The State of The Wine Industry…Dan-Style
I missed the Unified Symposium this year, and I’m worse off for it. It’s an important event.
However, I did read the news coming out of the Symposium about the state of my beloved California wine industry. All good news. All GREAT News! For example:
"Industry
experts assessed the industry at the 2008 Unified Wine & Grape
Symposium in Sacramento Jan. 30 with a dizzying array of charts, tables
and graphs. The data show a healthy and thriving market for U.S. wines
and the potential to capture an even greater market share"…wrote the folks over at Captial Press where agriculture reporting is the focus. In fact, this was the news reported out of the symposium just about everywhere.
Assessing all the various trend data and indicators to get an idea of the health of any industry is not an easy thing to do. Most of us are content to read the news and rely on our own observations. It’s always nice to have the perspective of someone who knows the industry intimately, but doesn’t have an interest in any particular part of the business.
Enter Dan Berger.
I know people who dismiss Dan’s because they are opposed to his belief that too many wines made today are down right unpleasant because of their enormity that comes with a desire to grab scores and the customers who buy scores. Dismissing Dan Berger’s opinion, however, is akin to dismissing the reporting of Bob Woodward because you were a Nixon fan.
Dan recently wrote an article for Appellation America that literally scrapes the smile off the Unified Symposium’s Happy Face. In this article Dan points to a number of trends that give one pause:
31 percent of all wine sold in the United States last year was imported
wine. This, in case you aren’t aware of it, is an all-time record. In
1986-87, imports reached nearly 1 bottle in 4, and if the current trend
continues, it’ll soon be 1 bottle in 3."
…
"With Gallo, Constellation, Diageo, and Fosters now controlling a larger
share of all wine production and sales than ever before, the consumers’
options have shrunk. The majors now call the shots in ways they didn’t
until just recently."
…
"Fredrickson, publisher of the respected Gomberg Fredrickson Report,
showed graphs and tables proving how healthy the U.S. wine economy was
in 2006, with shipments up 2 percent from 2006 to 2007. All well and
good, but his own data showed that sales of imports rose 9 percent last
year."
…
"Except for rising sales of Pinot Noir and Sauvignon Blanc, increases in sales of Riesling and rosé over the last few years, and a bit of enthusiasm for Pinot Gris/Grigio, little else is very encouraging."
This is a really important story that Dan Berger has written and it is recommended to anyone in the wine industry or anyone interested in the wine industry that craves perspective.
I’ve yet to read Dan’s article (though I will), but I wanted to pose a question: is there a solution to this? I think I read your post (and Dan’s excerpts) to mean that while the domestic wine industry outlook is OK but not great, it could be greater if…
And I don’t see anything following after “if”.
I respect the ability for very knowledgeable people (much more so than myself) to express negative opinions, but in a climate where the everyone in the U.S. is saying “recession” Dan’s words seem to offer nothing but more pessimism.
Then again, I just woke up.
I think Dan would argue, as others do, that among other things more emphasis should be placed on smaller appellations rather than the “California” appellation in order to build more value into California wines both here in the U.S. as well as abroad.
Dan is always the voice of reason in a domestic wine industry that’s ready to believe its own spin. One of the things I respect him for is his ability to look outside of California, not to mention the suffocating world of Napa/Sonoma, to taste and assess with a higher level perspective. These perspectives provide a lot of clues as to why imports are increasing so much. (Hint: better price/quality ratio and a real variety of tastes & terroirs.)
The last thing California wine needs is more unquestioning boosterism. Good for Dan.
“31 percent of all wine sold in the United States last year was imported wine. This, in case you aren’t aware of it, is an all-time record. In 1986-87, imports reached nearly 1 bottle in 4, and if the current trend continues, it’ll soon be 1 bottle in 3.”
Sorry, but this is pretty meaningless. You’re talking all wine, not ultra-premium wine. Give us meaningful stats. The above is also not meaningful, because you failed to mention the increase in domestic wine production and consumption. Dumb stats are dumb stats.
But, even if this is the case for the non-jug category/Under $9 category, and what’s actually happening? Imported wine seems to be accelerating in price (due to the horrendous exchange rate – apparently it’s more important to have cheap stuff from China than from Europe). Why would consumers choose higher-priced imports over domestic wine?! Why indeed.
“With Gallo, Constellation, Diageo, and Fosters now controlling a larger share of all wine production and sales than ever before, the consumers’ options have shrunk.” is pretty ridiculous, in general. We, in the US, have a greater diversity of wine available to us than anywhere in the world. Anywhere! Consumer options have shrunk only if you dine at chain restaurants. What a concept: industrial wine with industrial food.
Me? I’m still waiting for the first vintage of Dan’s San Diego Riesling.
These comments don’t make much sense, Jack. If you see those figures as I have (I’ve studied the damned things!), the increase in imported wines is in all price categories. Further, due to shortages in Calif. grape production, imports of bulk wines to add to CA house blends have grown enormously. These imports are coming from France and Italy, not just Chile or Argentina. One way to drain the French wine lake anyway.
Finally, if you buy wine at the supermarket or big chain store, which most people do, I’d have to say Tom’s comment about restricted choice holds water. There may be a lot of labels and countries represented, but more and more of the wines seem like they came from the same vat. The real choice comes in real wine stores, and there you are right. The variety of wines and styles is staggering.
Just when I thought this article was going to fade into obscurity… Good call Tom.
I also suspect that we are going to see a slump in wine sales over the next year or two. And this is probably not the time to be launching any wine startups. While the independently wealthy are somewhat recession proof, I think we’d all agree here that the bulk of the annual wine dollars are spent on the $30 or less category. Even if imported wines go up in price a couple bucks relative to their domestic counterparts, people who will be feeling the financial crunch coming after their property taxes come due in the spring will end up curtailing their spending on what they perceive to be a luxury item.
As soon as I posted the above, I went to cnn.com and found this story: http://www.cnn.com/2008/LIVING/personal/02/22/financial.security/index.html
Interesting how previous posts have focused on small details rather than Dan’s painting of the big picture which is fact no matter which way you look at it. Denial is typical of industries that have an “inner facing” directive rather than an outwards gaze. Historically the US markets have been too highly priced Vs quality and imports have taken the place or “niche” that the consumers have been asking for. Previous posts mention “$30 per bottle or less” and here is the crux of the problem… $30!!!!
On a world wide basis the US market is one of the highest priced production and retail markets in existence, providing poor, low quality “basic” wines and stratospheric “icon” wines that do very little for the true wine loving middle classed consumer. Imports on the other hand have always had a place in the US market and as such have been able to cement a growing demand for wines that represent good value at the $15/btl price. Forget the $5-$10 commodity sectors it is the growing $10-$20, upwardly knowledgeable consumer that will truly drive imports into this country in the future. $30 please! welcome to the real world.
Mike Z
Since I am the one who mentioned the “$30 or less” grouping, I have to ask:
Aren’t we saying the same thing? Certainly, you give a more detailed breakdown and one with which I have no serious issue.
Help me understand, though, the contention you have with my (admittedly roughly placed but not ridiculously off) cut off point?
I see the $10-$20 range as representative of the price range of quality imports many upwardly knowledgeable consumers buy. These same people will also, on occasion, buy wines priced even up to $35. They are educated, knowledgeable and curious and ‘adventurous’ and they will stray past the $20 mark. Even the most budget-minded will splurge on occasion.
Help me understand what I am missing or misunderstanding.
Interesting follow-up:
http://westernfarmpress.com/grapes/vineyards-caution-0228/