Tag Archives: wine marketing

Big Wine growth 2016

Big Wine growthThree sets of numbers — two public, one passed to me by my source in Big Wine — show just how dominant Big Wine continues to be, and how Big Wine growth will affect everything we drink.

The first public chart, reproduced here, was compiled by Lew Perdue at Wine Industry Insight, and shows that the three biggest companies — E&J Gallo, Constellation, and The Wine Group — control almost half of the U.S. wine market. In this, the eight biggest companies sell 60 percent of the wine in this country, which leaves more than 7,500 wineries to fight over the other 40 percent.

Those are almost the same numbers in the second public study, the annual Wine Business Monthly top 30 producers list, which are similar to the finding in the magazine’s 2014 report, when Gallo, Constellation, and The Wine Group controlled half the U.S. market. Meanwhile, the top 30 companies in the 2016 report accounted for 74 percent of all the wine sold in the U.S. Interestingly, that’s less than they reported in 2014, when the top 30 sold 90 percent of the wine; chalk that up to bigger companies, like Diageo, selling their brands to smaller companies.

The three biggest companies (again, Gallo, Constellation, and The Wine Group) controlled about half the U.S. market in the landmark 2011 Big Wine study conducted by Phil Howard at Michigan State.

It’s important to understand how big big is. First, the Wine Business Monthly top 30 total just .04 percent of all U.S. wineries, which makes the infamous One Percent look like an all-inclusive kumbaya sing-along. Second, Jackson Family, which makes Kendall Jackson and is about as close to a national brand as wine has, isn’t one of the half-dozen biggest producers in the U.S. It’s eighth in the Wine Industry Insight chart and ninth in Wine Business Monthly’s rankings with almost six million cases. That’s still big, but the biggest companies are so gigantic that even some of their brands, like Gallo’s Barefoot, sell more than all of the Jackson Family portfolio.

In other words, every time we buy wine, the odds are better than not that we’re buying a Big Wine product even if we don’t want to. My colleagues in the Winestream Media pooh pooh this whenever I write it, arguing that wine drinkers have more choice than that. What about those other 7,500 wineries? The catch, and what they don’t understand, is that most of us don’t shop in places that sell wine from the other 7,500. We shop at Costco and Walmart and grocery stores, and those retailers account for almost half the wine sold in the U.S.

Case in point: Sales statistics for 2015 that my source in Big Wine passed to me for 10 U.S. states (none of which are California), and where Big Wine (defined as a company that appears in either the Howard study or the Wine Business Monthly top 30) dominates at all prices:

? 9 of the 15 best-selling wines between $15 and $20 are from Big Wine, including La Crema (Jackson Family), Louis Martini (Gallo), and Meomi (Constellation).

? 12 of the 20 best-selling wines between $12 and $15 are from Big Wine, including Wild Horse (Constellation), Kendall Jackson (Jackson Family), and Chateau Ste. Michelle (Altria). And I didn’t include Hess and Rodney Strong, both on the Wine Business Monthly Top 30 list but family run.

? All of the 20 best-selling wines between $9 and $12 are from Big Wine, including Menage a Trois (Trinchero), Cupcake (The Wine Group), and Apothic (Gallo).

 

Winebits 417: U.S. wine sales, cold beer, Big Wine

wine sales ? Barely any growth: U.S. wine sales continued to plateau in 2015, reports Impact Databank — up just .02 percent for the year based on the number of cases, following a 1 percent gain in 2014. The rest of the news is even worse, says the report: The “estimated volume increase represents the smallest rise in [22 years]. And after steadily increasing from 1994-2011, per-capita wine consumption is projected to decline for the fourth consecutive year, as Americans bypass wine in favor of spirits, RTDs and cider.” RTD is an industry term for ready to drink, like flavored beers and spirits. The Wine Curmudgeon, noting the wine industry’s obsession with raising prices and trading up over the past couple of years, isn’t surprised. What’s the most basic rule of economics? If prices increase, demand decreases. But which, obviously, seems to be OK with the wine business.

