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Winebits 424: Scottish wine, domain names, crowdfunding

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Scottish wine

A Scottish wine story requires a picture of haggis, the Scottish national dish.

 • Too much rain: Scotland’s hopes for its own wine, which never seemed possible because the climate was too cold and too went, have been dashed once again. The drinks business reports that persistent rain in eastern Scotland has prevented Aberdeen’s Christopher Trotter, a chef and food writer, from producing anything commercially viable. He wasn’t able to bottle any wine in 2015, and the 2014 vintage yielded just 10 bottles — which critics called “undrinkable.” The Wine Curmudgeon feels Trotter’s pain. Regional wine, no matter where the region, is always more difficult than you think it will be, and there are always problems you never imagined. And I’ve tasted plenty of undrinkable regional wine.

Bring on .wine: Want to brand your website as definitely wine? Then you can buy the .wine and .vin domain names, two so-called not-coms that are finally available. There was concern from some legally protected wine regions, like our friends in Champagne, that the .wine and .vin names would be used to abuse their place names, but they bought Champagne.wine and solved the problem. The Wine Curmudgeon probably won’t buy winecurmudgoen.wine or .vin — not sure it would make much different to my brand, and winecurmudgeon.wine sounds stupid, anyway.

Kickstarting a winery: Recent changes in federal investment law allow businesses like wineries to use crowdfunding sites like Kickstarter and Indiegogo to raise $1 million in any 12-month period from friends, followers, customers and community as long as the sites meet federal guidelines. This is a significant change to current law, though not everyone is sure it’s a good idea. It’s one thing to raise money for a wine book on Kickstarter; it’s another to raise millions to expand a winery. Regardless of anything else, writes Jesse Debban in the North Bay Business Journal, the new regulations mean “the public — including your competitors and customers — will have access to sensitive information about your business.”  Which may be OK in the tech business, but is something completely different in the highly private wine business.

Winebits 423: Kroger wine, direct shipping, Bordeaux

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kroger wineThe big get richer: The Wall Street Journal is reporting that Kroger wants to contract management of its wine and beer departments to Southern Wine & Spirits, the biggest distributor in the country, so that the grocer doesn’t have to worry about buying or stocking the shelves. If accurate, this represents another significant change in the way we buy wine and the choices we get when we do. For one thing, Kroger is one of the biggest wine retailers in the country, and has paid for political campaigns to allow supermarket wine sales in many states, including Texas. Second, Southern could favor its brands over those of other distributors, giving its products better shelf space. Third, and the story isn’t clear on this, producers would have to pay Southern for the privilege of having it manage the shelves, and how many small producers could afford to pay those fees? I’m going to follow this story, because if it happens, other big retailers will follow, and our wine-buying lives will get that much more difficult.

Rapid growth: The direct shipping market — wine sold to consumers directly from the winery and the only exception to the three-tier systemgrew eight percent last year, to almost $2 billion. Which is a lot, though some perspective is needed: the U.S. wine market totaled about $39 billion in sales in 2014, so direct shipping represents less than five percent of the total. In addition, direct sales are focused on consumers in just five states, and one of them is California, where shipping costs are less of a factor. Also, the cost of the average bottle sold directly is $38, which means most U.S. wine drinkers are priced out of the DTC market. (And a tip o’ the Curmdgeon’s fedora to Steve McIntosh at Winethropology for sending this my way.)

Cheap by whose standards? The Wine Curmudgeon has long advocated that Bordeaux’s sales problems in the U.S. are a function of price, and this gem from the Village Voice demonstrates that nothing has changed. It touts the value in the current vintages of Bordeaux, yet only one of the eight wines in the story costs less than $25, a $17 bottle from what’s called a satellite appellation — a lesser region of Bordeaux. To add insult to injury, the story says it’s difficult to find satellite appellation wines because they usually don’t have scores and you will have to consult a “Bordeaux connoisseur.”  Yeah, like most wine drinkers have a Bordeaux connoisseur in their phone. And aren’t we done with scores yet?

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

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