Tag Archives: premiumization

More wine retailer foolishness

wine retailer foolishnessYou’d think I’d find something worth drinking among a dozen bottles, but you’d be wrong

Some notes after buying a dozen bottles of wine at various retailers over the last week; sadly, most weren’t worth drinking, let alone writing about. Call it more wine retailer foolishness:

• Points are bad enough, but they’re despicable when they’re so obviously fake. A Dallas mom and pop had an $11 rose from France that I had never heard of – Rose of Scarlet, complete with a Gone with the Wind style front label. Is this dry, I asked? Yes, I was told. It got 92 points. But really dry (because why would anyone put that label on the wine if it was any good)? Yes, I was told. It got 92 points. Of course, the wine tasted like a bottle of French rose with a Gone with the Wind style front label – not really dry, without much rose freshness, and way too much fruit. If it got 92 points, the score came from the winemaker’s mother.

• Premiumization run amok. A couple of years ago, I bought a bottle of the 2013 Spy Valley riesling from New Zealand at a prominent Dallas retailer for $16. Over the weekend, it was $18 at the same retailer. The wine has not necessarily improved with age, but it cost $2 more? And why was the store selling an out-of-date riesling for the same price as the 2014, which was next to it on the shelf?

• Trader Joe’s wine continues to baffle me. Its prices on national brands are a couple of dollars more than other retailers in Dallas, and buying its private label stuff is a crapshoot. Most of it is cheap and tastes that way, and I’ve bought just one wine in 15 years that was worth what it cost. How so many of my colleagues can rave about its wines baffles me. And the Texas section consisted of one wine stuck in the lower left hand corner of the shelf, and it wasn’t even technically Texas wine – it was a dreaded for sale in Texas only.

More about wine retailer foolishess:
• Wine pricing skulduggery
• Beware wine vintage skulduggery!
• The Kroger wine proposal

Has premiumization damaged wine’s popularity?

premiumizationThat’s what this Gallup poll seems to say

Beer is the drink of choice for some two-fifths of Americans, down from almost half in 1992. Wine, meanwhile, is preferred by about one-third of us, up from 27 percent over the last 24 years. So wine has really taken off in the U.S., right?

Not necessarily, as this Gallup poll shows. Wine missed its chance to become the U.S. drink of choice just before the recession, when it passed beer and claimed 40 percent of U.S. alcohol drinkers. So it’s not so much a five-point gain since 1992, which isn’t all that impressive anyway, but an eight-point drop in the past 11 years.

And what has happened since then? Premiumization.

I’ve harped on this for the past couple of years, that the wine business can’t charge higher prices for an inferior product – which is basically what premiumization is – without something terrible happening. Gallup, one of the few trusted sources of wine data that isn’t part of the wine business, has pointed out the terrible thing. Wine is losing popularity in the U.S., and the drop mostly coincides with premiumization.

The match isn’t perfect, and there are other factors to consider. One, as the poll analysis notes, is the 400 percent increase in alcohol ad spending over the past 40 years. Most of that is probably for beer, since there is little effective wine advertising, and would why explain why beer has improved its popularity since 2005.

The other key? That “Alcohol producers must compete with an ever-increasing number of producers and a population of drinkers that, rather than expanding, has remained relatively constant for decades.” In other words, more Americans aren’t drinking, despite the country’s population growth. So the only way to make money selling beer, given its low prices, is to sell more beer, and the easiest way to sell more beer is to convert a wine or spirits drinker. But you can make more money with wine by trading wine drinkers up, and the wine business seems happy to do that. That it leaves wine in the lurch doesn’t seem to bother them at all.

Ask the WC 9: Premiumization, wine bottles, Chicago Cubs

Ask the Wine Curmudgeon
“Damn, that’s a heavy bottle for a cheap wine.”

Because the customers always have wine questions, and the Wine Curmudgeon has answers in this irregular wine advice feature. Ask the Wine Curmudgeon wine-related question by clicking here.

Dear WC:
I’m confused about all this talk about premiumization. I’m not buying more expensive wine, and none of my friends are. We’re buying the same price wine we’ve always bought. So where do they get the numbers that say we’re buying more expensive wine?
Cheap and confused

Dear Confused:
There is data that shows that the dollar value of U.S. wine sales is increasing and that Americans are buying less wine that costs $7 a bottle or less. Hence, premiumization. What is less clear is why this this is happening. Are we consciously buying more expensive wine? What’s the role of price increases? And what does it mean that the demographic that bought all that $7 wine is getting older and drinking less? No one has really answered those questions. To my mind, it’s not so much that the average price of a bottle of wine is increasing; it’s that the same numbers show wine sales are flat. So, in the end, it’s a tradeoff, and one that’s not good for wine.

