Ten Wine Trends To Watch in 2008

Looking ahead is very much a process of looking backwards to see which trend lines have begun to turn upward. It’s the time of year that lends itself to this kind of vision. With that, my 10 trends to watch in 2008.

Green Marketing
It started this year with a number of wineries promoting their reduced "carbon footprint" and other environment friendly acts from a production standpoint. If by referring to this as "green marketing" I appear to be dismissing the efforts and the various pronouncements, please don’t take it that way. By doing so I only point to my own bias that has me looking at most of what is said and done at wineries to be be a form of marketing. The point is that 2008 will see a ramping up of wineries thinking about and implementing ways to satisfy their own, the industry’s and their customer’s demand that environmentally-correct approaches to life and work be implemented.

Economic Difficulties
It’s entirely possible from my reading of the tea leaves that spending on moderate to high priced wines could fall in 2008 if something close to a recession kicks in and/or if the housing crisis is not addressed in terms that give comfort to the middle class. There has been very nice growth in this end of the market and this is also where growth was forecast to continue. A number of business plans were based on a continuation of good growth in wines over $25. Continuing economic difficulties will put damper on some of those plans.

The Dollar’s Gift to Domestics
As the value of the dollar remains low, that means the price of imports will increase. Pretty soon retailers and restaurants are going to have to start increasing their prices on everything from classified Bordeaux to German Riesling to Australian Shiraz to Italian Super Tuscans. This is a default gift to American-made wines that begin to look like better values.

Flattering Gary
The success of Gary Vaynerchuk’s Wine Library TV has and will  continue to inspire a number of other folks to launch their own Wine Video Projects. Besides being inspired by Vaynerchuk’s success, it’s a fact that there appear to be no technological roadblocks to streaming video and a significant and still growing set of distribution networks on the Internet. As to the success of these projects the only question is the commitment of the producers.

Legal Eagling
2008 will see a plethora of legal issues that come front and center. The Costco appeals will be settled. At least 4 different direct shipping lawsuits concerning retailer to consumer sales will find rulings and appeal will follow. On the regulatory front we will likely see a new formula for TTB issued American Viticultural areas that if not satisfactory to some could lead to lawsuits.

Direct Shipping’s Increase
We’ll discover this year that those who buy their wine direct from the winery and the from the retailer are quite dedicated to this channel and have no intention of decreasing their direct purchases. In fact, I wouldn’t be surprised if it is this year that we discover through the work of dedicated individuals a reliable measure of the direct to consumer market that only confirms this channel is the most significant growth area for wineries under 100,000 cases. This in turn will lead to even further efforts at innovation in marketing and technological efforts to take advantage of the direct channel.

Sitting in the Dark
We’ll see at least two films released in 2008 that focus specifically on wine, beginning with "Bottle Shock" in January. In addition, a variety of documentaries will release. For the wine industry this spurs hopes of a Sideways-like bump in sales and interest. Whether such a specific bump in sales comes as a result is somewhat beside the point as any pop culture focus on wine will in fact create an increase in interest in the drink. The bottom line is that many unfamiliar media faces will both be associated with wine in 2008 and will otherwise be talking about wine in 2008. If there is a bump of a sort from the commercial and dramatic wine movie releases in 2008 the benefit goes to Napa Valley and the high end wines.

The "American" Wine Industry Awakens
It’s not as though they has not been a renaissance in commercial winemaking all across the United States over the past decade. There has been. However, I expect 2008 to be the year when more and more people to take notice of the beautiful wines being produced in Michigan, Massachusetts, Texas, Colorado, Virginia and other states. This attention I think will primarily come in the form of wine professionals pushing the bottlings from across the country and will be followed with much more media attention. Another result of this will be a continued change in laws that make it easier for wineries in non-traditional producing states to market their wines. These moves will be opposed by certain elements of he wine industry who will work hard to restrict the ability of wine industries in various states from growing.

