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Tag Archives: wine sales

Winebits 312: Sales trends edition

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YellowTail growth resumes: Remember all those stories about how the strong Australian dollar and YellowTail’s financial problems were going to mean the end of an era for Aussie wine? Not true, apparently. The biggest imported brand in the U.S. expects 2 1/2 percent gorwth this year, reaching almost 9 million cases. Driving that growth are the brand’s two sweet red labels, including a sangria. That YellowTail has rebounded from its problems says much about its marketing skill, but also speaks about its clout with retailers. How many other brands could have slumped the way YellowTail did, but not lose shelf space and even added space for two more wines? In this respect, Big Wine is becoming more and more like other consumer goods, be they ketchup or detergent, with all the means — good and bad — for the consumer.

Is craft beer headed for a bust? This matters to wine not only because craft beer competes for drinkers with wine, especially in the younger demographics, but because the growth in craft beer (“But even such a healthy rise in consumer demand won’t be enough to sustain the many new breweries jumping into the marketplace“) has similarities to what happened in California with “boutique” wineries heading into the recession and with the unprecedented growth in moscato and sweet red over the past couple of years. What’s interesting is that someone in craft beer has noticed what’s going on, while almost everyone in wine was in denial before the recession and during the moscato and sweet red boom.

If you can sell wine on-line. ..: You can sell a lot of it. That was the experience of the British supermarket chain Tesco, which doesn’t face the three-tier restrictions that U.S. retailers face in this country. The story, on the drinks business trade magazine site, says sales may have gone up as much as 51 percent over the same period last year, and offers all the reasons why that is so. Contrast this with Amazon’s wine marketplace, which after nine months still can’t sell wine in all 50 states.

Holiday wine trends 2013

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In which consumers are pretty much in charge, whether they want to spend a lot of money or not very much at all. More, after the jump:

The Treasury debacle, masstige wines, and what the consumer is trying to teach the wine business

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The Wine Curmudgeon, despite his brilliance as a writer, is a lousy businessman. How else to explain that former Treasury Wine Estate CEO David Dearie earned A$2.4 million (about US$2.25 million) for running his company into the ground, while I have been giving away, for free, the wisdom that could have helped Treasury avoid this year’s 53 percent drop in profit?

One more time, for those who still aren’t paying attention: The U.S. consumer buys wine on price. The challenge for wine companies, whether multi-nationals like Treasury, Napa cult wineries, or the thousands of other producers around the word, is to add value so that the consumer gets more than their $10 worth. Some do it with cute labels and marketing; some do it with points and high scores; and the best do it by giving us $12 or $15 worth of wine for our $10. (Go here for almost seven years worth of examples of how the best do it.)

Treasury did none of those. Instead, it looks like it did the absolute worst possible thing — it charged us $12 or $15 or $18 for $10 wines, a technique called masstige that was part of its business plan. I spend some time on this in the Cheap Wine Book, though I didn’t realize what masstige was when I wrote it. Rather, I noted that wines that cost between $12 and $18 seem to offer the least value, “probably because producers don’t improve the quality of the wine as much as they increase the price and gussy up the label.”

Think of masstige as a cross between mass market products like Two-buck Chuck and Barefoot and luxury labels like high-end Champagne. Masstige is apparently very common in cosmetics, where the added value comes from the prestige a product provides because it costs more money. This approach may still work in cosmetics, where the value difference between Revlon and Clinique remains well established even though the products are quite similar based on what’s in the jar. But in wine, the idea that expensive is always better (as noted here and elsewhere many times since 2008) is something that the consumer has rejected.

Interestingly, I’m not the only one who has realized this. An analyst, discussing Treasury’s problems, said “the underlying problem in the U.S. is not inventory, it’s the health of the brands, because of underinvestment in marketing.” Which, as mentioned above, is one of the three ways for producers to add value.

Want to make money in the wine business? Treat the consumer fairly, and the consumer will reward you. That’s the lesson the recession taught, and it’s really not any more complicated than that. Which is probably why I never thought I needed to charge for the advice.

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