom about the end of the cheap wine business in California will be over. All that Whole Foods Jr. $5 wine will have to come from somewhere, and that’s what California’s Central Valley exists to do.

No, no, Big Wine: The Wine Curmudgeon is finally and apparently not the only one who has noticed the role Big Wine plays. A group of northern California activists met last week to call for a halt to Big Wine’s growth in wine country. “They hire a chef before a wine-maker. This has to stop. We cannot let them pave over more of our ag land,” said one of the speakers. In this, the new group may be echoing what has happened in France over the past 20 years, with farmers and vineyard owners protesting Big Wine in its European guise of internationalization.

Bankruptcy? The company that owns Cameron Hughes, the wine geek’s favorite discounter, has been forced into receivership and a sale or merger is possible, reports Lew Perdue at Wine Industry Insight. The bank holding Hughes’ debt forced the action, which is often part of a bankruptcy. In this case, though, says Perdue, that probably won’t happen, and the receivership appears to be part of tug of war between the company and its bank over unpaid loans. The Hughes parent company issued a statement saying it was trying to reach an agreement with the bank to restructure its debt and would continue in business.

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