Category:Wine trends

Japan: Nuts to this abstinence business

by Wine Curmudgeon Posted On

Churro at laptop
Churro, a Millennial himself, has a variety of thoughts about increasing drinking among Japan’s youngest adults.

Japanese tax agency is paying for ideas to boost drinking in the wake of slumping revenue

No, this is not one of these.

Rather, it’s another sign Japan has not found a way to cope with a host of demographic problems that includes too low birth rates.

Reports the BBC: Japan’s tax agency has launched a national competition called “Sake Viva!” that hopes to come up with a plan to make drinking more attractive for 20- to 39-year-olds. It’s asking the age group for ways – marketing, promotions, or whatever — to increase demand among its peers for sake, shochu, whiskey, beer, and wine. There’s even a website.

Sound desperate, given the health problems – and cost to society — associated with increased drinking? Indeed. But the numbers show how desperate the government is to boost alcohol tax revenue, which has crashed as Japan ages and as its younger adults drink less.

Booze consumption among the young fell one-quarter between 1995 and 2020; by comparison, U.S. consumption for that demographic remained more or less steady during the same period. Booze taxes, meanwhile, accounted for about 5 percent of total revenue in 1990, but just 1.7% in 2020.

The Wine Curmudgeon is not eligible for the contest – too old and not Japanese. But the blog does have an unofficial Japanese bureau, and Churro (the blog’s associate editor) and I will be touch with our colleagues to offer a solution.

Quality $10 rose solves most problems, yes?

Walmart: An example for the wine business

by Wine Curmudgeon Posted On

Walmart store front
Walmart’s formula: Increased volume, lower prices, more profit

Retailer holds the line on prices, focuses on less expensive items, and makes more money

What does one of the world’s most successful companies do when faced with inflation, declining sales, and all the rest that is going on today?

Find a way to make more money, of course – without raising prices.

Are you paying attention, wine business?

The company is Walmart, and for all of its many failings as a corporate citizen, it knows how to boost the bottom line – over and over and over. The rest of U.S. retailing may be running around in a panic, but not Walmart. To quote one news report: “Walmart topped analysts’ expectations for earnings and revenue in the fiscal second quarter, even as consumers pulled back in discretionary categories like apparel.”

The company did it by holding the line on prices – even cutting some and taking smaller margins — and focusing on less expensive items. Its reward was not only more profit, but a 5 percent jump in its stock price.

In other words, it did exactly the opposite of what the wine business is doing.

Now, before some of you start saying this isn’t exactly an apples to apples comparison, that’s true. But there are enough similarities to make the comparison worthwhile:

• Walmart has noticed many customers, even high-end ones, “trading down” — buying less expensive products as inflation bites. This, of course, is anathema to the wine business, which insists we buy more and more expensive products because it wants us to.

• Demand at Walmart has remained steady, if not a little higher. It is seeing an increase in wealthier customers looking for bargains. The wine business, as we know all too well, hasn’t seen an increase in demand in years.

• Wine is a discretionary product; we don’t need to buy it. Walmart found a way to make more money despite a decline in the sales of discretionary products. What does that say about wine’s near-term health?

I don’t write these things to be spiteful or vindictive, and I wish I didn’t have to to write them at all. But someone needs to remind the wine business that it’s not 1995 anymore – and hasn’t been for a long time.

Follow-up: Gallup alcohol survey 2022

by Wine Curmudgeon Posted On

Mad magazine's A;fred E. Neuman
Alfred E. Neuman, the poster boy for the post-modern wine business

Another study that cries gloom and doom? Who cares?

Last year, when the Gallup survey about U.S. alcohol consumption showed that no one who wasn’t an older, college educated woman much cared about wine, the wine business was in an uproar. I even sold two freelance pieces about the reaction to the survey.

But what happened this year, when the survey showed mostly the same thing — as well the even more worrisome continuation of the drinking less trend?

The reaction was the opposite: What, me worry?

In other words, the wine business has made peace with declining sales, less alcohol use, and its generation gap. It is banking on premiumization, even though there are signs that that premiumization is wearing itself out, and what the blog’s official wine marketer calls “consolidation to grab market share;” that is, when sales decline, just buy another company to paper over the problem.

