When wine consumption shot higher in 1994, little did wine consumers know that they were uncorking one of the greatest bull markets in recent history. Every year since then, wine consumption has grown making the wine boom now 21 years old–old enough to buy itself a drink, legally, were it a human.
But the growth, which slowed in the wake of the recession, has lost steam but continued to edge higher. Last week in New York City, John Gillespie of the Wine Market Council, a non-profit trade association whose mission is to grow the wine market, presented data on the latest trends. From 1994 – 2007, only one year had less than 2% growth, the recession year of 2001. But since the Great Recession starting in 2008, although every year has seen growth, the growth has been slower with only one year exceeding 2%. Why is growth slowing and what does it portend?
These were the main questions behind the presentations. Growth is slowing because of the rise of craft beer (not exactly hard to see coming), but also, Danny Brager of Nielsen said, because some consumers are trading up, drinking less but more expensive wine. Brager also pointed out that beer consumption is in secular decline having fallen from 60% of the market share of alcoholic beverages in the US in 2000 to 52% last year–and much of the rise of craft beer is at the expense of big, boring beer. He also said that of the 125 packaged goods that Nielsen tracks, growth is sluggish across the board, so wine is outerforming 90% of them.
As to the future, John Gillespie wondered if the wine market is at a tipping point, which could spark a return to strong growth, or a turning point, which would point downward. While he didn’t come down on either side, the sinister organ music playing in the background, releasing a murder of crows into the auditorium and eerie sound of a creaking door slamming all led to a general impression. (Ed. note–dramatization.) We shall see what happens over the next year but if I had to guess, I’d predict more of the same slow growth.
Of course, the best way to really boost consumption would be to lower prices. And the only way that would happen is a legal change, such as eliminating the mandatory three-tier system and its layers of markups. Chance of that happening: infinitesimal.
See more stats from the presentations over on my Twitter feed.
Drought has been wreaking havoc on all of California, including the wine industry. Producers have varied their responses to it, with some irrigating as much as they still can and others calling for “dry farming.”
Yesterday, Josh Jensen (right) of Calera Wine told a packed seminar at the In Pursuit of Balance tasting in New York about his approach. He irrigates his 84 acres of hillside vines in the Gabilan Mountains (south of the Santa Cruz Mountains). Initially, when water was more available, he watered three hours at a time, four times a year. Then the increased those durations to six-, 12-, 24-hour “sets” or dousing through the drip irrigation. He finally reached 48 hours, arguing that a prolonged watering saturated the vines to the deepest level, sending the root deeper down.
However, now, with water scarce, he has to truck water up to 1,200 feet to feed the drip lines. He said that for seven months last year, he sent five truckloads of water a day up to fill reservoir tanks to feed the irrigation lines. In total, Calera brought up 1.8 million gallons of water, sourced from a neighbor. And even with that, the vines eked out a yield of 0.6 tons per acre.
Before wine enthusiasts get too excited, it’s worth noting that the beverage is more wine-arita than winery. Let’s break it down. Called Beatbox wines, it comes in a box styled as a beatbox. Nice! Two 5-liter boxes sell on their site for $64.99, which comes out to the equivalent of about $5 a bottle. So they’ve got the value pricing covered. And now, the content: this “wine-based” beverage with 11.1% alcohol comes in several flavors including Blue Razzberry Lemonade and Cranberry Limeade. Oh, and these serving instrux: “Try BeatBox on its own, with a mixer, in a cocktail, or as frozen BeatBoxicles!”
Billionaire Mark Cuban put it best on the show: “You’re not selling wine. You’re selling fun.”
Kevin O’Leary tasted it and proclaimed, “This tastes like S**t!” And then he bid on a slice of the company.
But it was Cuban who came out ahead, giving the Austin-based entrepreneurs five times the amount of money they were seeking for a third of the company’s equity–at a 50% higher valuation than they were seeking.
Given the myriad laws governing wine retail and distributing, here’s hoping that BeatBox doesn’t give Mark Cuban a $1 million hangover.
The signature characteristic for syrah from the Northern Rhone is an alluring savory character with a note of black olives. This Copain Syrah, “Tous Ensemble,” 2011, comes from three vineyards in Mendocino County and sees nine months in neutral oak. It’s in the Northern Rhone vein, favoring restraint instead of anything over the top–no “gobs” of anything here. It’s not that California syrah has to ape France; it’s just that Wells Guthrie of Copain favors that style, as do I.
I poured this wine at an event recently and it was very well received; I bought it again for $24 and it was a superb transition to fall with richer foods and cooler weather. And at $21.60 on the case, it is one heckuva a good wine for the price.
We know that a third of Americans abstain from alcohol. Another third don’t drink too much. But the Wonkblog has a striking graphic showing that the top decile really pound the stuff, drinking an astonishing ten drinks per day. That’s about two bottles of wine a day. Paging Gerard Depardieu! Read more…
An area south of Napa was the center of a big earthquake overnight. The 6.0 quake, the biggest in the Bay Area in 25 years, shook wine barrels and bottles off of shelves and onto the ground. What the damage is remains to be seen; we hope that it is fixable and that the barrels bounced and weren’t broken.
Here are some pictures from Twitter of the Napa quake (#napaquake is a common tag):
Steve and Jill Matthiasson, whose wines are a popular choice among wine geeks, posted this dreadful picture, saying “Will be barrel pickup sticks #napaearthquake.” He also posted a picture of severe damage to their house. It is is “not a wipeout,” Matthiasson commented. Thankfully!
And this from Silver Oak: Read more…
California…celebrities…vineyards…Throw in some hills, glitzy real estate with water views and it sounds like a match made in some screenwriter’s Heaven.
But LA County authorities are taking a dim view of such a scene. The part they find objectionable, oddly, are the vines! Yes, what is now LA was the home to some of the earliest vines in California. And the new Malibu Coast just won federal approval for putting on wine labels. Rather than cultivate this heritage, and nurture the new Malibu wine recognition, County authorities are moving to ban new plantings and uproot some existing ones.
What is this–Europe? Do residents of Malibu need planting rights as in the EU? The logic is not entirely clear as organic farms will be tolerated but organic vineyards would not. And equestrian facilities installed without permits will be allowed? Hmmm. LA Weekly has the full story but the motives of County officials remain unclear. The story concludes that the rule looks to be voted through in a meeting on August 26.
Image credit via creative commons
Governor Jerry Brown signed into law a the so-called “sip and spit” bill last week. As of next year, California students enrolled in beer or winemaking classes will legally be able to sample beer and wine in a class. They do have to be at least 18, but that’s a three-year jump on the legal minimum age for drinking. California has many places to study winemaking, including UC Davis is one of America’s leading faculties in viticulture and enology. The Golden State also produces 89% of American wine and is home to many leading craft breweries, including stalwarts like Sierra Nevada as well as Stone, Russian River Brewing, and Lagunitas, among many others.
While the law may seem silly–no swallowing, young’uns!–it is a terrific advance for American wine. Many colleges and universities across America are offering wine appreciation classes as wine consumption has risen for 20 consecutive years. Hopefully, this new law will inspire other states to consider similar legislation and remove a legal obstacle to the next generation of hipster wine and beer makers. If there’s something that really sets (young) American wine consumers apart, it is their curiosity and relatively high level of knowledge. This new law will only help the trend.