With 2010 well underway, what does it look like for the wine industry? Current numbers don’t really indicate that high-end wines are flying off the shelves. Just as the housing market appears to be on a roller coaster (and more downhill than uphill), high-end wines seem to be doing the same thing. Sparkling wine (Champagne to you and I who don’t really care about the French possessiveness) sold well during the holidays, but also was highly discounted worldwide—that is, if you consider half price a big discount. Is it possible that this is the sign of the times? A real fear on the high-end of the industry is that wine drinkers have discovered a lot of really good wines in the mid-priced category—my term for $10-$18 wines. High-end producers are still in a dilemma about what to do with their increased inventory. The choices are several, but none are very good. First, “hold on and pray” leads the parade, but isn’t necessarily the best solution, especially if cash flow is a problem. Those lucky ones using their winery as a toy and ego-stroker can probably do this and benefit from the additional aging of their wine.
Second, cutting the price by 25 to 50 percent (depending on how overpriced it was in the first place) is possible, but very damaging to the brand in the long run. It’s always easy to lower the price but a bitch to raise it again and return the brand to its proper space in the hierarchy of its peers.
Third, it’s possible to relabel the wine with a different, secondary label and sell it at a reduced price to eliminate harming your major brand. This practice accounts for some of the daily additions of new labels in places such as Trader Joe’s. This is expensive to do, and one problem is that at the reduced price, some wine consumers discover it, think it’s great and strengthen the trend of buying lower-priced wines. The greatest benefactor of this phenomenon so far has to be the Lodi area, which is producing some great wines at reasonable prices. I repeat: Will wine consumers return to their old spending habits, or continue to buy the mid-priced wines they’ve discovered? Wineries need to be careful not to get trapped in the low-end like the Australians have let themselves do. Consumers need to remember that quality and price don’t always go together, since (very frequently) price is a result of availability rather than quality. A wine that’s hard to get—good or bad—will be more expensive. For you old-time readers, you might remember the “perceived shortage” marketing program used by a few wineries. If nothing else, make the consumer think it’s in short supply so they’ll rush out and buy it. At least two large wineries in Sonoma County have used this, with great success, until recently. (I’ll let you guess who they might be.)
In Australia, there’s a program that lets wineries sell unlabeled wines. They’re called cleanskins and only need to be labeled with variety, vintage and appellation, with absolutely no reference to the producer. Currently, Dan Murphy Liquors, a subsidiary of a giant food chain, is selling cleanskins for $1.99. Sound familiar? Two-Buck Chuck strikes again, but in a different country. Wines at that price are also very common in supermarkets in Italy and other European countries. Cleanskins in Australia can be cheaply done, since label removal isn’t necessary. They bottle their wines but don’t label them until they’re ready for sale. Here, we label during bottling, so if you want to change something, removal of the old label is necessary first.
Since restaurants are favorite outlets for purveyors of high-end wines, a certain amount of prayer will be needed to get people to eat out at expensive restaurants. Stuck with high inventories when the roof caved in, the wines are still on hand and need to be sold before restocking is necessary. Then the question will remain as to whether consumers will continue to pay the ridiculous and outrageous highly marked-up wines, or if they’ll do as they’re currently doing in the supermarket and only buy moderately priced wines, which they’re finding to be quite good. There will definitely be some reduction in high-end wine buying in restaurants now that many business dinners are being cut back due to budgets, but also (very important) with new limitations on entertainment expenses, especially in the medical field. Long gone are the days when, “Hey, bring us a couple of bottles of that $100 wine” was a common practice. I guess wine is considered a good bribery tool (could also be called lobbying, I suppose), and bribery isn’t a suggested marketing tool today.
Other changes the new decade might bring include increased use of screwtops and alternative packaging and continued increase in the importing of inexpensive wines from newer-producing countries and regions like Greece, Portugal and South America. Let’s hope that a lowering in alcohol levels is included here also. One Aussie wine writer hopes that “fruit driven, characterless, alcoholic, one-dimensional wines” are also things of the past. Probably not a real bad idea. Is it possible that description could be of many of our high-end wines and thus another reason consumers might stick with the moderately priced wines?
We might also see a lot more low/no oak Chardonnays gaining acceptance. I, for one, won’t miss that oak toothpick in my mouth. Maybe we can also pray for a reduction in the ridiculous corkage fees charged at most restaurants unless the wine brought in is already on the wine list. In an SFGate column not long ago, Jonathan Waters, wine director at Chez Panisse, is quoted as saying, “Local wines tend to show off high alcohol, unmistakable oak presence and enough fruit to make Miss Chiquita blush.” Sounds like we have at least something in common with our Aussie friends. My quote has always been that wine is meant to go with the meal, not be the meal.
I guess it’s time to go and enjoy our meal with a screwtop bottle of unoaked Chardonnay and be sure it says Sonoma County on the label. That is, unless it’s a wonderful Napa wine, which will definitely say Napa, because it’s proud of its county name on the label—unlike many Sonoma County wineries.