? No cold beer in Indiana: An early candidate for the 2016 three-tier Curmudgie is the federal appeals court that ruled that Indiana is allowed to forbid grocery and convenience stores from selling cold beer while allowing liquor stores to do so. The Indianapolis Star said that the 7th U.S. Circuit Court of Appeals said there were legitimate differences between selling beer in a liquor store and selling it in a grocery and convenience stores, a point of law which I’m sure I would understand if I were a lawyer. As a wine writer, it’s baffling, and only points to the foolishness of three-tier.

? Big Wine winespeak: The Wine Curmudgeon enjoys noting the public utterances of those in the wine business, particularly when they demonstrate how little so many of them seem to care about wine quality. Because what does quality have to do with profit? The most recent comes from the woman who runs Treasury Wine Estates’ operations in the Americas, in which she used “masstige” twice, said that a marketing deal with the Texas Rangers baseball team would help sell New Zealand sauvignon blanc, and explained why young men will buy wine if it has a convict on the label. Is it any wonder I get so cranky so easily?

The 2015 Curmudgies

2015 curmudgiesWelcome to the 2015 Curmudgies, the fourth time we’ve given the awards to the people and institutions that did their best over the previous 12 months to make sure wine remained confusing, difficult to understand, and reserved for only the haughtiest among us. This year ?s winners:

? Worst news release: Another banner year for releases that insulted my intelligence, committed any number of grammatical errors, and did nothing to promote the product. The winner is 24-Group PR & Marketing for a release for Three Hunters Vodka, which included this foolishness (and a hat tip to my pal Tim McNally, who sent it my way): “We live in a time when some of the most important choices we make come prepackaged and predetermined by companies who know nothing about us. The decisions we make about the things we put in our bodies are constantly manipulated by clever and misleading advertising, and misconceptions about nutrition and health.” Why would anyone write that about vodka? Also, it is a classic example of the pot calling the kettle black.

? The regional wine award, or the more things change, the more they stay the same: To every restaurant in Dallas, and there are too many to list here, that doesn’t carry Texas wine. This is a disgrace given the improved quality and availability of Texas wine in the second decade of the 21st century, and speaks to the restaurant wine mentality that makes wine drinkers crazy. If Lucia can find a Texas wine to include on its otherwise all Italian list, so can the rest of you.

? The three-tier system is our friend award: To the 200 Minnesota cities that, thanks to one of the oddest state liquor laws in the country, operate their own liquor stores. As the Star-Tribune newspaper reports in a solid piece of journalism, “In 2014, 34 Minnesota cities, all outstate, lost a total of $480,000 on their liquor outlets ? money they had to backfill from their own coffers. Another 60 outstate cities saw sales drop from the previous year.” Given how much trouble so many cities, big and small, have doing basics like police and fire protection and garbage pickup, that some want to run liquor stores is mind boggling.

? The Wine Spectator will always be the Wine Spectator: For James Laube’s February 2015 blog post, which included this: “If you want to save more and waste less [on wine], consider how much money you spend on wine that you don’t drink, and how many bottles of wine you opened last year that should have been opened sooner.” Wine that we don’t drink, huh? Wine that we let sit in the cellar too long? Wish I had those problems. That one of the Spectator’s top columnists wrote about it speaks to how little the magazine has to do with how almost all of us drink wine.

? Would someone please listen to this person? The positive Curmudgie, given to someone who advances the cause of wine sensibility despite all of the obstacles in their way. The winner this year is Forbes’ Cathy Huyghe, who spent the month of November writing about the wine that most of us drink, and not what Forbes’ one percenters drink. “…[I]t has turned out to be one of the most eye-opening projects I ?ve ever done. … The longer I ?m a wine writer, the further away it ?s possible to get from the wines that most people drink.”

For more Curmudgies
? The 2014 Curmudgies
? The 2013 Curmudgies
? The 2012 Curmudgies

Post-modern wine marketing

wine marketing
Wine marketing is not just about shelf talkers anymore.

Wine marketing, like the rest of the wine business, has always been done the same way — some junk written on the back label, mostly useless, and the cute labels that have been the biggest innovation over the past couple of decades. Otherwise, unless there is a shelf talker (the printed card attached to the shelf under the wine with a score or description of the product), you’re on your own.

That was always fine with the wine business, which assumed that anyone who went into a store was going to buy a bottle, so what was the point otherwise? There is even a term for this — “building a brand,” in which the distributor and retailer work together to sell you certain wines.

