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Another study agrees: We buy wine on price

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wine genome studyThe biggest surprise in the Wine Genome study from Constellation Brands, one of the biggest wine companies in the world? That one-fifth of us buy wine on price.

“We knew they were out there, but the widening span of the study showed how deeply the recession cut,” said Dale Stratton, the Constellation official who oversaw this version, the third, of the company’s Project Genome, designed to identify the most common types of of wine drinkers based on purchase behavior, motivation, and preferences. “The recession had a big impact and significantly changed consumer spending habits.”

Stratton laughed when I asked him about this. No, he said, it’s not that Constellation (whose brands include Rex Goliath, Mark West, and Robert Mondavi) didn’t expect price to be important. Rather, it’s that price-driven wine drinkers were the biggest category of the six, doubling the number of  Enthusiasts — those who “love everything about the wine experience,” including researching purchases, reading reviews, and sharing wine with others. In other words, the Winestream Media’s audience. The other thing to note here? The Enthusiasts account for 15 percent of profit, compared to 14 percent for the Price-Driven group. Harrumph.

The study, which updated a 2004 effort, is full of surprises — unless, of course, you visit here regularly (and you can see a nifty infographic describing each group here):

• The third-biggest group, at 19 percent, are Overwhelmed, which means pretty much what it says: “I don’t enjoy shopping for wine, and find it complex and overwhelming. This, says Stratton, reinforces the need for wine education, not only for consumers but for those who sell wine — distributors, retailers, and restaurateurs. Hearing this was surprising enough, but I almost dropped the phone when Stratton said that winespeak is one of the reasons the overwhelmed are overwhelmed. Maybe, he said, retailers and wine writers should find simpler terms to use.

• Women, who have traditionally skewed higher for wine purchases at the lower end, are becoming more important at the higher end. The Enthusiasts, who were about 65 percent male in 2004, were close to 50-50 this time. “This means more women see wine as a hobby,” says Stratton, and that means more women attend tastings and shop at wine-specific retailers.

• Wine snobs, called Image Seekers, are still with us, and in a big way. They account for 18 percent of wine drinkers, but contribute 26 percent of profits, more than any other group. Given the wine they drink, that’s probably not surprising.

• Welcome the Millennials to wine, in the form of the Engaged Newcomer at 12 percent. This group is young, wants to learn more, and recognizes that wine is intimidating. They also spend more on a bottle than the other groups, about $13.

One other point worth noting: This kind of study is common for consumer packaged goods like laundry detergent and ketchup. That Constellation can do for wine what Proctor & Gamble does for its products speaks volumes about how much the wine business has changed, and that it is becoming more mainstream.

“Wine is increasing household penetration at a good clip, and the audience has broadened,” said Stratton. “And it’s going to continue to change, as the American population changes.”

Update: How much should an everyday wine cost?

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Update: How much should an everyday wine cost?How much should an everyday wine cost? Between $5 and $12, according to the poll that ran on the blog and that you can find at the bottom of this post. Thanks to everyone who participated. Several thoughts about the results:

• The $5 to $12 range, of course, is completely at odds with the wine industry’s view of how much everyday wine should cost — $12 to $18. That range came in second, but it wasn’t particularly close. Yes, this was not a scientific effort with margins of error, and yes, the results were almost certainly skewed because it was hosted by someone whose reason for being is cheap wine. But I was still surprised. I thought $12 to $18 would win, because that’s what the experts keep telling me wine drinkers want. But sometimes even I forget wine drinkers are usually smarter than the experts.

• Ultra-cheap wine, less than $5, finished fourth, barely ahead of expensive wine. This was also surprising, given how much of this wine is sold each year — some 5 million cases annually for just Two-buck Chuck, the $2.99 (or whatever) wine sold by Trader Joe’s. Either $5 fans didn’t do the poll, or many consumers see Two-buck Chuck and its ilk as something to keep in the fridge when they want a glass, but not necessarily something to open when they want a bottle of wine with dinner.

• Fewer than 2 percent of the votes were cast for expensive wine. Which also surprised me. I guess I need to remember why I do this and why so many people read what I do.

• The comments were almost as much fun as the poll, thoughtful and well-written (you can find them at the link at the top of the post). How about the guy who makes his own wine so he doesn’t have to pay for it? Or the several intelligent discussions about wine quality and price? Which is another reminder that the wine business misses an opportunity when it underestimates the intelligence of its customers.

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Winebits 334: Wine prices and the Winestream Media

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Winebits 334: Wine prices and the Winestream MediaIt’s all about real estate: The Women for Wine Sense Napa Sonoma website (now there’s a URL) breaks down the price of a bottle of California cabernet sauvignon, and the cost of land makes up much of the difference between cheap and expensive. “Everything else being equal, Cabernet from the Stag’s Leap AVA costs more than Cabernet from Lodi.” This is something that can’t be harped on enough, and is a key part of the cheap wine book. The other question the article poses: “Is the $50 wine really over 200% better than the $15 bottle or are you just paying to finance the winery’s fancy tasting room?” Heavens, doesn’t the author know it’s not polite to ask those things in California?

Another record harvest? There’s good news and bad news for wine prices, courtesy of Rob McMillan at Silicon Valley Bank, perhaps the world’s leading authority on the subject. Despite a record drought, California is on track for another huge harvest in 2014, which will almost certainly lower grape prices. But McMillan isn’t sure that will translate into lower wine prices, given the price increases producers haven’t taken over the past couple of years. The 2014 vintage may be about restoring margins, which have suffered since 2008 and the beginning of the recession. If that happens, then – as one astute blog visitor pointed out earlier this year — the hunt for great cheap wine, as opposed to just cheap wine, will become even harder next year.

Wine writing’s Cold War: Those of you too young to remember the collapse of the Soviet Union might be a little confused by this interview with Chateau Montelena’s Bo Barrett (who apparently was the only person happy with the casting for the movie “Bottle Shock”). In it, he compares the current feud between the old Winestream Media, like Robert Parker, and the new Winestream Media, like Jon Bonne, to the Cold War between the U.S. and the Soviets, which lasted some 40 years. It’s an interesting take, and one I hadn’t considered: “You’re either with the Soviet Union or you’re with the USA and NATO.  What happen is as that broke down you have this global anarchy, and that’s what I see with the Internet has created this democracy where people are voting with their feet, and the freedom to choose their own wines and different styles of wines has never been better.” Who knew we’d ever see NATO, the military alliance that includes the U.S. and western Europe, mentioned in a wine story?

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