Tag Archives: three-tier system

Winebits 477: Wine retailers edition

wine retailersThis week’s wine news: Wine retailers Walmart, Total Wine, BevMo are in the headlines

• Pricing dispute: BevMo, the West Coast liquor chain, has accused Total Wine of unfair advertising. It claimed that the latter’s ad campaign — “Don’t Paymo at BevMo” – that said BevMo’s prices were higher than Total’s wasn’t true. BevMo brought its complaint to the National Advertising Division, a self-regulatory group set up by the ad business. Total declined to participate in the process, which it is allowed to do. What’s interesting here is that Total, which seems to spend as much time courtrooms as Perry Mason, wasn’t worried by the challenge, which was made by one of the biggest regional chains in the country.

• Pricing dispute II: Total has also run afoul of the Massachusetts liquor cops, who have accused it of violating the state’s minimum pricing laws. The chain has sued the Alcoholic Beverages Control Commission for briefly suspending the licenses of two Total stores for allegedly selling vodka, rum, and other booze for $1 to $6 below cost. In the Total suit, the company said it assumes that local retailers turned the chain in to the state because they didn’t want to compete on price.

• Election dispute: How deep are Walmart’s pockets? The retailer spent more than $4.8 million that helped pass a ballot measure to allow wine sales in Oklahoma grocery stores. That was some 90 percent of the money raised by the group supporting grocery store wine sales. And, because this is about booze sales, the results of the election have ended up in federal court. The state’s retail liquor trade group claims the measure is unconstitutional and wants it voided.

Winebits 476: Wine prices, British bubbly, three-tier

wine pricesThis week’s wine news: Wine prices average hits $10, plus silly a name for British bubbly and more three-tier foolishness

• The $10 mark: Chalk it up to premiumization, as the average price of a bottle of wine in the U.S. now costs $10. That’s from Nielsen’s Danny Brager, who knows more about this stuff than almost anyone else in the world. Interestingly, that doesn’t mean the price of wine is increasing, says Brager, and it remains difficult to raise prices for wines costing less than $20. Rather, he says, more wine is being sold at the higher end of the bell curve, and less wine is being sold at the lower end – hence, the increase in the average price. Meanwhile, the situation continues to worsen for restaurant wine, according to Nielsen figures: Sales fell one percent last year, and even decreased by 0.2 percent in dollars. Those are recession-like numbers, even though the recession ended quite a while ago.

• No names, please: Apparently, U.S. marketers aren’t the only ones who have trouble being clever about wine. The goal was to come up with a term that can hold its own in the marketplace with the French Champagne, the Italian Prosecco, and the Spanish cava. But the top idea, British Fizz, has as little sparkle as the pun I just wrote. The name is so bad, in fact, that the Duchess of Cornwall told a British sparkling wine group: “I just feel Champagne is such a good name and we don’t want to let the French beat us with a better name, so I think everybody ought to get back to having another little think about it.”

• Send in the lawyers: Some states, including Missouri, oversee alcohol advertising as part of the three-tier system that regulates liquor sales in the U.S. One Missouri law forbids booze ads to mention prices, rebates, or discounts, but does allow advertising for happy hours. That contradiction resulted in a lawsuit, which has been wending its way through the federal courts since 2013. The plaintiffs, including a Missouri winery, won this month on appeal, and the state may have to change the way it regulates alcohol advertising. And, as always, don’t worry if none of this makes sense to you. It’s all part of the joy of the three-tier system.

Wine trends in 2017

wine trends in 2017The most important wine trends in 2017 won’t be the wine we drink, but who drinks it and how and where we buy it

Wine trends in 2017 will look a lot like what we saw in 2016, though with some significant additions. Prices will remain flat:

• More consolidation, certainly, but more importantly, more consolidation among the country’s 10 biggest wholesalers. A senior official at one of those companies told me everyone has to get bigger, not only to keep up with the competition, but because the retailers are getting bigger. How else to service Kroger, Costco, and Total Wine, he said? This matters to wine drinkers because distributors, given the nature of the three-tier system, determine what we see on store shelves almost as much as retailers do. If they don’t like a wine or don’t think it will sell, they won’t distribute it. And if they don’t distribute it, you can’t buy it. That will make it harder to find wine not made by the biggest multinational producers.

