ATLANTIC SEABOARD WINE ASSOCIATION (ASWA)
ACTIVITIES REPORT ON ANNUAL WEST COAST VENTURE
TO PROVIDE EDUCATION ABOUT AND PROMOTION OF EAST COAST WINES,
INCLUDING SUMMARIES OF THE MAJOR WINE INDUSTRY ISSUES
PRESENTED AT THE 2009 UNIFIED WINE & GRAPE SYPOSIUM
The ASWA
1
(formerly the Vinifera Wine Growers Association), again for the 20 th
straight year, attended the annual Unified Wine & Grape Symposium,
2
now the largest U.S. wine industry information and learning conference, which was held in Sacramento, California, from January
25 th
to 29 th
, 2009. Over the years, the Association has been a sponsor, has provided a keynote speaker from the U.S. Congressional Wine Caucus, given several lectures and participated in the yearly regional American wine tasting.
The goal this year was to promote “the
East Coast as a quality wine producing region” and present a selection of winning eastern wines, including Native American,
French Hybrid and world-class Vinifera grape wines.
Several bottles of some 38 different wines from 27 different wineries were shipped out to the Unified Wine & Grape
Symposium’s annual regional tasting event. All were top award winning wines that had been entered into the July, 2008,
Fourth Atlantic Seaboard Wine
U.S. House of Representatives members and Co-Chairmen of the
Congressional Wine Caucus (L to R) Congressmen Mike Thompson (D-
1 st , CA) and George Radanovich (R-19 th , CA) present the Best of Show
Silver Tiffany Jefferson Wine Trophy to (L to R) the owner of Newport
Vineyard & Winery at Middletown, Rhode Island, John F. Nunes and winemaker George Chelf, for their Best of Show 2007 Riesling wine. This winning wine of the July 2008, 4 th Atlantic Seaboard Wine Competition was featured in all of the 2009 West Coast promotional activities conducted by the ASWA. The presentation was made during the annual
ASWA awards and wine tasting reception on Capitol Hill last September
17 th , 2008.
Competition. This was the first time that winning wines from the ASWA competition were featured at the Unified, which was attended by over 11,900 wine industry personnel and suppliers from across the United States. The regional tasting was held on the afternoon of
January 28 th
with state and regional wine associations staffing tables which lined the perimeter walls of the very large Sacramento Convention Center and pouring their states’ wines. The ASWA tasting station drew significant attention and one of the longest lines of both curious and knowledgeable tasters. During the two plus hours of wine pouring and discussions, several trade and media representatives also dropped by.
1 The ASWA team that attended the 2009 Unified included Carl Brandhorst, President, Dave Barber, Vice President,
Anita Murchie, Secretary-Treasurer, Gordon W. Murchie, President Emeritus, and Anne Vercelli, ASWA West
Coast Representative.
2 Formerly known as the WineTech/GrapeTech Conference.
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The ASWA also attended several major industry meetings that were held in conjunction with the Unified that discussed key issues and concerns of the wine and grape industry, including the
Family Winemakers of California, headed by Paul Kronenberg, the
California Association of Winegrape
Growers conducted by Karen Ross,
CAWG President, and the Winegrape
Growers of America, headed by Bruce
Fry of Mohr-Fry Ranches, Lodi,
California, and WGA Chairman. Current matters of marketing, research and
With the seal of the United States presiding over the Energy and
Commerce Room of the Rayburn House Office Building on Capitol Hill, over 300 winery representatives from a number of East Coast wine producing states, members of Congress and staff personnel attended the
September 17 th
, 2008 annual awards presentation and wine tasting reception featuring the top winning wines of the 2008, 4 th
Atlantic
Seaboard Wine Competition. legislation were addressed.
Each morning of the conference, a general session was held for all attendees by panels composed of leading industry, business and government representatives, covering present and future major concerns of the
American wine industry, including Sustainability, State of the
Industry , and Changing Trends in Changing Times . Special summarizations of these major presentations are attached.
The ASWA team also conducted after-conference educational tastings of selected East Coast wines in the northern
California area. On the 30 th
of January, the team gave a presentation at the Santa Rosa Junior College for the adult wine appreciation class of wine expert Ray Johnson, teacher and deputy to Bob Fraser who runs the San Francisco
Chronicle Wine Competition, now at 4,700 wines. Johnson was anxious to expose his students to varieties from other regions of the country. All the wines were enthusiastically received by the attendees. Immediately following, a second tasting presentation was given for a group of trade representatives, including Bill Traverso of Traverso’s
Gourmet Foods in Santa Rosa, Jeff Libarle, an area wine broker (Grove Street), Mike Adams, the wine buyer for
Trader Joe’s, and Debra Del Fiorentino, local sommelier.
