Wines & Vines Home
   
 
Welcome Guest
LOGIN |  CREATE ACCOUNT
 
ADVERTISEMENT
 
 
 
01.15.2010  
 

Wine Industry's 'New Normal'

Studies find fragile consumers, cautious producers on the slow road to recovery

 
by Linda Castrone
 
 
Wine Market Council
 
As more members of the 16- to 33-year-old Millennial generation mature, John Gillespie of the Wine Market Council expects them to continue entering the world of wine at core status.
 

Santa Rosa, Calif. -- Say goodbye to a year of economic freefall and hello to what analysts describe as “the new normal.” Its key feature: Fragile consumers who are less interested in spending their money than in repairing their balance sheets.

For the wine industry, that translates into slow growth, lower prices and younger fans who are drinking more at home than at fancy restaurants.

Industry analysts gathered here Friday to presents results of new consumer studies conducted by the Wine Market Council and The Nielsen Company. They’ll repeat the presentations in New York on Tuesday and Dallas on Friday.

“The economy has been a bear to deal with, but the worst is over,” said Danny Brager, who leads the Nielsen’s Beverage Alcohol Client Service team. “Now we’re on the slow road to recovery.”

What’s next along the road is still anybody’s guess. Navigating these tricky times will require careful study of consumer behavior and individual market segments.

“Growth opportunities exist, but you have to have a specific strategy,” Brager told Wines & Vines after the presentation. “You have to figure out which channels are working, what’s the new pulse.”

In 2009, Americans went out less frequently, causing restaurant wine sales to fall, but developed a heightened interest in cooking—and drinking— at home.

Retail wine sales increased, as did the range of stores interested in selling liquor, and for good reason: Adding wine to the mix at shopping clubs, discount stores, drug and convenience stores adds $30 to the average shopping basket.

The increase in retail outlets may have boosted wine sales volumes, but it may also have added pressure to already falling prices. Discounters and drug stores rely on price competition to lure shoppers, and aren’t shy about starting price wars. A growing number are also introducing store brands, which cost less than namebrand labels, while also delivering higher profit margins.

“Some of the chains are moving toward stocking just the No. 1 and No. 2 national brands,” replacing all the rest with their own brands, Brager said. Trader Joe’s “Two Buck Chuck” led the way, paving the way for 7-11’s $3.99 Yosemite Road wines and Costco’s impressive Kirkland portfolio, which includes Cabernets from Rutherford in Napa Valley and Sonoma’s Alexander Valley, as well as Sonoma County Chardonnays.

Global wine surpluses, combined with scaled back consumption, have contributed to discounting at all levels, said Chris Fehrnstrom of Constellation Wines U.S.

“A lot of wine needs to move through the marketplace,” he said. Bottles that once sold for $12.99 have been discounted to $9.99, while $24.99 bottles dipped to $19.99.

Bill Cascio of Glazer’s Family of Companies has seen $60 bottles on sale for $49.99, and $100 bottles that have dipped to $80. He expects the discounting to continue.

“It won’t stop the brand building process, but it will be hard to build new brands,” he said. “When times get tough, people turn to the tried and true.”

There are exceptions, primarily for labels backed by large corporations. Fehrnstrom pointed to three value-priced brands that continue to grow despite the economy—Constellation’s Black Box and Woodbridge by Robert Mondavi lines and Gallo’s Barefoot brand. “People see them as having premium quality and value,” he said.

Studies of core wine drinkers turned up the best news of the day. Total wine consumption was up a projected 1.5% in 2009, said John Gilliespie, president of the Wine Market Council. “That marks 15 years of unbroken growth,” he said, no easy feat in these economic times.

More good news is on the horizon from members of the Millennial generation (now aged 16 to 33), who are embracing wine at ever growing rates. “They’ve gone from 0 to 60 in 5 seconds,” Gillespie said, “entering the world of wine at core status. They look at wine and say, ‘That’s for me.’ and there’s more of them in the pipeline.” Only 50 million of the contingent’s 70 million members have attained legal drinking age.
 

SHARE »
Close
 
Currently no comments posted for this article.
 
CURRENT NEWS 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  
September 2014 $575 million
5%
$7,743 million
6%
September 2013 $550 million $7,311 million
     
Direct-to-Consumer Shipments » Month   12 Months  
September 2014 $163 million
16%
$1,708 million
11%
September 2013 $141 million $1,538 million
     
Winery Job Index » Month   12 Months  
September 2014 166
14%
226
18%
September 2013 145 192
     
 
MORE » Released on 10.15.2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Practical Winery & Vineyard Library
 
Search the PWV archive »
 
 

Direct To Consumer
Wine Shipping Report
2014
 
Download full report »
 
 

CALENDAR
  • October 26
     
    Pinot on the River
     
  • November 1-2
     
    Temecula Harvest Celebration Barrel Tasting
     
  • November 5
     
    Single Vineyard Night
     
  • November 5-6
     
    Southeastern United Wine & Grape Symposium
     
  • MORE »
 

READER COMMENTS
 
Article: The 'Sideways' Effect »
 
Thank you for this research that confirms what many thought about the pinot noir effect....
Reader: Guest
 
Article: Fine for Volunteer Labor Makes Wineries Wary »
 
This is so incredibly asinine. And my taxes go to help fund these over-reaches? No...
Reader: Philburtonj
 
Article: Paso Winegrowers Back on TTB Track »
 
Unfortunately, they will be named Drought sinkhole #1, #2, #3, etc. Really, 11 different flavor profiles...
Reader: Donn Rutkoff
 
Article: Optimization of limited water resources in irrigated vineyards »
 
Very interesting article! Sap flow monitoring was in the past mostly used for research but...
Reader: Virginie Scoarnec
 
Article: New York OKs Out-of-State Grapes »
 
If the resultant wine, using out of state juice,bears the "American" on the label, I...
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
 Vice President Of Sale...
 Napa, CA
Sales and Marketing
 Nyc Sales Rep
 New York, NY
Sales and Marketing
 Wine & Beer Sales Exec...
 Delaware Beaches, DE
Sales and Marketing
 Owner/General Manager
 Atlanta, GA
DTC, Tasting Room and Retai
 Italian Wine Sales In ...
 New York City, NY
Sales and Marketing
 Regal Pasadena Sales R...
 Los Angeles, CA
Sales and Marketing
 Executive Sous Chef
 Paso Robles, CA
DTC, Tasting Room and Retai
 Outside Sales Rep
 Napa, CA
Sales and Marketing
 Wine And Spirits Consu...
 New York, NY
DTC, Tasting Room and Retai
 Faculty Chair In Wine ...
 Rohnert Park, CA
General Administration and
 
More Job Listings >>
Follow Us On:
 
 





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

Advertise  |  Site Map  |  Contact Us  |  Privacy Policy
 
 
Copyright © 2001-2014 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.