Category Archives: Wine Industry

Food, Wine and Climate Change

Harvard Business School Graphic
(Harvard Business School Reference Material)

Wine and Food Products by Location

The importance of climate in vineyard management can not be over-stated. The entire European culinary and beverage marketing model establishes food/wine character BY LOCATION. This European developed idea to turn place-names into unique trademarks defining specific flavors and aromas has been the cornerstone of worldwide food and wine marketing for decades. The same thinking caused governments to establish laws and trademark protections for food and wine production. Wine laws arguably could be the most stringent. Here are a few of the most famous wine examples: American Viticultural Area (AVA) in the U.S., Appellation d’Origine Contrôlée (AOC) in France and Denominazione di Origine Controllata (DOC) in Italy. This concept also applies to specialty foods: Parmesan Reggiano cheese may only come from Parma, Reggio Emilia, Modena and Bologna, IT, Roquefort cheese can only be made in Roquefort, FR, Prosciutto de Parma can only be made in Parma, IT, etc. If you have never tasted these original foods (and not imitations), you need to splurge a little and buy these imported products. The difference in flavor is astonishing.

Impact of Climate Change on Wine Production

The French terroir concept is the basis of this wine marketing by area idea and has been developing for hundreds of years in Europe. It is the primary driving factor behind the establishment of wine laws controlling vineyard and winemaking practices by location. The definition of Terroir:

Complete natural environment in which a particular wine is produced, including factors such as soil, topography, and climate. – AND / OR – The characteristic taste and flavor imparted to a wine by the environment in which it is produced.

(Oxford Dictionary)

Climate has a direct impact on the terroir idea defined above. It affects many choices for producers, ie. grape varietals to plant, when to harvest, control of crop size, how to water, conditioning/fertilizing of soil, etc. All of these affect wine character, flavors and aromas. So, what is coming for the wine and food industries due to climate change? Hang on… crystal ball is out, here we go…

Vineyards and Resulting Wine by Location

Common thinking has been that vineyards should be planted between the 30th and 50th parallels (latitude) around the globe, both northern and southern hemispheres. Cool climate reds like pinot noir often are best grown near the 45th parallel and warm climate reds like nero d’avola and shiraz near the 35th. Cool climate whites like riesling are often grown near the 50th parallel (ripening reliably compared to past) and warm climate like petit manseng near the 35th. Vineyard elevation can affect this range, but only minimally. The impact is not just temps, but also length and intensity of sunlight during the growing season.

The most consumed varietals in the world: cabernet sauvignon and chardonnay are best grown in a much narrower range: 40-45th parallel. Why is this important? What if the most famous cab sauv growing region in the world (Bordeaux, France) became too hot for premium cab sauv wine production? Would these producers accept: producing poor quality wine, over-manipulate the wine to change its character, or tear out cab sauv vines and plant warmer climate varietals like aglianico and petit sirah? French wine laws would fall apart with any of these options and as a result wine consumers might change their ideas about where the best wines in the world are produced.

Climate Impact on Commonly Grown Wine Grapes

When cab sauv is grown in cooler areas, the wine acquires vegetal flavors: green bellpepper and tomato are common. When chardonnay is grown in warmer climates, it becomes too fruity and loses it signature acidity. What would happen if Burgundy, France became too warm to grow quality pinot noir, or Napa, CA became too warm for cab sauv? The transition has already begun… I have been collecting and tasting wine since the 90’s and red burgundy has become fruitier and Napa reds have become flabbier. Many Napa producers have already begun manipulating their wines to adjust for the differences. One option is to harvest earlier, but then the pips (seeds) are not allowed to ripen and complex flavors are lost. In Napa, where the area’s signature cab sauv is very fruity, this option would change the whole character of the regions’ wine production.