Dan Kosta, the winemaker at Kosta-Browne Wines, well known for his Pinot Noirs, dropped by as well to “scout the competition” as he put it.
Subsequently, the team was honored at several working luncheons in the following days where they were able to again highlight some winning East Coast wines. Industry
Wine pouring station #3 near the entrance to the exhibit hall of the Sacramento Convention
Center, was for the first time presenting a selection of some 38 different wines from a score of East Coast wineries, all top awardwinning wines of the July 2008, 4 th Atlantic
Seaboard Wine Competition. Pictured L to R pouring and discussing the wines are Carl
Brandhorst, President of the ASWA, Anne
Vercelli, ASWA West Coast Representative, and Dave Barber, ASWA Vice President – one of the most sought out tasting stations at the annual Unified Wine & Grape
Symposium’s American regional wine tasting event.
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leaders attending these luncheons included Peter Downs, a Vice President at
Kendall-Jackson, Michaela Rodeno, CEO of St. Supéry Winery, Mike Martini of
Louis M. Martini, Paul Kronenberg of the
California Family Winemakers
Association, Rich Thomas, wine educator and writer, and Hank Wetzel of
Alexander Valley Vineyards. All expressed pleasant surprise by the variety and quality of the wines presented.
The team capped off this year’s California
Adult students attending a special introduction to a variety of East Coast wines including examples of Native American, French Hybrid and classic
Vinifera grape wines, such as Cayuga, Vignoles, Isabella, Chambourcin,
Norton, Concord, Sauvignon Blanc, Riesling, Gewurztraminer, Viognier,
Pinot Noir, Merlot and Cabernet Franc. Dave Barber, Vice President of the ASWA, leads an interactive discussion with the attending students at the Santa Rosa Junior College. wine educational trip with two other promotional activities. On February 1 st
, the ASWA team members were the guests on Michele Anne Jordan’s radio talk show, “Mouthful” on Sonoma Radio
KRCB.FM 90.1, a popular Sunday weekly wine and food talk show from 7:00 to 8:00 p.m. The show, which featured several specific East Coast varietals and a little history about the evolution of winemaking on the
Atlantic Seaboard, was taped and can be heard on their website or I-Tunes. Search on
“Mouthful” and then click on subscribe and you can hear the February 1 st
session for free.
The final presentation of East Coast wines was hosted by Cline Cellars and held in their historic adobe Mission meeting room on the property. Along with winemaker, winery staff, wine writers and consumer advocates, there was standing room only. Here again, the full array of examples of Native American, French
Hybrid and Vinifera wines were tasted and discussed.
Following are the summaries of the major panel discussions presented at this year’s
Unified:
A special tasting of a variety of East Coast wines and discussion of the evolution of viticulture and enology on the Atlantic Seaboard was held in the historic Adobe Mission at Cline Cellars in Sonoma for winemakers, winery staff, wine writers and consumer advocates. Presiding over the event was Gordon W. Murchie,
President Emeritus of the ASWA and the VWGA (R-off camera).
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TUESDAY, JANUARY 27
TH
, 2009
WHY BUSINESS IS EMBRACING SUSTAINABILITY
As a wine consumer, the issue of sustainability has come to your attention more and more recently. First, however, what exactly does it mean? In general, it is the method in which a product is manufactured which will permit the environment to support the continued creation of that item without placing future generations in jeopardy.
Ken McCorkle of Wells Fargo Bank in Illinois maintained that the definition of sustainability is
“doing more with less.” He explained that the worth of the U.S. population, in the last few months, has declined by $8 trillion – one-eighth of the entire net worth of this country. As a result, consumers have begun to save, avoiding luxury purchases. This has affected high end food and wine sales in restaurants and retail businesses. Accordingly, Mr. McCorkle outlined four applications of sustainable practices to get businesses through these times of turmoil and turned to the other panelists to expand on them:
Lower the cost of production
Tom Selfridge of Hess Winery in California described some of the actions his winery has found beneficial for cost savings that could be adopted by other wineries. Composting at his winery incorporates pomace from the winemaking process, seeds and skins, with other waste vegetation, even some used barrels; the mixture is aged one year and then spread in the vineyards. The winery plants cover crops, such as yellow mustard, fescue, broom and vetch, rather than trucking in hay for erosion control. Beneficial insects, such as wasps, praying mantis and ladybugs, are encouraged in the vineyards, as are predator owls which control gophers and voles. Tom
Selfridge was proudest of the winery’s decision to bring a herd of 24 voracious goats onto Mt.
