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  
October 2014 $570 million
6%
$7,775 million
6%
October 2013 $539 million $7,342 million
     
Direct-to-Consumer Shipments » Month   12 Months  
October 2014 $284 million
18%
$1,751 million
13%
October 2013 $240 million $1,556 million
     
Winery Job Index » Month   12 Months  
October 2014 139
6%
226
18%
October 2013 131 192
     
 
MORE » Released on 11.13.2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 

Practical Winery & Vineyard Library
 
Search the PWV archive »
 
 

Direct To Consumer
Wine Shipping Report
2014
 
Download full report »
 
 

CALENDAR
  • December 2-4
     
    Vinitech Sifel in Bordeaux
     
  • December 3
     
    Sustainable/Organic Wine Production Seminar
     
  • December 4
     
    North Coast Wine Industry Expo
     
  • December 6-7
     
    Wine Chemistry Workshop in Oregon
     
  • MORE »
 

READER COMMENTS
 
Article: Kluge Saga Continues in Virginia »
 
Not everybody likes Pat Kluge, but she and Moses built a first class winery /...
Reader: Josh Moser
 
Article: Canada Adapts to Kegged Wines »
 
I am a wine agent in Manitoba & there certainly are kegs of cider here....
Reader: Guest
 
Article: What's Your Winery's IP Worth? »
 
If you would like more information on this seminar please visit The Seminar Group's website....
Reader: Danielle Bingham
 
Article: DtC Is Lifeblood of Wineries, Banker Says »
 
Seems like another locical option would be to have more small niche distrbutors. Consolidation of...
Reader: Guest
 
Article: Tasting Wine From PD-Resistant Grapes »
 
Congratulations Andy! Lots of grapebreeders and southern growers will be looking through the catalogs. 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
 Cellar Club Coordinato...
 Dundee, OR
DTC, Tasting Room and Retai
 Customer Service & Rel...
 Healdsburg, CA
DTC, Tasting Room and Retai
 Brand Manager
 Woodland Hills, CA
Sales and Marketing
 Senior Vineyard Manage...
 Rutherford, CA
Vineyards
 Brand Director, Austra...
 Napa, CA
Sales and Marketing
 Sales Representative O...
 Sacramento, CA
Sales and Marketing
 Production Forklift Op...
 Yountville, CA
Winemaking and Production
 Project Manager
 Santa Maria, CA
Sales and Marketing
 Wine Salesperon
 Bay Head, NJ
Sales and Marketing
 Communications Special...
 St. Helena, CA
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 © 2001-2014 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.