Changes and Timelines

Climate change has been slowly accelerating, but still is not likely to have a serious impact on wine in my lifetime. Although, consider this thought: a wine vineyard requires 5-10 years to fully mature and begin producing premium fruit for wine production. This requires thinking in terms of decades, not years. The last 25 years of climate change has seen a noticeable difference in the character of wine in many regions. Not enough to change the wine industry substantially, but at this rate, what will another 25 years bring? Will vineyard managers have the vision to react in advance, when there is still time to save the current wine styles of today? Will the industry opt to tear-out current vineyards and replant warmer climate grape varietals, or decide to abandon warming vineyard sites for planting in cooler climate areas farther north? It is likely to be too expensive to abandon existing vineyard sites… so my crystal ball shows the younger generations of wine drinkers adapting to Petit Sirah and Petit Manseng…

This has been a very interesting topic. If others in the trade have different ideas regarding the impact of climate change on the industry, please drop me a note. I am always curious about new strategies… and no, please do not suggest adding citric acid to the final product, thank you…

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Filed under Cool Climate Wine, Wine Education, Wine Industry, Wine Marketing, Wine Tasting

Austrian Wine Scandals

The Most Horrific Wine Event of the 20th Century

I was reading a recent Meininger Wine Business Report and found this piece: https://www.wine-business-international.com/wine/news/wine-adulteration-austria.

For those that are not familiar with Austria and its history with wine, this article will familiarize you with the 1985 scandal when millions of bottles for domestic and export sales were found to have had diethylene glycol (similar to automobile antifreeze) added. This stuff can be very unhealthy. But, on the upside, it does make the wine fuller bodied and sweeter. Nice trade-off there. Fortunately, no one was seriously hurt, but the result of that mess was the destruction of 36 million bottles of Austrian wine and the complete collapse of their wine industry. It would take almost 20 years and the addition of numerous laws and legal safe-guards for their wine industry to fully recover. There has finally been a huge resurgence in the popularity of Austrian wines in the last decade.

Latest Austrian Scandal

In several wine producing countries, it is illegal to add any type of glycerine to wine. Unfortunately, in the U.S., it is permitted. There is a huge difference between synthetic glycerine and vegetable glycerine. The synthetic type CAN be quite toxic. The vegetable version is very safe, but desirable as a wine additive? (discussion to follow below) 25,000 bottles were discovered and destroyed in Austria that were found to have synthetic glycerine added this year. The added substance in question was a trivalent alcohol that gives wine a higher viscosity and is harmless, but is forbidden by Austrian law. This synthetic glycerine was petroleum-based. Convictions and fines were the result. Sentences are not yet legally binding though. With Austria’s past, any chance of toxicity is serious bad form.

Wine Additives

Some of the additives listed below are illegal in certain countries, but most are permitted in the U.S. Although, we don’t get to know which are used in the wine we drink, BECAUSE WINE HAS BEEN EXEMPTED FROM USFDA FOOD LABELING REQUIREMENTS. What does this mean to you personally? Well, nothing here is outright dangerous, but don’t underestimate the impact on allergies, tolerances and such. For example, my wife has a known allergy to soy, others find they have limited tolerance to added sulfites, etc. In general, all of these can affect color, flavors, aromas and the viscosity of wine. Your reaction to this discussion might be: “but, these additives are only used in cheap wine”. You would be very wrong. This list is commonly used in all price categories.

Here is a short list of common wine additives:

  • Citric, Fumaric, Malic, Lactic and Tartaric acids – to acidify wine
  • Calcium Carbonate – to de-acidify wine
  • Oak and Oak Chips – to add tannin, flavors & aromas
  • Acetaldehyde – to stabilize color
  • Copper Sulfate – to eliminate sulfites and mercaptans (bad tastes/odors)
  • Sulfur Dioxide, Potassium Sorbate – to sterlize and preserve wine
  • Mega Purple – to add color and body
  • Tannin Powder – to add mouth-feel and make wine more ageable
  • Gum Arabic – to reduce astringency (tannin) in wine
  • Dimethyl Dicarbonate – to stabilize, sterilize and remove alcohol
  • Sugar, Saccharose, or Grape Juice Concentrate – to add sweetness also called “chaptalization”
  • Vegetable Glycerine – to add body and sweetness
  • Gelatin, Albumin (egg white), Bentonite, Casein – to remove haziness caused by free proteins
  • Water – to dilute over-concentrated wine
  • Engineered, Cultured Yeasts – to control the fermentation process (vs. wild yeasts)
  • Diammonium Phosphate – removes naturally occurring sulphur in wine
  • Protease – improves wine heat tolerance
  • Soy Flour – Feeds yeast to accelerate fermentation