Veeder to control the underbrush and, during the dormant season for the grape vines, to allow the goats to consume the weeds between the vineyard rows.
Additionally, Tom Selfridge said that his winery recycles virtually everything: papers, pens, bottles, packaging supplies, plastic backing on pressure sensitive labels, resulting in an annual decrease of $3,000 for waste disposal costs. Water from the bottling line cleaning and barrel washing has been recycled, saving half a million gallons of water a year. All of the winery’s lighting was change to energy efficient lighting, saving $11,000/year. As Mr. Selfridge noted,
Hess is “one of the seven wineries in Napa that has received the green business certification.”
Create product differentiation – niche marketing
Laurie Demeritt of The Hartman Group in the state of Washington found that her company’s studies on consumers’ buying habits of sustainable products revealed that the majority of consumers fall into three unequal categories of commitment: the low level, the mid-level and core consumers. The low-level buyer is spurred by financial incentive and somewhat bound by social pressure, but does not go out of the way to search for sustainable products. The mid-level type buys limited amounts at natural food stores and is willing to change his or her attitude and behavior by seeking out expert opinions, particularly those of the manufacturers. The core group, only 13% of the sustainability world, or 9% to 10% of the total U.S. population, wants to
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feel in partnership with the companies that produce the goods they purchase, to know how the products are manufactured and whether the companies are following USDA regulations and certifications. The core consumers buy everything organic and are willing to pay 20% more for it. Laurie Demeritt reported that “63% of consumers say that quality is not just about taste and smell, but about where and how the product is produced.”
Manage downside risks
In order to manage downside risks, sustainable practices can decrease dependence on volatile energy sources, such as oil, water, gas, and others, which can result in the elimination or reduction in potential new taxes, lawsuits or penalties that may be imposed on the use of those resources. Many wineries are turning to solar power for all electricity needs, windmills, utilization of or recycling heat from the winemaking process, plus many other alternatives.
An interesting sidebar on social sustainability was explained by Gene Kahn of General Mills in
Minnesota. General Mills has a $5 million commitment in the countries of Uganda, Malawi,
Tanzania and Mozambique to bring sustainable agriculture to women there. Mr. Kahn stated that
“gender bias is at the heart of hunger and poverty problems” in those countries. A clear picture of his statement is the story he related about women performing about 95% of the agricultural farming and wood collection in those countries. When seeing a woman carrying a huge bundle on her head, he asked why the men do not share the burden. The answer was that “in Malawi, men do not put any weight or objects on their heads because they believe that it interferes with their power of reasoning.” General Mills is helping to feed school-aged children, teaching field irrigation, composting, use of chemical fertilizers, developing better seeds with Monsanto for drought resistance, and has food specialists who are involved in transferring such technology as canning, baking, and food sanitation to those countries.
Ken McCorkle stressed that social sustainability should be considered an important marketing tool to differentiate our products (wine), and should be brought to the attention of consumers.
Respond to government regulations
Mr. McCorkle concluded that government regulations oblige companies to internalize costs of such factors as the right to emit carbon dioxide into the atmosphere, by imposing an emissions tax or limiting the amount of carbon dioxide the company can release annually. Since those costs might previously have been at no cost, they will impact on that company’s finances, resulting in a domino effect on supply costs, labor, output, and capital.
Gene Kahn added that there is a “need to have a sense of urgency” to promote sustainability. “If the U.S. is 20% of the world’s developed country population and uses 85% of its expenditures on consumption, that is not sustainable,” he continued. Sustainability begins with assessments and acceptance of goals, plans and timelines. Of importance to note, it is a broad trend that is not going away but will continue to gain momentum. It is a mainstream opportunity and more sustainable products will become accessible. People will expect sustainability to be embedded in the products they purchase.
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All speakers at this session on “Why Business is Embracing Sustainability” agreed that sustainability, the stewardship of the environment, is here to stay.
