Tag Archives: premiumization

Drink wine? Then you must own a yacht

Yacht broker ad
Who knew wine and yachts go together like red beans and rice?

How else to explain the ads that show up on the WC’s Internet pages?

Imagine my surprise when I saw the ad at the top of the page as I was running through my morning Internet routine the other day. Yes, believe it or not, a yacht broker.

How is that possible, given that I am the world’s foremost authority on cheap wine? That’s hardly very yachty,

The only answer I could come up with is wine. Internet ads, thanks to our overlords at Google and their co-conspirators at companies like Meta, harvest our searches and then sell the information to advertisers. That’s why, when I’m pursuing my computer geekiness, I see ads for software services and server hardware. Or sometimes see ads for dog food and the like when I am doing a search for Churro, the blog’s associate editor.

But yachts? I don’t search for boat moorings, high-end cars, luxury apartments, or $5,000 refrigerators – all things that would seem to indicate a socio-economic penchant for yachts. And, given that Google and the like sell data they glean (a polite way of saying steal) from our personal information, they should know I don’t live near an ocean, don’t own anything save for the Honda Fit, don’t live in a uber-fancy ZIP code, and that I use coupons (digital, of course) when I go to the supermarket.

Again, hardly very yachty.

But I do search for wine, and when I did the reporting for the Gallo post after the company bought Rombauer and Massican, I was looking for information about two pricey Napa producers. And I regularly search retailer and winery sites, as well as Wine-searcher, to write the blog and to do my freelance work.

So what other conclusion could the Internet bots come to? I must have a yacht to sell if I’m checking Wine-searcher for $100 Napa cabs. And, as Gallup pointed out in its most recent annual survey, wine drinkers are about as close to the 1 percent as it gets when it comes to alcohol.

So thank you, premiumization. Who knew anyone would ever think the WC owned a yacht, if not for you?

Five days drinking $20 wine

woman holding wine glass
“Boy, the WC got this one right. I’m never buying a $35 rose again.”

Yes, the wine was better – but twice as better? Hardly — and I was surprised

The Wine Curmudgeon, who always tries to keep an open mind, spent one working week last month drinking only wine with dinner that cost $18 or $20 (or more). The goal? To see if the wines were truly twice as good as the $10 and $12 wines I usually drink.

And you know what? They weren’t. Which actually kind of surprised me.

This is not to say that most of the wines weren’t well made and interesting. They were. But compared to the quality $10 wines I usually drink, they didn’t especially stand out. For example, I spent $18 for a Spanish rose and $30 for a white Bordeaux, and both were enjoyable wines. But the rose was not $18 worth of nice, and as was terrific as the white Bordeaux was, it wasn’t $30 worth of terrific.

How is this possible, given the regular drumbeat from producers and the Winestream Media that we’re spending more money and drinking better?

A variety of reasons:

• Higher prices for the more expensive wines, thanks to the Trump tariff, pandemic supply chain woes, the war in Europe, and inflation. That means a wine that might have been a value at $18 but now costs $23 isn’t a value any more. This hasn’t necessarily been the case with my cheap wines, where producers have been more reluctant to hike prices.

• Marketing, marketing, and more marketing. It’s just not about the wines I noted last week; rather, it’s about shelves of wines that have been created to cost $20 or more because premiumization. When’s the last time anyone spent $I8 on a Chilean chardonnay or a $35 California rose? Yet that’s what I got as samples recently.

• Most importantly, the $10 and $12 wines that I drink – and recommend on the blog (subscribe now!) – are not supermarket plonk. It’s easy to “drink better” by spending more money if the cheap wine you’re drinking tastes cheap. But what if you’re drinking this? Or this? Or this? It’s much more difficult.

Photo: “drink more wine” by wrapped4good is marked with Public Domain Mark 1.0.

Premiumization strikes again

woman looking st wine glass
“Bleech. Why didn’t I listen to the WC?!?!”

Two $15 wines that aren’t worth $15 and don’t taste like much of anything, either

The Wine Curmudgeon rants a lot about premiumization and how it’s killing the wine business. Now, I have two more examples, $15 wines that are not worth what they cost, don’t taste like the wines they claim to be, and were apparently conceived for no other reason than to cost $15.

In this, it’s worth noting that these kinds of wines know no geographical boundaries or varietal. They can come from anywhere in the world and be made with any grape. Which, of course, is the point of premiumization – all wine should cost more money and taste the same.

The first: A French picpoul. To quote my tasting notes: “Welcome to the post-modern wine world — too much money for ordinary wine (at best). Thin in the back, with very little picpoul character.” In other words, made with cheaper grapes, missing the classic picpoul tartness, and seems to be made to taste like supermarket pinot grigio.

The second: A French Beaujolais that tastes neither French nor like Beaujolais. Rather (again, from my notes): “Heavy-ish and not especially Beaujolais. Some berry fruit and spice, but mostly just sits in the glass and stares back at you.” This red, with 14.5 percent alcohol, tastes like a California merlot that was made to taste like California cabernet sauvignon.

But WC, some of you may be asking, what difference does this make? Aren’t you here to warn about these wines?