Organic, Biodynamic and Natural Wine

All of this talk of additives has to lead your mind toward interventionist vs. non-interventionist winemaking philosophies. Have you considered the issue for your own wine consumption? Personally, I believe I can taste the difference in over-manipulated wines. Napa Valley producers in the low to medium price range have been utilizing these methods more of late. This is the key reason why my personal wine cellar has been moving towards a higher percentage of French and Italian wines, especially in the low-medium price ranges. France and Italy have very stringent wine laws regarding additives and in general, have winemaking cultures of less intervention. So, if you would like to address this issue, how can you know which U.S. wines to buy? It may be time for you to read the back label of that next bottle of wine… Wine in the U.S. can be “labeled” as organic, biodynamic, natural and sustainable… and can also be certified as such by a third party. Many U.S. wineries are implementing at least some of these practices. Here is what these terms mean:

  • Natural – Typically are made in a low-intervention style, fermented with native yeasts and contain only trace amounts of added sulfites. These wines are not filtered, or fined. This means they could contain particulates, or appear cloudy. Which is not necessarily a problem. These wines should have gone through the bare minimum of chemical, or winemaker intervention and are not often aged in oak. Wines produced with this approach may have limited stability and cannot be mass-produced, but are a different drinking experience, if you should choose to try them.
  • Organic – These wines fall into two categories: organic wine and wine made from organically grown grapes. Certified organic wines (USDA) have stricter regulations. Vineyards must not use synthetic fertilizers and all ingredients in these wines (including yeast) must be certified organic. No sulfites may be added, although naturally occurring is permitted. These wines will display the USDA organic seal.
  • Biodynamic – Unlike organic winemaking, biodynamic does not change between countries. When originally devised, the method had each day organized by fruit days (grape harvesting), root days (pruning), leaf days (watering) and flower days (vineyards to be untouched). Biodynamic practices are not required to follow this calendar, however. If you’ve seen biodynamic and organic wines grouped together at your wine shop, there is a reason. Biodynamic wines employ organic practices. They avoid pesticides and depend on compost, rather than chemical fertilizer. Therefore, the majority of these wines are also organic in practice. Certified biodynamic wines are permitted to contain up to 100 parts per million of sulfites, far more than the USDA certified organic wines. So, a wine that is organic is not necessarily biodynamic, although a wine that is biodynamic is often organic.
  • Sustainable – These wineries make an effort to utilize winemaking processes that protect the environment, support social responsibility, maintain economic feasibility, and are of high quality. This idea has less of a direct impact on the wine, but is an “eco-friendly” designation.

Here is a link to a page with detailed descriptions of all organic wine designations: https://organicvineyardalliance.com/organic-wine-definitions-behind-the-label/.

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Filed under Wine Education, Wine Industry, Wine Marketing, Wine Tasting

Chasing Napa Cult Status

Producer: Vineyard 7 & 8

Release: “7” Label

Varietal: Cabernet Sauvignon

Appelation: Spring Mountain AVA, Sub-Appelation of Napa AVA, California

Vintage: 2007

Score: 91 pts. – 100 pt. Scale, 16 pts. – 20 pt. Scale

Provenance: Buyer Cellared Original Purchase

Bewitched, Bothered and Bewildered

I am always conflicted when judging these premium Napa cabs made to chase after a “cult” profile. So many American wine enthusiasts enjoy this style of wine, that I feel as if I am not being fair in my evaluation. If you have tasted Caymus, or Silver Oak, you have been introduced to the lower price point for this New World style of wine that can run upwards of $1,000/btl (Harlan Estate for example). These super fruity, high alcohol, smooth drinking red wines often struggle to get past the downside of over-ripe harvesting and winemaker manipulation. At the higher price-points, sometimes the producer succeeds, but more often not. If you would like to taste the premium Old World opposite, you could try Sassicaia from Bolgheri, Italy ($200/btl), or Pontet Canet from Bordeaux, France ($150/btl). I am not a big fan of the Napa new oak (vs. neutral oak) dominated wines. The richness in the fruit and texture is often achieved at the expense of the freshness of the fruit. My favorite vintages of these labels are the cooler ones, like 2011. The cooler vintages tend to either tone down the over-the-top profile, or they are unpleasant (like 2011 Shafer cab). It is bewildering for me, why so many hold this style of wine in such high esteem. I much prefer a clean, fresh, light to medium weight, under-manipulated Bordeaux-style wine over these any day. These labels often taste like the wine equivalent of a fruity rum cocktail to me.

