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Tag Archives: wine business

Fred Franzia and the future of the wine business

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Fred FranziaFred Franzia, the man the California wine business loves to hate, reminded us why last week when he spoke to the wine industry’s most important trade show. “One billion bottles of Two-buck Chuck,” he said to the audience, and I can imagine almost all of those in attendance cringing. Because the last thing the 21st century California wine business wants to be known for is very ordinary $3 wine sold at Trader Joe’s.

Still, Franzia is one reason why California is the most successful wine region in the world. His successes, whether becoming one of the first to sell competently made cheap wine like Two-buck Chuck or pioneering the Big Wine model that is the blueprint for the industry’s domination today, are indisputable. But his speech also revealed why so many in California wine who aren’t Gallo and Constellation aren’t prepared for the rest of the 21st century.

That’s because it was written through the lens of his family’s three generations of success, which was built on better winemaking technology, an unparalleled knowledge of the supply chain, and a canny insight into the Baby Boomers who transformed the way Americans drink wine. Franzia’s Bronco Wine is an example of 20th century manufacturing at its finest — give the consumer a quality product at a fair price, and make sure the retailers who sell your product make lots of money, too.

Those days are long gone. Does Apple really care about its retailers? Does Whole Foods really care about the manufacturers who supply its stores? And does Amazon really care about anyone other than Amazon? Know, too, that Amazon became the largest retailer in the U.S. and it got there without selling a drop of wine.

Yet Franzia spoke about the wine business as if none of that mattered. His talk was firmly rooted in what has been, and not what will be. He was particularly critical of the recent Silicon Valley Bank report that spoke of serious challenges facing the wine business as the Boomers age and consumption declines, dismissing the report as irrelevant because it didn’t accept the truths that he has seen over the past 50 years.

He also quoted Mel Dick of Southern Wine & Spirits, the largest distributor in the world, who has said famously that if U.S. per capita consumption was as big as the French, we’d drink 1.6 billion cases of wine a year — five times what we drink now. The catch? Besides the French wine culture, they don’t have distributors, and buying wine there is as easy as buying a baguette. Which, of course, is not the case in the U.S. That Franzia doesn’t realize that the three-tier system damps down wine consumption and is increasingly irrelevant in the 21st century is not surprising, because he still sees distributors as crucial to wine’s success as perhaps they once were.

One of my regrets in some 20 years of wine writing is that I’ve never interviewed Franzia; the couple of times an interview seemed possible, something fell through. That’s because I admire and respect what he has done, and if nothing else for his constant harping about too-high restaurant wine process. And his success with Two-buck Chuck revolutionized the wine business, something for which many of his colleagues will never forgive him.

But past success is no guarantee of what will happen in the future, and it’s not change that matters as much as how one adapts to change. And change is coming to wine, whether anyone wants to believe it or not — even if you’re Fred Franzia.

Fred Franzia cartoon courtesy of The New Yorker, using a Creative Commons license

The end of the wine business as we know it?

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wine businessThe one consistency about the wine business, as we celebrate the blog’s eighth birthday, is that the big get bigger, and that there isn’t any room for the small. Or, as a distributor friend of mine put it the other day, “It’s all about consolidating or dying in this world of global megacorps.”

Gone are dozens of companies that made wine that I enjoyed — producers that were bought or folded or absorbed by other companies, many of which are also gone. Remember Hogue, which made a quality $10 sauvignon blanc in the 1990s? It was purchased by the Canadian Vincor, which was soon gobbled up by Constellation. That entire process, three complicated financial transactions worth tens of millions of dollars, took place in just five years.

The difference these days is that the big are bigger than ever, and today’s  small companies used to be considered big. The 10 biggest wineries in the U.S. account for about 71 percent of all the wine sold, based on figures from 2014 from Wine Business Monthly, and this  amalgamation is happening on the distributor side, too, with the 10 biggest wholesalers controlling two-thirds of the market.

Throw in consolidation among retailers, and Big Wine will soon be selling to Big Retail through Big Distributor, and a handful of companies will control what we drink — the prices, the quality, even what it’s supposed to taste like. It will be the end of the wine business as we know it.

More, after the jump:

The Comet Lovejoy wine phenomenon

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comet lovejoy wine

But how do they get a bottling line up there?

Astronomers were surprised to find that some comets produce alcohol, as well as sugar, as they travel around the solar system “We found that comet Lovejoy was releasing as much alcohol as in at least 500 bottles of wine every second during its peak activity,” said Nicolas Biver of the Paris Observatory in France.

This is huge news, given that one theory supposes that comets crashing into the the Earth 3.8 billion years brought with them the carbon-based organic molecules, like alcohol and sugar, that may have jump-started life on our planet. Which is all well and good, but comet Lovejoy wine raises equally important questions for those of us who worry about those things:

• Do the comets know about the three-tier system? Lovejoy was producing the equivalent of 150,000 cases an hour, and we all know that the country’s distributors aren’t going to let that happen without them. They’ve paid entirely too much money to state legislators to let a comet ruin things. And I can only imagine the horror if Lovejoy passed anywhere near Pennsylvania, with its state store system.

• Will E&J Gallo, the Big Wine producer that has made hundreds of millions of dollars of acquisitions this year, buy the comet to add to its portfolio? A sweet Lovejoy red, since the comet threw off sugar, would slide in nicely next to Gallo brands like Apothic and Barefoot on grocery store shelves. And how could a back label that said “Comet Lovejoy wine — out of this world” miss?

• Can the Winestream Media adapt its tasting notes to comet-produced wine? Toasty and oaky, given how cold it is in space, just aren’t going to work. Maybe something like “hints of vacuum linger on the finish”? And how do you a score a comet wine? Does it get 92 points just because it’s from a comet? Or do you take points off for that, since outer space is not Napa Valley?

Photo courtesy of Adam Block Photos, using a Creative Commons license

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