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Tag Archives: wine business

Winebits 333: Prosecco and cava, buying a winery, and family wineries

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Winebits 333: Prosecco and cava, buying a winery, and family wineriesThe Spanish understand these things: Imagine a California wine producer, facing intense competition for a foreign rival, and their reaction: “We must crush them!” But the Spanish, faced with the phenomenal growth of Prosecco over the past several years, have figured out that’s a good thing. “The Prosecco boom is helping to open minds and show that you don’t need to wait for a special occasion to open a bottle of sparkling wine – Prosecco and cava can be Monday night wines,” says Gloria Collell, the winemaker at Spanish cava giants Freixenet and Segura Viudas (and, in the interest of full disclosure, someone I know a little and like). Which, of course, is the Wine Curmudgeon’s approach to wine — drink it on Monday night (as well as Tuesday night, and so on and so forth). The interview, in the drinks business trade magazine, is worth reading for its sensible look at the sparkling business.

The best due diligence: I’ve met a lot of new winery owners over the years, and too many of them admit they really didn’t understand what they were getting into. Now they have this to read, from Jonathan Yates at The Street: “There are always good buys in established wineries on the market as many of the sellers purchased without focusing on how the business model operates.” His three points — understand wine is made everywhere, understand the importance of the tasting room, and understand wineries as destinations — are as good as anything I have seen.

Everyone owns a family business: The idea of local and the backlash against big and multi-national that started during the recession has even moved into wine. Casella Wines, the Australian producer that makes YellowTail, and has always been owned by the Casella family, has a new name — Casella Family Brands. Because, of course, nothing will better burnish the image of a brand that makes tens of millions of cases than the idea of family. It’s something E&J Gallo, still owned by the Gallo family, has always played up, and it’s even something that publicly-owned behemoth Constellation Brands, started by the Sands family and still run by it, tries to take advantage of. In wine, family and big are not mutually exclusive the way they are in so many other businesses.

Big Wine tightened its grip on the U.S. market in 2013

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Big Wine tightened its grip on the U.S. market

So how many smaller wine companies should we buy this year?

Big Wine tightened its grip on the U.S market in 2013, with new figures showing that three companies accounted for more than half of all the wine produced during those 12 months. E&J Gallo, The Wine Group, and Constellation Wines totalled some 187.5 million cases of the 370 million produced.

Throw in the next three biggest companies — Bronco, home of Two-buck Chuck; Trinchero Family Estates; and Treasury — and that total rises to 241.4 million cases — about two-thirds of the wine made in the U.S. The top 30 by themselves account for some 90 percent; in other words, all the wine that those of us who write about wine love to write about? Hardly anyone drinks it. No wonder availability is such an issue.

More, after the jump:

Winebits 310: Restaurant wine, wineries for sale, top grape growers

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Wine by the glass: Restaurant wine is one of the most frustrating of all the frustrating things in wine, what with high prices, poor selection, and indifferent service. And restaurant wine by the glass programs are even more frustrating. My pal Tim McNally offers an in-depth look at what’s wrong with wine by the glass and how it can be fixed: “Lack of product knowledge, lack of good business sense, lack of staff training and lack of desire to serve the customer’s needs all play a role in failed [wine by the glass] programs. … This is not rocket science. This is common sense with a profit reward at the end of the transaction.”

Want to buy a winery? Talk during the recession was that any number of California wineries were ready to go under, victims of what the economic slump did to sales. But none ever seemed to fold, and no one was sure if that was because their lenders didn’t want to forclose (what’s a bank going to do with a winery?), an influx of private cash, or very quiet purchases. Now, Shanken News Daily hints at what might have happened and is still going on: “But it’s an under-the-radar market. Plenty of wineries, faced with tough finances or generational change, are looking for buyers. But they’re not advertising the fact.” My guess is that this part of the structural change in the wine business that started during the recession and is continuing — more consolidation, the biggest multi-nationals getting bigger, and the appearance of mid-sized big companies  (for lack of a better term) like Foley Family Wines, which have been formed by combining a variety of producers who needed or wanted to sell.

The biggest grape growers: One of wine’s enduring myths is the artisanal harvest, where the grapes are picked with loving care by the people who own the winery. The truth, of course, is much different; grape harvests for most of the world are as mechanized as corn and soybeans. This was reinforced by a report in a farming trade magazine that detailed the biggest grape growers in the country; five of the top 10 wine grape farmers are cheap wine companies, led by Bronco (which makes Two-buck Chuck) at No. 1 and E&J Gallo at No. 3. That they control their grape supply, and don’t have to buy it elsehwere, is one reason why they can sell their wine for so little.

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