Tasting Note

Your impression of this wine will be very dependent on whether you have an Old World, or New World palate. The 7&8 estate vineyards are located at the highest point on Spring Mtn., but this wine doesn’t drink like a typical mountain fruit cab. The Pride Mountain vineyards are right next store, but proximity is where the similarity ends. If you enjoy this approach to winemaking, this bottle would probably merit a mid-90s score. The nose is full of alcohol, with little else. The fruit does not taste fresh and the new oak did not integrate well. This wine is still very fruit forward after 14 years aging in the bottle, with black currant, blackberry and black plum on the palate. The profile is fairly simple tho. Only a touch of dark chocolate on the mid-palate adds complexity. The wine has medium+ acidity and medium- tannin. The tannin has mostly resolved at this point and the wine is very smooth. The finish is medium length and tapers off leaving alcohol as the last impression. There is no noticeable residual sugar. This style of wine is off balance for me, with a texture and richness that approaches a stewed fruit profile. I can acknowledge that many wine enthusiasts will enjoy this wine, but in Napa, I much prefer aged Pride, or O’Shaughnessy mountain cabs instead. This has enough acidity to pair well with rich foods, but tended to overwhelm the steak my wife and I paired it with.

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Filed under Bordeaux/Meritage Blend, Napa Valley, Spring Mountain, U.S. Wines by Region, Wine by Varietal, Wine Collecting, Wine Industry, Wine Tasting, Wine Tasting Notes

Crazy Beer and Wine Distribution Laws?

Click Link Here: https://www.federalregister.gov/documents/2021/07/28/2021-16115/promoting-competition-in-the-beer-wine-and-spirits-markets

Take a minute to add your public comments to the effort by the federal government to understand the challenge of our crazy alcoholic beverage laws!

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Filed under Political Commentary, Wine Industry, Wine Marketing

Returning Faulted Wine?

Refusing Faulted Wine at a Bar, or Restaurant?

Have you ordered a glass of wine while out and find it tastes a little strange? Did you send it back and request a glass from a new bottle? Or maybe, ordered a bottle, only to find it didn’t taste as it should? Now, you know why wine enthusiasts smell the cork upon opening a bottle… The first situation above is quite common, the latter is rare, but it does happen. I will mention the most common wine faults here, but the primary focus will be:

How to handle the decision to send the wine back.

The appropriate conversation to engage the server when sending wine back.

Quick Review of Common Wine Faults

These are the most common:

Oxidization

Overexposure of wine to air/oxygen. Oxidized wines lose brightness in both color and flavor. Red wine turns brownish-orange and can have a vinegar and/or caramelized (sometimes buttery) flavor. This is very common when you are served wine by the glass. Sometimes, a glass can be poured after days of storing an open bottle.

Heat Damage

This occurs when wines are exposed to temps over 80 F for prolonged periods, or over 90 F for shorter periods. Cooked wines develop a jammy, sweet character that can taste like stewed fruit. This can be very common in places like Arizona, where I live. Wine must be stored under 70 F and away from light to remain in good condition after a few months. In places like AZ, this means storage in coolers during the Summer months. Some on-premise businesses turn their wine inventory quickly enough that room temp storage can be acceptable, but keep an eye out to determine if you plan to return.

When bottles experience high heat, the corks often leak, so you get a double hit from Oxidization AND Heat. This problem can sometimes be identified by inspecting the cork for wine stain to the very top.

Cork Taint or TCA

This was more common in years past. Technology has made it less so, but it still happens. TCA can have a taste/aroma similar to wet dog/newspaper. There are some that say 1/10 bottles with real cork closures will experience this. In my experience, it has been closer to 1/20 bottles.

Sulfur Fault

This results from improperly handling the addition of sulfites to wine. Sulfites are a natural byproduct of fermentation, but it is very common for winemakers to add sulfites as a preservative. When this is not handled correctly, it can cause burnt matchstick, rotten egg, or garlic flavors/odors. Biodynamic wines do not permit the addition of sulfites, if you are looking for sulfite-free wine.

