Browsed by
Category: News

Between the Lines: “It’s ‘Best of Times’ To Be in the Industry Says WSWA Chief”

Between the Lines: “It’s ‘Best of Times’ To Be in the Industry Says WSWA Chief”

A few months back, Leslie Gevirtz of Wine Enthusiast interviewed Craig Wolf, president of the Wine & Spirits Wholesalers of America.¹ Wolf strikes an upbeat tone, and Wine Enthusiast largely maintains that confident tenor. A closer reading, however, provides evidence that Wolf has reason to celebrate . . . at the expense of the consumer. “Let the good times roll” for the large and expanding mega distributors.

Wolf begins, “Our numbers have actually risen….People always see all these mergers at the higher level, but what they don’t see are all the small guys coming in to fill gaps….So, the number of wholesalers that are active across the country has increased.” The September 2017 edition of Wines & Vines states the following, “According to winery and distributor sources, in 1995 the United States had about 1,800 wineries and 3,000 distributors. Today, there were more than 9,200 wineries and nearly 1,200 distributors.²” A five fold increase in wineries, and a 60% reduction in distributors. At best, Wolf is intentionally focusing on a small window of time to bolster his (inaccurate) point. At worst, this is Trumpian era disinformation—smoke and mirrors.

Wolf goes on to say that, despite the recent consolidation trends, “(I)t hasn’t affected the consumer because the number of SKUs has only grown over that period of time.” If we can trust that the number of SKUs (individual wines on shelves) has increased, we must ask whether the quantity also brings us quality. As the article posits, the number of “private labels” has increased recently. Large to mid-sized retailers contract wineries to produce private labels so they can offer exclusive products with conveniently opaque pricing, which allows for dramatic markups and profit margins. The wines within the bottles? Too often mediocre at best, an unavoidable reality when asking large wineries or custom crush facilities to make a wine that tastes like plum juice concentrate or cherry jam with Hi-C for $2.40 per bottle.

Courtesy of v1ctor at www.flickr.com/photos/v1ctor/

With the number of wineries today, the demand for distribution is great. Many of these producers craft authentic and intriguing wines. As wineries boom, distributors serve as gatekeepers, deciding which wineries and wines deserve to come to your market. Somebody must certainly filter what sits on the shelves and restaurant lists. However, when consolidated mega distributors, well known for using corrupt practices to buy shelf space and restaurant lists³, serve as the gatekeepers, we have reason to be concerned.

The WSWA serves as a mouthpiece for the large distributors, while offering small benefits to mid-sized members. The association exists to solidify the dominance of the middle tier in our three tier system. I, for one, hope we can give more power to consumers. The WSWA certainly doesn’t have this interest at heart.

 

 

¹http://www.winemag.com/2017/05/10/its-best-of-times-to-be-in-the-industry-says-wswa-chief/

² https://www.winesandvines.com/features/article/189049/The-Challenge-of-Distributor-Consolidation

³ Previous article about distributor corruption: http://wagonwine.com/2016/12/05/the-sandbox/

Repackaged, Repriced: Trickster Branding in the 21st Century

Repackaged, Repriced: Trickster Branding in the 21st Century

In the February edition of Wine Business Monthly, Kevin O’Brien penned a noteworthy article filled with curious nooks and crannies.

Good news! Wine sales continue to grow, especially in the $10-$25 category. Sales of $6-$10 wines have meanwhile declined. This has resulted in the “premiumization” of the wine business. Even better, wine drinkers are lusting for honest wines. “. . . consumers are continuing to demand premium products across all beverage alcohol categories as they seek an authentic, high-quality experience.”

Of course, corporate wineries want in on this action, but only have a few options (beer drinkers, this should sound familiar):

  1. Increase price of existing wines
  2. Create new labels and reprice
  3. Buy premium brands*

As a consumer, beware of number two and a flip side of three. Thankfully you aren’t being duped by numero uno.

In the face of falling cheap wine sales, corporate wineries with substantial vineyard holdings have the need to put that fruit to better use. Quick, put the marketing department to work! Slap a new, shnazzy label on the identical bottle of vino (or nearly identical), get the PR machine buzzing, and out of the corporate sphincter comes a glimmering new bottle for the new and improved price of $15 (formerly $8).

Beware.

Massive producers have also used a related though sneakier tactic. “It should be noted that these large transactions, as well as several other completed during the year, were primarily focused on the brand rather than underlying vineyard or production facilities. A leading driver behind ‘asset light’ transactions is the flexibility in grape sourcing and resulting scalability of the brand.”

Decode: Corporate wineries gobble up a sexy, premium brand name, leave the vineyards and production facilities behind, and then put their less costly, already held vineyards to work under the newly acquired brand label.

Clever, clever, and harder to detect. The answer, the same tried and true answer, can be found in the following:

“The recent wave of wine industry transactions has been notable for its size and breadth. These acquisitions have been driven by suppliers’ desire not only to improve profitability through increased scale but also to remain relevant to their wholesaler and retailer partners. The past few years have seen several significant mergers between some of the country’s largest wholesalers and retailers. As the distribution funnel continues to narrow, wineries are finding access to the market increasingly difficult. . . . In general, larger retailers prefer to work with larger wholesalers in order to better integrate and simplify their supply chain and forecast demand.”