Obviously, this is not a long-term solution. But as wine has demonstrated over the past decade, long-term solutions are for suckers. The mantra these days is short-term profits, and the rest will work itself out.

Hardly a sound business plan, but what do you expect from a business that still acts like it’s 1995?

The other intriguing bit about the survey? There didn’t seem to be any difference in alcohol preferences based on politics. That’s a change from previous studies, including one I noted when I wrote the alcohol piece for the late American Demographics magazine. That showed a relationship between wine and more conservative voters; that doesn’t seem to be the case here.

Making sense of wine fraud

by Wine Curmudgeon Posted On

cartoon: Criminal bribing policeman
“Honest, office. Those are really investment-quality wines.”

How did we get to the point where con artists are faking Yellow Tail to turn a profit?

The Wine Curmudgeon, despite his newspaper reporter’s cynicism and the idea that nothing in wine can surprise me any more, must admit: I still can’t make any sense out of wine fraud.

I mention this because wine fraud has been roiling up the cyber-ether this summer, and especially over the past several weeks. Someone was even faking Yellow Tail in Britain – yes, $6 Yellow Tail. Meanwhile, the Lidl grocery chain — which should know better – got burned with fake Spanish wine.

So my question: Aren’t there easier ways to cheat people and to make more money in the process? Who’s going to make millions and millions with a wine fraud? Which, of course, is what happens with those old standbys, stock and real estate frauds. And if you want to be colorful and still clean up, you can always use fake race horses.

Nevertheless, wine fraud seems to be as much as part of the business as scores and premiumization. So what’s going on?

• Snobbery, of course. Most of the high-end swindles in wine have focused on rare wines, because every old rich guy wants to own rare wine. Whether it’s real or not is just a minor inconvenience.

• Wine as an investment. This shows how much wine has changed and is sadly pathetic. Con artists bilked 150 people, mostly older, out of $13 million by promising high returns on investments in rare wine and whiskey. If only they had wanted to buy wine to drink. Note that this is actually a stock fraud; hence the big payoff.

• Too much wine in the world. There have been a variety of frauds focusing on supermarket wine, which usually wouldn’t afford enough margin to be worthwhile. But given the wine glut in Europe and Australia, one can take bulk wine, slap a supermarket label on it, and turn a profit.

• China. Trying to understand wine fraud in China is like trying to understand cricket. Good luck unless you grew up with it.

• Taxes, and especially in Europe. Tax evasion in parts of Europe is as much a pastime as football; the only thing missing is a World Cup. So when you see a story that says someone counterfeited wine for no apparent reason, chances are it was to get around the tax police.

Winecast 70: Ray DelMuro of Refresh Glass and recycling wine bottles

by Wine Curmudgeon Posted On

Ray DelMuro of Refresh Glass
Ray DelMuro: It’s all about rescuing bottles.

“People tell me they recycle wine bottles because of the way it makes them feel, but they ignore the economic realities of recycling.”

Ray DelMuro of Refresh Glass in the Phoenix area may know as much abut wine bottle recycling as anyone. His company has been doing it for 15 years, works with hundreds of thousands of bottles a year (soon to become millions), and keeps expanding. Currently, his company takes in glass from across the west coast.

So believe DelMuro when he says that glass recycling rates are so poor (less than one-third) because it’s an expensive, bulky, and awkward business, especially when compared to other recyclables. Paper and aluminum can be bundled and are relatively light and easy to load and transport, for instance; glass is none of those.

In fact, we had a fine discussion talking about why recycling economics are so crucial to the process, as well what wine drinkers can do to help:

• If you want to do more than leave your bottles on the curb, find a glass recycler in your area. Put the bottles in a box (preferably the one they came in), and make sure to remove the cork or screwcap.

• One key to expanded wine bottle recycling is finding new uses for recycled glass. These include fiberglass home siding, road building materials, and other construction uses.

• There is an urgency in the industry to improve that recycling rate, and more money is available for research and new technologies.

Click here to download or stream the podcast, which is about 17 1/2 minutes long and takes up 12 megabytes. Sound quality is very good to excellent.

Update: Wine prices 2022

by Wine Curmudgeon Posted On

pile of grocery store receiptsAre wine prices going do something rational, given continuing decreased demand and increasing supply?