Secondary Fermentation

This occurs when a small amount of residual sugar reactivates the yeast and adds carbonation to the wine. Some wine varieties are made purposely in this “frizzante” style, like Moscato d’Asti, but think of a Cabernet Sauvignon with bubbles…

Microbial Fault

This occurs when the winery and production areas are not kept clean. Certain of these faults can be part of the wine style, such as Brettanomyces. This adds that barnyard aroma to some wines and can become an acquired taste. There are additional “off” flavors and odors caused by other microbes too.

How to Handle the Decision

If you have identified any of these faults (or others), keep in mind, at most bars and restaurants they are serviced by distributors who will always take back winery faulted bottles. In the case of heat and oxidization, it is totally preventable and the management on-premise needs to know about the inventory storage problem. This issue is the primary reason mark-ups are so high for wine service. There are 4-5 6 oz. pours in a bottle. Some businesses try to recoup their entire profit in one glass purchased, others two. Either way, they are covered. Don’t accept odd tasting wine. If you can identify the fault, share it with the server. Let them know there is a solid reason for the return and they will have the information needed to deal with their supplier.

There is another discussion on the topic of returning wine, which I will address briefly. When the consumer doesn’t enjoy the wine selected… as the buyer, it is your job to engage the server and help them to understand what wine characteristics you enjoy. Although, sometimes the server does not have enough experience to assist, or they have not been trained to identify flavors/aromas in wine. This is the area where the decision has to be what you are comfortable with. Most restaurants and bars, will replace wines you don’t like, if you share your comments. At some establishments, this can turn into an argument and affect your service, so think twice about how you handle this scenario specifically.

How to Discuss the Return Request

Be confident in your identification of odd flavors/aromas and explain what you are experiencing. Share any clear evidence with the server, such as: the cork stained to the top for heat, or the horrible odor on the cork for TCA. I experience Oxidization Fault very frequently. I would say 1/5th to 1/3rd of all wine I order by the glass is oxidized and I almost always send it back. The restaurants/bars know when the bottle has been open too long. Any management worth their salt will mark their by-the-glass inventory with the date opened.

Where does the Responsibility Lie?

All small production wineries should be willing to replace bottles with faults caused by their production. The same applies to distributors and restaurants/bars for faults caused by their handling and storage. Be comfortable that there is always a mistake along the way that causes these issues and it is not your responsibility to suffer through dealing with it. Wine is a luxury item and producers, suppliers and servers should treat their service like it is a premium product.

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Filed under Restaurant, Wine Education, Wine Industry

Judging-Scoring Wines

Risky Business

At the risk of upsetting every wine critic/judge out there, I set out to create a wine scoring system that matched my view of fine wine. I will include this scoring template at the end of the article, for those that might be like-minded. Email me if you would like a self-calculating spreadsheet copy.

My Motivation

After pro Sommelier training (where scoring was discouraged), I was exposed to the WSET scoring method and wine judging courses. Both used a variation of the UC Davis 20 Point Scoring System. I was shocked how these systems were unable to separate amateur from premium wines effectively. In these classes, we scored fruit wines (cherry, blueberry, strawberry, etc.) and vitis labrusca wines (Concord, Chambourcin, Catawba, etc.). These wines were near undrinkable for me and were being given the same scores as mediocre Cali Cabernet. The methodology and scoring systems taught in these classes were intended to be appropriate for both amateur and fine wines. Although, away from class these same people would explain the intent of these systems was to score wines based on a comparison of LIKE wines. This is not how I understood the training and it is likely the public views this scoring similarly. This experience motivated me to build a scoring system that is weighted properly and could be used to provide comparatively accurate scores for amateur, professional AND fine wines, without a bias.

The Evaluation Criteria

First, it was necessary to determine what separates fine wine, from other wines. In that evaluation, I arrived at the following characteristics that are under-represented in the UC Davis System: Balance, Complexity, Finish and Aging Potential. All of these measures are intended to be scored in the UC Davis “Quality” category, but to make the scores more comparatively accurate, I decided these characteristics needed their own point categories. I then looked at what seemed to be weighted incorrectly in the UC Davis System and arrived at: Clarity, Color and Acidity. Four of twenty points for clarity and color is 20% of the score. This is weighted too heavily towards mediocre wines. Acidity was only 5% of the score – not weighted heavily enough. I realized, if I reduced the points for clarity and color, increased points for acidity and added balance, complexity, finish and aging potential categories… I might be able to devise a scoring system that could properly measure a Concord wine (for example) and build an appropriate score against say… an aged Bordeaux Gran Cru.