Corporate wineries need one of the big three distributors to move their product into the large retailers. It’s that simple.

Gallo     Constellation Brands    The Wine Group    Bronco Wine Company

Breakthru Beverage     Southern Glazer’s     Republic National

Safeway     Total Wine     Costco     Whole Foods*

The answer, my friends, remains the same. Shop your locally owned wine retailer, get to know your steward, and you will bring home bottles with authenticity, character, and value. You will also support three authentic tiers rather than the behemoths above.

 

  • *Premium brands = wineries producing $20+ wines
  • *Whole Foods has historically worked hard to diversify shelf space with large and small wineries. However, results at any given store vary by state, and market pressures continue to push retailers of this size to consolidate and simplify i.e. work with fewer distributors and reduce options on the shelf.

Sources:

Chapter Deux

Chapter Deux

Starting today, I put all my chips into this world of bottled history and culture. Wagon Wine began in 2014 while I continued my full-time career teaching literature and writing. The site served as a creative outlet, a challenge to deepen my understanding of wine while writing engagingly. After a year of working both in the classroom and for a Willamette Valley producer, Fullerton Wines, I have accepted a full-time position with the Fullerton family. My wife says she can see the child-like wonder in my eyes—the thrill of fireworks on the fourth of July. I’m sure she can.

Expect more frequent posts as I jump head first, glass in hand, into my vinous ventures. I will also begin the WSET Level 3 Advanced Course in August as a way to broaden my perspective and palate. I anticipate the benefits of this study to flow into my writing and workplace.

A business trip to Elk Cove Vineyard this past week. Always beautiful in wine country, however, this site stands above the rest.
A business trip to Elk Cove Vineyard this past week. Always beautiful in wine country, however, this site stands above most.

Here are a few articles I’ve had published elsewhere in the past month:

Chapter one stirred the pot.

Chapter Deux

After embarking up the first mile of trail, a metamorphosis . . .

Thank you all for your support.

News Abounds

News Abounds

July has produced a preponderance of news and excitement here at Wagon Wine. First, the wine industry has called my name. The family at Fullerton Wines has hired me to manage public relations and the wine club, maintain and acquire accounts in the Portland area, and help in the cellar. I begin in August.

Integrity matters. Consequently, after this post, I will not review or mention Fullerton Wines, or their second label Three Otters (formerly Bull’s Eye), on this blog. However, I will say this today: I would never work for a winery I did not respect both for the quality of the wine and the integrity of its mission. Find more information at Fullerton Wines. To my readers’ benefit, I will use the knowledge and insight I acquire with Fullerton Wines to inform my posts on Wagon Wine. I have thus far written as an industry outsider with a focus and passion for northwest wines. Although I will now work within the industry, I will continue writing at Wagon Wine for the consumer–you.

I also received news in late June that the Wine Bloggers Conference awarded me a scholarship to attend this year’s conference in the celebrated wine region of Finger Lakes, New York. Held in Corning, the conference uniquely allows me to network with fellow citizen and industry bloggers, explore a wine region I have yet to visit, and learn from industry professionals, including Karen MacNeil, author of The Wine Bible (I have previously recommended this essential book). Thank you to the generous sponsors who made this possible. I am thrilled and humbled.

I cannot depart without briefly sharing two wines I have recently tasted and devoured due to the stunning QPR*:

  • 2013 Lone Birch Red Blend, Yakima Valley ($10): I love a good second label wine, and Airfield Estates’ Lone Birch fits the bill beautifully. Fresh, fruit forward aromas of plum and blackberry greet you along with a kiss (big smooch) of toast and dark chocolate. Smoothly textured with mild tannins, and gentle, balancing acidity. The wine struck me as surprisingly complete. While not huge on “blind tastings,” I would put money down on this wine against many other Washington red blends at higher price points. Delightful. 
  • Un Autre Monde Pinot Noir, Willamette Valley ($13): Thank you Bruce of Vino, Portland for turning me on to this wine (Bruce’s notes). Best value Pinot Noir I have tasted to date. A blend of 2011 and 2012 fruit from esteemed (unknown) vineyards–one within Dundee and the other Yamhill-Carlton. The cool and ideal weather conditions of these two vintages meld into a stunning Willamette Valley NV blend. Cranberry, cocoa, and spice align on this linear, piercing frame. Nuanced, surprising, the wine evolved provocatively over the course of the evening. Unfortunately, we can’t expect to see this wine again. Excellent. 
Un Autre Monde Pinot Noir, Willamette Valley

Finally, I spent over two weeks of July back in Minnesota, the motherland for the Wieland family. While home, my mother married her partner, Kevin, in a lovely lakeside wedding. Cheers to the couple–may the wind be always at your back.

Me and my Mother, Lisa, on her wedding day, July 18th


*QPR = Quality-Price Ratio