WEDNESDAY, JANUARY 28
TH
, 2009
STATE OF THE INDUSTRY
The first portion of the state of the industry discussion began with Dr. Andrew Waterhouse who stressed the need for future investment in agricultural technology for the wine industry. He stated that wine production practices today are fairly modern and there is a growing interest and awareness in the industry in quality control .
Dr. Waterhouse listed some of the innovations taking place over the last few years that have impacted on the wine industry:
Development of a yeast that does not produce hydrogen sulfide - a persistent problem in the wine industry, Dr. Waterhouse related – is being worked on by Dr. Linda Bisson of U.C. Davis.
Not through genetic engineering, but by using the technology of genetic analysis, Dr. Bisson was able to test every gene in a yeast genome for its production of hydrogen sulfide to find which ones were responsible for that effect. She was then able to search through a library of yeasts, a collection of yeasts at Davis from sources in the wild, finding a yeast that actually had damage to the actual gene that causes the production of hydrogen sulfide. By using a cropping technology or breeding technology, she will be able to bring that gene into a productive wine fermenting yeast. Her work is under license agreement at the moment, but will be available in the near future.
Some of the other developments in technology included deficit irrigation and research into the identification of genes responsible for rootstock resistance to various diseases; a new technology for looking at microbial ecology in a permanent fermentation has been effected.
What key technologies will have an impact in the future in improving efficiency and quality control, asked Dr. Waterhouse? First is the development of microsensors and sensor technology , which enhance the selection of fruit as it comes in from the vineyards and monitoring what goes on in fermentation. As part of sustainable practices , pest management is critical. Also, important are water issues – the water we use, the water we dispose of, processing waste water – are all critical issues.
The wine industry needs skilled graduates working in key positions to take advantage of this technology. They have to be kept up to date and organized efforts have to be made at educational institutions to produce the right numbers and the right specialists to keep moving forward. Dr. Waterhouse underlined that there is a need for the integration of viticulture and enology.
In conclusion, innovation merits investment – it is the key to our future success, Dr. Waterhouse stressed. He quoted Pasteur by stating that, “chance favors a prepared mind,” so research favors a prepared industry .
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Nat DiBuduo of Allied Grape Growers called the 2008 California harvest somewhat smaller than the 2007 crop, blaming vine removal, drought, frost, heat, and wind. He further stated that the year’s smaller crop completed the balancing trend since the large crop of 2005. The 2008 crop can be categorized as average over all, he reported.
Working with nurseries in California, his organization conducted a survey to determine the plantings for the previous year. Reds outnumbered whites 59% to 41%, and of the reds Pinot
Noir was 36% of the total with Cabernet Sauvignon at 13%. Plantings of Chardonnay were 20% and Pinot Grigio 18% of the whites.
Since the majority of the statistics and information in this session pertained specifically to
California, this section has been abbreviated and, if the reader is interested in that data, please go to www.alliedgrapegrowers.org where all of the statistics are available.
In conclusion, Nat DiBuduo urged managed growth for the future and planning at least two years ahead in order to minimizing the ups and downs of the market. Since the immediate supply of grapes is limited, there are planting opportunities, he related.
Bill Turrentine of Turrentine Brokerage, California, began his presentation by comparing flying an airplane and managing a winery. An airplane is magnificent if everything goes right, he said, but if not, the laws of gravity can assert themselves with a vengeance. If the grape and wine industry does everything right, it works magnificently, but if not, the laws of economics assert themselves with a vengeance. He continued that with an airplane, the first thing a pilot does is file a flight plan to identify his destination, route and what obstacles need to be avoided. In the wine business those obstacles would include the mountains and the downdrafts of shortage.
Mr. Turrentine said that, now in the wine industry, short term trends and long term trends are moving in opposite directions. If there is a conflict between short term and long term trends, short term trends have a priority. The real competitive edge in the wine business requires responding to short term trends but always keeping an eye on the long term trend.
As to short term trends , the economy is in trouble, he reported. The wine business has been hurt by declining restaurant sales , consumers are trading down, which hurts some brands and helps other brands. Also, there is an excise tax threat proposed at this time. The tax would be an increase of over $217 per ton equivalent - something the whole industry needs to fight.
Another short term issue, for one, is liquidity . It is difficult to borrow money; it is hard to find investors, and companies that have access to capital have a competitive advantage. There is also a water problem , which, hopefully, will be only a short term problem, but still a serious consideration.