A Wine Scoring Template

Now I was ready to put my scoring template together. I realized that many media outlets still use the old Robert Parker 100 pt system and decided to add it to my template. I wanted to help both systems arrive at a roughly equivalent score. I realized this could only be done, if I started the 100 pt score at 50, instead of 0. You will see what I mean below. The closer the wine came to the premium category, the better my 100 pt method seemed to arrive at an accurate score. It was the opposite with my 20 pt method, albeit much closer to reality than the UC Davis 20 pt method.

After the long explanation, here is my effort to build a scoring system that can evaluate both a poor blueberry wine and a Gran Cru Bordeaux – with the same template – done accurately and with a logical systematic approach.

In the past, my Somm training won out and I tried not to add scores to my tasting notes. In retrospect, I think this was mostly due to being uncomfortable with the systems available. I intend to use my scoring template moving forward and hopefully develop consistency and comparative accuracy across my tasting notes.

Feedback

I would be very interested in other opinions regarding both the thinking that drove this creative process AND the relative accuracy using this scoring system. I am also open to modifying aspects, if the changes fit within the logic model used to build it. Please feel free to leave your comments on this page. Thanks!

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Filed under Wine Critics, Wine Education, Wine Industry, Wine Marketing, Wine Tasting, Wine Tasting Notes

Wine Additives

This is an important topic and a good article from the “A Matter of Taste” site on the topic. If you are a wine enthusiast, it might be something to consider for future purchases. If you are interested, use the link to access the website here:

Link to Article on Wine Additives

European Wines vs. U.S.

This issue highlights the local AVA, DOCG, AOC (etc.) regulations/laws. Some of the typical U.S. additives are not permitted in much of Europe: chaptalization, acidifying and fining agents, etc. The chemical additives category may be an even more important topic of discussion. I have found generally, I NEVER get headaches from French/Italian fine wines. Hit or miss with U.S. product.

What is your experience? Do you think it could be additives? If so, the only option to change this, is speak with your dollars. When visiting tasting rooms and talking to retailers, ask about additives. If you can’t obtain the info, consider that in your buying decision. I am a huge proponent of listing ingredients on wine labels. If you just can’t part from your faves, consider one of the several wine filtering utensils available in the aftermarket… but consider these too. Could they be using chemical agents to filter the wine? Happy wine hunting!

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Filed under Wine Education, Wine Industry

Sign, Sign, Everywhere a Sign!

122110calvin_resolutions

Calvin & Hobbes – Bill Waterson, Copyright – Andrews McMeel Publishing

I am not the only one seeing the changing face of the U.S. wine industry and the industry resistance to any kind of meaningful response.

Sources

Wine-Searcher just posted an article regarding a recent wine symposium where the topic of conversation has been adjusting to the changing market. See my previous article at this link: Trends Changing the Wine Industry and the Wine-Searcher article at this link: Gloomy Outlook for Small Wineries.

Can Small Wineries Survive the Changes?

Here are the data points changing the face of the wine industry with limited response by producers (the numbers across multiple sources had some variation, so the figures below are approximate):

  • 90% of all wine made in the U.S. is sold by the 320 wineries that exceed 50,000 cases of production. Of that 90%, more than half is dominated by the top FIVE: Gallo, Wine Group, Constellation, Trinchero and Delicato. The other 9,000+ wineries are bringing only 10% of all wine production to market in the U.S.**
  • With the recent on-going consolidation in wine distribution, the top FOUR by volume nationally (Southern, Republic, Breakthru & Young’s) deliver approximately 60% of all wine distributed in the U.S., but represent only 30% of the wineries.**
  • In the case of wineries producing fewer than 10,000 cases, distributors were responsible for only 33% of sales in 2016. A 6% decrease over the previous year and the trend is continuing.**

Is your head swimming with numbers yet? Suffice to say, BIG has become financially BETTER today and could very well push SMALL to the side of the road. Why? The answer is in the numbers above. How do those other 70% of under-represented wineries bring their wine to market? Winery Direct-to-Consumer (DtC) sales is only 2% of all wine sold in the U.S. currently.