Consolidating the Gains of Wine 2.0

Interactive, Internet-based wine services that focus on social networking and content aggregation grew significantly in 2006 and 2007, particularly the sort that help sell or inspire sales of wines. In 2008 I suspect we’ll see two things happen: 1) the demise of some of these hard fighting and innovative initiatives as well as the buyout of a few by larger concerns. The most thoughtful among us will realize that this approach to wine marketing and wine promotion works and will only grow in significance in the near future. They’ll also realize that some of the better Wine 2.0 businesses represent a bargain as buyout options.

Buying a Place on the Wine Trails
The past few years has seen some amount of consolidation in the American wine industry. Older, established brands being traded and folded into larger organizations. I suspect one area where savvy investors not connected with large multi-national wine companies will be looking in terms of acquisitions are those wineries that have direct access to growing number of wine tourists that move up and down the well traveled wine routes: Highway 29 and the Silverado Trail in Napa Valley, Highway 12 in Sonoma Valley, Westside Road in the Russian River and Dry Creek Valleys, the Santa Ynez wine region, in and around Monterey. These properties are valuable to keen marketers because they provide instant access to the highly lucrative and high margin direct-to-consumer channel not only in the form of tasting room sales but incremental wine club sales that follow. The value of a tiny production winery that has a tasting room in any of these areas is made even greater by the prospects of fewer tasting room permits being issued by local authorities for fear of too much traffic.

Posted In: 10 Things


6 Responses

  1. Ed - December 18, 2007

    Tom – Very good article. The “American” Wine Industry Awakens could well have a sub-title: “Will the American Wine Industry Awaken to the American Consumer?” I see regional wines making great strides, due to their own efforts and that of quality info such as you and the others you mentioned provide.

  2. Matthew Apsokardu - December 20, 2007

    Your crystal ball speaks very clearly. nice article. Being involved with one of those wine 2.0 business ( http://www.classicwines.com ), your commentary definitely made me perk up and pay attention.
    Looking forward to the next post.

  3. Marco - December 21, 2007

    Tom, excellent article. Will California step up and start producing a $10 red that will wean me from Spanish, Southern Italian and Southern France reds? Or will the Euro do that for me? It’s a timely topic that has appeared on a lot of blogs.

  4. Steve - December 21, 2007

    Excellent list of what to expect from 2008. I am also involved in a Wine 2.0 business (Winescorecard.com) and I agree it will be interesting to see how this approach to wine marketing shakes out. Empowering consumers to find wines that suits their particular taste will only help the entire industry.
    I am hopeful (but skeptical) that some progress will be made on the legal eagling. And if only the domestic wine industry can take full advantage of the weak dollar, maybe it can thrive in spite of the decline in sales of the moderate to high priced wines.

  5. Steve Bachmann - December 22, 2007

    On consolidating the gains of Wine 2.0, there’s no question that the proliferation of Wine 2.0 entrants will not all survive (as money-making business models often seem missing). Therefore, whether any transactions represent “bargains” (with inherent value) or “fire sales” (close-down scenarios) is unclear. For a deal to make sense for all parties, I suspect the buyer will view these young entities as a form of “purchased R & D” which saves them time-to-market and furthers their own strategic goals. This is exactly what happens all the time with Silicon Valley technology companies.
    Having spent over a decade as an investment banker advising tech companies on mergers and acquisitions before starting Vinfolio, I’m a firm believer that one always has to be open to external growth options such as acquisitions. So if any Wine 2.0 company sees an interesting fit with Vinfolio (i.e., where we might be able to extract more value from whatever you’ve built than you can independently), please feel free to contact me.
    Meanwhile, we are investing in our own Wine 2.0 initiatives. Please see the following link for an announcement on VinCellar 3.0: http://www.vinfolio.com/thewinecollector/2007/12/announcing-vincellar-30-1.jsp

  6. Kathleen - December 23, 2007

    Green marketing combined with more interest in American wineries combined with higher prices for imports could provide a profitable 2008 for wineries all over America.
    As gas prices increase, and especially in light of a possible economic downturn, daytrips and weekend visits are more attractive than blockbuster week long vacations. For style on a budget, what better place to visit than a local wine trail?
    New York had a stellar 2007 vintage, making 2008 the perfect year for New Yorkers and wine drinkers all over New England to discover how good locally grown and produced wines really are.
    Kathleen Lisson
    Albany, NY

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