Looking at the long term trends , nearly every economist is predicting that there will be an economic recovery. Some believe it is three to five years out; others think that within 12 to 24 months we will see recovery. The wine industry is likely to do very well when it occurs. There is a very positive long-term demographic trend with the Millennial Generation , the group of
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people between 15 to 32, who have adopted wine to a much greater extent than the previous generation.
Then there are developing global and local supply constraints . The twelve countries that have the most vineyard acreage, from OIV data forecast for 2007, are Spain, France, Italy, Turkey,
China, USA, Iran, Portugal, Argentina, Romania, Chile and Australia.
Spain is the country with the largest vineyard acreage, although that is decreasing. While Spain continues to remove acreage of low quality, they are increasing in smaller amounts but in high quality acreage. France , again, is a similar situation, but with somewhat less of an increase than
Spain in the higher end vineyards. Italy continues to be stable. Vineyards in Turkey and Iran are almost entirely table grapes . China is increasing both table and wine grape plantings. The
U.S
. is increasing, but at this point, is down to replacement level plantings as are Argentina,
Chile and Australia. Australia is the one place in the world that has a significant excess at this point with possibly 3-5 million cases worth of Chardonnay more than their current sales call for,
3-4 million cases worth of Shiraz more than their current sales, and as much as a million cases each of Cabernet and Merlot. So Australia has a current excess, but as long as they can keep their total sales growing, they will balance, and, like the rest of the world, will be looking at applying constraints.
Mr. Turrentine mentioned that the wine industry tends to go through twelve year cycles. The last couple of times there has been a recession, the industry has also been going into a period of excess supplies, which is a brutal combination. However, this time on entering the recession, the industry’s excess supply is under control. There will be dislocations for some brands and some price points, but the overall supply situation is much healthier than it has been in the past.
Returning to the airplane analogy, he concluded that for the next couple of years the wine business will be flying pretty close to earth, but the wineries that keep their eyes on and prepare for the long term trend will have a chance to soar when recovery comes.
In his analysis of the market , wine industry consultant Jon Fredrickson stated that, based on estimated results, the wine market edged up in total by about 2 million cases last year to some
316 million cases in shipments overall. It is believed that California shipments to the United
States grew by 3.9 million cases. Other states are up 3%.
The growth of the wine industry this past year was the least in this decade. The slump impacted businesses differently. The three largest companies, representing roughly 60% of the market, and the top ten, with 81% of the market, did quite well. Wine sales above $7 a bottle shrank, and by November and December of 2008, there was no growth, except during the holiday season.
Higher end wineries target their sales to restaurants. Restaurant sales hit a low in November, so people were buying wine to drink at home. Mr. Fredrickson estimated that volume sales at restaurants may be down 10-12%.
He noted that, by November, the losses from warehouse sales in northern California were tremendous. Both restaurants and distributors cut orders and bought conservatively. So, shipments in 2007 were up 9%, and shipments in 2008 were down 8%. Since selling to restaurants became difficult, wineries tried to open new channels, selling to new retailers, who,
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however, claimed inability to sell because consumers were not buying at those price levels. So, discounting of higher priced brands is occurring , which, in turn, spurs consumption.
There are threats to the future of the California wine industry: no new vineyard plantings, the excise tax hike, and increasing amounts of foreign bulk entering the U.S. - up about 12 million cases in 2008. Incremental growth has to come from overseas and only Australia has the potential to supply inexpensive value wines to build the market.
The threat of the excise tax is serious. The misnomer of a nickel a drink is a joke, stated Mr.
Fredrickson. It’s not a nickel a drink, it’s $1.28 a gallon, which is $3.04 attached at the winery level. At retail stores that tax rises to $6.08, but in restaurants it becomes a $9.12 a case tax.
Ultimately, the state only receives one-half or one-third of the tax and the rest remains with the trade. The price of 750 ml bottles would up 25% because of the tax hike with full trade markups. Looking at the five liter size which grew some 3% last year, there would be a 42% to 56% increase in the shelf price.
In food stores , total wine sales dropped off sharply in October/November of 2008, except for a gain during the holidays. Imports have been on a downward trend because of price increases as the Euro has strengthened. Looking at varietals, Chardonnay was up almost 8% in unit volume over the 2008 holidays, double the rate of the same period in 2007, and most of the growth was in the lower price segment. The five brands with the most Chardonnay growth last year were
Barefoot, La Crema, Beringer, Kendall Jackson, and Estancia, which had the largest revenue increase.