I am. But, sadly, not enough of the wine world has the WC to rely on. (Not that I haven’t tried to make it otherwise.)

Rather, it’s the idea that an unsuspecting wine drinker will walk into a wine shop, think that $15 constitutes quality, and buy this crap. Which I did, and they even fooled me.

Then, when they get it home, they’ll taste it, go, “Bleech (or whatever the generation-equivalent expression is),” and never buy wine again.

And wine, which has enough trouble keeping customers, will have lost another one.

Thanks again, premiumization.

Photo: “Tasting wines.” by adactio is licensed under CC BY 2.0.

 

 

Winebits 718: Premiumization, anti-trust, postal service wine delivery

pandemic pricing
“It doesn’t matter what it costs — we want it!”

This week’s wine news: Premiumization “is the gift that keeps on giving.” Plus, grocers ask feds to take action and the history of the postal service and booze delivery

• Premiumization strikes again: I wasn’t going to report this, since we’ve had enough depressing wine news over the last several years. But premiumization as “the gift that keeps on giving?” For whom? Certainly not wine drinkers. Yet Richard Siddle, writing in a British restaurant trade magazine, insists it is: “But we are also increasingly willing to pay more for brands that are genuinely different, authentic and make us feel good about buying them.” The rest of the piece is the usual marketing-speak about how consumers won’t pay more money unless they’re convinced the product is worth it and which, with consolidation, has less and less to do with reality. And no, that the story spells premiumization with an s, in the British English style, doesn’t help.

• Supermarket consolidation: Those of us who pay attention to wine consolidation aren’t the only ones who have noticed what’s going on with big companies controlling key parts of the economy. A trade group of independent grocers has accused the largest retailers, including Walmart and Amazon, of “predatory action.” The trade group says the biggest retailers get better pricing, exclusive products, and even better packaging because they have more clout in the market place. The group has asked the Federal Trade Commission to investigate to see if those practices violate federal law.

• Booze and the postal service: Wayne Curtis, writing in The Daily Beast, does a terrific job detailing the history of the U.S. Postal Service and alcohol as there’s a chance the agency might be allowed to deliver wine. “Given the long-standing prohibition against shipping liquor, it may come as a surprise to learn that ordering liquor by mail was once commonplace.” It’s the kind of story I wish I had written, and includes an ironic section about how it was once legal for out-of-state retailers to sell into another state.

Welcome to the terrors of ultra-premiumization

wine as opera
Wine? Opera? What’s the difference?

Is ultra-premiumization – where wine becomes a luxury and not something to drink everyday – the next logical step in the evolution of the wine business?

This is the second of two parts looking at premiumization’s grip on the wine business. Today, Part II: Is ultra-premiumization the next logical – and terrifying – step? Part I: Higher prices are strangling wine to death, so that we may have lost a generation of wine drinkers

My in-basket has been overflowing with the news, updates, and offers: A startup has raised $1 million to compete with Liv Ex, the wine stock exchange. A cellar management app will now offer wine investment advice, since “investment-grade fine wine has performed very strongly against most major asset classes.” A wine consultancy, meanwhile, has formed a limited edition wine club, which will only sell “one of a kind” wines in small numbers. And how about luxury wine glasses, which start at $34 each? Or the $5,000 Napa wine trip?

These days, it seems, hardly anyone sends me a news release about a wine or wine product that most of us can afford.

And why should they? Wine has embraced premiumization for a decade, targeting more expensive wine, more expensive wine products, and the affluent consumers who can afford them. Which raises a most terrifying question: Is ultra-premiumization the next logical step in this process?

I hope not. And I know that my email is a small sample size, with all that means about predicting what’s next for wine. One wine writer’s spam does not a trend make.

But I’m reminded of a couple of predictions that wine economist Mike Veseth has made: First, what he calls juice box wine, in which mega-producers will make cabernet sauvignon not from one region or even one state, but from different countries, just like juice is made. A carton of orange juice often lists two or three or more countries of origin. So why not cabernet from California, Chile, and eastern Europe, in which economies of scale and mass production give us the wine equivalent of juice boxes – both in price and quality?

Second, that wine will become like opera – too expensive and too pretentious for most people to appreciate, even if they wanted to. Opera was popular entertainment in Mozart’s time; today, it’s barely a blip on the cultural register.

These two forecasts offer a glimpse of ultra-premiumization: Juice box wine for those of us who still care about wine, and wine as opera for the one percent, complete with expensive glasses, wine investment advice, and one-of-a-kind wine clubs. Yes, there are still hundreds and hundreds of inexpensive wines, but they’re owned by a handful of companies. And these companies have the technical and supply chain expertise to turn those products into juice box wine while focusing on their most expensive wines. Is it a coincidence that those producers have been investing heavily in brands costing $20 or more over the past several years?

Again, I write this not because I’m certain it will happen, but because it seems ever more possible as the wine business continues to push aside the ordinary wine drinker in favor of the more affluent. My job is to warn those of us love wine about the possibility.