This is one reason why there has traditionally been so little advertising, TV or otherwise, for a $40 billion industry. Ketchup ads are everywhere, even though the ketchup market is 1/80th the size of wine.

All of which is changing, thanks to our friends at Big Wine. They understand, in a way that their forebears did not, that wine has become just another category in the food business, and it needs to be marketed like ketchup. We may not see TV spots with fresh young things touting wine the way they do yogurt, but we’re going to see more and slicker efforts to get us to buy specific wine brands.

Perhaps even more important, these ads will focus on consumers who don’t buy wine in the small retail shops that have traditionally been the backbone of the wine business. As an executive at one of the biggest wine companies in the world told me a couple of weeks ago, the future of wine retailing is Costco, Total Wine, and grocery stores, so expect Big Wine to target consumers who shop there. This is revolutionary for wine, where it has always been about making a decision on brand in the store. You may want red wine for dinner, but which red wine? Big Wine, knowing no one is around to help you pick a specific red wine at a supermarket, wants you to decide on their brand before you go to the store. It’s all about brand loyalty, the same way it is with Heinz and Tide.

Hence, these two marketing efforts, which are just the beginning. This spring, Little Black Dress, the $8 brand owned by Fetzer (which itself is owned by Chile’s $1 billion Concha y Toro), did a spa day sweepstakes, where “entrants will be asked to tell Little Black Dress about their best friend and why she deserves a day of pampering for a chance to win two $300 gift cards to a local spa.” I can’t imagine too many of the Winestream Media’s favorite “oaky and toasty, redolent of cigar box aroma” wines doing this.

Or baseball wine. Seriously. Nineteen teams have official wines, made by some company called Wine by Design and part of the “MLB Club Series wine collection.” Who cares what the wine tastes like? It has my team’s logo on it, so let’s buy a case.

Again, this is about cutting the tie between retailer and consumer, which has always been essential to selling wine. Big Wine doesn’t need the traditional retailer, and it’s going to do everything it can to usher in post-modern wine marketing.

For more on wine marketing:
? Chateau Ste. Michelle, wine marketing, and wine blogging
? Diet wine, and why we’re stuck with it
? When Blue Nun ruled the world

Winebits 401: Randall Grahm crowdfunding, grape diseases, craft wine

crowdfunding ?Crowdfunding success: Randall Grahm, the Bonny Doon impresario, raised $167,857 in his crowdfunding attempt to develop 10,000 new grape varieties, beating the $150,000 goal. Which isn’t quite the same thing as the Wine Curmudgeon being named editor of the Wine Spectator with a mandate to eliminate scores, but is close enough. Most crowdfunding projects fail, and it’s even more difficult for projects that aren’t tech related (as Grahm and I discussed here) to reach their goal. That he did it speaks to the passion surrounding wine and Grahm’s skill at getting out the vote. And then there is this — how can one not appreciate a Salinger allusion?

? The end of Pierce’s Disease? Next to phylloxera, which almost destroyed the French wine industry a century ago, Pierce’s Disease is probably the most dangerous threat to the wine business. It’s spread by insects which inject bacteria into the vine, and the bacteria blocks water from going through the plant, which kills it. There’s no cure or treatment, and the only preventative is pesticide, which brings its own problems. Now, though, Texas researchers may have found a solution, using a combination of viruses injected into the vine to kill the bacteria. Much work still needs to be done, say researchers, but this is among the most promising developments in fighting Pierce’s in decades.

? It’s all about the adjective: Our recent discussion about craft wine brings this, from the Harris survey people, about how consumers react to terms like craft and artisan. The survey found that almost six in 10 think handcrafted or handmade “strongly or somewhat communicates that a product is high quality.” Artisan and artisanal and custom are next at 46 percent, while craft is at 44 percent. The most interesting part? That save for handcrafted, most of us recognize these terms for what they are — marketing jargon with no real meaning.

