Wines & Vines Home
   
 
Welcome Guest
LOGIN |  CREATE ACCOUNT
 
ADVERTISEMENT
 
 
 
01.23.2012  
 

Red Flag for Merlot?

Questions remain for troubled variety as demand increases

 
by Andrew Adams
 
 
turrentine brokerage
 
Brian Clements, left, and Marc Cuneo of Turrentine Brokerage discuss the current bulk wine market during the Sonoma County Winegrape Commission's Dollars and Sense forum held Jan. 19 in Santa Rosa, Calif.
Santa Rosa, Calif.—With the availability of bulk wine, especially Cabernet Sauvignon, at its lowest level in more than a decade, and growing consumer interest in red blends, grapegrowers may see an increase in demand for Merlot—if, that is, there is enough acreage to support it.

During a recent grower forum in Santa Rosa, Brian Clements, vice president and partner of Turrentine Brokerage, said Merlot acreage is at levels not seen since the mid-1990s, when growers ripped out vines in response to a demand shift. In California’s Central Valley, Clements said, growers pulled 40% of their Merlot vines.

Clements’ remarks came during the Sonoma County Winegrape Commission’s “Dollars and Sense” meeting and tradeshow. This year’s event drew 550 attendees, with 55 exhibitors at the tradeshow.

While Merlot withered, the industry had a bountiful supply of bulk Cabernet. During the past decade, Clements said, “Cab was the biggest Cab blender.”

Today, bulk Cabernet Sauvignon inventories are around 400,000 gallons or just 8% of 2007 supply. “Now, there’s really no Cab,” Clements said. “So what do they turn to? It’s Merlot.”

Interest in Merlot may also be fueled by growing demand for red blends. Mike Colicchio of Nielsen’s alcohol beverage division said red blends saw an 8% growth in sales.

“Merlot has served as the backbone of a lot of those programs,” said Marc Cuneo, a broker with Turrentine.

Clements, however, marked the Merlot situation with a “red flag,” illustrating that the dynamic could be out of balance. “Is there enough? That’s something to take note of,” Cuneo emphasized.

Merlot saw a 5% drop in its share of wine sales in 2011, but the varietal remains the second-most popular wine overall, with a healthy 23% consumer loyalty.

While growers of Merlot—and in fact all other varieties—could hope the diminished bulk market may mean an increase in grape prices, Clements and Cuneo cautioned that most wineries are still moving inventory at discount. Clements said this is the first time he’s seen a market switch that has not been driven by increased winery sales, explaining that the past two light vintages changed the market dynamics. “Mother nature kind of flipped this market,” he said.

The sweet tsunami

Moscato and other sweet wines continue their surging success in the market, said Nielsen’s Colicchio.

As consumers across the board continue to buy more wine—and beer has “just fallen off a cliff” with a 2% drop in total volume sales this year, following years of anemic sales growth—more and more drinkers are going sweet. In the past 13 weeks of market research, sweet table wine enjoyed a 207% growth in total value of sales and a 213% growth in total volume of sales.

“Clearly the sweet wine category is starting to take hold,” Colicchio said, adding that brands labeled “sweet” are seeing the biggest increase.

Leading the sweet surge is Moscato, with 78% growth, accounting for more than 3% of total wine sales and more than $200 million in value.

Moscato has skyrocketed since it first was popularized in rap music. In 2005, Kanye West ordered up cases of Saracco Moscato d’Asti for a party; other rappers followed suit, praising the wine. A 2010 album by artist Waka Flocka includes the song “No Hands” that has the artist rapping: “Girl the way you movin’ got me in a trance, DJ turn me up, ladies this yo jam, I’m-a sip Moscato.”

Table wine still the growth engine
The “engine of growth” for most wine, though, is still table wine, of which two-thirds is Californian. Cabernet is strong with high varietal loyalty, solid 6% growth in 2011 and 15% share of the total market.

Chardonnay held the largest share of the market in 2011 at 21%, but demand for the varietal stayed constant. Pinot Noir enjoyed a 10.5% increase in sales in 2011 with a nearly 9% bump in the past 13 weeks.

Sonoma County is on par with Napa County for share of the market, but Napa and the Central Coast had bigger gains in the market for 2011 and the past 13 weeks. Napa continues to lead with the biggest sales increases in the higher priced wine tiers.

Imports across the board are losing sales and market share, except for Argentina, due to growing interest in Malbec, and New Zealand because of Sauvignon Blanc.

People who enjoy the cheapest wines are also the most loyal. Wines priced less than $2.99 maintain a 68% consumer loyalty.

Nick Frey, president of the Sonoma County Winegrape Commission, said he was very happy with the turnout for Dollars and Sense because it showed that growers in Sonoma County are engaged with the changing wine industry.

He hopes prices will rise: Some growers had been producing grapes at a loss in recent years. He said he found the news about a tight bulk market good, but cautioned, “We can’t get too excited.”

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.