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  
March 2013 $546 million
5%
$6,988 million
7%
March 2014 $572 million $7,451 million
     
Direct-to-Consumer Shipments » Month   12 Months  
March 2013 $177 million
20%
$1,483 million
10%
March 2014 $213 million $1,634 million
     
Winery Job Index » Month   12 Months  
March 2013 253
15%
166
27%
March 2014 292 210
     
 
MORE » Released on 04.14.2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Wines & Vines
Packaging Conference
 
Learn More »
 
 

Practical Winery & Vineyard Library
 
Search the PWV archive »
 
 

Direct To Consumer
Wine Shipping Report
2014
 
Download full report »
 
 

CALENDAR
  • April 23-26
     
    CABs of Distinction in Paso Robles
     
  • April 26
     
    Siera Pelona Valley wine festival
     
  • April 27
     
    TAPAS Grand Tasting
     
  • April 29
     
    Rendez-Vous Laffort
     
  • MORE »
 

READER COMMENTS
 
Article: Starbucks Expands Wine Sales to More Cities »
 
Pretty amazing that the 1st wines chosen are from Argentina, Italy, and New Zealand! I...
Reader: Jacques Brix
 
Article: Starbucks Expands Wine Sales to More Cities »
 
Given Starbucks commitment to sustainability and global responsibility, I expect this move could be a...
Reader: Guest
 
Article: What to Do About Red Blotch »
 
There is NO correlation with planting density. Also FPS is working on the problem. New...
Reader: Guest
 
Article: Premiere Wine Auction Nets $5.9 million »
 
Thanks for letting us know Janet, we've updated the story. Cheers
Reader: Andrew Adams
 
Article: Will Barrels Go the Way of Floppy Disks? »
 
Fun piece. Particularly enjoyed the three clearly superior attributes of standard barrels, including looking cool...
Reader: Tom Gable
 
 


Directory/Buyer's Guide — Your Wine Industry Marketplace
 
 
WINERY SEARCH
 
 
Advanced Search »
SUPPLIER SEARCH
   by Product
 by Company Name or Brand
 
Browse by Category »
2014 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
 Coordinator, Vineyard ...
 Napa, CA
General Administration and
 Direct Sales Operation...
 Healdsburg, CA
Sales and Marketing
 Direct Shipping Clerk
 Napa, CA
General Administration and
 Lmr Estate Guide
 Saint Helena, CA
DTC, Tasting Room and Retai
 Tasting Room Associate...
 Napa, CA
DTC, Tasting Room and Retai
 Tasting Room Associate...
 Napa, CA
DTC, Tasting Room and Retai
 Cellar Staff
 St. Helena, CA
Winemaking and Production
 Winemaker
 Napa Valley, CA
Winemaking and Production
 California State Sales...
 Healdsburg, CA
Sales and Marketing
 Sales & Marketing Admi...
 Wenatchee, WA
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.