Photo: alevision.co on Unsplash

 

Winebits 702: Premiumization, Smithsonian, wine bottles

wine toast
“Let’s celebrate! Wine is going to come in lighter bottles!”

This week’s wine news: One retailer says premiumization is out of control, plus good news for wine at the Smithsonian and wine bottles get lighter

• Enough, already: Writes one of the leading independent wine retailers in the country: “The damage caused by skyrocketing pricing for exclusive allocations may be irrevocable.” Brett Zimmerman, the owner of the Boulder Wine Merchant, says prices for top Burgundy are out of control, citing a 600 percent increase for one wine over the past couple of vintages. The result? A bottle costing $4,300 wholesale – even before he takes his markup. At this rate, Zimmerman writes, “the damage to our industry caused by skyrocketing pricing for exclusive wines may be irrevocable. … [W]ith pricing like the offer I received recently, there’s no doubt that these wines will be available only for a small demographic otherwise known as the Billionaires Only Club.” His post discusses the “disingenuous” pricing and sales tactics used for these wines, and points out that prices like this can only alienate younger consumers – the people wine needs to thrive.

• Thank you, Warren: Wine is getting a boost at the Smithsonian’s National Museum of American History, thanks to the generosity of Barbara and Warren Winiarski. They’ve donated $4 million to establish a curator for U.S. wine and food history, who will guide the museum’s efforts to research, collect, and exhibit the country’s wine and food traditions. Warren, of course, was one of the participants in 1976’s Judgment of Paris, which established that California wine could hold its own with the best from France. His Stag’s Leap cabernet sauvignon was one of the winners. And, if I may name drop, Warren has been a long-time friend of the blog.

• Lighter bottles: The Wine Enthusiast reports on a growing trend among wine critics and wineries to advocate for lighter bottles, what Britain’s Jancis Robinson has called a chance to make wine more green, since “making and transporting glass bottles is by far the greatest contribution to wine’s carbon footprint.” Who knew the WC was so far ahead of the rest of the wine business? Regardless, it’s about time that more writers and producers noted that lighter bottles make environmental and fiscal sense.

Photo: fauxels via Pexel

 

Update: Wine prices 2021

Wine Prices
Where’s the $18 Italian chardonnay?

Making sense of an $18 Italian chardonnay blend, the California grape glut, and higher wine prices despite flat demand

Would you pay $18 for an Italian chardonnay blend? Chardonnay, of course, is hardly an Italian white grape and it certainly doesn’t speak to terroir the way Italian wine is supposed to. But there it was, on the dinner table, in its heavy bottle with a big punt – just like any other luxury wine.

Which, as much as anything, speaks to the pricing conundrum that wine drinkers are facing this year.

I’ve spent the past couple of weeks trying to make sense of why, despite the law of supply and demand, wine prices are higher than they should be.

I’ve spent the past couple of weeks trying to make sense of why, despite the law of supply and demand, wine prices are higher than they should be. It baffled me at the beginning of the year, and it still does.

And I’m not the only one who is confused:

• Jeff Bitter, who oversees the Allied Grape Growers trade group, says California has way too many vines, and needs to pull out almost 50,000 acres. Otherwise, he says, the continued oversupply will cut prices in a flat market.

• Wine critic Dan Berger doesn’t pull any punches: “One of the wine industry’s Achilles heels, and a topic no one ever talks about, is that domestic wines’ retail prices always seem to go up and almost never come down.” His analysis: Price has been associated with quality for so long that producers are terrified that lower prices will mean their wine is crummy.

• Steve McIntosh, writing in the Imbiber’s Journal: “By far the most frequently discounted variety on my radar this year is not nebbiolo or grenache or sangiovese. It’s cabernet. And you know who bottles cabernet labeled as such? Not France. Not Italy. And certainly not Spain or Germany. California does. More specifically, Napa Valley cabernet.” In this, Napa caberent – and, to a lesser extent, other California cab – is being heavily discounted on so-called flash sites, which buy from producers who can’t sell what they make through normal channels.

So what’s going on?

Why are we seeing $18 Italian chardonnay – and so much other pricey wine – when the evidence shows there is no apparent economic reason for it?

My guess – and it’s only a guess, without a study to support it – is that wine is finally crossing the divide from agricultural product to consumer packaged good. The former’s price revolves around the cost of the grape; higher grape prices mean more expensive wine, and lower prices mean less expensive wine. That’s been the case for centuries.

Consumer packaged goods, on the other hand, are priced according to brand. That’s why Tide detergent costs almost three times as much as Arm & Hammer, even though the ingredients are mostly the same. You’re paying for the Tide name, which the manufacturer has worked diligently to promote as denoting quality that’s worth three times more.

Is that where we are with wine? The $18 Italian chardonnay was well-made, but was it worth almost 30 percent more than my Domaine Tariquet? Has packaging and price become the symbol of quality, just like laundry detergent, rather than what’s in the bottle? Are we expected to pay more for a wine not because it’s better or more interesting, but just because we’re supposed to?

I hope not, but premiumization’s continuing presence in the face of economic logic seems to say otherwise.

Photo: “Wine Prices” by mason bryant is licensed under CC BY-SA 2.0