Wine trends in 2014
The wine business in 2014 won’t be so much about varietal or sweet, though both will matter. Rather, wine trends in 2014 will be about the continuing transformation of wine into a truly global business, focusing on:
• Increased retail availability — more wines in more and different kinds of stores, and especially grocery stores. This means attempts to change state laws where that’s illegal
• More consolidation among producers — not just the biggest getting bigger, the trend over the past decade, but consolidation among mid-sized wineries, which will be folded into companies specificially formed for that purpose.
• The growing importance of the consumer, who is beginning to drink what he or she wants and forcing the wine business to adjust, rather than the other way around.
Mixed in with this will be renewed attempts by the neo-Probhibitionists in goverment and medicine to reduce wine consumption. More, after the jump:
It may sound silly to talk wine becoming a global business; hasn’t it always been global, with consumers drinking wine from around the world? That’s true, but it wasn’t global the way other consumer goods are global. Mostly, until the 1990s, wine was a family business — smaller wineries working with smaller importers, smaller distributors, and smaller retailers, and that’s what has changed. As a friend of mine asked the other day, “Are there more than a handful of California family wineriers still left that go back three generations?”
This change is part of what the economists call the globalization of a commodity, where it’s the product that matters and not where it’s from. Do you care where your shoes are made, as long as they fit and offer value? Of course not. Hence producers who source shoes from wherever they get the best deal, be it the Caribbean, Malaysia, or China. The idea that the best shoes come from Italy is becoming as quaint as the idea that the best wines come from France, and the only consumers who still care about that are those who can afford to pay $2,000 for a pair of shoes or a bottle of wine. Hence increasing sales figures for imported wine and that should continue to increase.
In this, retail availability is tied into producer consolidation. You can’t have more wine in stores unless someone makes more wine, and bigger producers are better at it than anyone. First, the multi-nationals like E&J Gallo and Constellation gobbled up smaller producers, and now it’s happening with a second tier, those who don’t deal in millions and millions of cases. Their goal, be they The Hess Collection, Foley Family Wines, or The Wagner Family of Wine, is to combine similar wineries from around the world into a larger whole, which gives them increased clout with importers, distributors, and retailers.
That’s because more and more retailers, and especially non-traditional venues like grocery and dollar stores, want to sell wine. Yes, three-tier and state regulation makes it difficult for retailers to expand, and key markets like New York and Pennsylvania still forbid grocery store sales (though each has come closer than ever to changing the law). But grocery stores love wine in a way they never have, and may account for half of all wine sold in the U.S.
• Kroger was named the wine retailer of the year by the Wine Enthusiast and has added what it calls “sommeliers” to many of its locations.
• Aldi, the discount grocer that prides itself on its cheap wine, is almost doubling its growth rate to more quickly cover the entire U.S.
• Amazon’s wine business, which debuted with a thud, is almost certain to improve. Every retailer and consultant I talk to says Amazon will eventually figure out how to make buying wine as seamless as buying a computer, despite the difficulties of three-tier.
And none of this takes into account that Total Wine ($1.5 billion in sales) and Beverages & More (more than $500 million in sales) are racing to be the first national liquor chains.
All of this is possible because we’re drinking more wine than ever before. We can argue about who is drinking it and flat per capita consumption, but wine sales by volume are higher than ever. U.S. consumers are beginning to see wine as something to drink regularly, and they are beginning to make their own decisions about what to drink using criteria the industry has never seen before. The sweet wine and moscato booms were consumer-driven; no one in the establishment saw them coming or thought they would be important when they arrived.
This is a watershed moment, and some in the business are beginning to realize it, according to an international survey taken last year: “The wine industry will need to be more responsive to consumer needs, leading to end top-down consumer education and placing more emphasis on experiential and emotional engagement with consumers in communications.”
The kicker in all this? The neo-Prohibitionists, who want to limit wine consumption for health reasons and will become ever more vocal. The same survey found that moire than half of respondents expect to see wine and alcohol face many of the same restrictions that apply to tobacco by 2034. That’s the sort of thing that could undo all the good news.
Image courtesy of The Sommelier Update, using a Creative Commons license