Solutions

Small wineries better become experts at marketing, capturing clientele and earning their continuing loyalty… and fast! If they do not already have a developed DtC customer base, it is near too late. Those who wish to survive, should be investing now! The large distributors dominating the market already have large portfolios of wine labels and shelf-space and wine lists only have so much room.

There were two great hopes: the loosening of rules in cross-state shipping of wine allowing the emergence of online wine retailers and the advent of wine big-box retailers (think Total Wine). At one time, it was looking like these two channels buying winery-direct could represent small wineries and fill the gap. Although just like the DtC space, they are missing the expertise to deliver the volume of sales needed. Can online retailers get better at building inviting online platforms and tools to identify and explore the consumer palate? Can big-box retailers provide a better buying experience that allows thousands of labels to be properly represented? Unfortunately recently, wine commerce laws have become stricter (see recent changes in FL) and it is making it more challenging for both of these channels to grow fast enough to fill the gap.

Why Should Consumers Care?

Well, if you have favorite wines produced by wineries with under a 10K case output… supporting them with your DtC purchases will become important to their continued survival and your continuing supply. It is that simple. The survival of small wineries is in your hands…

 

**Reference sources for this article were: Various Wines & Vines articles, Grand View Research – Wine Market Trends Report, Forbes Food & Agriculture articles, L.E.K. Insights  – Trends Affecting the Wine Industry, Dr. Liz Thach MW – Blog and Statista – Alcoholic Beverage Statistics. The internet provides so much rich content, if you search!

 

 

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Filed under Wine Collecting, Wine Education, Wine Industry, Wine Marketing

Trends Changing the Wine Industry

GallowinetrendsMillennials

Silicon Valley Bank has been producing state of the beverage industry reports for years. I try to make sure I read the formal report every year, but they also write a blog for the wine industry that I check-in on occasionally. The data can deliver insights that bring an interesting perspective to market trends.

Data is Predicting Changes

The U.S. wine industry has been on a steam roller building big gains in revenue and beverage market share drawing in new consumers from younger generations of social drinkers. The recent data is showing significant slowing of that growth, even in areas that have been hot in the past, such as: Napa Cabernet Sauvignon, Super Premium Wines, Direct-to-Consumer Sales and On-Premises (restaurant) Consumption. Unfortunately, the growth in the number of small growers and producers is not slowing to match pace. Many of these producers are being drawn to the lifestyle, not the business opportunity and the industry is reaching a tipping point for several reasons.

TRENDS

Restaurant Wine Sales is Slowing

Distribution is their own worst enemy here. In an effort to control local beverage markets, they are actually causing irreparable harm to their dealer’s ability to respond to market trends. Destructive strategies, such as:

  • Withholding well-known brands of beer and spirits, if specific high-profit wines being promoted are not purchased.
  • Extending credit limits, or terms to obtain leverage on buying decisions.

A successful restaurant wine inventory should have wines covering well-known lower priced labels, lesser-known value in the middle range and highly scored, high priced wine that garner recognition. This approach tends to satisfy a much wider range of consumer, offer a selection all can explore/enjoy/afford and provide up-sell opportunities for the staff when the occasion calls for it. Instead, distributors in many states are preventing this type of responsive approach. Read the piece at this link for additional info:  Restaurant Wine Sales

Fruit/Wine Supply Exceeding Demand

Wine travel in Europe teaches you one thing: don’t be afraid to order cheap table wine with a meal there. Even table wine in Europe can be very good. The growing over-supply issue may change the landscape in the U.S. For many years now, the $10-15/btl retail price has delivered poor quality in the U.S. I am hoping this market trend will bring more, better quality fruit and wine to the market at reduced prices, instead of vineyards dropping the excess fruit to rot in the fields. See information on this at this link:  Wine Supply

Premium Wine Sales are Flat

The continued growth in this category is coming primarily from price increases, not the volume of wine. Interestingly enough, consumption of premium craft beer has also weakened. This is very likely being caused by an aging Boomer generation drinking less wine, without Millennials filling the gap. The younger generation seems to be moving towards exploration and looking for value, rather than committing to older high-priced labels. See information on this at this link: Premium Wine Sales

