Top Five Wine Trends to Watch in 2018
These aren’t so much “predictions” as they are observations of movements I expect to see extended in 2018. Well, there are some predictions in here. All of these developments and trends would have an important impact on the wine industry as well as the wine consumer.
The Continuation of Wholesaler Consolidation
The past two years have seen a huge consolidation in the middle tier with the largest American wine wholesalers combining. I thoroughly expect this trend to continue in 2018. The largest two wholesalers looking for a total geographical footprint are likely to go after two or three of the remaining top ten wholesalers in the country. None of this is going to be good for the vast majority of wineries or retailers.
The Battle for Napa Valley
It’s official. On the June 2018 ballot will be an initiative that, if passed by Napa County residents, would essentially end all vineyard development on the hillsides. This is despite the fact that there remain numerous appropriate spots for vineyard development that under current regulations would pose no harm to the environment. The battle that ensues over this “Oak Woodlands Initiative” that has been pushed by the county’s anti-winery contingent will be watched very closely by their allies in other winemaking regions such as Sonoma, Santa Barbara and elsewhere.
Cannabis v. Alcohol (Wine Too)
The coming legalization of recreational cannabis use in California (January 1, 2018) will have an enormous impact on the perception and sales of alcohol in the state. And as goes California, goes the rest of the country. We will be reading a great deal about the impact of legal recreational cannabis sales on sales of alcohol in the state. Equally important will be how the California alcohol industry reacts to this challenge. While there is not a cannabis v. alcohol war coming, I expect 2018 to witness lower growth in alcohol and wine sales due to the legalization and sale of recreational cannabis. The degree to which alcohol and wine are impacted, however, will determine lots of marketing and sales strategies for big alcohol and wine concerns going forward.
Amazon Re-Enters the Online Wine Sales Marketplace
I fully expect to see the announcement or launch of “Amazon-Whole Wine Online” in 2018. With its retailer licenses in nearly every state, Amazon/Whole Foods has the regulatory infrastructure to sell and ship and deliver wine to nearly every corner of the country. The idea that Amazon would forgo the opportunity to take advantage of this landscape goes against everything we’ve learned about Amazon and Bezos over the past decade. Look for an Amazon Wine Online Initiative to emerge in 2018. The biggest loser in this move will immediately be Wine.Com, but small and medium-sized fine wine retailers will also be impacted if they cannot move the ball on changing laws in more states to allow shipments from out-of-state retailers.
Wine Media Consolidation
I think it is entirely possible that the purchase of 40% of The Wine Advocate by Michelin and Vinous’ purchase of Delectable is just the tip of the iceberg. I believe there is a very good chance that we will see more wine media consolidation in 2018. This includes some of the peer review sites that today act as information dissemination vehicles.
Two observations. The first . . .
Whole Foods Market now operates under a [Place Distributor] Order-To-Shelf (OTS) system. (Similar to a “just-in-time” delivery system.) Minimal to non-existent back room stock is the expectation . . . soon to become the norm.
If the wine shelf only accommodates six bottles deep, then the wine is double faced to clear the 12 unit box.
Double-facing wines reduces the total number of SKUs on the shelf and in the department.
That means less diversity of wines, not more. Less direct competition to fine wine merchants, whose offerings are more expansive.
Moreover, no Whole Foods Market is staffed or equipped to process phone and fax and email orders for wines to be shipped via UPS or FedEx. (Whole Foods Market can’t turn to the U.S. Post Office, as its parent company Amazon does to deliver books and other merchandise.)
Whole Foods Market does not maintain a website listing each store’s product offerings. That precludes e-commerce business via Wine Searcher.
To handle phone and fax and email orders, each Whole Foods Market would need back room storage space for wine stock and shipping materials. (There is no such resource to turn to.)
What Whole Foods Markets could do is install in its stores are Amazon delivery lockers for store customers to retrieve their “picked” orders anytime during store hours.
News report: https://www.wsj.com/articles/SB10000872396390443545504577567763829784538
As of now and in the foreseeable future, Whole Foods Market is not a threat to fine wine merchants who have adopted “The Long Tail” approach to merchandising and mastered the art of selling online.
Two observations. The second . . .
I will make a prediction for 2018.
Americans will drink more red Bordeaux. Specifically, the 2015 vintage just now coming to market.
Taking market share away from California and Washington producers.
Interesting piece, Tom! There definitely seems to be consolidation happening.
What do you think Amazon has to do to dominate in wine (as they are determined to do in everything!)?
Also it would be interesting to hear a wine trend you’d like to see continue into 2018, and one you wish would stop.