•

Wine Curmudgeon:
Why is so much inexpensive wine still sold in heavy, expensive bottles? You’d think that would add to the cost of the wine, and I don’t want to pay for it. I want to pay for the wine.
The glass is not half full

Dear Glass:
Because wine has to come in a heavy glass bottle with a punt and a cork, or consumers will think it’s crappy wine. Still. The good news is that, as glass and shipping prices have increased, more and more producers are switching to lighter bottles to keep their profit margins. So we’re seeing some change, albeit slowly.

•

Hey Curmudgeonly One:
Now that your Chicago Cubs are in first place by a lot, are you still going to buy that $300 bottle of wine if they win the World Series? Won’t that destroy your reputation as a cheapo?
Not a Cubs fan

Dear Not:
Do I detect a little St. Louis Cardinals jealousy here? It’s a long baseball season, and the Cubs aren’t playing well after that incredible start. I’d love the opportunity to buy an expensive bottle to celebrate, but I’ve been a Cubs fan for too long to count on anything. Remember 1969?

More Ask the Wine Curmudgeon:
• Ask the WC 8: Restaurant wine, storing wine, sparkling wine
• Ask the WC 7: Winespeak, availability, Bordeaux
• Ask the WC 6: Box wine, wine closeouts, open wine

Winebits 444: Prosecco, direct to consumer, Barnes & Noble

Prosecco• Premiumizing Prosecco: These days, it’s not enough to increase sales of a product eight-fold. You have to trade consumers up, even if that means you’ll sell less of the product. That’s the situation with Prosecco, the Italian sparklng wine, reports the Shanken News Daily website. Sales have passed 4 million cases, almost exceeding Champagne. But that’s not good enough, say marketers, since Prosecco rarely costs more than $15 – just a fraction of what Champagne costs. So the push over the next several years will be to convince consumers to buy higher-priced Prosecco, even though the reason for its growth and popularity is that it can cost one-third less than Champagne.

• Take that, Michigan: Remember the good news about three-tier last week? Not so fast, says the state of Michigan. The liquor cops there, who still seem to have a chip on their shoulder from losing the landmark Granholm case in the Supreme Court in 2005, are cracking down on wineries who ship to consumers in the state. ShipCompliant, which helps producers navigate the various local liquor laws, reports that wineries who don’t list their special Michigan license number on the packing label are being cited. If this seems nitpicky, but it’s all part of the fun that is 50 laws for 50 states.

• Bring on the booze: What do you do if you’re a struggling national bookstore chain? Sell beer and wine, of course. Barnes & Noble will add alcohol to stores in Virginia, California, New York, and Minnesota this year in an attempt to boost long-depressed sales. Ironically, Barnes & Noble is suffering at the same time that independent bookstores are enjoying a revival; what does it mean that independents who don’t sell wine are doing better? Hmm. Customer service, perhaps?

Premiumization: Are wine drinkers really trading up?

premiumizationThat’s the top trend in wine this year, that we’re feeling better about the economy and trading up: Buying more expensive wine than the wine we bought during the recession, moving from $4 bottles to $8, from $8 to $12, from $10 to $15, and from $15 to $20. The wine business calls this trend premiumization, and the salivating at the prospect has reached epic proportions.

That’s because the wine business doesn’t necessarily want to sell cheap wine — it’s not as profitable and it doesn’t carry the prestige that selling more expensive wine does (a much more important reason than consumers can possibly imagine). Plus, selling cheap wine requires more work. You can move a tanker truck of $25 wine in 20 minutes if it gets a 95, but cheap wines don’t get 95s, the competition for shelf space is ferocious, and most cheap wine is sold by the biggest retailers, who demand the best deals and which makes cheap wine even less profitable.

Hence premiumization, which some of the smartest people in wine say is here and isn’t going away. I’m not so sure, and I don’t say this just because my livelihood is cheap wine. As I continually remind people, there has never been a definitive study made public that demonstrates that wine drinkers trade up. Everyone just assumes it’s so. But does anyone know a wine drinker who went from Barefoot to Bogle to Hess or Rodney Strong to Silver Oak?

More, after the jump: Continue reading →