Wines & Vines Home
   
 
Welcome Guest
LOGIN |  CREATE ACCOUNT
 
 
November 2013 Issue of Wines & Vines
 
SUBSCRIBE   »
 

Opinion: Wine Industry Outlook

 
by John Hinman
 
 
The pressure building on the wine industry is to find profitable and available routes to market.

Distributors are almost all full and can only handle the major brands and the largest of the next level of production. This is a function of the success of the wine industry (not just in California) in making better wine (lots of really good players out there) and of an increasingly sophisticated customer base who drink wine, beer and spirits depending on the occasion and on their inclination. This is also a function of politics, and of the restrictive legal system perpetuated by the wholesalers in combination with the anti-alcohol forces.

The younger demographic is really into spirits, which, because it’s an easier sale than wine (and cheaper and easier to transport than beer, with a higher profit margin and an easier-to-describe story to the salespeople) is taking up space at the distributors and knocking out a lot of wine producers. This is a trend.

Coupled with the retail chain (on and off premise) focus on higher profits through lower costs, the result is more and more private and control label business going through the clearing wholesale system at the biggest customers. This also includes PL/CL spirits and beer. This means that there will be less available shelf and wine list space and cutthroat competition for the space. This is a trend.

For the wine industry I see the need for wineries to increasingly have to focus on on-premise hospitality (events, tastings, social media-driven occasions and so forth) in order to maintain their margins, which will (for most small and medium size wineries) be more and more dependent on DTC. The constraint here is having events in agricultural zones, and how aggressive one can really be. For examples see what is happening in Santa Barbara county, in Lodi, in Napa and throughout the state. In other states the constraint is no different and maybe even more restrictive (witness the issues in Oregon). This is a trend.

With respect to your commentators, I agree that there will be growth but that it will occur based on population demographics (more Millennials coming into the legal drinking age and more Boomers drinking more—see the Wine Market Council releases), more social media marketing and better products more than anything else.

As for the comments about credit, put yourself in the place of a banker trying to decide whether or not a particular small or medium size winery can buck the difficult route to market trends and pay back larger credit lines as they expand. The banks are still (for the most part, there are exceptions) sitting on the sidelines because the historic value base (land, brand and vineyards) is not increasing in value (at least as far as we’ve seen) as it was a decade ago. Also, because of the aging out of the winery owners that bought in during the late 1980s to earl '90s period, more properties will come available.

John Hinman of Hinman & Carmichael (San Francisco, Calif.) has been working in beverage law for more than 35 years and is a leading analyst of wine industry trends. He gave us some insights into winery margin trends, sales issues and resulting credit shyness at the banks.  

 
SHARE   »
Print this page   PRINTER-FRIENDLY VERSION   »
E-mail this article   E-MAIL THIS ARTICLE   »
Close
 
Currently no comments posted for this article.
 
CURRENT MONTH'S FEATURES INDEX »


 
Wines & Vines Home
 
866.453.9701 | 415.453.9700 | Fax: 415.453.2517
65 Mitchell Blvd., Ste. A San Rafael, CA 94903
info@winesandvines.com
Wine Industry Metrics
 
Off-Premise Sales » Month   12 Months  
April 2015 $627 million
5%
$8,028 million
5%
April 2014 $595 million $7,623 million
     
Direct-to-Consumer Shipments » Month   12 Months  
April 2015 $184 million
17%
$1,890 million
15%
April 2014 $157 million $1,649 million
     
Winery Job Index » Month   12 Months  
April 2015 406
34%
252
19%
April 2014 302 212
     
 
MORE » Released on 05.15.2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

Direct To Consumer
Wine Shipping Report
2015
 
Download full report »
 
 

Practical Winery & Vineyard Library
 
Search the PWV archive »
 
 

CALENDAR
  • May 26
     
    Mendocino Economic Summit
     
  • May 28-29
     
    Direct2015
     
  • May 28-30
     
    WIneMaker Annual Conference
     
  • May 28-30
     
    International Chardonnay Symposium
     
  • MORE »
 

READER COMMENTS
 
Article: $10 Wine Would Cost $40-plus Under COOL »
 
As a Napa Valley producer, we have spent 30 years building our brands in the...
Reader: Pete Przybylinski
 
Article: Be a Sustainable Wine Ambassador »
 
A great idea. All TR employees at every responsible estate should be encouraged/required to become...
Reader: Guest
 
Article: Historic Napa Winery Standing Tall Again »
 
It would be nice to know that Trost Jacking and Heavy Moving is the structural...
Reader: Guest
 
Article: Women for WineSense offering scholarships »
 
This is fantastic! Women in Wine Education must find ways to continue their individual pursuit...
Reader: Guest
 
Article: Historic Napa Winery Standing Tall Again »
 
Very Interesting, I'm so glad the building is successfully being saved.
Reader: Guest
 
 


Directory/Buyer's Guide — Your Wine Industry Marketplace
 
 
WINERY SEARCH
 
 
Advanced Search »
SUPPLIER SEARCH
   by Product
 by Company Name or Brand
 
Browse by Category »
2015 Directory/Buyer's Guide
The Wines & Vines Directory and Buyer's Guide
 
 
EXPANDED ONLINE SEARCH INCLUDED WITH PURCHASE
 
ORDER NOW »
 
LEARN MORE »
 
 
Wines & Vines Magazine
 
 
LEARN MORE »
 
SUBSCRIBE »
 
Digital Edition Now Available!
Wines & Vines Digital Edition Now Available
 
LEARN MORE »
 
ORDER NOW »
 
 
The Wines & Vines Online Marketing System
 
The Industry Standard winery marketing application
 
FREE LIVE DEMO »
 
VIEW VIDEO »
 
 
 
 
Latest Job Listings
 Tasting Room Associate
 St. Helena, CA
DTC, Tasting Room and Retai
 Regional Sales Manager
 Sf/Bay Area, CA
Sales and Marketing
 Epicure By Jcb Manager
 Yountville, CA
DTC, Tasting Room and Retai
 Retail Sales
 Sonoma, CA
Sales and Marketing
 Marketing & Social Med...
 Sonoma, CA
Sales and Marketing
 Market Manager
 Various, NA
Sales and Marketing
 Region Sales Manager-M...
 Minneapolis, MN
Sales and Marketing
 Chain Account Speciali...
 Seattle, WA
Sales and Marketing
 Area Sales Manager In ...
 Atlanta, GA
Sales and Marketing
 Sales Representative
 Manhattan, NY
Sales and Marketing
 
More Job Listings >>
Follow Us On:
 
 





Home  |  About Us  |  Editors  |  Subscribe  |  Print Edition  |  Digital Edition

Advertise  |  Site Map  |  Contact Us  |  Privacy Policy
 
 
Copyright © 2001-2015 by Wine Communications Group, Inc. All Rights Reserved.
No material may be reproduced without written permission of the Publisher.
Wines&Vines does not assume any responsibility for any unsolicited manuscripts or materials.