In January, I wrote that wine prices were caught in a confusing economic muddle – continued premiumization, inflation, and supply chain pressures on the one hand, but slumping demand, continued high production, and increasing inventories on the other.

Hence, it was almost impossible to figure out what prices would do this year. But I think, just maybe, that a trend is developing – and it could mean lower wine prices.

So what has changed in the past seven months?

• The collapse of the euro (partly because of the Ukraine war, which has added its own complications). The euro is at parity with the dollar for the first time in 20 years; the dollar has also strengthened against the currency of a variety of other wine exporting countries, including Argentina and Australia. All of which should make imports from Europe and elsewhere less expensive.

• The beginning of the end of the supply chain crisis. Things are not going to return to normal soon – buy holiday wine now! — but the situation should improve next year. So lower shipping prices.

• Really, really bad news for wine consumption. One wine analytics company predicts total sales volume in the U.S. will fall in 2022 for the second year in a row, which is almost unprecedented since the 1980s. In addition, SipSource, which tracks sales from wholesalers to restaurants and retailers (called depletions), says wine depletions were down 8.2 percent in the first five months of the year. So, say what you will about whether premiumization has any staying power (and the first report says it does), an 8.2 percent decrease in five months is serious.

Now, none of this certain. For one thing, despite the drop in the price of oil — and which should hint at slowing inflation — no one has any idea what prices are going to do. Second, premiumization has become so baked in to pricing that it’s probably going to take a hard jolt, not unlike what happened during the 2008 recession, before producers cut prices. Third, if economists can’t get this stuff right (and they haven’t), what chance does a cranky ex-newspaperman have?

Still, I wouldn’t be surprised if, by this time next year, we’re seeing the first signs of falling wine prices.

Update: Ingredient labels and nutrition facts for wine

by Wine Curmudgeon Posted On

beer ingredient labels
If light beer, why not wine?

The federal government may be ready to require calories, ingredients, and all the rest

Are we closer than ever to seeing nutrition facts and ingredient labels for wine? That may well be the case.

The TTB, the federal agency that oversees alcohol regulation, is considering proposals to require producers to include ingredients, calories, and the like to wine packaging. In other words, the same information that’s on canned chicken soup, vegan sausage, and soft drinks.

Technically, the process is just starting — it’s called Advanced Notice of Proposed Rulemaking, the “pre-rule” phase. That means the agency will ask for comments and consider what has been said. If there are enough comments supporting the proposal, the agency could move to a Notice of Rulemaking. This requires another comment period before a final decision.  So we’re not anywhere close to a resolution.

Also, if the TTB moves in this direction, there’s no indication what ingredient listings would include. Would it be enough use the word “grapes” generically? Or would it require naming specific grapes, including grape juice products like Mega Purple? And would oak barrel alternatives, like chips and dust, have to be listed?

I’ve been writing about this since 2003, and there has been little change in the federal government’s position. Yes, it allowed voluntary ingredient labels in 2013, but that has been almost universally ignored by wine; in fact, some of us saw it as a sop to Big Spirits and Big Beer, and not as an actual attempt to add the information.

So what has changed since then?

• A growing awareness that younger consumers want the labels. Several wine industry officials, who had opposed adding the information, have told me that the time has come for ingredients, especially and because of wine’s generation gap. Said one: “Today, with consumers asking for more about their food, I think it’s an imperative.”

• Improved technology, which will make it easier for small producers to add the labels. This has always been a key obstacle, since more than 80 percent of U.S. wineries make fewer than 5,000 cases a year.

• The Biden Administration’s renewed focus on the alcohol business, which the three previous administrations mostly ignored (save for the Trump tariff, of course).

• The growth in so-called “healthy wines,” which claim to be better for you but seem to be mostly like every other wine. The TBB has warned producers to stop making these kinds of health claims, and ingredient labels and nutrition facts would make sure they don’t.

Having said all of this, there is still tremendous resistance to adding the information among powerful groups within the wine business. This means, even if the TTB wants to require labels, there’s no guarantee that it will be able to do so. Wine has successfully fought against them for almost 20 years, and there’s no reason to think it wouldn’t prevail again.