Direct-to-Consumer Beverage Sales Continues to Grow

As long as State legislatures and the Supreme Court continue to keep their hands off this segment of wine/beer/spirits distribution… this will likely be the savior of the small producer… for those that get it right. With the extensive consolidation in the beverage distribution industry in the last few years, there is just not enough room on the shelf for the growing number of labels, especially for smaller producers without a sizable marketing budget. The continuing growth in the number of small producers will force an understanding of how to connect and maintain a relationship with a clientele, or fail. Wineries must continue to move towards improving the wine experience for potential customers, rather than provide a traditional tasting room as the only engagement. This is the only segment left in the wine industry that offers a solid business opportunity, but selling out each vintage will increasingly become a challenge, without the bulk purchasing distribution can offer. The trick will be how to build the DtC channel for each producer. With most small wineries being about the farming, or the winemaking… there will need to be a newly developed understanding of marketing and customer engagement. It will be a matter of survival. See information on this at this link: Small Winery Sales

Changes are Coming

The U.S. wine industry is likely to look quite different five years from now. There is a good chance, with the Millennial penchant for exploring new wines, that imported wine sales will grow faster than domestic in the future. This pressure may actually force the U.S. wine industry to get better at producing quality in that $10-15/btl range that typically does not exist today. An outcome I am looking forward to…

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Wine Apps & Mobile Sites

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All aspects of the beverage industry are working so hard to leverage technology, online social media and media access… the efforts are humorous at times. Often I feel bombarded by recommendations from the wine industry: in person, in writing, by software, on websites.

How Do They Know What I Will Enjoy?

We now have apps for retailers, apps for consumers, apps for wineries, apps for restaurants, etc… all designed to help either respond to demand, create demand, or convince me which wines to buy. I am so tired of this deluge of software telling me what I should know about the beverage market/industry, or what I should be buying. If this software can attract enough participation, a database can be developed to identify popular flavor profiles, but how does this really help me? Do I really need to know what the other guy is buying?

I get so frustrated with wine stewards, tasting room attendants, retail clerks AND apps wanting to tell me what beverage is popular, because I am sure to enjoy it. Since when am I sure to appreciate a beverage, because it appeals to the next guy? I don’t need more sources telling me what other people prefer, I need more direct assistance leveraging my preferences to select beverages I KNOW I will enjoy.

The wine industry makes the wrong assumption. I don’t need to be told what to buy, I need an understanding of the actual tasting experience with the product. I need an app that I can input my data: likes wine with high acidity, texture, complex flavors, fruit forward… and it pops out matching wines. It could be for Bourbon too: caramel, butterscotch, vanilla, a little spicy, not too sweet and not too hot… and I get a list. This is where technology could actually pair demand with production and offer both buyer assistance AND seller demand creation.

Why Isn’t Anyone Working on This?

I have been asked to look at/test run several wine apps. Most all depend on sharing consumption trends. The ones that try to do it the right way, all get it wrong, i.e. just because I enjoy black coffee, doesn’t mean I will appreciate savory flavors in wine. I am going to put it out there in the public domain, the questions needed to structure a questionnaire that captures real wine preferences:

  1. Prefer wine with/without food?
  2. Drinking the wine now, or holding in your cellar?
  3. Easy drinking, slightly sweet wines?
  4. Wines that clear your palate and are crisp?
  5. Textured wines with good mouthfeel?
  6. Can you appreciate savory flavors in wine (complexity)? Must a wine be very fruity to appreciate?
  7. Do you prefer reds with red, or black fruit flavors? Whites with citrus, tropical, or stone fruit flavors?
  8. How much dry/cottony feeling in the mouth can you appreciate?
  9. What is your budget?

Let me ask these questions of a wine enthusiast and I can pick out a wine they will enjoy 9 out of 10 times. I have done this with friends so many times… So why is that so hard to design software around? Picture a wine app that is loaded on a tablet that could assist an attendant to make a recommendation based on these simple questions?

If you have simple questions that can provide insight into wine preferences, please share.

 

***** I will put the challenge out there. If there is a wine app that handles wine evaluation in this fashion, please contact me. I will promote your solution anywhere I can. *****

 

 

 

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Filed under Wine Education, Wine Industry, Wine Tasting