Winebits 388: The world hates expensive wine

expensive wineThe cyber-ether has been full of vitriol for expensive wine over the past month, so much so that even the Wine Curmudgeon has wondered what’s going on. Some of these posts make me seem like a “bring on the $100 samples” member of the Winestream Media:

? Damn you, Napa cabernet: Something called Vox Observatory, which is part of the company that owns the chi-chi Eater food site and the SB Nation sports blogs, posted a video called “Expensive wine is for suckers.” The results? Not only is expensive wine overpriced, but many of the tasters said they liked the way the cheap wine tasted better than they liked the way the expensive wine tasted. One even went so far as to say that she was glad she had cheap wine taste. I wonder: Would Eater have run a similar post, citing the cheap and simple qualities of grocery store tomatoes over $15 organic, heirloom tomatoes? Of course not. This post speaks directly to the cliches the wine business and the Winestream Media reinforce about wine, and how their approach intimidates people who aren’t wine drinkers.

? Grocery store cheap wine: The cheapest offers the best value, according to a study done among British supermarkets. Almost two-thirds of the wines sold at Lidl and Aldi, known for their low prices, were called a good value; at least half the wine at six other chains was judged a poor value; and three-quarters of the wine at the bottom grocer was called a poor value. This is an amazing result, and not just because so much wine in grocery stores is so ordinary. It speaks to the concept of premiumization, and that producers and retailers aren’t giving us better wine when we pay more money, but the same wine in better packaging and with more expensive marketing.

? The placebo effect: Think your pricey wine tastes better than the cheap wine I drink? That may be because you want it to, says a study in the Journal of Marketing Research. Says the report: “Expectations truly influence neurobiological responses,” and there are even brain scans to prove it. Again, not a surprising result, and especially for those of us who have spent our professional careers trying to educate people on the differences between cheap and expensive wine.

Wine prices in 2015: Stealth increases

wine prices in 2015Wine prices in 2015 for the wine that most of us drink will do what they’ve done the past decade or so, which isn’t much. The exception will be wine that costs $20 or more, where there could be substantial price increases — as much as one-quarter to one-third, according to one distributor.

That’s because producers remain leery of raising prices for wine that costs less than $15, worried that those of whose drink those wines will switch rather than pay more. That’s the consensus from the experts who follow and work in the wine business that I talked to this week.

Hence the producer strategy for wine prices in 2015: Stealth increases — introducing new brands as well as new varietals and blends within existing brands to get us to trade up to a $15 bottle from $10, or to an $18 bottle from $15. In this, the people I talked to used terms like “sneaky” and “surreptitious” to describe the strategy. Not surprisingly, these new brands will have clever names, cute labels, and demographically-inspired marketing. How does “perfect for the woman who enjoys an active, healthy lifestyle but also seeks time to relax and rejuvenate” sound?

One retailer, who works for a 100-plus store chain, said he is already seeing this, particularly from Big Wine. His concern is that this approach could confuse consumers and ultimately backfire, and “prove damaging to the existing brands from whence they spawned.” In addition, despite the industry’s firm belief that consumers trade up, there has never been any evidence that it happens. We may splurge with a more expensive wine, but we tend to buy the same priced wine more often than not.

In this, you can forget all the foolishness over the past several years about grape shortages. The past three California harvests were the three biggest ever; combined with the on-going grape glut in Australia and a bumper New Zealand harvest, that more than makes up for shortages elsewhere. Plus, reduced demand from a poor economy and changing lifestyles means European producers need to keep prices low to compete in the U.S.

So there are lots of grapes available to do new labels. Said one consultant: “The number of ‘instant successes’ from new brands, concepts, regions. or varieties should make retailers and wholesalers more open to new and unusual wines. It might be easier to introduce a new wine at $10-15 with a good story than to raise an established brand ?s price from $10 to $12 these days.”

The one exception for wine prices in 2015 is for wine that costs $20 and more, which is still struggling to regain pre-recession prices and market share.

“The perception is that the economy is doing well, gas prices are down, and there is more disposable income in folk’s pockets,” said the distributor. “The suppliers want to reach into that pocket and get some while the time is ripe. I think there are going to be more price increases than I would have originally thought.”

In all, good news, and it’s remarkable how wine prices are still about where they were a decade — or even two decades — ago. There’s just one caveat: I’m not the only one who has a sneaking suspicion that quality will suffer as producers keep the line on prices, letting their $10 wines suffer in favor of the new brands and new labels. But I’ll be around to call them on that next year.