Cabernet Sauvignon also had a very strong growth, up 12.5% in unit volume in the holiday period. Again, most of the growth came from the lower price levels, but there was some growth at higher prices. By brand, Coppola had the largest revenue increase and Barefoot, Gnarly Head from DVF wines, Black Box, and Red Diamond from Washington State were all high growth in
Cabernet Sauvignon sales.
Pinot Noir growth has slowed a little, because it tends to be higher priced. Still Pinot Noir is up
11% over the past weeks with a total volume increase of 162,000 cases. The top brands in Pinot
Noir sales were Gallo’s Mirassou, having the largest revenue increase among all Pinot Noirs, La
Crema, Mondavi Private Reserve from Constellation, Estancia, and Yellow Tail, one of the first imports to show up in the ratings.
Merlot had done well, holding its own. It is an entry level red wine that helps build future consumption. Consumers starting out on wine want the user-friendliness of Merlot, then tend to move on up to other reds.
Total imported wine bottle volume came down about 4.3 million cases last year, but bulk imports have increased so that imports have risen about three million cases. A considerable amount of high priced import inventory remains in the system and in transit, so it will be a long time before European wine prices are reduced. The French are seeing the impact of rising costs on consumers, but the value of French wines is still up 10%.
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Spain flattened out, although it still represents value to the consumer. Its growth rates have clearly slowed as its wines have gone up in price. New Zealand wines are not as expensive as they were, and are likely to increase sales as they have increased their supplies. With supplies constrained in California, we may see more Chilean wines coming in. Argentina has done extremely well. Argentina’s currency is tied to the dollar and offers a huge value for the money.
Argentina’s Malbec selling very well, so the country’s wine industry is growing rapidly and has a good future as long as the government is stable and they can deliver the wine.
The U.S. is still exporting some 22 million cases of bulk wine while importing 12 million cases, but it may go to parity as California runs short of grapes. Exports are very important to
California, accounting for 18% of its total shipments. One of the largest markets this year was
Canada which grew by about 1.2 million cases, followed by the U.K. - the biggest market overall with some 14.2 million cases shipped through November - up about 600,000 cases. The U.S. is heading for a billion dollars in exports.
Jon Fredrickson announced that there were three finalists for “winery of the year:” Bronco, which finished 2008 with the best year the winery has ever had, The Wine Group which had a record year purchasing Almaden and Inglenook from Constellation, and E. & J. Gallo –“the winery of the year
.” Gallo’s Barefoot
achieved the largest revenue increase in volume and sales and is now the seventh largest selling brand in food stores. With some of Gallo’s other
California brands, such as Mirassou, Peter Vella, Liberty Creek, Tisdale, André, Louis M.
Martini, MacMurray and Ghost Pines, its total volume grew by 1.5 million cases last year.
Even with the bad economy, as long as wines offer value to consumers, 2009 should be a good year for the wine industry, Jon Fredrickson concluded.
THURSDAY, JANUARY 29
TH
, 2009
CHANGING TRENDS IN CHANGING TIMES
Jim Trezise , President of the New York Wine & Grape Foundation, began this segment of the
Unified General Session by saying that the only constant these days is change. Today’s speakers would be addressing changing trends in the wine industry, covering the past, present and future of change in the wine industry, in four general areas, political, economic, communications and generational.
Regarding modifications in the political system, Jim Trezise stated that the recent elections brought a sea change in Washington, D.C., owing in the majority to the advance in communications: rather than using the traditional media channels as before, Obama’s team incorporated their social networking skills into the campaign. They set up a seamless fundraising system on the Internet that had never existed before, reaching the young people, the
Millennials who wanted change.
Pertaining to the economic aspect of change, New York seems to be the epicenter of the global meltdown in the financial world, Mr. Trezise reported. Wall Street is a ghost town, in lower
Manhattan restaurant patronage is down, and housing rents have decreased. He added that the
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excise tax threatened in California and in New York would be extremely counter-productive.
“We shouldn’t think of the excise tax as a tax on luxury but rather as a tax on the health of our citizens” said Mr. Trezise quoting Thomas Jefferson. As is obvious, the economy is affecting consumer behavior, as well.
Paul Lukacs , wine writer, educator, advisor, and columnist for The Washington Times said that
“we are living in a time of real challenge, for not just wine, but for our lives,” referring to the present global recession. At the same time, he added, for every challenge there is opportunity.
The United States is poised to become the biggest wine consuming country in the world.