• Three-tier reform. No, the dreaded three-tier system isn’t going to go away, but this year will see inroads made in several states to make it easier for us to buy wine. This follows last year’s surprise reforms in Colorado and Pennsylvania, which opened the wine markets in ways not seen since Prohibition ended. In Texas, for example, I’ve been told that the legislature will allow liquor retailers to open on Sunday, which hasn’t been legal for decades. Again, not big changes, but smaller changes across the country that may eventually lead to bigger changes.

• The official end of the U.S. wine boom, because younger drinkers didn’t move to wine as quickly as their elders did. One of the great shocks to the wine business was that Millennials didn’t do as they were told and start buying as much wine as the Baby Boomers. One of the top analysts in the country told me that, for the foreseeable future, U.S. wine sales would increase only as much as the growth in the drinking age population, about one percent a year. That’s a far cry from the double digit increases of the past.

• Craft beer and craft spirits replacing wine as the drink to have with dinner. Several analysts told me that there are no firm numbers on this yet, but that they have seen evidence that Millennials and Gen Xers are perfectly content to drink beer and cocktails instead of wine with dinner. That’s revolutionary: Wine’s reason for being is to drink with meals. But beer and spirits are easier to order and the diners know exactly what they’re getting in terms of flavor. A cocktail made with grapefruit vodka tastes like grapefruit in a way that sauvignon blanc doesn’t, no matter what the tasting notes say. If this happens, it will take away one of wine’s most important advantages in its fight with craft products to keep market share.

Winebits 468: La Vielle Ferme rose, Utah laws, Kevin Zraly

La Vielle Ferme roseThis week’s wine news: Even La Vielle Ferme rose wants to be hip, plus Utah liquor laws and Kevin Zraly.

• Bring on the pink: How do we know that rose is hot, hip, and happening? Because the Wine Curmudgeon has received two news releases from the company that makes La Vieille Ferme rosé, the first I’ve ever gotten from La Vielle. The wine has been sold in the U.S. for so long that I wasn’t old enough to drink when it first appeared; until 10 or 12 years ago, the rooster rose was about the only dry pink wine that was widely available. That the producer needs to remind wine writers that it’s still on the market, and hasn’t done a Blue Nun, speaks to the idea that newer, more trendy roses are getting all the attention. I should try it again and see if the producer has stepped up its game given all the competition on the market.

• Even in Utah: The state, known for some of the most draconian three-tier laws in the country, sold a record five percent more booze on the Wednesday before Thanksgiving. This matters since the state makes it so difficult to buy spirits, wine, and beer. Nevertheless, there were so many customers at some of the 44 state-owned stores that officials had to limit the number of people in the store so it wouldn’t be overcrowded. If anything shows that the country’s attitude towards alcohol has changed, this is it. Utah is home to the Mormon church, whose members are supposed to abstain.

• 40 years on: Kevin Zraly, the man who wrote perhaps the best introductory book about wine, has taught his last Windows on the World wine class. I can’t say enough about Zraly’s book; I’ve used it in my El Centro class and always recommend it. Says Zraly: “If my course had just been about wine, it never would have lasted. It’s interactive. It’s entertaining, I want people to talk. I studied elementary education. After the third glass of wine, it’s not a class. It’s crowd control.”

In search of the elusive La Moneda malbec

La Moneda malbecThe La Moneda malbec will be in Dallas-area Walmarts, but who knows which ones and who knows when?

May 15, 2017 update: A reader writes: Why so much publicity and so little availability?

Nov. 27 update: The Wine Curmudgeon braved Black Friday Dallas traffic to drive to a Walmart in Irving and bought the last bottle in the store. The review is here.

The news last week that the La Moneda malbec – “the world’s greatest cheap wine” – was going on sale in the U.S. demonstrated two things: First, that the Wine Curmudgeon will do almost anything for his art, and second, that the three-tier system is just as antiquated and worn out as I have always said it was.

I spent Monday morning hunting for the wine, a Walmart private label and available only at the chain. I visited the Walmart near me (“Never heard of it,” said the store manager); called the two biggest distributors in Texas to see which one worked with Walmart; and contacted the company’s media relations office in Bentonville, Ark.

The consensus? The La Moneda malbec should be available in some Walmart stores in the Dallas area sooner rather than later. Which ones? We’ll have to wait and see. The company spokeswoman emailed me that “Many stores in North Texas have or will receive the wine: multiple locations in Plano and Fort Worth, Arlington and Irving.” Meanwhile, the distributor told me the wine was in their warehouse, and he’d call if, when, and where it shipped.

Which is hardly definitive, but shows just how badly three-tier works in the 21st century.