Historically , at the turn of the 20 th
Century, wine was big business, Mr. Lukacs noted, not only in California but in New York, Ohio, Missouri, and elsewhere. Even though not all Americans drank wine, many viewed wine as being apart from other alcoholic beverages, something that belonged on the dinner table as opposed to the saloon. By 1919, wine had been lumped with all other alcoholic beverages and made illegal. Though repeal of Prohibition came in 1933, the wine industry lives in its long, lingering shadow, he added. We have the opportunity today to make wine part of American life, and not make the mistakes of 100 years ago.
The economic recession means that, regardless of generation, more and more Americans are eating and entertaining at home with less disposable income to spend on wine. Increasingly, offpremise sales are going to become more important than on-premise sales. The challenge for
American wine is no longer to compete with European wines, but to compete with Malbec from
Argentina, Cabernet from Chile, blends from South Africa, from Southern Italy, from the
Languedoc in France. Those wines did not exist a generation ago. There has been a gap in the international wine market between fine wine and “jug wine,” although now because of technological advances, this is no longer true. The mantra in a recession has to be value for money and the Millennials seem to be the first generation in the U.S. that is interested in drinking wine at the supper table at home, making it part of their daily lives.
America is drinking more wine than every before, but our per capita consumption is still low.
And there are huge swaths of this country where people never think about wine. If we position wine as simply another alcoholic beverage, we will not attract these people. We have to attract them by positioning wine as what it has historically been for thousands of years in Western culture, as part of the meal. The legacy of Prohibition is that wine is sold alongside of other alcoholic beverages. I would suggest that our challenge and our opportunity are to present wine as a different kind of beverage and something that belongs in America. We need to teach, educate, and promote wine, whether it is the wine you make, the wine your neighbor makes or whether it is the wine that is imported. Paul Lukacs underlined that wine as a whole needs to grow.
Courtney Cochran of Your personal Sommelier in California insists that the foodie gourmet culture is sweeping America because of the Millennials, and that culture is driving wine consumption. Forty-four percent of Americans consume alcohol and a smaller percentage drink wine. Even though there are celebrity chefs, there are no hero sommeliers, she warned, so wine is still inching its way into America’s consciousness. Ms. Cochran suggested utilizing online tools, new technologies in communications that provide the channels through which to market
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wine. She reported that Facebook has 60 million subscribers with 250,000 connecting each day.
Twitter , which has grown 343% in one year, Wine 2.0, OpenWineConsortium.org
,
MySpace.com
with 110 million members, are all fantastic ways to connect with customers.
Additionally, blogs are free and connect with people more quickly than ever before. The reviews posted by Wikipedia.org, Amazon.com
and Yelp.com
are about real people commenting on every subject. She continued that “experts” on blog sites are those who contribute most often. If you want to grow and be relevant in the future, social media is the answer, she stressed. When online, she instructed, make your comments real, personal, connected, get involved and comment, include your winery’s record on sustainability from a financial perspective. Add information about cooking at home, drinking wine at home and living more comfortably at home.
Two final notes from Ms. Cochran are that Asia is one of key players on the global wine market, not just in consumption but in production, and will continue to be important, and she stated that wine is finally in the White House after eight years!
Next, John Gillespie of Wine Colleagues in California reported that studies conducted by his organization revealed that consumption levels and the financial situation are definitely linked.
Upscale restaurants have seen the greatest downturn, yet, on the positive side, reinforcements are coming to the wine industry in the form of the Millennial Generation. He added that 23 million
Millennials have not yet reached 21, the legal drinking age. Each year five million of those can join the wine drinking population. The survey also found that on the occasions the Millennials drink wine on average they will drink 2.83 glasses of wine, whereas Baby Boomers, for instance, only consume 2.13 glasses per occasion. Of all U.S. wine drinkers, 25% have been to wine bars; however, 38% of the Millennials have visited wine bars and 80% of those will continue. Of U.S. wine drinkers 18%-19% are members of winery wine clubs, whereas 20% of Millennials are members and more than 75% purchase more than one out of every four bottles of wine they buy per year from wine clubs.
Reporting on emerging red wine varietals with the most growth potential, Malbec, Tempranillo,
Grenache and Carmenère should all be considered, with Malbec number one for growth and
Tempranillo next. Grenache should have strong growth, but Carmenère weaker than the others.
All in all, Mr. Gillespie reported that the industry is cautiously optimist for 2009 and beyond.
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