Walmart is one of the world leaders in supply chain efficiency, and academics study the company to see how it eliminates waste and increases productivity in ordering merchandise. Walmart is supposed to be so good at this that it can tell you how many widgets are on the shelf at each of its almost 12,000 stores with a couple of mouse clicks.

This is a far cry from what the manager at the store near me said. “I’ll have to ask my food guy, who who will have to ask his wine guy,” the manager said. No mouse clicks here, because this is wine and not widgets.

Walmart’s supply chain brilliance is based on dealing directly with the producer. Which, of course, isn’t the case with wine. Three-tier laws require it to deal with the distributor, which adds another layer of bureaucracy, confusion, and waste to the supply chain. In this case, the wine’s availability is not about Walmart, but about the distributor. The world’s biggest and most important retailer is waiting on a third party to decide when it gets product. How quaint.

Next week, hopefully, I’ll review the La Moneda malbec. But if I don’t, you’ll know why — thank you, three-tier.

Winebits 455: Wine labels, Connecticut pricing, direct shipping

Cute labelsThis week’s wine news: Cute labels matter, plus more on the Connecticut pricing controversy and direct shipping in South Dakota

• The cuter the better: Even in Japan, where the culture and the alphabet are far different than here, cute wine labels matter. Reports the Japan Times: “Wines produced in Chile, Australia and other New World regions are gaining popularity among consumers in Japan due to their reasonable prices and eye-catching animal logos.” The Wine Curmudgeon doesn’t know quite what to make of this, save to reiterate what I’ve written many times about cute labels, and to note that reasonable prices certainly matter regardless of culture and alphabet. One of the most popular Chilean brands, Condor, sells for about ¥580, a little less than US$6.

• Joining the fray: A second liquor retailer has taken aim at Connecticut’s minimum pricing law, selling alcohol below the state mandated pricing. BevMax, 13 locations in Connecticut and New York, was advertising and selling liquor below the price set by wholesalers, an apparent violation of Connecticut law, reports the Hartford Courant newspaper. Says a BevMax official: “We feel that the law is unjust. It’s right to break an unjust law.” Last week, Total Wine sued the state to overturn the law, and has also been advertising its products for the state minimum. Late last week, the retailers said they would return to minimum pricing.

• Even a small state: This story, about South Dakotans buying 1,158 cases of wine directly from the producer in the first year of direct sales in the state either speaks to the tremendous power of direct shipping or it doesn’t. That’s not a lot of wine, but consider that South Dakota has fewer than 900,000 people. But that still works out to about one-half bottle per legal age resident. So you tell me – is that a lot or not?

Winebits 451: A three-tier system roundup

three-tierThis week’s wine news is all about the three-tier system – a well-written story about how it works, plus updates on marijuana and Utah.

• “It’s impossible to taste 645 wines:” Jeremy Baker of Food52, a self-described “amateur wine lover,” writes about his adventure in the three-tier system, and he spends a lot of time down the rabbit hole. Baker interviews a wine shop owner, who explains what it’s like to taste hundreds of wines a week to decide what to carry, and gets to visit a trade tasting where 645 wines are being shown. “The tasting list is in actuality a 166-page book,” he writes, and his amazement goes on from there. That Baker can actually begin to imagine the difficulties that the system imposes on retailers is the strength of the story. My only regret is that he doesn’t assess the system and decide if it’s time is past. Otherwise, highly recommended reading.

• Don’t trust the wholesalers: Tom Wark, whose crusade against the three-tier system makes my opinions seem like a child’s musings, has a warning for the marijuana business: “Whatever you do, don’t allow America’s alcohol wholesalers anywhere near your growing and soon-to-be-legal industry.” Wark’s post explains why he doesn’t want the legal weed business to be dominated by the distributor-based system that controls the wine supply chain. My favorite part? Where he quotes a distributor trade group, which says legal marijuana needs three-tier to prevent illegal sales. Which, of course, sounds like an argument only Dave would understand.

• Only in Utah: Regular visitors know how much the WC appreciates Utah’s Kafka-esque interpretation of three-tier, and this is yet another example. Under a new tasting law, liquor producers must have a “distinct area for consumption” so that tastings are “outside the view of minors” who may be at the winery. In other words, wineries can only do tastings in a back room out of sight of any children who may be at the winery. Which presupposes that kids are flocking to wineries and craft beer and spirits producers to watch adults sample the product. Could be worse, though: What happens when the Utah legislature finds out kids might be watching their parents drink at home?